Moodys latest outlook on African banks drew a picture of major local financial institutions as collateral for the Covid-19 sting that collapsed their associates in South Africa.
Among Moodys publicly rated banks is Absa Group Limited South Africa, a parent to Absa Botswana and FirstRand Bank Limited South Africa, a mother to First National Bank Botswana. Absa Group South Africa with assets sanding at USD 90 143 million, carries a Ba3 rating with a negative outlook while FirstRand South Africa, with assets of USD 89 079 million has a Ba2 rating with a negative outlook too.
When analyzing the already dogged by recession and deteriorating and indebted South Africa, Moodys had this to say: Our outlook for the sector (South Africa) is negative. The coronavirus-related disruptions are exacerbating the already challenging operating conditions characterized by low growth and wide fiscal deficits.
For banks, we expect a rise in problem loans to over 7%-8% of gross loans, and a significant drop in profits due to higher provisions and a squeeze in margins. The migration of Stage 1 & 2 loans to riskier Stages 2 & 3 will lead to higher risk weighted assets and lower capital.
Despite depositors move to shorter duration products and banks reliance on institutional deposits, funding conditions remain stable and liquidity buffers resilient. A planned new banking resolution regime with bail-in features will be credit positive for senior creditors. Good risk management practices will support financial stability.
In its 2021 Africa banks outlook, Moodys says there is difficulty in operating conditions and banks close links with their respective sovereigns drive the negative outlook. Most African sovereigns like Botswanas outlook has been negative since the outbreak of Covid-19 in the first quarter of 2020. Moodys further says, loan quality, profitability and foreign-currency (FC) liquidity will be pressure points, but stable funding and capital will mitigate risks.
This is after Fitch said that weaker-rated Sub Sahara Africa nations may face higher funding costs than before the pandemic, which could discourage their return to markets. On Wednesday Moodys outlined that there will be stress in African economies as operating conditions will remain difficult, as economic activity, consumer spending and investor confidence remain battered by the pandemic. The rating agency further stated that African sovereigns are heavily indebted and have limited capacity to absorb shocks.
Moodys said banks creditworthiness is linked with deteriorating sovereign credit profiles through their large holdings of government securities. Governments capacity to provide support to troubled banks will also be impaired.
However, according to Moodys, 2021 growth will recover modestly (to 3.3% for Moodys-rated countries). But financial stability will be broadly maintained as stable local currency deposit funding, high liquidity in local currency, good capital buffers with the equity-to-assets ratio typically exceeding 9%-10%, and gradual improvements in risk management will help to contain the risks.
Moodys says banks will be hurt via their links with governments as sovereign pressures will continue to weigh on banks credit profiles: economic slowdown hampers banks financial performance; government capacity to provide support is impaired; while banks are heavily invested in government securities and are hit by a drop in their value.
The African Banking sector will maintain its regional diversity. For example; Egyptian banks will be least impacted by the pandemic. While South African and Nigerian banks will face acute macro challenges, while loan quality and liquidity remain issues for Angolan and Tunisian banks, respectively. East African and Francophone West African banks are better placed than Central African banks given more resilient economies.
The pressure points will be NPLs, profits, FC liquidity and Moodys researcher expect non-performing loans (NPLs) to potentially double from 2019 levels as payment holidays expire, while increased provisioning needs, reduced business generation and margin pressure erode profitability.
Partly dollarized systems like the oil rich Nigeria, Angola and Botswanas diamond money reserves where foreign-currency revenues slumped, are more at risk of foreign exchange shortages.
Furthermore, Moodys said ESG and technology of increasing credit importance is on the forefront. The rating agency outlined the rising environmental risks which will increasingly affect overall economic performance and specific economic sectors, also impacting banks.
On the flip side of the gloom and doom, digital transformation provides exciting opportunities for the banking sector, primarily from rising financial inclusion, says Moodys. Locally commercial banks have been lauded for their resilience amid covid-19 winds, despite banking stocks taking the biggest hit since March this year at the local bourse.
When looking at the Bank of Botswana Research Bulletin which was released on Monday, a study on Market Structure and Performance in Botswanas Banking Industry gave a positive outcome of a healthy local banking sector. The paper said the banking sector profitability does not raise any competition concerns as they are driven by adoption and use of organizational strategies and technologies that improve the efficiency rather than market power or its abuse.
Last week during the MPC press conference on Thursday, Bank of Botswana Deputy Governor, Kealeboga Shalaulo Masalila explained that the reason why banks were able to remain standing tall during tough times is because they are able to evaluate their processes, their loan books are sound and they strive to expand their income, especially from the interest income to digitalization. He further lauded banks marketing strategies that makes them attractive to customers.
As a response to avert vulture poisoning currently going on in Botswana and KAZA region, Birdlife Botswana has collaborated with three other partners (BirdWatch Zambia, BirdLife International & Birdlife Zimbabwe) to tackle wildlife poisoning which by extension negatively affect vulture populations.
The Director of Birdlife Botswana, Motshereganyi Virat Kootshositse has revealed in an interview that the project which is funded by European Unionâs main goal is to reduce poisoning related vulturesâ death and consequently other wildlife species death within the KAZA region.
He highlighted that Chobe district in Botswana has been selected as a pilot site as it has experienced rampant incidents of vulture poisoning for the past few months. In August this year at least 50 endangered white backed vultures were reported dead at Chobe National Park, Botswana after feeding on a buffalo carcass laced with poison.Â In November this year again 43 white backed vultures were found dead and two alive after feeding on a zebra suspected to have poisoned. Â Other selected pilotsâ sites are Kafue in Zambia and Hwange in Zimbabwe.
Kootshositse further explained they have established a national and regional Wildlife Poisoning Committee. He added that as for the national committee they have engaged various departments such as Crop Productions, Agro Chemicals, Department of Veterinary Services, Department of Wildlife and National Parks and other NGOs such as Raptors Botswana to come together and find a long-lasting solution to address wildlife poisoning in Botswana. âLetâs have a strategy or a plan together to tackle wildlife poisoning,â he stated
He also decried that there is gap in the availability of data about vulture poisoning or wildlife in general. âIf we have a central point for data, it will help in terms of reporting and advocacyâ, he stated
He added that the regional committee comprises of law enforcement officers such as BDF and Botswana police, village leadership such as Village Development Committee and Kgosi. âWe need to join hand together and protect the wildlife we have as this will increase our profile for conservation and this alone enhances our visitation and boost our local economy,â he noted
Kootshositse noted that Birdlife together with DWNP also addressed series of meeting in some villages in the Chobe region recently. The purpose of kgotla meetings was to raise awareness on the conservation and protection of vultures in Chobe West communities.
âAfter realizing that vulture poisoning in the Chobe areas become frequent, we realise that we need to do something about it. Â âWe did a public awareness by addressing several kgotla meetings in some villages in the Chobe west,â he stated
He noted that next year they are going to have another round of consultations around the Chobe areas and the approach is to engage the community into planning process. âResidents should be part of the plan of actions and we are working with farmers committee in the areas to address vulture poisoning in the area, âhe added
He added that they have found out that some common reasons for poisoning wildlife are farmers targeting predators such as lions in retaliation to killing of their livestock. Another common incident cross border poaching in the Chobe area as poachers will kills an elephant and poison its carcass targeting vultures because of their aerial circling alerting authorities about poaching activities.
Kootshositse noted that in the last cases it was disheartening the incidents occurred three months apart. He added that for the first time they found that some of the body parts of some vultures were missing. He added harvesting of body parts of vultures is not a common practice in Botswana, although it is used in some parts of Africa. âWe suspect that someone took advantage of the availability of carcasses and started harvesting their body parts,â
The music industry is at a point where artists are jostling for space because there are so many aspirants trying to get their big break, thus creating stiff competition.
In the music business it’s about talent and positioning. You need to be at the right place at the right time with the right people around you to propel you forward.
Against all odds, Everton Mlalazi has managed to takeover the gospel scene effortlessly.
To him, it’s more than just a breakthrough to stardom, but a passion as well as mission directly appointed by the Lord.
Within a short space of 2 years after having decided to persue a solo career, Mlalazi has already made it into international music scene, with his music receiving considerable play on several gospel television and radio stations in Botswana including other regional stations like Trace Africa, One Gospel, Metro FM in South Africa, Hope FM in Kenya and literally all broadcast stations in Zimbabwe.
It doesn’t only stop there, as the musician has already been nominated 2 times and 2 awards which are Bulawayo Arts Awards (BAA) best Male artists 2022, StarFM listerners Choice Award, Best Newcomer 2021 and ZIMA Best Contemporary Gospel 2022, MLA awards Best Male artist & Best Gospel Artist 2022.
Everton’s inspiration stems from his ultimate passion and desire to lead people into Godly ways and it seems it’s only getting started.
The man is a gospel artist to put on your radar.
Minister of Health Dr Edwin Dikoloti says Africa member states call on World Health Organization (WHO) to ensure equitable resource allocation for 2024-2025. Dr Dikoloti was speaking this week at the WHO Executive Board Meeting in Geneva, Switzerland.
He said countries agreed that there is need to address the budget and funding imbalances by increasing the programme budget share of countries and regions to 75% for the next year.
âThe proposed budget for 2024-2025 marks an important milestone as it is the first in Programme Budget in which country offices will be allocated more than half of the total budget for the biennium. We highly welcome this approach which will enable the organization to deliver on its mandate while fulfilling the expectations for transparency, efficiency and accountability.â
The Botswana Health Minister commended member states on the extension of the General Programme of Work (GPD 13) and the Secretariat work to monitor the progress towards the triple billion targets, and the health-related SDGs.
âWe welcome the Directorâs general proposed five priorities which have crystalized into the âfive Psâ that are aligned with the GPW 13 extension. Impact can only be achieved through close coordination with, and support to national health authorities. As such, the strengthening of country offices is instrumental, with particular focus on strengthening national health systems and on promoting more equitable access to health services.â
According to Dr Dikoloti, the majority of countries with UHC index that is below the global median are in the WHO Africa region. âFor that, we call on the WHO to enhance capacity at the regional and national levels in order to accelerate progress. Currently, the regional office needs both technical and financial support in order to effectively address and support country needs.â