COVID-19 shrinks BDC’s dividend income
Pauline Dikuelo | Monday November 8, 2021 06:00
The BDC invests via debt and equity across several companies in sectors such as agriculture, industry, services and property management. Equity returns from many of these investments fell during the reporting period as the companies held back their dividend declarations to preserve cash for operational needs.
BDC managing director, Cross Kgosidiile recently told the Parliamentary Committee on Statutory Bodies and State Enterprises that despite operating in the background of a turbulent COVID-19 trading environment, the group’s income from dividends however remained well-diversified with contributions across the portfolio.
Most of the BDC’s revenues of P536 million for the year to June 2020 came from interest income on debt assets, which executives said was in line with a strategy to have debt as the main source of income at the company level.
“We made efforts to invest in more debt instruments to boost the guaranteed revenue stream and this has seen a 90% year-on-year growth in income from debt assets to P154 million,” Kgosidiile said. “We continue to monitor all our investments.”
According to the MD, the BDC’s portfolio achieved a 15% growth in the year to P4.5 billion by June 2020 while borrowings increased from P700 million to P1.4 billion.
“During the year the board approved a diversification plan in relation to matured assets. “Proceeds from these divestments were used to cushion financing obligations and operational needs,” he said.
Meanwhile, the BDC, which is an investment and diversification agency of government, has embarked on a new strategy whose priorities include investing with the sole purpose of maximising long term returns and investing locally in large scale entities that are export-oriented.
The strategy, known as 'Beyond 2019' also targets businesses with a key focus on citizen economic inclusion and will also see the BDC investing in high return commercial and strategic projects. The corporation will also aim to integrate Botswana into the world economy through commercial investments and partnerships as well as seek to pioneer industries and unlock value in untapped sectors across the country.
“Beyond 2019 is premised on maximising and creating long term value for the shareholder and creating wealth for future generations by deeply integrating Botswana into the global economy through investments and partnership,” Kgosidiile said.
The corporation has P309 million invested P309 million, P80 million in mining, P149 million in property and P49.4 million in health care.
Last year, the corporation signed a P900 million, 10-year Line of Credit with the African Development Bank. The injection is expected to support the BDC’s long term strategy to scale up its investments in key sectors including manufacturing, transport and service sectors to support the transformation and industrialisation of the economy. The BDC’s upcoming local investments include agriculture, agro-processing and transport.