The National Development Bank (NDB), which is to release its latest financial results next week that are expected down, has set out a number of recovery interventions geared towards attaining a sound financial position as it enters transition into a commercial bank.
Its anticipated uninteresting financial performance is attributed to the agriculture sector and start-up enterprises, according to information sourced from the bank insiders. Although farming and start-up enterprises are commonly known as high risk ventures, the bank regards funding the two ventures as part of its core mandate. Official information sourced from NDB indicates that their loan book is currently sitting at P1.3 billion. Of that agriculture constitutes about 50 percent.
“Our role as NDB is developmental with a focus on empowering Batswana and making sure we contribute towards economic diversification, hence our resolve to remain supportive of start-up enterprises and farming ventures,” said the Bank’s Chief Executive Officer, Lorato Morapedi.
Given the “high risk” tag attached to agriculture and start-ups, most lending institutions, including commercial banks, rarely ever entertain thoughts of funding them and therefore the Bank has become the “first point of call” for agriculture and start-up businesses to promote economic diversification. The NDB leadership has pointed out that supporting start-ups and farming ventures remain one of the bank’s fundamental mandate and in its over 51 years of existence has transformed the lives of Batswana through this mandate.
Morapedi could not discuss their latest financial results, noting that it would be unprofessional for the bank to do so before they are officially made public. But, those close to the management say the board is expected to approve the financial report before the end of the month, possibly next week. It is a move that comes as hardly a surprise to market observers who note that the bank’s financial results could be less than exciting to its stakeholders.
The bank is implementing a new recovery plan which is intended to improve its turnaround, and the operational and financial performance. No specific details were given but the bank’ leadership stresses more emphasis on a robust credit risk and shareholder management. The turnaround plan is also expected to prepare the bank for the looming Privatisation and Commercialisation exercises.
The Bank’s poor performance for 2013/14 financial year is attributed to varied economic and other factors. The Bank of Botswana accommodative monetary policy has on one hand assisted in making access to affordable credit to provide a conducive environment for start-ups and other small business to flourish and has on the other hand affected the bank’s interest income which is the main source of revenue for the Bank by reducing interest margins. Persistent drought that Botswana has been experiencing for a considerable period of time and the re-occurrence of the foot and mouth disease especially in the Chobe area has posed serious challenges for both arable and livestock farming, leaving farmers with difficulties in servicing their loan facilities. These has been major factors to consider looking at the fact that agriculture constitutes a significant share of the bank’s loan book and this scenario has brought about a significant increase in impairments or bad debts.
NDB was established in 1967. Its input in the development of entrepreneurship and diversification of the national economy extends to provision of loan financing across various key economic sectors. These sectors include Agriculture, Commercial and Property, Industrial as well as Human Capital Development.