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BDC prime engine of growth.

The Botswana Development Corporation (BDC) is the country's chief catalyst of growth. Its task is to identify investment opportunities in Botswana for exploitation by both local and foreign investors. It has a leading role in the proportion of private sector development, with interests in more than 100 companies or enterprises spread across the spectrum of the economy.

Earlier this year, the BDC began divesting its shareholding in a string of industrial firms, raising P309m in the process. The corporation's latest annual report says it sold 21 companies out of the 35 initially earmarked.

The BDC's latest spring-clean has slowed in recent months as it prepares some of its remaining companies for disposal. Most of these still need further nurturing and/or restructuring to make them profitable and attractive to private investors.

Also complicating the disposal of BDC interests is the fact that the corporation is a minority shareholder in the companies.

The process was started in 1994 and was a key component of the government's strategy to empower the Batswana. By selling stakes the BDC has contributed to the promotion of competition and efficiency.

Looking back, looking forward

The government of Botswana has long recognised that the capital intensive nature of large mining developments limits their potential to generate employment. It also recognises that the diamond boom cannot continue indefinitely and that any downturn would have serious effects on the economy.

National Development Plan 7 was devised to expand other industries such as manufacture, services and tourism. It relies mainly on exports and expansion - this means that Botswana products must be diversified to respond to demand in world markets. It also means that products must penetrate regional and overseas markets more widely.

While government institutions and parastatals such as the BDC established the solid foundations of Botswana's economy, it is the private sector that will drive it forward from now on.

Divestment

The BDC's divestment programme was started in 1994/95, during which its high-performing stock was disposed of. Immediate replacement has [TABULAR DATA OMITTED] proved difficult. As BDC chairman, O.K. Motambo notes: "The lean years appear to be upon us, until a few large projects which have been approved begin production after a gestation period of two or three years."

Mr Motambo also reports increased project commitments for the 1997/98 year of P208m, a 16% increase over the previous 12 months. "The increase is substantially due to new projects."

BDC had interests in 106 companies at the end of June (15 less than last year), and comprised 34 subsidiaries, 21 associated companies and 51 small shareholdings or loans. Total direct employment in the group at the year's end was 13,389, which is a 13% improvement on last year's figure of 11,855.

"Considering the fact that three major projects are still at the implementation stage, I expect new jobs created to increase by some 5,000 in the ensuing year," says Mr Matambo.

RELATED ARTICLE: Investment offers difficult to refuse

Foreign investment will be the essential ingredient in Botswana's economic growth.

The government, primarily through the BDC, is consequently making the investment process simple and attractive by putting in place and maintaining a positive business environment which encourages free enterprise.

The Financial Assistance Plan (FAP) has been a successful mechanism in stimulating development over the past seven years. It provides both citizens and non-citizens with financial incentives to invest in productive economic sectors. It is a system of grants - capital, unskilled labour and training designed to assist the establishment or expansion of private sector business in manufacture, agribusiness, mineral processing, linking service industries and tourism.

FAP projects are divided into three categories on the basis of fixed assets.

* small-scale projects - investment in fixed assets (machinery, equipment and buildings) of P75,000 or less

* medium-scale projects - investment in fixed assets between P75,000 and P2,000,000

* large-scale projects - investment in fixed assets over P2,000,000

More information is available from the BDC Private Bag 160, Gabarone, Botswana. Tel (267) 351811, fax (267) 303105
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Title Annotation:Botswana Development Corp.
Publication:African Business
Article Type:Cover Story
Date:Sep 1, 1998
Words:668
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