A debt deal in which the government’s Okavango Trading Company (ODC) secured a loan from Standard Chartered Bank Botswana with the help of a senior minister at Finance and Development Planning, Kenneth Matambo. The close to P1 billion debt deal has been endorsed by parliament despite its admission of not knowing about its parameters.
Under normal circumstances, Matambo is required by law to seek approval from parliament before guaranteeing the loan which the Okavango Trading Company solicited from Stanchartered Bank Botswana.
Sunday Standard understands that Matambo signed the loan facility which covers a period of ten years on condition that ratification would be facilitated in the next suiting of parliament which is the current one.
As a result, this week, a junior minister at Finance and Development Planning, Vincent Seretse acting on behalf of Matambo asked parliament to rectify the government’s guarantee for the loan amounting to US$100 million (P871 million).
Although a number of legislatures including Tonota North MP Fedelis Molao had reservations about the deal, the house went on to grant Seretse’s request.
“Although we do not support the minster’s decision to bypass parliament and extend a guarantee to ODC, I am of the view that we will be flocking a dead horse should we try and block this deal.” Molao said.
Molao further questioned how the concerned bank (Standard Chartered Bank Botswana) was chosen amongst all other commercial banks operating in the country.
Seretse explained that Matambo used the powers vested in him by the Public Finance Management Act, 2011 which states that the minister may extend a government guarantee if the facility is believed to be in public interest.
The Public Finance Management Act, 2011 subsection 2 (b) reads, “The minister may provide a guarantee in terms of subsection (1) without prior authorisation or ratification of the national assembly where he or she is of the opinion that it is not practically possible to secure prior approval of the national assembly before providing a guarantee as provided in subsection (1), subject to subsequent parliamentary authorisation or ratification given through resolution.”
This publication understands that Matambo signed the guarantee and subordination agreements on the 11th of December 2013 while the national closed on the 13th of the same month.
Seretse says that taking into consideration the urgency surrounding the need for financing in December 2013, it was therefore not possible to secure parliamentary approval before guaranteeing the loan offered by Standard Chartered Bank.
It has also emerged that in 2012, a loan amounting to P540 million was given to ODC out of the Public Debt Service Fund to cover operational costs and purchase diamonds.
Seretse confirmed the transaction on Wednesday but justified that, “It was proven that the P540 million on PSDF loan facility extended by government was not adequately serving ODC due to foreign exchange fluctuations and as a result a request was made for a foreign currency facility of US$ 100 million.
Okavango Diamond Company (ODC) is owned by the government and has formed a new private diamond trading company that will purchase, market and sell the 10 to 15 percent portion of Debswana production that the state is entitled to, through the new marketing agreement signed with De Beers last year.
ODC is expected to independently auction an estimated P2, 250 million to P2, 625 million worth of diamonds on the open market per annum from Debswana’s average $3 billion-a-year supply
Its commercial strategy is to deliver a market-leading value proposition, which will encourage diamantaires from Botswana and across the world to acquire their rough diamonds from ODC at globally competitive, market determined prices.