11 Mar 2015

The Minister of Finance and Development Planning, Mr Kenneth Matambo says the National Development Bank (NDB) finances high risk ventures such as agricultural projects and start-up businesses.

Mr Matambo said the projects were sensitive to natural disasters such as drought and diseases, adding that the bank had been adversely affected by reduced economic activity.

He said the impact of these factors was an increase in non-performing loans that affected the level of profitability of the bank. He added that the bank was anticipating reporting a loss for the financial year ended March 2014.

Despite the challenges, he said the bank continued to be a going concern and that it was fully executing its mandate as validated by external auditors who have issued a clean audit report.

Mr Matambo said it was the ministry’s expectation that the bank’s financial results for the year ended March 2014 woud be published during this month after they have gone through all necessary corporate governance approval structures.

He said the bank was migrating to a new integrated banking system, and that this required a detailed audit to be done taking into account the transition from the old system to the new.

Mr Matambo also said while the bank experienced a delay in the production of the 2014 financial results, all stakeholders were updated accordingly and approval was granted for the extension of time at different levels of governance.

In the past, he said the bank’s financial statements were always published within the six months period as required by the National Development Bank Act.

On the other hand, Mr Matambo said the banks loan approvals were done taking into account the need to manage its liquidity within acceptable levels, and that the bank has decided to implement various initiatives in order to ensure that its liquidity position was adequate.

Some of the measures include to implement a robust collection strategy and to review its collection strategy.

The bank also continued to consider farming loan applications except for dry land seasonal loans, and that the bank decided to suspend receipt of loan applications for business loans and bonno products primarily because they have reached their annual budget target and were currently being reviewed.

He said staff members at different levels were constantly consulted on the banks financial and operational performance through internal communication structures, in addition to the weekly updates to the general staff by the chief executive officer.

Francistown South MP, Mr Wynter Mmolotsi had asked the minister to explain the financial situation at NDB and why the NDB financials for 2913/14 have not been declared to date. Mr Mmolotsi also asked why NDB suspended loans to farmers and whether staff members were ever consulted on the bank’s situation. ENDS