Standard Chartered Bank Botswana has become the first bank to confirm that it has significant exposures to BCL Group.
The confirmation by the bank comes after a month of uncertainty and speculation concerning the after effects the closure of the mines will have in the overall economy, particularly the banking sector. The bank finds itself in a tough spot after posting lower profits in their previous two reporting periods. The latest announcement will most likely hamper the bank's efforts towards increased profits.
"In terms of the listing requirements of the Botswana Stock Exchange, the Board of Directors hereby notifies shareholders that Standard Chartered Bank Botswana (SCBB) has considerable exposures to the BCL Group and its employees, its liquidation could adversely impact the 2016 performance," the bank said in a cautionary statement to shareholders, also adding that the bank continues to have sufficient liquidity and capital to deliver on its strategy imperatives.
In early October the government announced that they are placing BCL Group under provisional liquidation, effectively meaning that the country's largest copper mine in Selibe Phikwe and Tati Nickel mine in Francistown will cease to operate pending the liquidator's assessment which is expected to take four months. The liquidator is expected to determine whether the mine could be restructured and salvaged or liquidate BCL group's assets to meet its credit obligations.
While liquidation process is underway, the liquidator Mr. Nigel Dixon-Warren has since issued out retrenchment letters to more than 5000 employees of BCL group. Furthermore, the affected employees have been issued letters pertaining to their terminal benefits. The sudden closure of the mines has rattled the banking sector which has not only provided credit lines to the group but also to the axed employees.
When the news of the liquidation broke, Barclays Bank of Botswana acted swiftly to assure its shareholders and clients that its exposure to the struggling miner is shielded by a guarantee from the government. The bank had extended P1 billion guaranteed credit to the mine, meaning that should the mine fail to pay, the government will pick up the tab.
The other commercial banks have so far avoided stating their exposure, instead offered that they cannot discuss confidential matters between a bank and a client with a third party. But behind the scenes, the banks have been frantically assessing and trying to mitigate the impact the closure of BCL will have on their books.
The revelation by Standard Chartered Bank Botswana about its considerable exposure to the BCL group and its employees is the first of many expected from listed banks as they approach the reporting season. The listing requirements require that listed companies warn their shareholders if they expect their financials to be impacted.
With Barclays and Standard Chartered Bank Botswana having declared their positions, the eyes are on the country's biggest bank- First National Bank Botswana- to state its position, with analysts speculating that there is no way the bank will emerge from this unscathed.
It has been an awful year for Standard Chartered Bank Botswana and their announcement will put more pressure on the bank which has been operating in a tough trading environment. The bank was in a shock 85 percent profit drop for the year ended 2015.
"Our performance in 2015 was impacted by the challenging trading environment, characterized by subdued macro-economic conditions, low interest rates and a significant decline in market liquidity. These factors resulted in a substantial increase in our cost of funding, causing considerable margin compression, which ultimately reduced income and profit.
Throughout these challenges, the group remained focused on implementing long term sustainable solutions to keep the statement of financial position resilient and ensure that the group remains here for good for our customers and stakeholders, " Mr. Moatlhodi Lekaukau, the bank's CEO said in March in a press conference with analysts and the media following the release of the end of year results.
The bank's performance was dragged down by a huge surge in net impairments which jumped by 7200 percent from P1.4 million to P104 million. The increase came as a result of the company’s exposure to businesses that have been operating under challenging market conditions, particularly those in the mining sector which has seen commodity prices plunge. The bank was later revealed to have had a significant exposure to a diamonds dealing company.
The harrowing experience caused the bank to limit its role in diamond financing deals. While the bank remained optimistic about future operations, the bank's interim profit for the half year ended June 2016 dropped by 5% following a 42% surge on net impairments losses. The results at the time sparked fresh fears that the bank might post profit lower than the one realized in 2015. Now it looks likely that the bank's upcoming end of year results will be materially impacted in light of their significant exposure which is expected to push up net impairment losses.
The statement from the bank advised shareholders to exercise when dealing in the bank's securities until the results are announced. The bank has performed badly in the stock market this year with its share price dropping by 30 percent to trade at P7.79. The precipitous drop in the share price has wiped over a billion pula from the bank's market valuation, leaving the bank with a market capitalization of P2.3 billion down from P3.3 billion in the beginning of the year.
Prices for cereals or staple foods in Botswana and other Southern African countries continue to rise at a slower pace, following trends in the global markets, according to the latest November 2022 Food Price Monitoring and Analysis by Food Agricultural Organization (FAO) of the United Nations.
Running a digital businessMTN Business Solutions Botswana, popularly known as MTN Business is an Internet Service Provider. We are a subsidiary of MTN Group Limited, a multinational telecommunications Group headquartered in South Africa, which operates in 19 markets across Africa and the Middle East.
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Having made substantial investments in fibre technology, high-speed terrestrial and undersea networks and new frequency spectrum across the markets wherein it operates, MTN is perfectly positioned to respond to this shift in the market.
A few years ago, MTN also made the decision to build an IP capable radio network for its mobile services, giving its core network the ability to seamlessly integrate with enterprise IP networks. The mobile towers deliver services to enterprise clients absolutely anywhere it has a network, shortening the last mile and removing complexity and cost.
Now there is increasing demand from clients to connect their remote sites in all areas, including rural and semi- rural. MTN has assisted clients with overcoming this connectivity hurdle, enabling their staff to get the job done wherever they are.
For MTN, the focus has shifted from just being a core telecommunications services provider, towards also becoming a technology solutions provider. The service offering now also includes Unified Communications, Data Hosting and Cloud Solutions, Security-As-A-Service and Managed Network Services. The scope has changed to being client and industry specific, so the requirements and service portfolio vary from one client to the next. The expectation is that a company like MTN must respond to these challenges, helping clients to get business done better as they shift from old to new technologies.
As many businesses continue to grapple with a digitally dynamic world, they face new challenges that have to be solved. This environment will benefit those that are more digitally enabled and agile. It is a brave new world that will favour online over on-site, wireless over wired and fluid over formulaic. Businesses will seek out partners and suppliers that are every bit as flexible and forward-looking as they are.
Ultimately, clients need partners like MTN Business that will invest in infrastructure, deliver the services they require, have market credibility, are financially sound and have a long-term commitment to their market presence.
Botswana Institution Of Engineers (BIE), has last week hosted a gala dinner in which they appreciated engineers who worked tirelessly and with dedication for 10 years from 1983 to steer the BIE to its current status.
The event that was held at the Phakalane Golf Estate had brought together young, experienced and veteran engineers and was held under the theme “Vitalize the dignity and eminence of all professional engineers”.
Explaining the theme, the institution’s treasurer, Thanabalasingam Raveendran said that engineers were looked upon reverentially with respect as the educated but with time it seems to have deteriorated. He indicated that there is a need to change the narrative by all means.
“The BIE exists for the welfare and the betterment of us Botswana engineers, we need to recognize specialised units within our Institution. We Engineers strongly believe in Engineers make it happen” Raveendran said.
He indicated that under the theme they appeal to all engineers to energize, to attain quality of being worthy of honour and respect and to achieve recognized superiority amongst the Society.
Raveendran stated that engineers need to ensure their end product is of good quality satisfying the end users expectations and engineers must be honest in their work.
“Approximately 8000 engineers registered with Engineering Regulatory Board (ERB) are not members of the BIE, engineers need to make every effort to recruit them to BIE” he said.
He alluded that BIE being a society, it currently needs to upgrade itself at par with professional institutions elsewhere like the UK and USA.
He further stated that BIE has to have engineering units of specialised disciplines like Civil/Mechanical/electrical etc
“As President Masisi indicated in his inaugural speech, the young people, who make 60 percent of the population of this country, are the future leaders and therefore investing in them is building the bridge to the future” said Raveendran
Kandima indicated that BIE has a memorandum of Understanding with Engineers Registration Board (ERB), where BIE is a recognised provider of CPD training, mentorship programmes and more importantly IPD undertaking to upgrade the skills and know-how of our engineers.
“For us to achieve our mandate and make worthwhile changes to engineering in Botswana, we have to be totally focused and act with intent” said Kandima.
Furthermore, Stephen Williams, past president of the BIE from 1986-1988 told the engineers that the BIE provides a fertile environment where they can meet, share ideas and grow professionally.
“The BIE is also a nesting place for graduate engineers to learn from their peers and seniors, it also cater for engineering technicians and technologists and so nobody in the technology field is left out” he said.
He further indicated that Botswana Government provides a conductive environment for growth of engineering professionals.
“It must be stated that the Botswana Government recognises the existence of BIE and it can further be stated that the government enables ERB to carry out its mandate as a regulator of engineering professionals” said Williams
He plead with engineering companies to recognize and support BIE as it is the only source of engineering personnel’s for various Industries .
Furthermore, when giving his farewell speech, Michael Pinard , a past president of the institution said how they are viewed as engineers by the general public might be due to some lack of appreciation as to exactly what role they play in the development of the country.
“The BIE slogan is aptly coined-Engineers make it happen, in other words, what man dreams engineers create” Said Pinard.