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BDC moves to sell another subsidiary

Competition Authority has received a merger notification for the proposed acquisition of 100% shares in Kwena Concrete Products by Steelbase, from Botswana Development Corporation Limited (BDC).


The acquiring enterprise, Steelbase, is a Botswana based manufacturer, stockist and marketer of different types of steel roofing solutions such as plate, sheet and structured steel across Botswana. The products offered include IBR roofing sheets, pre-painted coils and concealed fix roofing. The directors of Steelbase are Najmuddin Kader; Nabeel Kader; and Faheem Kader.

The primary target enterprise, KCP, manufactures and sells concrete landscaping, building and infrastructural products such as pavers, bricks, and kerbstones across Botswana.  KCP is controlled by BDC, a state owned enterprise that was established in 1970 to be Botswana’s main agency for commercial and industrial development.

BDC, wholly owned by the Government of Botswana, is a development finance institution founded to promote and facilitate the development of industrial, commercial, and agricultural enterprises within the framework of the Government of Botswana's plan for economic development. Under the leadership of Mr. Bashi Gaetsaloe, BDC turned around its fortunes after it implemented the Transformation programme which begun in 2014, shortly after Mr. Gaetsaloe was appointed the managing director.


Under the Transformation Programme, BDC returned to profitability after previous historic loss making position. Part of the Transformation Programme initiatives included revision of all major processes to reflect industry best practise; revision of risk management and governance policies; revision of legal agreements; deployment of a new organisational structure and right-sized the organisation; and,  recruitment of new skills and capabilities, including the key roles of Chief Risk, Chief Operations and Chief Audit.

The Transformation Programme also focused on addressing key issues of restructuring BDC Group’s portfolio and balance sheet. In its 2015 annual report, the group says it has successfully completed Wave 1a of their divestment strategy and has commenced Wave 1b and Wave 2 of this strategy. BDC said that the strategy has not only raised cash for the Corporation, but has also empowered Batswana as most of these businesses ended up in the hands of local citizens.

The Corporation has since divested from five investments in the hospitality, manufacturing and financial services sectors. Divestments made in the hospitality sector were in Cumberland Hotel, Khawa Lodge, and Toro Lodge. The divestment in the manufacturing sector was in Golden Fruit 97(Pty) Ltd. The Corporation also divested from Metropolitan Life Botswana (Pty) Ltd.

The Kwena Product and Steelbase merger notification comes hot on the heels of the recent merger approval of disposal of all the manufacturing assets of Can Manufacturers to Nampak Products Ltd and a yet to be formed Special Purpose Vehicle (“Newco”), which will be jointly controlled by Botswana Development Corporation and Nampak Limited.


Other than disinvestments, BDC has been seeking a P1 billion guarantee from the government to fund its new investments. The guarantee is for the P850 million loan already approved by the African Development Bank and another P150 million, which it plans to raise through a local bond. When making its case for the guarantee, BDC said it intends to inject P45 million in Milk Africa, P200 million on Baisago University expansion, P250 million to fund Letshego’s regional expansion, P270 million to be pumped in private estate in Francistown, P30 million for a paper production company and P280 million to expand the automotive plant.

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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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