Lobatse Clay works, Milk Valley yet to reach profitability
Lewanika Timothy | Wednesday May 28, 2025 06:00
A recent report has shown the two have yet to achieve profitability, contributing to a four percent decline in the Corporation's net worth, which stood at P2.15 billion as of June 30, 2024, down from P2.25 billion the previous year. Milk Valley formerly Milk Africa, BDC's dairy farming initiative based in Lobatse, remained in a capital-intensive phase during the year.
The subsidiary faced challenges in scaling up operations, including difficulties in expanding its dairy herd due to regional Foot and Mouth Disease outbreaks.
These factors contributed to ongoing operational losses, with the subsidiary not yet generating positive cash flows.
Similarly, Lobatse Clay Works, which resumed operations in 2024 after a seven-year hiatus, incurred significant start-up costs.
The brick maker, revitalised with a P138 million investment from the African Development Bank, aimed to produce three million bricks per month.
However, the initial ramp-up phase involved substantial expenditures on energy-efficient equipment and hybrid fuel systems, leading to high operational costs
Looking ahead, BDC anticipates that these investments will yield long-term benefits, contributing to Botswana's economic diversification and industrial growth.
However, the Corporation acknowledges in its annual report for 2024 the need for continued financial discipline and strategic oversight to navigate the current challenges and achieve sustainable profitability.
Previously, the investment agency had shared its audacious P2.5 billion investment plan mostly targeting the financial services sector, which was earmarked to get 55% of targeted funding.
Beyond the financial services, BDC’s investment pipeline includes significant allocations to other sectors crucial to Botswana’s development such as the manufacturing sector which is due to receive 18% of the funds, whilst agro-processing is set to benefit 17% of the pipeline.
The gross portfolio value rose to P5.1 billion in June 2024, marking a four percent increase from P4.95 billion in June 2023. This growth was primarily driven by disbursements for the retail development.
Meanwhile, the Corporation’s quality of loan assets improved, with non-performing loans experiencing a decline 13.1% in FY23 to 11.90% in FY24 remaining within the policy provisions of the corporation.