BDC maintains momentum on investments
The corporation defies the pandemic, continues investing in various sectors
Botswana Development Corporation, under the watch of Cross Kgosidiile, continues to make significant strides both in terms of investment in new and existing projects, despite the hard- hitting COVID- 19 scourge.
The world over, similar investment boutiques such as BDC have scaled down on new investments, partly because of the poor investment yields which have been brought about by the economic challenges imposed by the pandemic.
In Botswana, COVID- 19 hit hard in the last weeks of the first quarter of 2020. The Government immediately reacted by coming up with restrictions for both persons and business. BDC has invested in various sectors across the country and the imposition of restrictions on both travel and movement for both individuals and companies surely had an impact on the group. One will have ordinarily thought BDC will drastically curtail investments, more especially on new projects in the past year, when the pandemic reached unprecedented levels. However, the company found ways and means to carry on with its mandate.
As a matter of fact, the BDC managed to post strong profits, a stark contrast when compared with other peers regionally and abroad. For example, during the year ended June 2020, the group posted a profit before tax of P231million versus P207million in the comparative period, a 12percent increase year on year. “This positive result was as a result of an increase in revenue by 23percent from P277million to P341million driven by higher interest income resulting from accelerated pipeline conversion. In recent years, BDC has made a deliberate effort to invest in more debt instruments to boost the guaranteed revenue stream. This effort has seen a growth in income from debt assets of 90percent year on year to P154million,” said BDC.
Nonetheless, income from dividends has seen a decline to P72million compared to P134million of the prior year. “This decline was mainly due to the impacts of the COVID‐ 19 pandemic which saw several companies delay dividend declarations in a bid to preserve cash for operational needs. The dividend income however remained well‐ diversified with contributions received from across the portfolio,” reasoned the group.
During the year to June 2020, the BDC portfolio continued its growth trajectory growing by an impressive 15percent, closing the financial year at a record P4.5 billion, against prior year balance of P3.6 billion. “The noteworthy growth experienced was primarily due to new investments undertaken over the period as well as the continued implementation of existing transactions in the portfolio. Borrowings grew in line with this growth from P700 million to P1.4 billion.
During the year, the Corporation continued in the Board approved divestment plan relating to matured investments. Proceeds from these divestments were used to cushion financing obligations and operational needs,” disclosed the corporation. During the year under review, the Corporation disbursed P706million, which represents one of the highest disbursements achieved in the Corporation’s history. “This achievement, though grand in itself, fell short of the target of P1billion set at the start of the year. The shortfall on target was brought about by the COVID‐ 19 pandemic which caused delayed pipeline conversion in the second half of the financial year. These disbursements were disbursed
79percent locally and 21percent into the region,” explains the Corporation.
There were a number of projects in which BDC invested, spanning into various sectors. For example, there was an investment of P239million disbursed towards one of Southern Africa’s leading manufacturing, supply and distribution companies based in Botswana. The company’s product range consists of fast- moving consumer goods, pharmaceuticals, liquor, building materials and equipment. In addition, BDC also made a follow‐ on investment of P80million towards a coal mining and trading company incorporated in Botswana and listed on the Botswana Stock Exchange.
Some years ago, BDC was given the green light to invest outside the borders of Botswana. This explains why in the past year, the institution found it fit to inject approximately P149 million into a Pan African focused real estate income