Monday, October 19, 2020

END OF MOHOHLO’S BOB ERA: Who will replace her?

Five years after Forbes Africa ranked her among the 10 most powerful women in Africa, Bank of Botswana Governor Linah Mohohlo has announced her long overdue retirement at the end of next month. Sunday Standard Business Editor VICTOR BAATWENG looks at a few but key “Mohohlo” news headlines over the past years.

MOHOHLO STICKS TO TARGET DESPITE UNRULY INFLATION

FEBRUARY 2006: Amid the unstable global and domestic inflationary environment as late as mid-2012 Mohohlo, defiantly stuck to her guns of an annual inflation range of 3 to 6 percent. The target was first announced around February 2006 and by mid-2009, the national year-on-year inflation slipped by over one percent point to move closer to the central bank target during the month of June, brightening prospects that the cost of borrowing might ease in the long term. However fast forward to 2010, CPI figures dished by Central Statistics Office frustrated Mohohlo with domestic inflation increasing from around the upper end of the 3 to 6 percent objective range in the first quarter of 2010 to 7.1 percent and 7.8 percent in April and May 2010, respectively.

Eventually the CPI figures hit where Mohohlo wanted in July 2013 easing to 5.8 percent in June 2013, down from 6.1 percent during the previous month, as commodity prices remained stable.

MOHOHLO REJECTS STANCHART EXPAT MD

MARCH 2007: Towards the end of March 2007, Standard Chartered Bank Botswana (SCBB), the old lady of Botswana’s commercial banks, was left with egg on the face after Mohohlo rejected the appointment of its proposed Managing Director, Lami Manjang. Urging for a deeper localisation programme, Mohohlo rejected Manjang who was to replace Neil Jones who left the country’s oldest commercial bank for its sister bank in Dubai at the close of 2006.

BANK OF BOTSWANA MANAGEMENT IN FRAUD ALLEGATIONS

OCTOBER 2008: Towards the end of 2008, Sunday Standard reported about the confidential notes between the former Bank of Botswana Chief Internal Auditor (Joe Mutwale) and the Bank’s Audit Committee Chairman (Gordon Cunliffe) which painted a picture of how the management of the Central Bank deliberately falsified figures that formed part of answers presented to Parliament by the then Minister of Finance and Development Planning.

A former Member of Parliament for Kweneng East, Gordon Mokgwathi, had asked a set of pointed questions on the lifestyle of Mohohlo. Among other things, Mokgwathi had asked the Minister of Finance to tell the House the cost at which the Bank of Botswana Governor’s house was built and furnished. The MP further wanted to know the number of foreign trips undertaken by the Governor in the past year as well as the cost of such trips.
Also posed as a question was whether or not the Minister would consider amending Bank of Botswana Act to ensure that in the spirit of corporate governance, the Governor, as the Chief Executive Officer, does not also serve as Chairman of the Bank’s Board.

MOHOHLO’S BoBcs COSTED BOTSWANA

FEBRUARY 2015: In early 2015, a macro-economic book written by former cabinet minister and businessman David Magang challenged the importance of the Bank of Botswana Certificate known as BoBcs. These were introduced during Mohohlo’s tenure (1991) with the intention of limiting the amount of money in circulation in the country. The move was also a strategic and a pro-active check on domestic inflation as it provided an incentive for commercial banks to keep a sizeable portion of customers’ deposits at the Central Bank while earning a reasonable return.

Available figures show that by May 1991, the value of BoBCs was pegged at P200 million, reaching the highest level ever of P19.9 billion in 2010. The 2010 value translated into 97 percent of total deposits. Money market figures also shows that before the record figures registered in 2010, the banking sector was characterised by excess liquidity, super normal profits and low deposits rates. The trend was associated with making savings ‘unattractive’ to depositors as banks paid low interest rates.

Mohohlo was later to intervene with regulatory changes resulting in what economic experts describe as ‘deposits’ and ‘credit growth’.

In 2014 Mohohlo confirmed that the she had decreased the amount of BoBcs issued for liquidity absorption. Excess funds were further sterilised by increasing the Primary Reserve Requirement in stages from 3.25 percent to 10 percent over the five-year period to 2011.

Given these figures, Magang noted in his book that BoBcs had created more problems that they had mitigated. “Firstly, they have had the effect of dampening commercial bank lending to business in that banks were making more money from BoBcs than from the interest they earned from loaned out funds”

MOHOHLO UNDER FIRE AFTER COLLAPSE OF KINGDOM BANK

MAY 2015: Still in 2015, Mohohlo and the central bank came under fire from financial industry players, who said it should have anticipated the collapse of Kingdom Bank and put in place measures to protect the interests of clients and stakeholders. Mohohlo and BoB however refuted allegations that the recent collapse of Kingdom Bank was indicative of its limited capacity to monitor and regulate commercial banks. Kingdom Bank was placed under temporary management on 16th February 16 in a move that resulted in the suspension of withdrawals from deposit accounts held by the bank.

At the time, BoB explained that the suspension was meant to enable it to perform its statutory obligations, which included preparation of an inventory of assets vested in, belonging to or held by Kingdom Bank.

After the collapse, industry players cast aspersions on BoB’s regulatory framework, saying the Reserve Bank should have detected the warning signs and acted timeously to protect clients and stakeholders. At the time, Head of Communications officer at BoB Andrew Sesinyi explained that the Reserve Bank moved fast to assume temporary management of Kingdom Bank after satisfying itself that the bank was in unsound financial condition and that its board and management had failed to conduct business in a prudent, safe and sustainable manner.

RACE FOR BOB GOVERNOR BEGINS AS MOHOHLO RETIRES

SEPTEMBER 2016: On Tuesday this past week, Mohohlo made it official – her departure from BoB is eminent. She will vacate her office on the 20th of this coming month. But as she steps down on October 20, following 17 years as governor and a total of 23 years with the central bank, a few names of her possible successors have already been discussed in the financial circles. There is a mention of Moses Pelaelo ÔÇô her deputy for the past several years. But there is also the mention of Andrew Motsomi who got promoted from the banking supervision division after a sudden departure of yet another candidate for the post – Oduetse Motshidisi. A suggestion was also made to have Gaborone Bonnington South legislature Ndaba Gaolathe as a possible replacement. However, those close to the soft speaking MP says he has long shunned the offer. He is also believed not to be favoured by his political affiliation being the opposition ÔÇô Umbrella for Democratic Change (UDC).

While Mohohlo might play a critical role in the choice of her successor for now she might be leaving a happy woman. Amongst her accolades Mohohlo leaves behind a number of awards she won while the BoB governor. This include Botswana’s highest public service award for efficient and devoted service, the Presidential Order of Honour. Both the Financial Times Magazine and Euromoney bestowed on her the Central Bank Governor of the Year for Africa Award in 2001 and 2003 and 2008, respectively. In 2011, she received the Lifetime Leadership Award from the Official Monetary and Financial institutions Forum (OMFIF).

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