Botswana Insurance Company Limited (BIC) is proud to announce that this year, 2015, is its 40th yearin business. BIC opened its doors for business on the 12th August 1975, aiming at providing insurancesolutions for both general insurance and life assurance business.
The Company was originally divided between two parties, with Botswana Development Corporation holding 51% of the shares and J.H. Minet & Company Limited of London the remaining 49%. In 1985, J.H. Minet sold its 49% holding to St Paul (UK) Ltd, a subsidiary company of the St Paul Incorporation of Minnesota USA.
In 1991, Botswana Insurance Company, to comply with the Botswana Insurance act of 1987, was subsequently restructured to provide only short term market solutions.
BIC is a subsidiary of Masawara Plc, which has interests across Africa in insurance, the hospitality industry and agrochemicals sector.
The Insurance company is the longest serving short term insurance provider in Botswana, with a head office in Gaborone, and 2 branches, one based in Francistown catering for the Northern region and another in Maun, targeting sector specific industries for specialized insurance, particularly for Aviation and Tourism. With a sound reputation, BIC is still the leading insurer in the short term industry since its inception in 1975.
BIC has maintained its leadership status by continuously being product oriented, in terms of customising clients ever changing needs, innovative by embracing technology and including it as a fundamental component of the business growth strategy, being customer centric and forming key strategic affiliations, specifically in reinsurance.
A robust service delivery model of exceptional shortâ€term insurance products and services aimed at specific markets, as well as optimizing our Broker & Agency network as the main delivery channel is the key drive of the business. BIC has the capabilities and expertise to provide insurance covers for personal, commercial and specialised lines of business.
BIC was the first insurance company in Botswana to be awarded an AAâ€credit rating, which is the highest national rating a short term insurer in Botswana can currently attain as accorded by Credit Global Ratings.
The AAâ€ credit rating was achieved through BIC’s firm capital accumulation, through sound earnings generation, underwriting profits and stable investment income. Further, BIC’s balanced investment strategy, which is supportive of adequate liquidity metrics, underpinning its claims paying ability was an important added factor.
BIC has contributed tremendously to socioâ€economic d evelopment and employment creation.
Corporate Social Responsibility(CSR) is a crucial component of the business , and in 2014 BIC won a Vision 2016 award for its contribution to social development, based on its sustainable partnership approach strategy for CSR.
BIC’s talent pool is also vital to growth; BIC has invested heavily in training its team, and is one of the only short term insurance companies to have a fully functional local operational team, looking at various core functions as well as support services.
The BIC team commemorated their 40th anniversary on the 12 August, simultaneously at the head office and its Francistown and Maun branches. BIC Managing Director, Johann Claasen highlighted that the road to 40 years has been a roller coaster ride and the company has achieved tremendous growth over the years.
"Today we want to say a big thanks to you all for your dedication and immense value add to the company", Claasen emphasised to employees.
BIC has a number of initiatives planned in celebrating this milestone through a ‘40 years of making it happen’ campaign which will run through to the end of November 2015.
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”