The Botswana government on Thursday diverted atleast P212 million from funds raised by telecommunications company BTCL from the capital markets which were meant to aid the expansion of the now publicly owned company.
BTCL, which listed its shares through a public offer on the Botswana Stock Exchange (BSE) raised P462 million in early April 2016. The company recorded an over subscription on its share sale after receiving 776,333,400 Shares Offer for only 462,000,000 Shares on Offer/available.
On Thursday, senior minister at the Office of the President (OP), Eric Molale received a huge cheque of P212 million from Barclays Bank Botswana which is part of the P462 million collected during the BTCL Initial Public Offering (IPO) period. Barclays Bank Botswana, which was appointed the “receiving” bank during the IPO offer period also handed BTCL with the remaining P250 million.
Without specifications, Molale who received the cheque on behalf of the government said that the money will be used to supplement national budgetary requirements. Economic commentators however were skeptical on the decision by the government to receive part of the money that was meant to help finance future expansion plans of BTCL.
The diversion of some of the BTCL IPO funds comes shortly after the government reported a deficit budget for the current financial year. This followed an announcement by Finance minister Matambo in February 2016 that the domestic economy will record an average accumulated budget deficit during the plan period estimated at P4.7 billion or 3.1 percent of Gross Domestic Product (GDP) compared to P31.9 billion initially projected.
Despite the achievements in the macroeconomic area, the Botswana government’s efforts to address development challenges facing the country have been constrained by the continued weak recovery of the global economy.
Still in February, Matambo admitted that the prolonged depression of the commodity prices especially in the diamond sector has further wakened the domestic economic prospects. In addition the shortage of water and electricity which are key inputs in the driving of economic activities has also undermined domestic growth prospects.
Botswana’s economic base is narrow, dominated by mining and the public sectors. The country’s real GDP grew on average by 6.6 percent during 2010-2014. In 2014, growth slowed down to 3.2 percent and further to 1.2 percent in 2015 due to weak demand for diamonds as well as electricity and water shortages. The downturn in the global diamond market and its impact on the economy prompted the Government to adopt the Economic Stimulus Programme (ESP) as a strategy to boost growth, promote economic diversification, and create jobs.
