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Barclays sheds African stake worth £2.2 bln

Barclays has successfully shed a huge controlling stake worth about £2.2bn of its African subsidiary in its restructuring drive to centre business on the British and US markets.


Barclays Africa Chief Executive Maria Ramos stated in a conference call with African journalists Thursday that she had never thought that she would be “sharing such striking news after the multibillion share chunk sold at 33.7%, up from just 22%.”
Barclays is now a minority stake owner in Barclays Africa. Ramos stated that the sale is “testament to the quality of our franchise and resilience of our establishment.” She further described the move as an opening that gives them a standalone Pan African footprint with a significant shareholder base and local ownership.


“We have attracted long term ownership and we have a significant opportunity to shape our destiny as a standalone African business.” When probed further by a South African business journalist on what she meant by shaping their destiny, Ramos explained: “Being a subsidiary of a larger international company is beneficial, however, we will be able to think afresh, openly and creatively. We will do what we want without restraints and without being in a large group as a subsidiary.”


The 34% chunk transaction was sealed after securing approval from the South African government where Barclays Africa is listed and headquartered. Ramos further said that the sale agreement will give them three more years to use the Barclays brand outside the South African market, after which they will start to craft their own African centred brand. She however made clear that there is no new name yet.


“We believe that the ownership change will accelerate our vision to become a Pan African bank.” said Ramos, who is also the wife to former South African Finance Minister, Trevor Manuel. At its peak, Barclays held a staggering controlling 62% stake of the African subsidiary. In 2016 it shed 12% of it.


European media reported that the pullout is the strategy of Jes Staley, the 60-year-old American CEO who took the helm in December 2015 and has set about to turn Barclays into a mainly transatlantic business, a strategy that has seen it pull out of a host of businesses around the world including Africa. This strategy undoes the legacy of former chief executive Bob Diamond, who pushed Barclays deeper into Africa until he was forced to quit in 2012 amid the Libor-rigging scandal.


Selling down the stake is important for Barclays because it will raise funds that it will use to bolster its capital position The stake sale is something of redemption for Mr Staley, who has come under fire in recent weeks after it emerged that he had   broken rules designed to protect anonymous whistleblowers.


Barclays PLC will contribute the equivalent of 1.5% of Barclays Africa’s market capitalisation, equating to approximately R1.85 billion (based on Barclays Africa’s share price of R145.95 as at 30 May 2017), towards the establishment of a broad-based black economic empowerment scheme. 


As announced in February 2017, Barclays PLC has agreed to contribute approximately R12 billion (£765 million) primarily to fund the investments required for Barclays Africa to complete the separation from Barclays PLC. The contribution will, in part, go towards investments in technology, rebranding and other separation projects. This process presents an opportunity to modernise and harmonise systems across Barclays Africa operations.


Ownership of Barclays and Absa operations in Africa does not change as a result of the reduction in shareholding. The 11 banks that form part of Barclays Africa will continue to be led and operated by people with deep local knowledge and a diversity of skills and experience.


Barclays PLC announced on 1 March 2016 that it intended reducing its 62.3% shareholding in Barclays Africa over time because of regulatory changes in the UK.  On 5 May 2016, Barclays Bank PLC sold 103.6 million shares in Barclays Africa in a bookbuild, reducing its shareholding to 50.1%.


Ms Ramos concluded: “This is a defining moment for Barclays Africa.  We now have a significant opportunity to determine our own destiny and make our own decisions on what is right for a pan-African focused business”.

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Botswana on high red alert as AML joins Covid-19 to plague mankind

21st September 2020
Botswana-on-high-alert-as-AML-joins-Covid-19-to-plague-mankind-

This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.

The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.

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Finance Committee cautions Gov’t against imprudent raising of debt levels

21st September 2020
Finance Committe Chairman: Thapelo Letsholo

Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.

He was speaking in  Parliament on Tuesday delivering  Parliament’s Finance Committee report after assessing a  motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.

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Gov’t Investment Account drying up fast!  

21st September 2020
Dr Matsheka

Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.

The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.

The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.

The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.

This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.

Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.

Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.

However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.

Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.

When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.

This  as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.

Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.

The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.

Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.

In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.

Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.

Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.

Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.

Acknowledging the need to draw down from GIA no more, current Minister of Finance   Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”

He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”

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