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BIHL group leadership transformation…

Botswana Insurance Holdings Limited (BIHL) Group understands that for an organisation to achieve exceptional performance in a competitive and ever-evolving industry, the journey begins with strong leadership.

Between 2015 and 2016, the Group saw the successful appointments of formidable chief executives across the business including at BIHL, Botswana Life Insurance Limited (BLIL) and Botswana Insurance Fund Management Limited (Bifm), to sustain the Group’s strong market position as a premier financial services operation in Botswana. The developments in the BIHL family leadership has indeed born good fruit, as the Group has yielded modest financial results for the six months ended 30 June 2016.

Major appointments that took place during this financial year to steer the behemoth BIHL Group ship included newly appointed BIHL Group CEO, Mrs. Catherine Lesetedi-Letegele, Bifm CEO Mrs. Neo Bogatsu, and more recently Botswana Life Insurance Limited CEO, Mrs. Bilkiss Moorad. The results report that in the midst of challenging market conditions, experienced by most key business lines, the Group has retained a good position and experienced elements of growth.

 “As a leading Group in the Botswana economy, we continue to maximise our efficiencies by taking advantage of our rich talent, our numbers and leveraging off our strengths to provide value for our customers and stakeholders, as we offer seamless and relevant financial solutions across our subsidiaries. In the midst of a challenging economic environment, which has seen the likes of UK’s unexpected exit from the EU and the underperformance of global equity markets, the Business’ financial position remains strong, with a stable outlook for future. We are exceptionally proud of our management and how they are steering the BIHL family ship, as they execute their respective mandates, while in turn delivering collectively on driving our twin strategy of growth and profitability,“  noted BIHL Group Chair, Mrs. Batsho Dambe-Groth.

Key highlights across the Group are as follows:

·       The Group sustained the new business value at P78.9 million.

·       Consolidated Investment Income, comprising of dividend income and interest income saw a significant increase to P370.5 million, compared to the P341 million attained in the comparative 6 months.

·       The life insurance business achieved a moderate growth in Operating profit of 2 percent to P192 million from P188 million in the first half of the prior year. Recurring premium income grew by an impressive 8 percent from P486 million in June 2015 to P530 million during the first 6 months of 2016.

·       Bifm, which provides asset management services, and has shareholding in a business in Zambia, yielded a steady 2 percent increase year on year in total assets under management (AUM) to P21.1 billion (Bifm P17.6 billion and Zambia P3.5 billion). This came on the back of strong inflows to the Unit Trust business.

The short term insurance business, though has posted subdued financial results with an operating loss of P0.7 million compared to P1.3 million operating profit recorded in the first half of 2015, total net income for general insurance increased to P23.9 million in 2016 from P22.98 million in the first half of 2015. The business had also undertaken a successful restructuring of Legal Guard following the sale of general insurance lines business in August 2014.

Concluded Mrs. Dambe-Groth, “It is worth noting that the Business has had quite a challenging season in the face of higher costs in operations, movements in the global economy including that of Brexit and the volatility of global equity markets. Thanks to our robust leadership and the formidable legacy of those that paved the way before, we have pushed ourselves to work even harder to continuously better our approach to doing business and seizing overlooked opportunities for achieving sustainable growth and profitability. This attitude has indeed carried us through this tougher economic climate, to retain our strong market position as a leading financial services Group.”

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

21st September 2020

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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