Botswana Development Corporation and private sector investment

Since its establishment in 1970, the Botswana Development Corporation (BDC) Limited has created wealth and value in many ways. Through its pioneer  products: Loan Financing: Equity Participation and Property Development, it has initiated establishment of numerous companies, owned  by both local and foreign investors, which contributed significantly to  Botswana economy.

For the Corporation to achieve its mandate of growing the economy meaningfully, it forged solid partnerships with both local and foreign investors.  Special emphasis was on technical partners who will not only help create employment, but also impart technical skills to the local workforce.

Over the years, the Corporation has taken calculated risks, getting involved in all sectors of the economy (except large-scale mining) namely:  Industry and Manufacturing; Property development and Management; and Agribusiness and Services. It believes in smart investment, characterized by not to overexposing one’s capital possible, and limiting its involvement in new projects to a minority interest and putting more emphasis on endeavors that are in the national interest.

Some of the companies assisted to establish and are currently blossoming  and contributing immeasurably to economic development include: Kgalagadi Breweries Limited and Bolux Milling in the manufacturing sector; Botswana Diamond Valuing Company in the mining sector; Botswana Airways Corporation (now Air Botswana) in the transport and communications sector; Sefalana in the retail sector; International Financial Services Centre (IFSC), Botswana Insurance Company. Metropolitan and Stockbrokers Botswana in the financial services sector; and Car Rentals Botswana operating under the Avis International franchise in the car hire services, as well as the Cresta Group of hotels in the hotel and tourism sector.

To date, it remains one of the leading property developers, focusing on commercial, industrial and residential property. Of significance in this regard are projects such as the  Gaborone International Convention Centre (GICC); Riverwalk Shopping Complex, co-financed with other partners, and the expansion of Phakalane Estates development, which was later re-financed by a commercial bank; and infrastructure development at Fairgrounds in Gaborone.

Moreover, as part of its initiative to help develop education in the country, BDC has assisted Lavender Projects, a citizen owned company, with a financial package of preferential shares and a loan to purchase the assets of New Era Unified Secondary School (now Livingstone Kolobeng College). In fact, BDC is not a new comer in the provision of assistance for education; it has been associated with the development of schools from the early 1990’s. In 1992, the Corporation disbursed a P4 million loan toward the establishment of Botswana’s first international school, Westwood International School.

In keeping with its divestment policy, the Corporation has divested from some of the aforementioned enterprises. Perhaps one of the landmark developments in the divestment initiatives was witnessed when the corporation generously offered a substantial portion of its shares in Sechaba Investment Trust Limited for Botswana to purchase.  The majority of shares were floated on the Botswana Stock Exchange and were purchased by many Batswana who continue to receive dividends on their investment, evidently fulfilling the Corporation’s mandate of citizen empowerment.

By and large, the Corporation has made 100 investments through subsidiary, associate and affiliate companies in almost all sectors of the economy bar large-scale mining.

Furthermore, BDC is not only an accomplished investment partner, but also devoted to good corporate governance principles, and assures potential investors that they have appropriate assistance.  As a signatory to the internationally recognised King 2 Report on Corporate Governance and various statues, the Corporation has embraced best practices, and is committed to maintaining the highest standards of integrity, accountability and openness.

The Corporation was also ISO re-certified in early 2006, underscoring that its processes, procedures, and quality management systems meet the stringent ISO 9001: 2000 requirements.

Poised for further growth

Having all but fulfilled most of the targets set in the Two-year Strategic plan in 1998, which saw the Corporation move from negative accumulated capital reserves and losses it experienced in the late 1990s to the current level of profitability, the Corporation is looking forward to achieving more. Greater emphasis has been on risk management and a more rigorous credit approval system relating to new loan advances and equity investments. Currently, BDC boasts a total investment exceeding P1.2 billion both in equity and loans in a diversified portfolio from a “small” amount of P775 000.

Unveiling of its new four-year Strategic Plan (2007-2011) proves that BDC is unquestionably pulling no punches in ensuring that it continues to  position  itself as the leading innovative investor in Botswana. Through its new Mission, “The Premier Innovative Investment Partner Delivering Flexible financial solutions”, BDC pledges to put its stakeholders at the heart of all it does to promote investment, employment and wealth creation in the country.
In fact, the release of the Strategic Plan is perfectly timed as it tries to address challenges which BDC continues to face in its efforts to promote citizen participation in business ventures, besides attracting foreign direct investment.
Scarcity of green-field projects remains a major challenge because it has slowed down growth in the Corporation’s portfolio of investments, and consequently  requiring the Corporation  to be more aggressive and improve on its past performances by identifying new strategies for attainment of sustainable economic diversification and global competitiveness.

The Corporation is unremittingly monitoring the ever-changing market conditions in accordance with best international practices and new initiatives that would, ultimately, add long-term value to the nation. Besides marketing products and services, the Business Development team is always on the move, searching for new investment opportunities that will benefit both the Corporation and the investor.

To illustrate its dedication to investor-friendly business environment and its financial wherewithal, the Corporation recently introduced a relatively new product to Botswana called “Invoice Discounting” to cater for the working capital needs of small and medium scale concerns. This is indeed a solution to short-term credit facilities for growing businesses!