CEDA CEO Thabo Thamane was last week elected the Chairperson of Association of African Development Finance Institution (AADFI) at a glitzy conference held in Malabo, Equatorial Guinea.
Botswana, as well as Eswatini and Uganda, had expressed interest in the position.
However, the Southern African allies agreed it would be in their best interest to field a single candidate, with Thamane getting the nod.
The vastly experienced official has been part of the association’s National Executive Committee for the past seven years, representing the southern region.
The Voice’s Portia Mlilo caught up with Thamane to discuss his exciting new role and how it might benefit Botswana.
Q. Congratulations on your new appointment chief.
A. Thanks, I really appreciate it.
Q. So, what exactly does AADFI do?
A. It started as a meeting for Directors of African Development Banks in 1968 where it was agreed that to strengthen their Development Financial Institutions (DFI) they should register the association.
This finally happened in 1975.
The association helps DFIs access funds from development partners.
There are three types of membership: ordinary, special and honourary.
Development partners like European Investment Banks are non-African members so they recognise us as an affiliate of African Development Bank so they can invest in our DFIs.
It promotes cooperation among the DFIs and regional integration.
We look at the social and economic impact made by our DFIs.
Q. And what does your role as the AADFI Chairperson entail?
A. My role is to promote economic and social development in Africa through cooperation amongst the banks and financial institutions.
I am responsible for making sure that all our more than 80 members DFIs have a meaningful impact in their economies through certain monitoring standards.
There is what we call ‘prudential grading standards’ where every DFI grades themselves on a template where we put scores primarily around three parameters: Financials Sustainability, Corporate Governance and Operational Effectiveness.
These are then submitted to the association, they are audited through an independent auditor and are graded.
CEDA has consistently been in the 80 percent and above bracket, it is among the top 20 best DFIs which are run well.
The other responsibility is to stimulate cooperation among the DFIs for financial support and investments.
I will be in this position for four years.
However, my contract as CEDA CEO comes to an end in two years and if it is not renewed it means I will also lose the Chairperson position.
Q. How will this new development benefit Botswana?
A. It is an opportunity that I must lobby for capacity building, training and funding for DFIs.
The association has tailor-made training programmes that address challenges faced by DFIs.
One of our challenges at CEDA is non-performing loans and it happens to other countries.
This association will train our employees around how you deal with non-performing loans.
The other benefit is staff exchange among our DFIs which will also be an opportunity for them to gain exposure and international experience.
Soon we will be sending some of my staff to Malaysia for bench-marking in an exchange programme through our association’s affiliation to World Federation of DFIs.
Also, when I attend meetings I will be acting like an Ambassador for my country.
I am going to meet Brand Botswana Office and Botswana Tourism Organisation, where I am on the board, so that we see how best this can work to our advantage to sell my country.
Q. What has CEDA learnt from other DFIs in terms of product development?
A. We learnt Mabogo Dinku programme from the Kenyan and Bangladesh model.
This is a very good product that looks at financial inclusion.
Because of that we have managed to make a lot of progress, including non-banking people, those who run tuckshops and those that buy and sell clothes.
One good thing is that we encourage them to save – whatever they make they must save 10 percent of it in the bank.
We have control over their bank account, they cannot withdraw cash without our consent.
It encourages Batswana to work amongst each other because you need to be five and a maximum of 15 for you to get our financial support in business.
It encourages integrity, cooperation and trustworthiness and we are overwhelmed by applications.
The next step is to leverage on technology so that applications can be done on mobile phones or the Internet as opposed to building offices across the country.
Q. There are countless cases of clients who fail to pay back CEDA loans – what could be the cause?
A. This is a challenge across all countries.
It is just that people want to blow it and compare us to commercial banks.
A commercial bank, if you are inexperienced and have no security, they will not consider you.
With us, I must be able to understand your dream and take a risk on you.
The major challenge is mismanagement of funds and lack of focus, especially amongst the youth.
Some of them have genuine challenges and others quickly lose interest.
Sometimes companies do not support them and tend to buy from outside suppliers.
The other critical point is that people take a long time to pay suppliers and cash flow is important, especially in small businesses.
What we advertise in newspapers is not even one percent of our loans, it is very little! Majority of those are the ones we have been following for about 10 years for repayment of loans.
In some instances, I must admit we make bad investments.
Q. Which projects are worst affected?
A. Agriculture and Manufacturing.
There is what we call brand loyalty.
If we fund someone to manufacture say toilet paper, it will take time to break into the market yet we expect him to pay back the loan.
Clients will start questioning a ‘Motswana’ product and doubt if it is of high quality.
That is why we started the Project Facilitation Fund with LEA to help our clients on quality assurance.
For them to compete with established brands it’s difficult.
This is where we need the government to deliberately support local businesses.
Agriculture is affected by climate changes.
Q. There are allegations that your staff reject business proposals only to use the ideas themselves. Can you comment on this?
A. I am not a saint and I can’t say my employees are not doing it.
If there is anyone who has that kind of a query I would advise them to report to DCEC.
We have a toll free number they can report their concerns.
We undergo a long process to approve applications because of such allegations.
I can’t make the final decision alone but in a bank people are given authority to reject loans and people accept it.
When it happens here we are accused of selling their idea to someone else.
We have an appeal structure and we explain why we rejected you.
Three years back, DCEC deployed someone in our office for three months to look at our process and advised us where we can improve.
I don’t understand why someone can think they have a unique idea in this era of new technology, Internet.
We welcome feedback and try to be as transparent as we can. We fired four employees in Palapye offices for corruption.
Q. Is CEDA able to sustain itself or does it depend on subvention from Government?
A. Government gives us 40 percent and we raise 60 percent of what we require.
It is my intention that I grow it to 80.
Right now we are looking at how we can optimise our balance sheet and basically say what can we put in place to rely less and less on government funds.
We want to get other stakeholders to understand that they are part of the value chain.
Q. Thank God it’s Friday, what are your plans for the weekend?
A. I am going to attend a funeral on Saturday and then go to the farm to relax, it has been a hectic two weeks!