October 2021
An interview with Resegohetse Pheresi, Senior Debt Trade Solutions Transactor at RMB Botswana
- Please introduce yourself?
My name is Resegohetse Craig Tlale Pheresi and I am a Senior Debt Trade Solutions Transactor at Rand Merchant Bank (RMB), the Corporate and Investment Banking Division within FNB Botswana (FNBB). I am responsible for driving strategy, origination, and risk oversight for the lending book within RMB. Simply put, I am responsible for working alongside coverage managers to understand our clients’ businesses and provide any potential funding and trade and advisory solutions that would add value to our clients.
- Our economy was greatly affected by the COVID-19 pandemic. How is RMB assisting in alleviating the impact of the pandemic for its clients and stakeholders?
COVID-19 has had a severe impact on many industries and the livelihoods of many across the country, with very few industries remaining unscathed. The banking sector and the clients we service have been no exception. As RMB, and the broader FNBB, we recognised the responsibility we shoulder as the largest commercial bank in the country. We consider ourselves a responsible corporate citizen, and in that vein, the bank strengthened its commitment to sustainability in relation to our economy, the community, and our customers.
The bank committed P10 million towards the fight against the impact of the pandemic, both directly and indirectly, in cash and through various initiatives aimed at preserving an acceptable quality of life for those affected.
In addition to cash donations and other initiatives, at the onset of pandemic and initial lockdown - which restricted movement and the ability to generate income - we engaged with all our clients and availed debt relief in the form of payment holidays.
- Which sectors were most affected by the COVID-19 pandemic? Briefly touch on the measures put in place to assist.
COVID-19 resulted in a contraction of almost all sectors, however, what is apparent even to the naked eye is the devastating impact it has had on historically key sectors in terms of GDP contribution. Economic data tells us that the tourism, mining, and construction sectors, along with hospitality (restaurants and accommodation) have been hit the hardest. Though it’s difficult to quantify the toll that the pandemic has had on the informal sector, I believe the sector was severely impacted due to its reliance on the movement of people, which was restricted in due to the pandemic.
The mining sector perhaps took 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 to sell its commodities, given restrictions that were in place. Fortunately, we have witnessed strings of recovery this year, which will hopefully reduce fiscal pressures to a certain degree.
In terms of measures put in place, government introduced several initiatives across various industries. These initiatives include salary/wage assistance programmes for entities that were severely impacted, availing of P1.3 billion through the industry support fund, the P1 billion loan guarantee scheme administered through BECI in partnership with banks to provide companies with working capital requirements and a pledge of P14.5 billion through the economic recovery transformation plan (ERTP), which is aimed at stimulating economic recovery through government expenditure.
- Which sectors are likely to recover the slowest?
In my view, sectors that are heavily reliant on the efficient rollout of vaccines and the significant relaxation of COVID-19 restrictions are likely to take a longer time to recover. These are potentially tourism and hospitality industries and they are highly dependent on the country’s vaccine rollout, as well as the level of comfort that other nations have towards our COVID-19 risk, and the recovery rate in those countries that will dictate their level of disposable income.
It’s however promising that these industries are starting to open, following the lifting of the State of Emergency (SoE), we just must wait and see.
- What role does RMB play in supporting corporations during times of economic downturn?
Unlike what we have seen in past economic downturns, financial markets and systems were not the origin of the recession experienced in this instance. However, banks will always be of critical importance to the structural soundness of any economy. During times of economic stress, commercial banks need to continue acting as stabilisers of trade, payments, and access to liquidity.
In a relatively small economy like Botswana, it is imperative that commercial banks can 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 to allow companies to utilise available liquidity to cover overheads, etc.
- Since the start of the pandemic, which forward-looking strategies has RMB put into place?
RMB, like many other businesses globally, has had to adjust and adapt to new ways of doing business for the benefit of all our stakeholders. In line with COVID-19 protocol and to ensure that we prioritise the health and wellbeing of employees and clients, we have endeavoured to adhere to the 25% capacity staff compliment, with most of our staff working remotely. This, of course, is not an easy shift for any organisation facing challenges regarding the suitability of employee homes as workplaces; the availability of the necessary infrastructure and equipment; and the conduciveness of working from home environments to a productive and driven work force. I am pleased to state however, that our employees have been fully equipped to work from home, and this arrangement will continue until we are certain that the threat of COVID-19 has been adequately curtailed. With the lifting of the SoE and gradual return to office, the bank intends to remain cautious and put the health of its employees as the forefront, hence staff capacity will be weighed against potential risks of infection.
The pandemic has also given us an opportunity to re-assess operational and service delivery efficiencies, given the changing work and trade dynamics. With regards to our clients, we have aggressively pushed for an increased uptake of our digital solutions 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 strained times. One such a solution is invoice discounting, which allows clients faster access to funds that are tied up in their receivables.
- How long do you anticipate it will take our economy to reach a pre-pandemic state and begin to rebuild?
I think that even the most seasoned futurologists, and gamblers alike, would struggle to give a conclusive response. We have started to see some signs of recovery with growth for this year projected at around 6-8%. However, it is important to note that we are coming from a low base of contraction of 8.5% in 2020.
Full recovery and a return to pre-pandemic economic conditions will really depend on a multitude of factors, including how the situation will unfold following the recent lifting the SoE.
- What do retrenchment levels look like?
According to our Economist, Mr Gomolemo Basele, we are likely to see an uptick in unemployment levels in the short-term following lifting of the S. We expect local businesses to undergo right-sizing exercises in terms of their staff compliment, against a backdrop of relatively lower consumer activity compared to historical levels. This is not unique to Botswana, as we have observed unemployment levels rise across the globe because of the pandemic. Our expectation over the medium term is for the ERTP, along with other intervention measures, to unlock employment opportunities across a host of sectors, offering much needed reprieve to households.
- Where is the highest level of unemployment expected once restrictions have been removed?
The true level of unemployment once restrictions have been lifted will depend on several factors, primarily centred around the evolution of the pandemic. A key factor is the rate at which we can get a significant portion of the population vaccinated to ensure that we can resume some form of “old-normality” in the movement of people and goods alike.
Possibly most importantly, and most unpredictable, is the level of mutation of the COVID-19 variants. The emerging of new variants makes it particularly difficult to not only plan, but to also implement any plans that have been developed.
These factors will determine industry outlooks across the economy. Repeated waves of the virus, resulting in restrictive measures being instituted, will detract from possible growth opportunities, and add to unemployment levels. Due to this uncertainty, current expectations are for unemployment levels to rise to between 23-25% from below 20%, pre-pandemic.
- How has RMB cooperated with the Government of Botswana to resuscitate economic activity?
As a bank, we have offered support through contributions in cash and other relief initiatives. We have continued to engage the government as one of our critical stakeholders and recognise the need for alignment 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 affected by COVID-19, and the restrictions associated with it. We have continued to engage government around available options and access to funding that will support the fiscus from a recurring and developmental budget perspective.
The bank is 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, position us well to provide value-adding solutions.
- As the world continues to shift towards a digitally led environment, how do you anticipate this will assist in boosting our economy?
I believe digital transformation provides an unlimited market for our goods and services, along with providing us with access to unlimited information, services, goods, and ideas. It provides us with opportunities to increase the complexity of our economy in the medium term, which has been seen in many instances as key to making the challenging step from middle 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 become involved in more components of the value chain 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, such as copper and manganese. We are also able to provide services of convenience and efficiencies, which complement logistics, retail sales, dining and many more.
- How do you foresee the pandemic affecting income inequality in Botswana?
It is without a doubt that this pandemic has taken us a few steps back in the progress made around equitable distribution of income. The private sector and those burgeoning small and medium enterprises, the real engines for creating new wealth and bridging the inequality gap, have been dealt a massive blow. They possibly have seen sizeable erosion of the equity they had built up over the years and may struggle to maintain the desired levels of employment within these operations.
A lot of work will have to go into rebuilding these entities, and the hope is that the government’s economic stimulus measures will 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.
- Who is Resego outside of RMB?
Rese is a young Motswana man originating from Mmankgodi Village but born and bred in Gaborone. I am a sports enthusiast and have been taught the painful side of loyalty through my support of the Gunners of London aka Arsenal FC. I enjoy a variety of sports, but my passion really is centred around football, basketball, and tennis. I enjoy watching and playing these sports whenever I have an opportunity, which is not as often as I would like. Outside of the cutthroat corporate world I am an aspiring farmer, interested both in horticulture and livestock. My midterm goal is to take this interest into something that is commercially viable, with local and regional clientele. Perhaps my most important role is being a guardian to a 7-month-old rottweiler that goes by the name Quincy Owusu Obei. That pretty much sums me up: a simple ‘small village, big city’ man.
