The government investment arm, Botswana Development Corporation (BDC) will not sell its stake in Kgalagadi Breweries Limited (KBL) and Cresta Marakanelo Group, as the companies are strategic, Managing Director (MD) Bashi Gaetsaloe disclose while fielding questions from The Business Weekly & Review at his recent financial results presentation.
BDC’s investment plan has previously been set out by Gaetsaloe; as being to enable business development by initiating project, and once they become profitable to a satisfactory level, it would then be sold to citizen investors as empowerment.
The same would also happen with the non-performing assets which would be a burden to the corporation. This publication sought to establish if there were chances that KBL, the beer producing firm and hospitality outfit, Cresta, which are BDC cash-cows would be sold.
Half way into its 5-year strategy, the 100 percent governmentowned investment arm has been divesting from most of its non-performing investments such as Golden Fruit Pty Ltd and others, which have become a burden to the company.
Gaetsaloe said they are not in a rush to offload some of their strategic investments (such as KBL, Cresta) and put them in the hands of ordinary Batswana “We use some of these investments as leverage.” Though in future they will sell their stake in these strategic investments, Gaetsaloe says they are currently looking at it cautiously.
Strategic BDC profit making investments such as KBL and Cresta contribute handsomely to BDC coffers. Their contribution has seen the BDC Company overall profits before tax for the year ended June 2016 rise to P224 million, a significant increase of 104 percent from P110 million recorded in 2015. BDC Company asset also experienced a 9 percent rise to P212 million net growth against a P26 million reduction in total liabilities. “An additional P239 million growth was realised in shareholder funds, representing a 14 percent year-on-year growth,” BDC Chief Financial Officer (CFO),Mbako Mbo stated. stated. BDC Group assets also grew by 6 percent to P4.4 billion driven; mainly by a growth in BDC (Company) net asset base, whilst group level shareholders’ funds experienced a conservative 3 percent growth to P3.2 billion.
It is in this sterling performance that directors of BDC saw it fit to declare dividend to government. “We are extremely pleased to be able to declare and pay a divided to our shareholder,” Gaetsaloe said, adding that the last dividend pay-out to government was in 2008. Gaetsaloe says not only did they realise profits, but they also created 830 new jobs while sustaining 4793 net jobs across the portfolio of companies. “In the year just ended BDC approved funding of P588M to new projects which contributed to diversification of the economy, generated exports and expanded the private sector.”
Gaetsaloe says his Corporation continues to realise sustainable growth. “The end of the 2016 financial year marks the midpoint of our current 5-year strategy. The first half, that just concluded was led by our business transformation initiative and consolidating the kind of outcomes that have realised increased growth from our portfolio.”
Looking ahead, Gaetsaloe says their focus is now on investing into new ventures to expand and solidify their portfolio, while in turn accelerating their contribution to Botswana’s economic development and diversification. “We have an extensive pipeline of earmarked investments existing which we are confident will contribute significantly to Botswana’s development agenda, whilst at the same time providing satisfactory financial returns to our main shareholder.”