MPs freeze BDC�s P1bn spending spree
Innocent Selatlhwa | Friday September 2, 2016 15:27
The Parliamentary Committee on Statutory Bodies chaired by Samson Moyo Guma spoilt the moods of BDC managing director, Bashi Gaetsaloe and board chairperson, Blackie Marole, with legislators accusing them of being “dishonest” and “economic with the truth”.
This was after the duo appeared to issue contradicting statements when appearing before the committee members Setlhomo Lelatisitswe, Pius Mokgware, Kefentse Mzwinila and Phenyo Butale whom they had to convince that the guarantees were going towards sound investments.
The BDC is seeking government guarantees for an P850 million loan already approved by the African Development Bank and another P150 million, which it plans to raise through a local bond.
Finance and Development Planning minister, Kenneth Matambo failed to secure the guarantees after fast-tracking the motion on the day Parliament adjourned earlier this month. Parliament adjourned on August 12 after one of its longest sessions that ended after 4am on Thursday, August 11. Legislators, led by Guma, blocked the motion and redirected it to the Parliamentary Committee on Statutory Bodies, saying greater detail was required to avoid a situation where taxpayer funds are lost to imprudent investments. The Committee was forced to call a special sitting on Wednesday to hear the BDC’s case.
The corporation wants the guarantees to fund several investments it says are in its “immediate” pipeline and which it says will create 1,300 jobs.
Gaetsaloe told the committee that BDC needs P1 billion of which it would use up only 70% and leave seven percent as a buffer when there is need to pump money into a project in need. However, after his presentation of the projects the total amount needed was P1.075 billion.
Marole’s explanation contradicted his MD and he said they had other funds that would add to the P1 billion they would be given. He also told the committee that they had many more projects in the pipeline that they could divert funds to and they were thus seeking flexibility.
The committee members expressed disappointment that the Ministry of Finance and Development Planning treated the request as urgent and had approved without having researched it.
Milk Africa P45 million
“We will spend P45 million on a dairy project in Lobatse. It is a fully integrated dairy factory with rearing milk cows, processing milk and selling to the local market,” Gaetsaloe said. He said they loved the project, as they believe it is one of its own and will create jobs as well as save people costs of importing milk.
The members did not object to this, but advised that thorough research be made to avoid repeat of what happened to other dairy projects which have failed before. They also called for strengthened monitoring which BDC promised to do stating that it was part of their strategy.
Ba Isago P200 million
Gaetsaloe went on to state that they would spend P200 million on the expansion of Ba Isago University, as a way to try and solve the puzzle of skills mismatch and offering better education. He said they believed very much in the project, as private tertiary education had proven to be of good quality and expansion would make it even better.
Guma argued that it does not make sense for government to invest in a private institution while its own public institutions are not performing well. Mokgware expressed worry that investing in Ba Isago would tie it to the government forcing it to always send students there to recover the money. He also said quality assurance in a private institution was a problem hence it could be a risky move.
Mzwinila decried that BDC seemed to work as a silo as they should have left the education issues to the relevant ministry. He added that instead of answering the question of job creation, BDC wanted government to spend more maintaining the institution.
Letshego P250 million
Having acquired a banking licence in Kenya recently, Letshego micro lender’s dreams to have BDC invest in their business is also in limbo as MPs did not see the need to spend P250 million on a lender who they say “impoverishes Batswana” with high interest rates. Gaetsaloe said with Letshego having gone continental, it would benefit them greatly in terms of making income.
Mokgware said this could be a bad move as microlenders charge a lot of interest and empowering them to further impoverish Batswana would not be a good idea. Mzwinila argued that funding Letshego will not be diversifying the economy, as there are already banks in the market.
Private Estate in Francistown P270 million
Gaetsaloe said they would also fund a private estate in Francistown where they will service the land and construct roads. The project is expected to have residential, a school and a clinic amongst other things. He said they would make profits as the plots and houses will be sold. Mzwinila, who had expressed concern that P1billion should create more jobs, decried that developing private property would not be a good idea. “They should just do like the Phakalane people did; this will only benefit a few elites and create no jobs,” he said.
Paper project P30 million
Gaetsaloe said they would spend P30 million on moving a paper production company to do its operations in Botswana. All committee members welcomed the project. They believed it does not even need to be on the list as they could finance the project.
Automotive plant P280 million
BDC also wants to spend P280 million in expanding an automotive plant. Members called for serious research especially basing on past failures in the same industry. Gaetsaloe stated that due to technology, they do not expect the project to produce many direct jobs. He however said they expect to make profits as the plant will also export its products.
Way forward
In closing, Guma said they will present their recommendations to Parliament in December. He called on the finance ministry to send BDC back to prepare and get to understand the viability of what they need.
“They should stop being economic with the truth. Their books show that they did well in the past two years. They should be able to convince us with ease, but their request is not even urgent. There are more pressing issues to deal with,” he said. Guma said he was disappointed that while BDC had been given guidelines as to what to present, the opposite had been done.
The Ministry of Finance and Development Planning Development budgeting secretary Cornelius Dekop thanked the committee for their contributions and said they will look into the advice given by the committee. He said they believed the projects, on top of creating jobs, were profitable. The Ministry of Investment, Trade and Industry’s permanent secretary Peggy Serame pleaded with the committee to approve the requests, as they believe the projects will be profitable. Lelatisitswe was the only member in support of this arguing that if delayed potential partners could move on.
However, the committee maintained that they were not convinced the projects will pump money into the organisation with a not so attractive past.