Charged with steering Botswana Development Corporation (BDC) away from troubled waters, Managing Director Bashi Gaetsaloe seems well on the way, KEABETSWE NEWEL reports.
Only 17 months into the job, Bashi Gaetsaloe has turned around the loss making behemoth government investment company, Botswana Development Corporation (BDC). BDC last paid dividend to its sole shareholder, Botswana government, in 2006 and has been making losses ever since. The lossmaking was further shadowed by scandals where millions in tax payer money was lost.
Assuming BDC’s top post, Gaetsaloe put together an ambitious transformation strategy which involved shedding off non performing and non-strategic companies, maximizing remaining companies, and expanding regionally. “There is need for a paradigm shift to change the way BDC does business,” Gaetsaloe told this publication in an interview some two months ago. He emphasized the need for BDC to make profits and feed into government’s fiscus.
This week, Gaetsaloe, the Yale educated economist, announced to the media and a throng of corporate stakeholders a sparkling set of results. Only a year into his ‘saving grace’ strategy, BDC got leaner and efficient, lessening expenses by 28 percent at company level and 41 percent at group level. He attributed the efficiency to a re-balancing of the BDC portfolio – including an assessment of non-strategic and poor performing assets for divestiture.
“It has helped us to optimise the investment process and cycle, including new policies and structures, adopting a cautious approach to attracting new business, but with a duty to honour existing commitments,” said Gaetsaloe.
Maranyane Makhondo, BDC’s acting Chief Financial Officer said the audited financials exhibit a 29 percent hike in company revenue to P194 million, when compared to the previous corresponding period. Group revenue also shot up 19 percent to P339.9 million in 2015. The soft spoken financial ‘crack-head’ said revenue was driven by growth in all of the corporation’s revenue streams.
“BDC makes its money from dividends collected from the companies it has a stake in, as well as repayments of loans,” she said. Under its fold, the state owned investment firm has 42 active companies in operation under Technology, Healthcare and Innovation, Services and Tourism, industry and Agribusiness as well as Property. It is unclear which companies or sectors contribute the most to BDC revenue but Gaetsaloe said that they get most of the money from listed companies because of regulatory requirements.
For the period under review, Makhondo said Company Profit Before Tax (PBT) increased to P109.8 million following a loss of P67 million in the prior year. “At group level, PBT grew to P247.3 million from P35.7 million in the previous year,” she said.
She said the Corporation’s results come on the back of its wide-reaching transformation programme which included not only a review oF the corporation’s processes, structures and policies, but also a re-structuring of its balance sheet through a divestment strategy (targeting non-strategic assets) and a turn-around programme.
Gaetsaloe announced his intention to double the size of BDC by 2016, “to ensure that the corporation has more financial power to conduct large scale businesses, create mass employment and bring money into the economy.” He said they are looking to invest in all sectors of the economy but to make a larger impact they will only finance projects needing P30 million or more.
“We have identified a need for infrastructural development across Africa,” Gaetsaloe announced, citing Kenya, Nigeria and Zambia as harbouring untapped growth potential. He explained that BDC was in talks with investors to collaborate in mega infrastructure projects in those economies.
“Things will be done differently this time. BDC is roping in commercial banks and foreign investors as financiers to spread the risk. We’re also wooing African Development Bank to augment our thin balance sheet,” he said.
According to Gaetsaloe, BDC is seriously looking into hydroponic agro-business. “In partnership with investors, we can create a sustainable agri-business free from the worries of unfavourable weather, pesticides as well as unfertile soil since we will be using green-housing,” he explained.
He spoke with the same passion about developing the manufacturing sector, revealing that BDC was about to close major deals that will unlock value-exceeding P100 million.
“We are going to create mass-scale employment,” uttered Gaetsaloe.
Further, Gaetsaloe acknowledged that services are currently one of the recognisable drivers of GDP in Botswana, which means opportunities are in abundance as that sector continues to grow. These, he said, are driven by continued growth in sectors like mining, which needs services to support them.