Economic Growth Solutions

expansion and growth.

Strides: SMEs are the engine of economic growth in Botswana and across the globe; what was the response of this important business segment to the initiative, and do you have figures in percentage as to how much of the disbursed funds were accessed by SMEs?

Ramalefo: When processing the applications, much of the work was done by the banks but the companies cut across from small medium to large enterprises. The facility was not focused on the size of the entity but on the need. You may find out that even a larger entity just needed so much to generate some cash flows to be able, in some instances, to pay salaries.

On the other hand, I am sure most of the beneficiaries in the Agricultural sector were SMEs. Note this is the sector that was facilitated by NDB with over 40% of the approved facilities.

Strides: How did your partnerships with financial institutions and business advocacy bodies like Business Botswana, BEMA, BITC, and others, which were established before the pandemic, help in your work of administering the scheme?

Ramalefo: These partnerships were of an advantage for us in administering the scheme. We consulted Business Botswana to help us seamlessly chart the way forward as regards the scheme guidelines because they had input on other schemes along the same line which were running parallel to cushion against the effect of COVID-19 pandemic.. So they had an input in the process. However, the key institution we were dealing with are banks and the Bankers Association of Botswana (BAB). The Bankers Association of Botswana helped in the coordination of the negotiation of the scheme’s terms and conditions. The other key entity was the Ministry of Finance which was tasked with this intervention.

Strides: Should we expect the launch of new insurance schemes or products, collaborations, or the signing of memoranda of understanding as a result of your experience working with the participat- ing banks, the Bankers Association of Botswana, and companies during the pandemic?

Ramalefo: The formulation of the scheme has put BECI in a positive stance with the banks. There is a lot of engagement with the banks to continue with a similar facility for businesses because the challenges are still abound beyond the pandemic and the lockdowns. We have crafted new products which talk to credit or financial guarantees. We need such facilities to be able to support companies especially those with a leaning towards regional expansion and the export market. They need to be funded and banks need to be guaranteed of their financed capital.

We have engaged other institutions, in terms of the Memorandum of Understanding to provide the solutions that we realise are needed in the market. Although there was hesitation from insurance companies to provide financial guarantees in the past, we’ve seen this change in the recent past. There’s been a lot of interest from others in the market in terms of insurance, especially the American Reinsurance market in terms of providing the capacity to issue or to provide support for financial guarantees, however with an underlying trade transaction. Therefore, we should be able to see a lot of funding from banks for viable projects with the support of insurance instruments that would take care of any losses or unforeseen losses that could affect the banks’ loan books.

We have seen the creation of opportunities that if we explore enough, will get us relevance in the market for increased trade, especially as we envisage increased trade activity along the African Continental Free Trade Area (ACFTA). We have a new strategy which talks about supporting government initiatives and other trade financing products. These days most companies are not just interested in insurance, they want to be supported in terms of

Strides: As an insurer, what lessons did you learn from your own experience and that of your peers in the region and elsewhere on the globe?

Ramalefo: We noted that financing from the banks was distressed, and while the government was ready to support the banking sector, it doesn’t entirely mean the government was issuing grants. The government issued guarantees for legible and viable companies, however there were also issues of viability that the bankers had set for one to be able to utilise the scheme. The banks were limited in terms of how much exposure they could take on, even with guarantees. That is the downside of the scheme because the whole economy was struggling. The banks were challenged because they also had to finance other loans and therefore, they were cautious of overexposing their balance sheets. Nonetheless, they came to the party and by their participation, companies got the requisite assistance. Although there wasn’t engagement with other insurance companies in this instance, we have of late, however, seen a lot of interest from insurance brokers, especially on financial guarantees.. We are well-positioned to assist with financial guarantees to be able to support this expansion and access for any other required trade information.

At BECI, we are working on our transformation agenda. We are positioning ourselves to be of much relevance to the market and as such realigning. We have engaged with a technical partner to help us provide the requisite skills for supporting the economic growth of the country though insurance products. We have a developmental mandate behind at the core of our mandate. As such, we need to align our product offering with the government reset agenda as well, to be able to facilitate and support where government initiatives require insurance.