• Restructures; to divest 12 %
• To focus on commercially viable businesses
• To invest outside Botswana, diversify risk
Botswana Development Corporation (BDC) Managing Director Bashi Gaetsaloe says BDC will double its business in the next five years which will see the corporation doing away with non-performing projects as well as divesting from other portfolios.
Gaetsaloe was speaking during the announcement of the BDC financial results on Friday for the year ended June 2014.
His pronouncement that the company will double its business comes at a time when BDC is implementing its five year strategy which aims to turn around the fortunes at the government’s investment arm and lift it from the doldrums.
Gaetsaloe is confident that the BDC is on the right path to recovery following the implementation of the strategy, focusing on commercially viable business.
“While some new activities are ongoing, BDC is now “live” in the new environment,” Gaetsaloe exclaimed, adding that since his arrival BDC has changed its way of doing business as a way of laying foundation for the recovery process.
The strategy adopted by BDC will be approached in three phases. Explaining that they needed to do things differently, Gaetsaloe said the first thing was to fix the business. Under the “fixing” phase, Gaetsaloe says the company took bold decisions that will reduce waste and increase working capital within the organisation.
This includes divesting from non-performing projects and selling non-strategic assets. The second phase is to prepare the business, which involves creating a platform for sustainable and viable growth and addressing short-term liquidity challenges among others.
Gaetsaloe made it clear that the organisation has earmarked to divest 12 percent of its portfolio. The group holds a stake in various companies some of which are joint ventures with private companies in sectors such as tourism, property and agro business.
Here also BDC also designed its new business model, which seeks to nurture a new corporate culture and introduce new ways of working, partnering and executing.
The new model, which was implemented in April 2014, focuses on priority areas for improvement, some of them being financial restructuring, review of legal and governance frameworks, organisational structure review among others.
After the successful implementation of the new model, Gaetsaloe is positive that BDC will not only rebuild trust with stakeholders, but also emerge as the leading investment company in Botswana and the region.
The third phase of the model is to grow the business by investing in sustainable and profitable businesses. The MD emphasized that the corporation intends to invest in projects that will yield returns; some of the projects will be initiated by BDC while it will also consider some proposals from the private sector and individuals for joint ventures.
Gaetsaloe said BDC will also seek to invest outside the borders as a way of diversifying the risks from the country.
As far as the financial performance is concerned, the year 2014 was still not a good year for BDC although the Gaetsaloe and the Chief Financial officer, Magdalene Tsiane both say the signs of improvement are there.
During the period under review, BDC group achieved a profit before tax of P35.7 million which is 166 percent increase while the group’s statement of financial position also grew by 15 percent to P3.6 billion.
Revenue for the BDC Company went up by 48 percent from P101.7 million to P150 million from the year before. However at group level, revenue decreased by 10 percent which according to Tisane is a result of the challenges and changes that the organisation is grappling with within its subsidiaries and associate company structures.
At company level, BDC noticed loss before tax of P67.7 m compared to the loss of P222.2 m recorded in the previous year. This is attributed to key initiatives brought in to manage operating costs. Despite the incurred expenses of the remodeling exercise, BDC operational costs went down by 25 percent.