It has been a challenging year for First National Bank of Botswana, and the tough trading conditions were exacerbated by the closure of major mines and associated business failures which placed a large number of consumers under considerable pressure and negatively impacted their disposable incomes.
The consequence to the Bank was a sharp increase in nonperforming loans (NPLs), particularly in the Retail consumer segment, which rose to unprecedented levels. Downstream businesses in the transport, hospitality, accommodation and associated service industries that supported the mines were likewise severely impacted, affecting the Business segment’s performance. Employees of theses support industries were in turn impacted, compounding the knock-on effect on the Bank’s overall performance.
An Uncertain Global Outlook: The global economy has been somewhat stagnant during the year, with uncertainties on many fronts. The US economy has not performed as well as expected in the wake of the new administration’s failure to deliver on key election promises that were to rejuvenate the American economy, and while there have been some minor improvements, these have not yet gained the anticipated momentum.
Brexit, with its many unresolved issues, has also had a negative impact on the world economy as countries wait to see the shape of a post-Brexit Europe and whether, and on what terms, the UK will re-invent itself as an independent economy. China’s reduction in infrastructure spending impacted commodity demand and this resulted in a price collapse. The political and economic landscape in South Africa is having a negative effect on the rand-pula exchange rate and the downturn in that country has had an adverse impact on the local market.
A Slow Recovery at Home: The local economy presents a somewhat mixed picture, with some positive developments offset against a number of challenges. Business confidence showed an improvement in the first half of 2017 and there has been some recovery in the commodity space. There was no growth in diamond production, but diamond sales, which are mostly exports, were significantly higher than in the previous year.
These developments had only a slight impact on the capital intensive local economy and did not translate into short-term employment growth. On the negative side, mining revenues which feed into government coffers were stable or declining during the year, resulting in small businesses not being paid on time; and this had a knock-on effect on the cash flows of most of their downstream clients. The negative impact of the closure of the BCL and Letlhakane mines is likely to be aggravated by looming retrenchments recently announced by some organisations.
Liquidity: The liquidity situation in the market remained stable and appears to have recovered from the considerable pressure it experienced during the liquidity crisis of late 2014.
Risks: As alluded to earlier, increasing impairments constitute the most significant risk the Bank is facing. Impairments have grown exponentially during the year under review, owing to the increased pressure on the consumer, and this has particularly affected the Retail and lower end Business segments.
Inflation: Annual inflation in June 2017 was 3.5%, 0.5% above the lower limit of the Bank of Botswana’s target 3% to 6% range. Inflation is expected to gradually increase in the second half of 2017 before falling back towards 3% in the first half of next year.There were no interest rate adjustments during the financial year.
Performance: Overall performance was relatively flat, with profit before tax increasing by 3% to P680.3 million and profit after tax marginally down on the previous year at P500.5 million. The balance sheet grew by 8% with 4% increase in net advances. Leadership renewal and the Bank’s Productivity Project led to increased employee benefit costs which rose by 17% to P514.8 million. Continued investment in infrastructure, including the opening of two new branches, also impacted on costs.
Credit Extension: Market credit extension grew 4% year on year. Growth in advances to businesses remained flat at 1%, a slight improvement on the 0.2% decline recorded in the previous year. This is a welcome development as the pendulum has swung from the consumer to the business segment. Consumer segment credit extension declined from 13% to 7% during the financial year, reflecting the pressure that the consumer is under at the moment. The decrease in household credit extension illustrates slower growth across all the main loan categories.
There is continued pressure in the property finance space, particularly for properties above P2 million, while the value and rental prospects of properties below P1.5 million have remained resilient.
The Regulatory Environment : The heightened regulatory environment, which has resulted in the need for increased anti-money laundering (AML) awareness, has guided the Bank’s efforts to meet the Know your Customer (KYC) requirements as stipulated by the Bank of Botswana, the South African Reserve Bank and the Financial Intelligence Agency (FIA). I acknowledge that the KYC process has been arduous and sometimes inconvenient for our customers and would like to take this opportunity to thank them for their patience and endurance. With the KYC process nearing completion and staff able to resume their core duties, customers can expect a return to service excellence.
Our Customers: FNBB’s underpinning strategy is Customer Centricity; placing the customer at the centre of everything we do. We continue to innovate and avail new channels such as our enhanced call centre services and broadened e-solutions, illustrating our commitment to enriching the customer experience.
Our People: The Bank continues to invest heavily in staff training, ensuring that it has both the critical skills and succession capacity to maintain its best bank status. During the year, FNBB started a new international secondment and attachment programme that places top performers from various universities to undergo a year’s rigorous training within the Group in South Africa, after which they are redeployed to Botswana. The Bank also awarded five full employee scholarships to ensure the development of the high-level skillsets essential for Botswana. At any one time a number of our employees are on attachment at various divisions within the Group in South Africa for periods of between six months and two years.
Looking Ahead: Indications are that the diamond industry is recovering, and the tourism and agricultural sectors are performing well. We expect the economy to start showing positive signs of recovery in the short- to medium-term and are encouraged that the Bank of Botswana perception index indicates that the business community is buoyant about future prospects for the country. The improvement to business credit extension is further evidence that the economy is on the road to recovery, and we believe that we can confidently look forward to a better 2018.
Steven Lefentse Bogatsu is the Chief Executive Officer of FNBB
In 2005, the Business & Economic Advisory Council (BEAC) pitched the idea of the establishment of Special Economic Zones (SEZs) to the Mogae Administration.
It took five years before the SEZ policy was formulated, another five years before the relevant law was enacted, and a full three years before the Special Economic Zones Authority (SEZA) became operational.
… courtesy of infiltration stratagem by Jehovah-Enlil’s clan
With the passing of Joshua’s generation, General Atiku, the promised peace and prosperity of a land flowing with milk and honey disappeared, giving way to chaos and confusion.
Maybe Joshua himself was to blame for this shambolic state of affairs. He had failed to mentor a successor in the manner Moses had mentored him. He had left the nation without a central government or a human head of state but as a confederacy of twelve independent tribes without any unifying force except their Anunnaki gods.
If I say the word ‘robot’ to you, I can guess what would immediately spring to mind – a cute little Android or animal-like creature with human or pet animal characteristics and a ‘heart’, that is to say to say a battery, of gold, the sort we’ve all seen in various movies and tv shows. Think R2D2 or 3CPO in Star Wars, Wall-E in the movie of the same name, Sonny in I Robot, loveable rogue Bender in Futurama, Johnny 5 in Short Circuit…
Of course there are the evil ones too, the sort that want to rise up and eliminate us inferior humans – Roy Batty in Blade Runner, Schwarzenegger’s T-800 in The Terminator, Box in Logan’s Run, Police robots in Elysium and Otomo in Robocop.
And that’s to name but a few. As a general rule of thumb, the closer the robot is to human form, the more dangerous it is and of course the ultimate threat in any Sci-Fi movie is that the robots will turn the tables and become the masters, not the mechanical slaves. And whilst we are in reality a long way from robotic domination, there are an increasing number of examples of robotics in the workplace.
ROBOT BLOODHOUNDS Sometimes by the time that one of us smells something the damage has already begun – the smell of burning rubber or even worse, the smell of deadly gas. Thank goodness for a robot capable of quickly detecting and analyzing a smell from our very own footprint.
A*Library Bot The A*Star (Singapore) developed library bot which when books are equipped with RFID location chips, can scan shelves quickly seeking out-of-place titles. It manoeuvres with ease around corners, enhances the sorting and searching of books, and can self-navigate the library facility during non-open hours.
DRUG-COMPOUNDING ROBOT Automated medicine distribution system, connected to the hospital prescription system. It’s goal? To manipulate a large variety of objects (i.e.: drug vials, syringes, and IV bags) normally used in the manual process of drugs compounding to facilitate stronger standardisation, create higher levels of patient safety, and lower the risk of hospital staff exposed to toxic substances.
AUTOMOTIVE INDUSTRY ROBOTS Applications include screw-driving, assembling, painting, trimming/cutting, pouring hazardous substances, labelling, welding, handling, quality control applications as well as tasks that require extreme precision,
AGRICULTURAL ROBOTS Ecrobotix, a Swiss technology firm has a solar-controlled ‘bot that not only can identify weeds but thereafter can treat them. Naio Technologies based in southwestern France has developed a robot with the ability to weed, hoe, and assist during harvesting. Energid Technologies has developed a citrus picking system that retrieves one piece of fruit every 2-3 seconds and Spain-based Agrobot has taken the treachery out of strawberry picking. Meanwhile, Blue River Technology has developed the LettuceBot2 that attaches itself to a tractor to thin out lettuce fields as well as prevent herbicide-resistant weeds. And that’s only scratching the finely-tilled soil.
INDUSTRIAL FLOOR SCRUBBERS The Global Automatic Floor Scrubber Machine boasts a 1.6HP motor that offers 113″ water lift, 180 RPM and a coverage rate of 17,000 sq. ft. per hour
These examples all come from the aptly-named site www.willrobotstakemyjob.com because while these functions are labour-saving and ripe for automation, the increasing use of artificial intelligence in the workplace will undoubtedly lead to increasing reliance on machines and a resulting swathe of human redundancies in a broad spectrum of industries and services.
This process has been greatly boosted by the global pandemic due to a combination of a workforce on furlough, whether by decree or by choice, and the obvious advantages of using virus-free machines – I don’t think computer viruses count! For example, it was suggested recently that their use might have a beneficial effect in care homes for the elderly, solving short staffing issues and cheering up the old folks with the novelty of having their tea, coffee and medicines delivered by glorified model cars. It’s a theory, at any rate.
Already,customers at the South-Korean fast-food chain No Brand Burger can avoid any interaction with a human server during the pandemic. The chain is using robots to take orders, prepare food and bring meals out to diners. Customers order and pay via touchscreen, then their request is sent to the kitchen where a cooking machine heats up the buns and patties. When it’s ready, a robot ‘waiter’ brings out their takeout bag.
‘This is the first time I’ve actually seen such robots, so they are really amazing and fun,’ Shin Hyun Soo, an office worker at No Brand in Seoul for the first time, told the AP.
Human workers add toppings to the burgers and wrap them up in takeout bags before passing them over to yellow-and-black serving robots, which have been compared to Minions.
Also in Korea, the Italian restaurant chain Mad for Garlic is using serving robots even for sit-down customers. Using 3D space mapping and other technology, the electronic ‘waiter,’ known as Aglio Kim, navigates between tables with up to five orders. Mad for Garlic manager Lee Young-ho said kids especially like the robots, which can carry up to 66lbs in their trays.
These catering robots look nothing like their human counterparts – in fact they are nothing more than glorified food trolleys so using our thumb rule from the movies, mankind is safe from imminent takeover but clearly Korean hospitality sector workers’ jobs are not.
And right there is the dichotomy – replacement by stealth. Remote-controlled robotic waiters and waitresses don’t need to be paid, they don’t go on strike and they don’t spread disease so it’s a sure bet their army is already on the march.
But there may be more redundancies on the way as well. Have you noticed how AI designers have an inability to use words of more than one syllable? So ‘robot’ has become ‘bot’ and ‘android’ simply ‘droid? Well, guys, if you continue to build machines ultimately smarter than yourselves you ‘rons may find yourself surplus to requirements too – that’s ‘moron’ to us polysyllabic humans”!