NDP privatisation gains steam

Brian Benza
Staff Writer | Wednesday July 9, 2008 00:00

 

The Public Procurement and Asset Disposal Board (PPADB) announced yesterday that following a recommendation from Public Enterprises Evaluation and Privatisation Agency (PEEPA), the tender for the P4.4 million advisory services for NDB privatisation has been awarded to Nedbank Capital, a subsidiary of the Nedbank Group.

Nedbank provides seamless specialist advice, debt and equity raising and execution and trading capabilities in all the major South African business sectors. Its principal clients include the top 200 domestic corporates in South Africa, parastatals, leading financial institutions, non-South African multinational corporates and clients undertaking major infrastructure and mining projects in Africa, as well as emerging Black Economic Empowerment (BEE) consortiums.

NDB will become the first government owned financial institution to be privatised in Botswana. This will break the rigid structure in the local financial industry where all institutions are either government or majority owned by foreign multinationals.

Head of out-sourcing at PEEPA, Don Ruhukwa, said that Nedbank Capital has out-bid two other financial consultancy companies, Deloitte and Touche and Cresco Project Finance Limited, that were in the running for the lucrative tender, and is now tasked with coming up with a strategy that will best unlock the value in NDB.

The strategy, according to Ruhukwa, includes advising government on the different options that can be pursued. These may include either outright sale or an initial public offer, followed by the implementation of the deal after getting the green light from government.

According to the project timelines, the development of the privatisation strategy is expected to be completed by December 2008 and, thereafter, Cabinet approval of the Strategy will be sought by March 2009. The form and timing of implementation will depend on the option selected by Government.

'Nedbank has won the tender to come up with the different options that can be followed to privatise NDB after which they will submit their report to government, which will decide on the best possible avenue to pursue.

What needs to be clear is that the actual privatisation has not started. This is just a process where government is seeking expert advice on the different options that can be followed. After government comes up with a decision, the transaction advisers will then begin the implementation of the whole process,' Ruhukwa said.

Following the collapse of the privatisation talks for Air Botswana, NDB looks set to be the first government institution to be privatised ever since the set up of PEEPA. Ruhukwa said that the agency is still working on a rationalisation study for the privatisation of more parastatals.

Given the dominance of foreign multinationals in the financial industry, government will be keen to see increased participation by citizens in the sector.

All seven commercial banks are either wholly or majority foreign owned with the only other local financial or quasi-banking institutions being state-owned.

'The issue of effective citizen participation in the privatisation of NDB is a central principle underpinning the transaction. The privatisation of NDB will be undertaken in accordance with the objectives of the Privatisation Policy of Botswana (Government Paper No.1 of 2000), which amongst others, seeks to promote the participation of citizens in the economy by increasing opportunities for Batswana to participate in ownership, control and operation of privatised entities. 

'The Adviser, in coming up with an appropriate strategy will be required to take into account possible opportunities and existing government policy instruments on citizen economic empowerment,' added Ruhukwa.

This is now a potential for state-owned financial institutions to become fully-fledged locally owned banks through privatisation and restructuring, although they will still have to go through the process of obtaining a banking licence.