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Non-Bank Financial institutions defy odds with P2 billion profit

Non-Bank Financial institutions

Botswana’s Non-Bank Financial services sector displayed resilient performance in the year 2020, beating unprecedented difficult trading conditions presented by the COVID-19 pandemic. This week, Non-Banking Financial Institutions Regulatory Authority (NBFIRA) released its annual report for the 12 months period ended 31st March 2021.

The outbreak of the COVID-19 pandemic set a difficult global stage for countries, industries, and individuals alike. A severe contraction of global economic activity in the first half of 2020 was reflected by the decline in global GDP of 3.3 percent, a state of affairs worse than that recorded in the global economic and financial crisis of 2008/2009.

In response, The Non-Bank Financial Institutions Regulatory Authority (NBFIRA), the statutory body set up to regulate this sector, adopted a facilitative regulatory approach in line with the international efforts to mitigate the effects of the pandemic on the performance of regulated businesses. Notwithstanding the unprecedented developments, the Non Banking Finance Institutions (NBFI) sector shone hence closing the reporting period with a 2.9 percent increase in active entities from 764 in 2019 to 786 in 2020, as well as a 2.5 percent growth in assets compared to the prior year.

With total assets of P129 billion in 2020, the NBFI sector retained the dominant share of 54 percent in the domestic financial services sector. The sector’s capital and profitability positions were stable in spite of the COVID-19 pandemic. The capital position increased from P7.5 billion in 2019 to P9.2 billion in 2020 demonstrating the financial soundness and resilience of the sector. The profit before tax increased from P1.7 billion in 2019 to P2 billion in 2020, while the return on assets grew from 5.8 percent in 2019 to 6.8 percent in 2020.

The liquidity position also improved, as evidenced by a 10 percent reduction in liabilities from P21 billion in 2019 to P19 billion in 2020. Overall, the NBFI sector was assessed to be stable and financially sound, with no obvious vulnerabilities in the short to medium term. Due to good performance of the foreign financial markets, Retirement Funds recorded an asset increase of 3 percent from P89 billion in March 2019 to P 92 billion in March 2020.

Retirement Funds continued to dominate the NBFI sector with a market share of 71 percent in 2020, going up from 70 percent registered in 2019. After the year-end closure, management accounts of Retirement Funds for the 12 months’ period ended December 31, 2020 showed that pensions had grown to P105 billion compared with P93 billion in the prior year. The growth was attributed to a strong performance in foreign equities and alternative investments.

However, total investment income was lower by 47 percent ending the year 2020 at P6.2 billion from P 11.8 billion in 2019. Total contributions to the retirement funds by both the employees and the employers increased sharply by 15 percent from P4.6 billion in 2019 to P5.2 billion in 2020, partly, due to additional voluntary contributions and 3 percent civil service salary adjustments. The offshore/onshore asset allocation was 65/35 percent in 2020 compared to 61/39 percent in 2019.

Total assets for Investment Institutions (asset managers and management companies of CIUs) declined by 60.9 percent from P1,451.4 million in 2019 to P567.6 million in 2020 due to the reclassification of some of the financial assets as well as restructuring of the businesses of some of the major players in the market. Total liabilities also declined significantly by 75.8 percent, from P1,119.8 million in 2019 to P271.0 million in 2020. The Investment Institutions sector was able to preserve equity, which declined by 12.1 percent from P337.6 million in 2019 to P296.6 million in 2020.

Total Assets Under Management (AUM) for Investment Institutions amounted to P51.1 billion in 2020, representing a slight increase of 2.5 percent from the P49.9 billion recorded in  prior period. Gross Written Premiums (GWP) for the Insurers (Life and General) increased by 4.6 percent from P5.4 billion in 2019 to P5.6 billion in 2020. When expressed as a percentage of Nominal GDP, the penetration ratio increased to 3.1 percent in 2020, compared to 2.7 percent in 2019.

The Insurers’ total assets grew by 5.1 percent from P19.4 billion in 2019 to P20.4 billion in 2020. In the reporting period, the total assets of Microlenders increased by 17 percent with the main driver of the growth being the loan book which grew by 12.8 percent in 2020 and accounts for 61.9 percent of the total assets increase. The industry also experienced growth in liabilities by 20.7 percent, with 75.4 percent being short-term liabilities due within a year. NBFIRA Chief Executive Officer Oduetse Motshidisi said despite the COVID-19 pandemic, the NBFI sector remained resilient during the period under review.

The insurance industry maintained a strong balance sheet with robust capital positions and profts exceeding the previous year. As support to the industry, the implementation of the transitional provisions of the insurance Act, 2015, due in 2020 were deferred to 2021. The strategic asset allocation of the retirement funds in favour of offshore markets was benefcial to the retirement funds as windfall gains were made on investments, underpinned by stock market recovery and fight of funds to safe currencies of developed countries.

The asset distribution for offshore/onshore was 65/35 percent in 2020 compared to 61/39 percent in 2019. The top 20 microlenders by asset size also reported strong balance sheet position despite business closures during the periods of lockdown.

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Food prices continue to rise, but at a slower rate

28th November 2022

Prices for cereals or staple foods in Botswana and other Southern African countries continue to rise at a slower pace, following trends in the global markets, according to the latest November 2022 Food Price Monitoring and Analysis by Food Agricultural Organization (FAO) of the United Nations.

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Still doing business the old way?

18th November 2022

It’s time to get business done better with MTN Business Botswana’s ICT Solutions.

Running a digital businessMTN Business Solutions Botswana, popularly known as MTN Business is an Internet Service Provider. We are a subsidiary of MTN Group Limited, a multinational telecommunications Group headquartered in South Africa, which operates in 19 markets across Africa and the Middle East.

More and more, clients are looking for ways to keep their staff productive in a dynamically changing business environment. Whether your people are working from home, the office or abroad, there is a growing recognition that digitising your operations can offer unprecedented commercial value in flexibility, productivity and growth. This new, digital reality means that it is more important than ever to stay agile – if there is anything that can slow a business down, it is being burdened by othatld technology.

Having made substantial investments in fibre technology, high-speed terrestrial and undersea networks and new frequency spectrum across the markets wherein it operates, MTN is perfectly positioned to respond to this shift in the market.

A few years ago, MTN also made the decision to build an IP capable radio network for its mobile services, giving its core network the ability to seamlessly integrate with enterprise IP networks. The mobile towers deliver services to enterprise clients absolutely anywhere it has a network, shortening the last mile and removing complexity and cost.

Now there is increasing demand from clients to connect their remote sites in all areas, including rural and semi- rural. MTN has assisted clients with overcoming this connectivity hurdle, enabling their staff to get the job done wherever they are.
MTN’s evolution

For MTN, the focus has shifted from just being a core telecommunications services provider, towards also becoming a technology solutions provider. The service offering now also includes Unified Communications, Data Hosting and Cloud Solutions, Security-As-A-Service and Managed Network Services. The scope has changed to being client and industry specific, so the requirements and service portfolio vary from one client to the next. The expectation is that a company like MTN must respond to these challenges, helping clients to get business done better as they shift from old to new technologies.

As many businesses continue to grapple with a digitally dynamic world, they face new challenges that have to be solved. This environment will benefit those that are more digitally enabled and agile. It is a brave new world that will favour online over on-site, wireless over wired and fluid over formulaic. Businesses will seek out partners and suppliers that are every bit as flexible and forward-looking as they are.
Ultimately, clients need partners like MTN Business that will invest in infrastructure, deliver the services they require, have market credibility, are financially sound and have a long-term commitment to their market presence.

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BIE to vitalize the Dignity of Engineers

9th November 2022

Botswana Institution Of Engineers (BIE), has last week hosted a gala dinner in  which they appreciated engineers who worked tirelessly and with dedication for 10 years from 1983 to steer the BIE to its current status.

The event that was held at the Phakalane Golf Estate had brought together young, experienced and veteran engineers and was held under the theme “Vitalize the dignity and eminence of all professional engineers”.

Explaining the theme, the institution’s treasurer, Thanabalasingam Raveendran said that engineers were looked upon reverentially with respect as the educated but with time it seems to have deteriorated. He indicated that there is a need to change the narrative by all means.

“The BIE exists for the welfare and the betterment of us Botswana engineers, we need to recognize specialised units within our Institution. We Engineers strongly believe in Engineers make it happen” Raveendran said.

He indicated that under the theme they appeal to all engineers to energize, to attain quality of being worthy of honour and respect and to achieve recognized superiority amongst the Society.

Raveendran stated that engineers need to ensure their end product is of good quality satisfying the end users expectations and engineers must be honest in their work.

“Approximately 8000 engineers registered with Engineering Regulatory Board (ERB) are not members of the BIE, engineers need to make every effort to recruit them to BIE” he said.

He alluded that BIE being a society, it currently needs to upgrade itself at par with professional institutions elsewhere like the UK and USA.

He further stated that BIE has to have engineering units of specialised disciplines like Civil/Mechanical/electrical etc

“As President Masisi indicated in his inaugural speech, the young people, who make 60 percent of the population of this country, are the future leaders and therefore investing in them is building the bridge to the future” said Raveendran

Kandima indicated that BIE has a memorandum of Understanding with Engineers Registration Board (ERB), where BIE is a recognised provider of CPD training, mentorship programmes and more importantly IPD undertaking to upgrade the skills and know-how of our engineers.

“For us to achieve our mandate and make worthwhile changes to engineering in Botswana, we have to be totally focused and act with intent” said Kandima.

Furthermore, Stephen Williams, past president of the BIE from 1986-1988 told the engineers that  the BIE provides a fertile environment where they can meet, share ideas and grow professionally.

“The BIE is also a nesting place for graduate engineers to learn from their peers and seniors, it also cater for engineering technicians and technologists and so nobody in the technology field is left out” he said.

He further indicated that Botswana Government provides a conductive environment for growth of engineering professionals.

“It must be stated that the Botswana Government recognises the existence of BIE and it can further be stated that the government enables ERB to carry out its mandate as a regulator of engineering professionals” said Williams

He plead with engineering companies to recognize and support BIE as it is the only source of engineering personnel’s for various Industries .

Furthermore, when giving his farewell speech, Michael Pinard , a past president of the institution  said how they are viewed as engineers by the general public might be due to some lack of appreciation as to exactly what role they play in the development of the country.

“The BIE slogan is aptly coined-Engineers make it happen, in other words, what man dreams engineers create” Said Pinard.

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