- Plans to disburse P1 billion in funding to citizen contractors over a 5-year period
First National Bank of Botswana (FNBB) says it has committed P 1 billion in its strategic partnership with Debswana aimed at encouraging foreign owned entities that deal in the manufacturing of machinery, chemicals and many other products used in the Debswana mining value chain to set up shop in Botswana through collaboration with citizen owned businesses.
Dubbed the Citizen Economic Empowerment Program (CEEP), the initiative by Debswana is expected to result in local beneficiation as the mining company shifts some of its annual spend to locally owned enterprises in an aim to accelerate citizen participation in its supply chain.
In an interview with the Business Weekly and Review, Peo Porogo, Director of Marketing & Communications at FNBB highlighted that the under this program the bank will disburse P1 billion over a 5-year period through the FNB CEEP credit facility designed to support the start, run and growth journey of citizen contractors benefiting from the program. According to Porogo, the primary objective of the credit facility is to facilitate access to funding for CEEP enterprises who receive Debswana contract/s from time-to-time to ensure that the participant companies under this program have guaranteed funding.
“The program ensures that beneficiary companies are able to access the much need funding across project specific needs; project mobilization, working capital, assets finance to commercial property finance for places of operation/warehouses. We take note of the fact that majority of the CEEP target group may still be at early development stage of their businesses, the “Start “phase, with urgent need to build capacity, efficiency, and scalability,” Porogo stated as she explained the impact that FNBB anticipates to make for citizen owned companies in line with the beneficiation agenda. She further emphasized that FNBB’s assistance ensures a comprehensive banking solution for CEEP beneficiaries encompassing transacting, investing and insurance.
“Growth and sustainability of each beneficiary is premised in the prudent deployment of current CEEP project proceeds and efficient systems capability. The bank has ensured that all beneficiaries are enabled through advanced FNB online banking platforms and capabilities to do more with less and make use of the investment products.” The funding gap that FNBB says it seeks to fill is to assist Small and Medium Enterprises (SMEs) fulfill orders for services in the primary stages of the diamond value chain which are seen as emerging opportunities that local SME’s can take advantage of.
Porogo says these services may include but not limited to drilling, plant and equipment maintenance, fuel suppliers, safety measures, resources (slope and ground stabilization), and it is at this stage that FNBB will help SMEs fulfill orders for many of these services through its Purchase Order financing solutions. She added that the bank would also assist with their capital and cash flow needs through the trade and working capital credit facilities. “These funding solutions alone with the Bank’s digital banking and transactional facilities aim to bring operational efficiencies to help SMEs run and eventually grow their businesses.”
Over and above funding, through the CEEP credit facility Porogo explained that FNBB would also provide advisory services through its team of products and industry experts that includes FOREX, Commercial property finance, Vehicle & Asset Financing through WesBank, Trade & Working Capital planning, Investments as well as Insurance. It will go on even further to provide regular monitoring support throughout the lifespan of the CEEP project through its financial and business advisory services, which will offer bespoke solutions to ensure informed decision-making and sustainable growth for SMEs.
While there have been concerns that even though mining is the backbone of the Botswana economy, there is a lack of skill, Porogo says FNBB recognizes that majority of the CEEP beneficiaries have strong technical experience from working in the mining environment or related sectors, with the need to develop capacity in financial planning. Hence, the FNBB advisory services ensures that CEEP beneficiaries are guided and supported accordingly with several workshop scheduled in the second half of 2022/23 in the areas of Finance, Contracting, Investment and Risk Management to further build capacity and enhance SMEs’ operational structures.
In recognition of the fact that majority of SMEs do not have the balance sheet nor collateral to support the lending they may need to fulfill their new Debswana contracts, Porogo explained that the bank adjusted its selection criteria to make funding more accessible. Under the CEEP program instead of using Balance Sheet lending, FNBB says it will use Cash flow lending and even forego deposits in some facilities.
Porogo added that the impact of the FNBB CEEP program would be measured in a number of ways that include ownership of funded entities – citizen, female and youth ownership, the annual turnover growth and jobs created under the funded projects as well as number of women and youth employed. While Debswana has already set itself a target of creating 20 000 jobs through the program, the bank says it is still reviewing its job creation target. “We intend to set a target we are sure we can reasonably measure,” Porogo said.
