Inside FNBB Itsose competition row
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A business competition which was power-driven by the commercial First National Bank of Botswana (FNBB) in association with Local Enterprise Authority (LEA) and University of Botswana hailed as Itsose Business Idea Competition has missed the mark in funding its last ten (10) front-runners in the business proposal contest.
The Weekend Post has established that the 10 who emerged victorious in the competition were never funded save for one, a bitter pill to swallow for the other nine contenders who have yet to receive their funding.
This is notwithstanding that the competition’s aim as espoused in its information sheet was to “facilitate the provision of funding to entrepreneurs who meet the criteria of the competition’s funding partners”.
When explaining the row, FNBB Director of Coverage, Boiki Tema, who sat with bank Communications Manager, Kemiso Ben, told this publication in an interview on Monday that, “only one gentleman sought merely P200 000 altogether in his proposal and we thought the amount was slight and reasonable and therefore funded the project fully; while the other required P5. 1 million but we only offered him P100 000 which he outrightly rejected. We suggested he would get the money in phases as the project implicated huge sums of money.”
This basically means that only one participant’s project was fully financed. According to Tema, who has watched the project carefully since inception, said the bank is and was nonetheless “not obliged to fund” the front-runners of Itsose Business Competition, although they benefitted widely from coverage.
He referred this newspaper to the ‘agreement to the competition terms and conditions’ which were signed by contestants. Clause 8 of the agreement states categorically that, “I accept and agree that funding is not guaranteed even if I win the competition, and while FNBB will endevour to fund my proposal, any such funding is subject to satisfactory conclusion of a due diligence investigation or any other investigation which FNBB may deem necessary; furthermore any funding shall be subject to the negotiation and conclusion of an agreement between myself/ourselves and FNBB.”
It is understood that the competition, although widely advertised in the mainstream media, was merely hypothetical. Indications on the ground are that, “the fast-track to funding, business support and success for Batswana entrepreneurs, start-ups and growing businesses” have gone rather pear-shaped, with the bank somersaulting on the prior arrangements and leaving the contenders on the lurch.
Some of the aggrieved winners who spoke to Weekend Post on conditions of anonymity questioned FNBB’s policy of “donating” money to other projects, including for people and organisations to build parks, for example, but failing to give out (refundable) loans to them. According to them, this probably led to the competition’s miscarriage.
“There was a meeting at some point at FNBB and we were told that we will be funded and asked to apply for the loans. Now they are quiet. So how do you say our businesses nosedived if you have not facilitated the loan to the fullest? The only way out of this dispute is to finance us,” one of the contestants who got a raw deal asserted.
He added: “the competition created problems for some of us, as we don’t have working capital to start our proposed businesses. There is nothing to generate money with despite our proposals being regarded as the best.”
This publication has been informed that some, who were financed at almost P100 000 for multimillion pula projects are being made to walk on broken glass. It is alleged that they were blacklisted under controversial circumstances at the Citizen Economic Entrepreneurial Agency (CEDA) and therefore could not even be lent money at the loan institution.
For this reason, FNBB is currently dragging some to lawyers for failure to pay despite still having no working capital and therefore not being able to generate sufficient income.
“Some of the lawyers are harassing us and threatening to jail us,” he insisted.
Meanwhile Tema acknowledged that two gentlemen making up some of the proposal front-runners had launched their grievances with the bank. The duo, Tiroyaone Barung and Tumo Kgopo have started a series of meetings with the bank with a mission to iron out the differences and find a common ground going forward.
Tema also added that all the other eight contestants have been referred to LEA where they will be advised and guided for alternative funding. Although clause 8 of the competition terms and condition says funding by FNBB is not guaranteed, it is not clear why FNBB found a need not to finance the projects although they had the best business proposals from the 10 contestants.
According to Tema, some of the shortlisted project proposals which triumphed but lack funding ranges from waste management, a piggery business, advertising, a sports academy, a driving school and safari and toll gates among others.
“As a bank we only felt it was a good competition as it will position the SMMEs of Botswana and also build a data base for entrepreneurs, including helping diversify the economy,” he said.
The 10 finalists were shortlisted from the one hundred (100), who were selected from the initial 2 800 participants who had entered the competition. The 100 were taken through training and development, and given three weeks to solicit their business proposals. The proposals were then presented before a panel of judges from which the 10 winners emerged.
The conquerors then took home a package of P10 000 in cash, a business laptop, mobile phone, business training and mentorship, publicity and exposure of business and only lacked “access to preferred funding”.
Itsoseng started in 2008 and was seen as Botswana’s biggest, most exciting small business competition which gave a life time opportunity to upcoming entrepreneurs. Some of the competition’s aims was to fast track the start-up and growth of businesses with great potential and support their successes, encourage entrepreneurs to sharpen their businesses acumen, improve their business plans, thinking and writing skills.
Other objectives included encouraging individuals with good business ideas to take the “first step;” showcasing winning entrants as role models to encourage other entrepreneurs as well as facilitating the provision of funding to entrepreneurs who met the criteria of the competition’s funding partners.
The project has seen three of the bank’s Chief Executive Officers (CEO’s) exchanging power since it’s commencement in 2008, from Danny Zandamela through to Lorato Boakgomo – Ntakwana to the current Steven Bogatsu.
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Batswana owe banks P79 billion
The Minister of Finance, Peggy Serame, has disclosed that the total bank credit extended by commercial banks amounted to P79 billion, out of which P53.4 billion was retail loans and advances to households.
Parliament was informed this week in response to a question by the Member of Parliament for Selibe-Phikwe West and Leader of Opposition (LOO), Dithapelo Keorapetse.
“As at 31st December 2022, loans and other advances extended to households by banks constituted the largest share of bank-lending at 67.6 percent, the majority of which was unsecured personal loans at P36.2 billion (67.8%),” said Serame.
She added that the total household Debt to GDP ratio was 21.9%, while the total private business credit to Gross Domestic Product (GDP) ratio was 10.8%.
On the other hand, it was noted that outstanding mortgage loans extended to households were P14.2 billion (26.6% of household debt) or 5.9% of GDP. Overall, total bank credit as a ratio of GDP stood at 32.7 percent.
It was acknowledged that there are 10 deposit-taking banks in the country, that is, nine commercial banks and one statutory bank (Botswana Savings Bank). This statistics excludes the National Development Bank (NDB), which is a development finance institution. The nine commercial banks include an indigenous bank, Botswana Building Society Bank Limited (BBSBL), which was issued with a commercial banking license by the Bank of Botswana in October 2022.
Still in December 2022, it was recorded that there were 376 non-bank lenders in Botswana consisting of 246 micro lenders, 66 finance companies, three leasing companies and 61 registered pawnshops.
According to Minister Serame, the loan book value representing the principal amount lent by these entities to individuals and to small, medium and micro Enterprises (SMMEs) is collated by the Non-Bank Financial Institutions Regulatory Authority (NBFIRA), which at 31st of December 2021, the loan book values were P5.6 billion for micro lenders, P1.6 billion for finance companies, P225 million for leasing companies and P14 million for pawnshops.
Government policy is that price control is not effective or desirable, and, as such, interest rates are not regulated. Non-regulation may, among other things, result in an increase in non-interest rate fees and commissions, reduced price transparency, lower credit supply and loan approval rates.
“It is important to note that, from a macroeconomic perspective, household debt in Botswana is neither a pandemic nor considered to be excessive. Indeed, the Bank of Botswana’s periodic and continuous assessments of household debt, including through the annual Household Indebtedness Surveys, suggest moderate household indebtedness and therefore, is of no apparent risk to the safety and soundness of the domestic financial system,” said Serame.
She also alluded this assessment is validated by the recently concluded Financial Sector Assessment Programme (FSAP) on Botswana undertaken by the International Monetary Fund and the World Bank Group.
Keorapetse however rebuked the issue of debt not being excessive and noted the Minister thinks it’s fine for Batswana to be debt burdened in a way that their debts diminishes their quality of life.
“A significant portion of Batswana’s salaries go to servicing debts and because she doesn’t see this as a challenge, there can never be any intervention from her side. There is no price regulation on interest, which can go up to 30%+ a month. Since President Masisi ascended to the high office in 2018, 2 384 Batswana were put in prison for failure to pay debts, that is 467 Batswana every year. So, for us, debt problems are big and concerning,” said Keorapetse.
He said they are worried because Batswana are drowning in debts because of relative poverty, slave wages and unemployment/underemployment, they buy basic needs and services with borrowed money and noted predatory and unethical lending has become a major problem in Botswana’s financial sector.
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How to fleece P14 million from Chinese investor
The modus operandi of how five men allegedly swindled a Chinese national P14 million last week continue to unravel. Highly placed sources from the intelligence, the Directorate on Corruption and Economic Crime (DCEC) and Botswana Unified Revenue Services (BURS) revealed to this publication how the whole scam was concocted.
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ENVIRONMENT ISSUES: Masisi asks Virginia for help
President Mokgweetsi Masisi says the issue of sustainable natural resources management has always been an important part of Botswana’s national development agenda.
Masisi was speaking this week on the occasion of a public lecture at Virginia Polytechnic, under theme, “Merging Conservation, Democracy and Sustainable Development in Botswana.”
Botswana, according to Masisi, holds the view that the environment is fragile and as such, must be managed and given the utmost protection to enable the achievement of Sustainable Development Goals (SDGs).
“It is necessary that we engage one another in the interchange of ideas, perspectives, visualizations of social futures, and considerations of possible strategies and courses of action for sustainable development,” said Masisi.
On the other hand, dialogue, in the form of rigorous democratic discourse among stakeholders presents another basis for reconfiguring how people act on their environments, with a view to conserving its resources that “we require to meet our socio-economic development needs on a sustainable basis,” Masisi told attendees at the public lecture.
He said government has a keen interest in understanding the epidemiology and ecology of diseases of both domestic and wild animals. “It is our national interest to forestall the dire consequences of animal diseases on our communities livelihoods.”
President Masisi hoped that both Botswana and Virginia could help each other in curbing contagious diseases of wildlife.
“We believe that Virginia Tech can reasonably share their experiences, research insights and advances in veterinary sciences and medicines, to help us build capacity for knowledge creation and improve efforts of managing and containing contagious diseases of wildlife. The ground is fertile for entering into such a mutually beneficial partnership.”
When explaining environmental issues further, Masisi said efforts of conservation and sustainable development might at times be hampered by the emergence and recurrence of diseases when pathogens mutate and take host of more than one species.
“Water pollution also kills aquatic life, such as fish, which is one of humanity’s much deserved sources of food. In this regard, One Health Approach imposes ecological responsibility upon all of us to care for the environment and the bio-diversity therein.”
He said the production and use of animal vaccines is an important space and tool for conservation, particularly to deal with trans-border animal diseases.
“In Botswana, our 43-year-old national premier pharmaceutical institution called Botswana Vaccine Institute has played its role well. Through its successful production of highly efficacious Foot and Mouth vaccines, the country is able to contain this disease as well as supply vaccines to other countries in the sub-region.:
He has however declared that there is need for more help, saying “We need more capacitation to deal with and contain other types of microbial that affect both animals and human health.”