Q: How is RMB assisting in alleviating the impact of COVID-19?
A: We at RMB and the broader FNB recognised the responsibility we shoulder as one of the larger corporates in the country and the largest commercial bank in the country. We have always seen ourselves as the bank of the people, and in that same vein we mobilised not only cash but goods as well as community outreach and lending relief to assist not only our clients but the wider community.
FNBB has committed in excess of P10 million towards the fight against the impacts of COVID-19, both directly and indirectly, in cash and through various initiatives aimed at preserving an acceptable quality of life for those impacted by the pandemic.
In addition, we availed debt relief in the form of payment holidays for all parties that were adversely impacted by the outbreak of the COVID-19.
Q: Briefly touch on the measures that have been put in place in the various sectors to help relieve the impact on the affected sectors.
A: Number crunching economists tell us that the tourism and hospitality sector and the mining sector were hardest hit. Another sector that is quite difficult to quantify is the toll that the pandemic has had on the informal sector; those that are reliant on the movement of people and certain establishments with whom they would have a shared client base being operational.
The mining sector’s is perhaps the most significant blow, given its contribution to fiscal revenue and export earnings. The sector was forced to cancel some planned sales and had to explore alternative measures through which to sell its commodity, given restrictions that were in place. Fortunately there are strong signs of recovery within the space in the current year, which will hopefully reduce fiscal pressures to a certain degree.
We have seen government put in place salary/wage subsidies along with the availing of P1.3 billion through the Industry Support Facility (ISF). The BECI administered guarantee scheme has been in place in conjunction with the banking sector to provide companies with working capital requirements up to the tune of P1 billion. We have also seen the government pledge P14.5 billion in the Economic Recovery Transformation Plan (ERTP) which looks to stimulate economic recovery the government expenditure.
Q: Which sectors are likely to recover the slowest?
A: These are likely to be the tourism, restaurants and accommodations. These will be largely dependent on our own vaccine rollout, as well as the level of comfort that other nations have with our level of COVID-19 risk and the rate of the recovery in those countries that will dictate their level of disposable income.
Q: What role does the bank play in supporting corporations during times of economic downturn?
A: During times of economic stress commercial banks need to continue to act as stabilisers of trade, payments and access to liquidity.
Banks need to establish sound digital and compliance infrastructure to allow trading to occur during times of stress and particularly during extraordinary circumstances such as those experienced over the past 18 months in which mobility has proven to be challenging.
In a relatively small economy like Botswana, it is imperative that commercial banks are able to support corporations with additional liquidity needs that may arise from reduced or suspended operations. This support may be in the form of trade instruments to facilitate the purchase and sale of goods, working capital solutions to unlock cash that is held up in assets or to bridge gaps between receipts and payments. The support may also come in the form of loan moratoriums, as previously mentioned, to allow companies to utilise available liquidity to cover overheads.
Q: Since the pandemic began, what are the various strategies that the bank has put in place?
A: RMB has had to adapt the way we do business for the benefit of both internal stakeholders, external stakeholders and customers alike. In line with COVID-19 protocol advisory and in order to ensure that we prioritise the health and well-being of employees and clients, we have endeavoured to ensure that we do not breach 25 percent capacity staff complement. This has meant the majority of our staff moving to work from home schedules. This of course is not an easy shift for any organisation with questions around the suitability of staff homes as workplaces, the availability of the necessary infrastructure and equipment to carry out what is required, the conduciveness of the work environment for a productive and driven workforce. We currently maintain this work-from-home structure and are in no rush to return employees to the office until we are certain that the threat of COVID-19 has been adequately curtailed.
With regard to the clients that we serve, we have aggressively pushed for increased uptake of our digital solutions in a bid to reduce branch traffic without disrupting the ability to carry out business. We have introduced new trade and working capital solutions that will allow clients quicker access to funds during times of strained solutions. One such solution is our invoice discounting solution which seeks to allow clients faster access to funds that are tied up in their receivables.
Our work place banking team has engaged numerous corporates on financial literacy and well-being training which has become an even more essential life skill when there is a strain on individuals’ disposable incomes.
Q: How long do you anticipate it will take for our economy to return to its pre-pandemic state and begin to fully rebuild?
A: I think we have started to see some signs of recovery with growth for this year projected at around 6-8 percent. However, it is important to note that we are coming off of a low base of contraction of around 8-9 percent in 2020.
Full blown recovery and return to pre-pandemic economic conditions will really depend on a multitude of, including the state of affairs once the SOE has been lifted. What do retrenchment levels look like? Where is the true level of unemployment once these restrictions have been removed?
Another key factor is the rate at which we are able to get a significant portion of the population vaccinated to ensure that we are able to resume some form of ‘old normalcy’ in the movement of people and goods alike. Possibly most important and most unpredictable is the level of mutation of the virus.
Q: How has the bank worked hand-in-hand with the government to resuscitate economic activity?
A: As RMB/FNBB, we have looked to support through contributions in cash and in kind. More than contributions pledged, we have continued to engage the government as one of our critical stakeholders and recognising the need for alignment in order to maintain the path to achieving national development goals.
We are participants in the BECI administered P1 billion government guarantee scheme aimed at providing working capital support to entities that have been clearly affected by COVID-19 and the restrictions associated with it. We have continued to engage the government around available options and access to funding that will support the fiscus from a recurrent and developmental budget perspective.
We as a bank are also keen to provide advisory and funding support around the optimal way to execute and/or implement key infrastructure projects, particularly within the PPP scope. Our access to capital, regional experience and key relationships with developmental finance institutions makes us well positioned to provide value adding solutions.
Q: As the world continues to shift towards a digitally-led economy, how do you anticipate this will assist in boosting our economy?
A: I think what the digital transformation does is take what globalisation did a few decades ago in promoting trade across borders even further in completely eroding borders. We have seen the impact of tech in turning the Silicon Valley into a USD3trillion economy on its own and the success of the likes of Alibaba.
I think digital transformation provides a nearly unlimited market for our goods and services, along with providing us with access to unlimited information, services, goods, ideas and so on. I think it provides us with an opportunity to increase the complexity of our economy in the medium-term which has been seen in many instances to be key to making the challenging step from middle income to high income status. A more complex economy equates to more industries, more employment, more competition, more revenue and more development.
We have the opportunity to see ourselves involved in more components of the value chains that have led to our development up to this stage. Diamond planning technology may see more Batswana involved in diamond trading going forward. The borderless nature of technology can allow Batswana to connect with trades of all sorts of commodities, e.g. copper and manganese.
We are able to provide services of convenience and efficiencies which complement logistics, retail sales, dining and so on. These are of course a few thoughts that require development, skills transfer, development but the overall sentiment on technology is it is capable of delivering great efficiencies that we would have not thought possible previously.
Q: How do you foresee the pandemic affecting income inequality in Botswana?
A: I believe that is without a doubt that this pandemic would have taken us a few steps in the progress that was being made around equitable distribution of income. The private sector and those burgeoning small and medium enterprises that are the real engines for creating new wealth and bridging the inequality gap have been dealt a massive blow. They will have seen sizeable erosion of the equity they had built up over the years and struggled to maintain the desired levels of employment within the operations. I believe a lot of work will have to go into rebuilding these entities and the hope is that the government economic stimulus measures will be able to provide a foundation for rapid recovery and a multiplier effect will trickle down to these enterprises. There is also hope that the pandemic has called to attention the pressing need to improve our self-sufficiency, and this can only be done by increased participation of local entities in all facets of our economy.