Sunday, June 16, 2024

Bifm reels from BPOPF contract termination

Botswana Insurance Holdings Limited (BIHL) is reportedly bracing for a massive retrenchment and scaling down exercise at its subsidiary, Botswana Insurance Fund Management (Bifm), after the shocking loss of its multi-billion pula management contract with Botswana Public Officers Pension Fund (BPOPF). The pension fund recently dropped a bombshell on Bifm when it terminated its P9billion worth management contract, effectively shrinking Bifm’s funds under management from a whooping P11bn to just under P2bn.

On Tuesday, Bifm terminated the contract of its Chief Executive Officer (CEO) Tiny Kgatlwane, a move that was seen as the first step towards the looming mass retrenchment. On Thursday, BIHL issued a press statement confirming Kgatlwane’s departure and the appointment of Neo Bogatsu as Acting CEO.

“Kgatlwane will be leaving the BIHL Group effective 28th February. Neo Bogatsu will assume the role of Acting-CEO with effect from 1st March. Bifm’s focus continues to be on offering clients and investors the outstanding service they have come to expect, against the foundation of a business with a long track record and a 40`year heritage,” read the statement.

Insiders say Kgatlwane’s departure was expected given the dwindling prospects of Bifm. They added that Bifm could not afford to keep the CEO given its diminishing financial standing.

“Kgatlwane was very expensive as she fetched a salary in the region of P2m a year.”

Sources also revealed that Kgatlwane was informed of the board’s decision on Tuesday last week and reassured that her sacking had nothing to do with her performance, but was purely a business decision based on the unfolding circumstances. BIHL also chose to let Kgatlwane go immediately even though her contract ends mid 2015. After Kgatlwane, said our sources, BIHL intends to scale down Bifm from a big independent corporation to just a small department with skeletal staff.

“This means almost half of Bifm’s current members of staff will have to go,” they said.

BIHL refused to answer questions from Sunday Standard regarding the BPOPF contract, saying it was constrained by confidentiality agreements.

“Bifm is not in a position to discuss client information with third parties due to existing confidentiality agreements.”

An independent report released last year shed light on the importance of a BPOPF contract to the very existence of fund management companies in Botswana. BPOPF’s assets under management currently stand at P45.1bn. The first signs of tension emerged mid 2014 when fund managers jostled for BPOPF’s billions, amid allegations of overcharging targeted specifically at Bifm and Fleming Asset Management. There were also concerns that BPOPF, as a citizen owned fund, should engage local fund managers to facilitate beneficiation as they buy insurance from Botswana, pay tax in Botswana and employ a good number of Batswana.

Last year, BPOPF acting Chief Executive, Lesedi Moakofhi launched an ambitious three-year investment strategy with particular focus and bias towards private equity, infrastructure and strategic investment in Botswana. The strategy would create employment and position BPOPF as a key player in the national economy. The fund has been investing heavily in offshore markets because of limited investment opportunities in the local economy. 70 percent of BPOPF’s billions were invested in offshore markets and only 30 percent locally.┬áMeanwhile, reports indicate that local fund managers like Investec, Stanlib, Allan Gray, Afena Capital and Fleming Asset Management will soon be mandated to manage BPOPF’s local and offshore investments.


Read this week's paper