Friday, December 4, 2020

BDC’S gets P858m shot in the arm from AfDB

BY BONNIE MODIAKGOTLA

The Botswana Development Corporation is getting a huge capital injection after the African Development Bank Group (AfDB) approved a line of credit to the state-owned investment entity, AfDB announced recently.

The $80 million or P858 million-credit extension was approved through AfDB’s private sector window, and the funds will be used by BDC to fund local companies involved in manufacturing, transport, logistics and services sectors. The funded projects are expected to create between 2,500 and 2,800 jobs, the bank said in a statement.

“The financial support provided by the AfDB will help mobilise the long-term financing required for economic diversification in the country, with an emphasis on increased exports and creating jobs. The proposed projects will also support regional integration as most of these products and services are exported in the Southern African Development Community,” said Kazuhiro Numasawa, AfDB’s chief investment officer.

The approval of the $80 million credit facility comes three years later after the Botswana government refused to be a guarantor to BDC’s planned P1 billion bond programme, where P850 million was to be raised from AfDB as a loan. However, the government was not convinced on BDC’s planned investments, forcing the development financing institution to forego discounted borrowing costs that come with having a guarantor, and instead BDC said it would go ahead and access the credit facility, albeit at expensive rates.

In March this year, he ministry of Investment, Trade and Industry, which BDC falls under, revealed to parliament that BDC has raised P700 million to be disbursed by end of June 2019. Minister Bogolo Kenewendo said the funds were raised from domestic and foreign institutions, and added that the loans were on non-sovereign guaranteed basis.

“This capital comes at high cost and capital structure compels the business to focus on high return, high yield projects and under stricter credit criteria.”

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The Telegraph December 2

Digital edition of The Telegraph, December 2, 2020.