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NDB lobbies MPs for P400 million recapitalisation

Publishing Date : 21 May, 2018

Author : ALFRED MASOKOLA

The National Development Bank (NDB) has lobbied the Parliamentary Committee on Public Enterprises and Statutory Bodies to facilitate a process that will see the beleaguered bank being recapitalised to stay afloat en route commercialisation.


NDB has found the going tough in recent years, with the bank riddled with perennial losses amid a funding model that has been ruled out as not sustainable. This year, the bank has found itself in dire crisis as it had only P10 million to disburse for loans. This publication has been informed by one Member of Parliament, who is also a member of the Parliamentary Committee on Public Enterprises and Statutory Bodies that about two weeks ago, NDB management met with the committee at their request to present their situation.


“They [NDB] invited stakeholders with some of us included to appraise us on their business in general and also solicit input. My view is that they have improved in some respects from previous years, in part due to the input of the committee [Public Enterprises and Statutory Bodies] and other stakeholders,” said the legislator.


WeekendPost has established that NDB’s problems and bottlenecks are deeper than simply the matter of recapitalisation. The structure and sources of funding mean that they have an unfavourable cost structure which paralyses their competitiveness. “It is almost a chicken and eggs situation that for them to lower their cost of funding, they need to be deposit taking, that is through banking license, but it appears they need to capitalise a bit more to prepare for qualification as a deposit taking institution,” the committee member observed.


WeekendPost understands that NDB is sourcing its funds from BIFM Capital, Barclays Bank and First National Bank Botswana (FNBB) at an interest rate of 8.5 percent, and 9.5 percent for BIFM capital. This, according to the bank, is brought about by the verity that government has stopped issuing bonds to the bank, forcing it to find alternative funding avenues.


It has merged that most of committee members are sympathetic to NDB and are determined to make a case in their favour before parliament. Parliament has the authority to authorise government spending and has in the past approved bailing out of several public enterprises which were struggling financially. Though NDB was at one point making profit, it does not get subvention from government on annual basis despite the bank being a development bank.


In 2016, NDB requested government to inject capital amounting to about P1 billion in the next three years in order to transform the bank and prepare it for commercialisation.  Last year, it was offered P400 million by government, P100 million of it being a grant while the remaining P300 million was a loan.


As per Chief Executive Officer of the Bank, Lorato Morapedi’s statement before the parliamentary committee on Statutory Bodies and Enterprises in 2016, NDB wanted government to inject P400 million in the next financial year [2017], followed by two government guaranteed loans of P165 million and P250 million in subsequent years.


Due to the financial crisis that the bank found itself in, management recently took a decision to retrench some of its employees to minimize the costs. Already, NDB staff has been informed of management’s intentions to retrench, with letters scheduled to be handed from the 21st-24TH May 2018.


NDB is one of the quasi-government institutions that have been put up for privatisation, with Botswana Telecommunication Corporation (BTC) having successfully gone through the process. It is expected that, like the BTC, government will retain 51 percent shareholding in the company, while 5 percent is offered to employees, with the rest of the shareholding being offered to the public. However, there has been debate both within and outside NDB with regard to whether the bank is in a state to be commercialised. Some school of thought is that in its current state, government would be either giving it away or nobody will show interest in its stock, hence the need to recapitalise the bank.

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