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BDC borrows P131m to finance new projects

BRIAN BENZA
BDC Managing Direction Bashi Gaetsaloe is driving the new investment strategy
The Botswana Development Corporation (BDC) has borrowed a total of P131 million from the bond market; funds they will use for new projects as well as refinance existing loan facilities.

BDC has used its shares in Cresta, Letlole La Rona and  Sechaba as security for the issued bonds after it failed to secure a government guarantee on the bond in September last year.

Listing of the issued notes has been approved by the Botswana Stock Exchange and was registered on the bourse’s bond platform on September 29, 2017.

“The net proceeds of the bond will be used for general corporate purposes, specifically for funding requirements of its approved investment pipeline and the refinancing of a loan facility with Standard Chartered Bank,” said BDC.

As part of its ambitious strategy, BDC is investing in new projects that they say will not only boost the industrialisation agenda of the country, but also diversify Botswana’s exports composition, which is currently dominated by diamonds.

Industries targeted under the strategy include large-scale investments of not less than P30 million in sectors such as energy, in particular solar power plants, manufacturing, agriculture and other infrastructure projects.

The bond issuance is part of BDC’s P1.1 billion investment plans, the bulk of which was supposed to be financed by a P850 million loan from the African Development Bank (AfDB).

The AfDB loan, which required a sovereign guarantee from government, has so far stalled, as

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it is still to get the greenlight from lawmakers.

In September last year, lawmakers declined to give the guarantee required for the AfDB loan as well as the bond issuance saying they needed more details on the investments that the BDC was undertaking.

As part of raising funds for new projects, the BDC has also been divesting from some of its projects and investments.

The government’s investment arm has so far sold commercial and residential properties around the country and other companies such as Cumberland Hotel, Toro Lodge, and Khawa Lodge as well as disposing of its stakes in Metropolitan Botswana, Asphalt Botswana and Kwena Rocla, Golden Fruit and Can Manufacturing.   

The divestments by BDC is part of its strategy adopted in 2014 in which it said it would sell 12% of its portfolio in ‘matured industries’ and invest in new sectors.  

As part of its strategy, the corporation aims to diversify its funding mix and reduce its reliance on shareholder and short-term revolving credit lines financing while increasing longer term funding from borrowings.

BDC says this will also help the company to address its funding maturity mismatch challenges and align its on-lending terms with the needs of the target sectors and clients.

 



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