The Direct Pay Online Group (DPO Group) has acquired 100 percent shareholding in Virtual Card Service (VCS) in Botswana and Namibia. The acquisition of VCS operations in Botswana and Namibia were completed in early March and will be closely followed by the acquisition of 100 percent of VCS business in South Africa. This was revealed by both businesses in a press release.
The latest acquisition by DPO Group, the leading online payments service provider in Africa, forms part of its expansion strategy into Southern Africa, as the group seek to strengthen their position as the leading payments solution on the African continent. The group is still fresh from another recent acquisition of PayGate, a leading South African online payments gateway.
The DPO Group is the leading payments service provider in Africa. It serves thousands of online merchants in Kenya, Uganda, Rwanda, Tanzania (including Zanzibar), Ethiopia and Zambia, including leading travel and tourism-related businesses in the region. The Group in September 2016 acquired PayGate in South Africa.
The Group accepts all major credit cards, mobile money and e-wallets, and is a leader in technology, usability and security across the region. It is currently the only Payment Service Provider in East Africa holding PCI DSS Level 1 Certification, the highest security certification in the payment cards industry, ensuring high levels of safety, security and data privacy. The Group is leading the way in digital payments in the region, and recently introduced a mobile application that enables merchants to process payments through their mobile phones using a mobile Point of Sale device.
On the other hand, VCS was established in South Africa in 1996 and expanded into Botswana in 2008 and Namibia in 2010. The company is one of the leaders in developing and implementing credit, debit and smart card processing systems for all major card issuer in Southern Africa. The Company’s solutions assist customers in transacting in a simple and secure online environment, whilst the Company’s unique ‘Virtual Vendor’ system, which interacts with a bank’s existing legacy systems, provides vendor’s with an automated, electronic transaction system regardless of existing banking relationships.
This latest transaction is the DPO Group’s second investment in Southern Africa in six months, following its investment in PayGate. The acquired entity, PayGate, is a payment service provider that offers online retailers simple, effective services to accept electronic payments, which can be a very complex part of running a business. It offers merchants connections to multiple acquirers and fully manages the technical connections and relationships with the banks, card, and payment networks.
It also offers risk management services with payment notifications, settlement reports and fraud protection. PayGate is linked to more than 70 banks in over 30 countries and has been providing secure, reliable online payment services since 1999. Its immediately accessible services help businesses of all sizes stay on top of the continuously evolving world of online payments.
The combination of PayGate and VCS under the Direct Pay Online Group will provide a single contact point for merchants looking to accept payments across the continent. Merchants will have access to DPO's services across the continent to provide bespoke development solutions and customer support in their local language; a single integration that offers their customers the broadest suite of payment options in Africa and world-class security, risk management and fraud prevention.
Commenting on the investment, Mr. Offer Gat, the DPO Group Chairman said, “The VCS team have built a leading market position in the Botswana and Namibian payments landscapes by offering a distinguished suite of services to all organisations requiring automated, high volume and secure card payment processing. We look forward to working together to continue the Group’s growth story and expanding further within Africa.”
For his part, Mr. Gordon Ashby, CEO and major shareholder of VCS said that he is excited to be part of the DPO Group, adding that he was drawn to the Group’s experience in the online payments processing arena and its deep understanding of Africa. “As a management team, we believe that the firm’s knowledge of what it takes to be successful in our markets and its proven track-record of having built the business over 20 years is a great fit for our growth strategy in the future.”
Mr. Eran Feinstein, the DPO Group CEO said the latest acquisition of VCS Namibia and Botswana will complement the DPO Group in various areas including technology, expansion of the client base and growth in this geographical area. “Our aim is to accelerate the intensification of payments in Africa, as we seek to empower every person and organization to have the option to pay and be paid online anywhere, anytime, and by any mode of payment.”
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.
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.
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”