Local banks still dusting themselves after 6 months rollercoaster swing
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Local commercial banks are facing less improvement on credit growth as companies are credit-shy while workers in the private sector have their jobs pinned on the recently extended State of Emergency (SoE) to keep their careers, uncertainty remains for them hence less borrowing appetite.
Local market research says the banking segment just ended first half of 2020 is akin to a see-saw of two halves; a solid first quarter before Covid-19 wave took over in the second quarter plunging all the listed banks in Botswana Stock Exchange in the red. The once MVP of the local bourse First National Bank Botswana (FNBB) stock fell dramatically in the second quarter of 2020.
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While in a previous interview with BusinessPost in July, Stockbrokers Botswana research analyst Donald Motsomi put it to thought that FNBB is not the only banking stock getting shocks of the pandemics effects, there has been a downfall in the share price of another listed bank, Stanchart.
Motsomi then predicted that it was only a matter of time that the ABSA and BancABC stock looks down. Analyst believe that banks will get the heat because of possible impairments and bankruptcies and loan defaults which are their main revenue.
The first half of 2020 was a story of two halves for the banking sector with a solid start to the year in the first quarter followed by a subdued performance in the second quarter as the outbreak of COVID-19 and subsequent containment measures enacted by government led to a significant slowdown in activity.
The first quarter saw acceleration in annual credit growth before the trend reversed into deceleration in the second quarter to end the six month period with an annual growth rate of 6.4% (June 2019: 6.5 percent), says a Banking Sector Performance Update by Stockbrokers Botswana released on Monday.
The update explained that the slightly lower credit growth of 6.4 percent in June 2020 was heavily depressed by subdued credit growth of 0.6 percent (June 2019:1.7 percent and this weighed on the credit growth on households which was 10.1 percent from the 9.7 percent in the same period of last year.
According to Stockbrokers researchers, the growth in household credit was due to influx in motor vehicle and unsecured loans.
The subdued business credit growth was due to a number of factors; being repayments of some credit facilities, write-offs, decreased utilization of overdrafts in numerous sectors and more broadly, a marked decline in business optimism in the second quarter, said Motsomi.
The banking industry provisions for bad and doubtful debts for the six months to June jumped 86.7 percent to BWP484.8 million (June 2019: P259.7 million), according to Motsomi.
Stockbrokers Botswana noted a wide disparity in the increase in provisioning amongst the listed banks. Profitability came under pressure with total industry net profit for the six months to June falling 20.5% to P698.4 million (June 2019: P878.1 million), according to Stockbrokers recent research.
How our banks performed
FNBB was the first banking stock to show signs of Covid-19 business fever when its stock tripped during lockdown as its price fell by 20 thebe or 6.78 percent. Stockbrokers Botswana says FNBBs full year net profit for the year ended June 2020 which is a 5.0 percent decline from P695.8 million (June 2019 P732.5 million).
The local stock broker said FNBB profits were weighed on heavily by 59 percent rise in impairment by almost double, from P264.9 million in 2019 to P421 million in June this year.
FNBBs main rival ABSA profits dropped on the back of a ballooning of impairments and separation costs. The bank has gone a big face change this year wearing off its Barclays brand to the current one, ABSA, and this did not come cheap.
According to Motsomi, ABSA expected credit losses amounted to BWP178.5 million (June 2019: BWP8.3 million net recovery) as the debt relief offered to clients necessitated change in the risk classification of the portfolios coupled with the impact of a macroeconomic variable update to reflect the deteriorating macros.
Motsomi said that lockdown constrained debt collection and customers mobility to make payments. But the banks operating expenses soared by 15.3 percent to P496.6 million (June 2019: BWP430.7 million). The expense growth was largely driven by a once off staff voluntary separation scheme cost and Barclays PLC separation spend (which will be incurred through to 2021).
Meanwhile in an interview ABSA also revealed that the bank approved P3 million facilities under the Government COVID-19 guarantee scheme, mainly in the tourism and hospitality sectors. Absa Bank Botswana still has a number customer applications under credit review.
While big banks FNBB and ABSA continue to choke under the wrath of Covid-19 other listed banks like Bank ABC improved performance as net revenue growth exceeds opex growth.
BancABCs net profit was 8.6 percent higher to BWP55.7 million (June 2019: BWP51.3 million) as total net revenue growth of 8.1 percent exceeded total operating expense growth of 7.5 percent, according to Stockbrokers Botswana.
As for Standard Chartereds half year profits, they were more than tripled to BWP90.1 million (June 2019: BWP27.0 million) as operating income rose 13.6 percent against a 5.0 percent increase in operating expenses whilst a BWP48.0 million impairment reversal pertaining to a cancelled related party loan to the Standard Chartered Bank Education Trust significantly boosted profitability
With banking industry profits having fallen 20.5 percent for the first six months of 2020, this trend is expected to continue for the remainder of the year in the context of subdued credit growth, margin pressure from further rate cut(s) and heightened impairments.
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BOMU exits to ensure that musicians in Botswana are supported by all platforms and services that are aligned to what they do, which at most times is the production of music.
In 2023, the Union put together grand music awards prized at a whooping P3 million. Indeed, the man working behind the awards, Seabelo Modibe of Total Music Group understood the assignment. For the very first time, BOMU awards left an impressive mark, leaving people murmuring.
With that said and done, BOMU became a very important stakeholder in the on-going DBS roadshow. The relationship started in 2022 when the project was initiated. In this massive project, BOMU plays a role of mobilizing and registering new artists.
In the previous years, the Union has been clouded by dispute and back-and-forth. It was accused of being bungling, purposeless and served no interests of its members (artists). Following the effective execution of the eleventh music awards, artists progressively joined BOMU and the DBS roadshow added cherry on top.
Some of the artists who made it to the Top 30 of the DBS roadshows much-admired the platform, saying it played a major part in changing their lives. Some of them started getting booked, changed their mindsets and consider music as a business entity.
These are some of the few nuggets of wisdom they raked from the man behind the roadshow, Thato Sikwane. He is known as DJ Fresh in the music sector and his company, Big Dawg Productions is the brainchild behind the DBS roadshow.
Matter of fact, DJ Fresh and Modibe worked on this concept together with an aim of unearthing new talent in as much as music is concerned. In order to achieve this goal, the duo had to engage BOMU to allow for the artists to have a body that governs them.
When speaking in an interview with WeekendLife, BOMU Secretary General Rasina Rasina said the roadshow is actually a blessing in disguise, as it was initially considered a tall show.
“This is a much-needed platform for a sector that has been deteriorating over the years. We believe it is here to resurrect the music industry. The DBS roadshow cultivate talent from scratch and nurtures it. This will help us as a Union to have a solid foundation and as BOMU, as we are highly appreciative.”
Rasina said BOMU is very much aware of Season One challenges, adding that they too experienced them. “As BOMU, we therefore appreciate that it was the beginning. Naturally, beginnings have challenges but we are optimistic that everything will be in order as together as a team, we can work to solve all pressing matters that delay the progress of artists in Botswana.”
Successful artists during the DBS roadshow will reap from what they sow. BOMU has been allocated a budget to help artists access the roadshow. Rasina has however refused to divulge the total amount but specified that they ensure artist participation and mobilization, as well as feeding.
“We have learnt from past challenges. We do not pay artists but we assist them with transportation funds to mobilize them to attend the roadshow and showcase. What we offer them is not payment. We ensure their participation, transport mobilization and feeding. They compete, showcase and get the platform they need. We partner with them to deliver a product. Essentially, there is a car, a record deal, airtime deal and cohesion.”
Thus far and during the Season 2 roadshow, BOMU has registered an average of five hundred (500) members. In the process, it has managed to rebuild an average of ten BOMU District chapters nationwide.
Rasina commended the government for coming up with a project that caters for the welfare of artists and creative minds in Botswana.
“Our expectations from the next season is that it will be bigger and better. We appreciate the contribution of DBS and the recent focus towards the creative industry by government. Importantly, it is important to note that the creative industry should never be treated from a blanket approach view. Every region, district, village or town has its own talent. The heritage of Botswana is defined by the creative industry talent.”
Child poverty is a pressing issue that affects millions of children around the world, and the link between child poverty and disability is a particularly concerning aspect of this problem. The recent research paper published by the Botswana Institute for Development Policy Analysis (BIDPA) sheds light on the stark reality that children with disabilities are more likely to be living in poverty compared to their non-disabled peers.
The findings of the research paper reveal that children with disabilities face higher levels of deprivation in basic capabilities such as education and health. This means that they are often excluded from essential services and opportunities that are necessary for their well-being and development. The wider gap in education outcomes between children with disabilities and their non-disabled peers highlights the systemic barriers that prevent children with disabilities from accessing quality education.
Moreover, the higher rates of deprivation in health and food security among children with disabilities further exacerbate their vulnerability to illness and malnutrition. This not only impacts their physical well-being but also hinders their overall development and potential. The research paper also highlights the economic disparities faced by children with disabilities, indicating that they are more likely to experience poverty across demographic and economic variables.
The implications of these findings are profound and call for urgent action to address the inequalities faced by children with disabilities. Affirmative action is needed to ensure that policies and interventions are specifically targeted towards addressing the unique needs of children with disabilities. It is crucial to prioritize the inclusion and empowerment of children with disabilities in all aspects of society to ensure that they have equal opportunities to thrive and succeed.
In conclusion, the link between child poverty and disability is a critical issue that requires immediate attention and action. It is essential for policymakers, stakeholders, and communities to come together to create a more inclusive and equitable society where all children, regardless of their abilities, have the opportunity to reach their full potential. By addressing the root causes of poverty and discrimination faced by children with disabilities, we can work towards building a more just and compassionate world for all.
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This accomplishment demonstrates Botswana’s dedication to improving the quality of broadband internet in the country; and re-affirms its position as a leader in Africa’s telecommunications and ICT services. “The acknowledgment of Botswana’s internet as the 2nd fastest in Africa reflects our commitment to cultivating a digitally inclusive society,” remarked Mr. Keabetswe Segole, Acting CEO of Botswana Fibre Networks (BoFiNet). “This achievement highlights our ongoing endeavors to enable all citizens to participate in the digital economy.” BoFiNet, the leading provider of telecommunications infrastructure in Botswana, has been instrumental in shaping the nation’s digital landscape.
Reflecting on BoFiNet’s contribution to Botswana’s digital connectivity, the Acting CEO stated:”BoFiNet takes pride in its role in securing Botswana’s position as the 2nd fastest country in Africa for mobile internet. Our robust fibre optic and microwave network has been pivotal in delivering high-speed connectivity to both urban and rural areas, ensuring access to reliable internet services for all citizens. We remain committed to fostering innovation and digital inclusion, thereby paving the way for a prosperous digital future in Botswana.” Through the recently launched SmartBots Village Connectivity project, 1,138 premises across 144 villages in different Botswana districts are able to connect to this fast internet.
Botswana’s population is utilising connectivity creatively as a result of a boom in mobile penetration, which is advancing the nation’s digitalisation. Rapid advancements in mobile high-speed internet are causing a digital revolution in Africa, bringing about changes in areas including the economy, education, healthcare, and empowerment.