KEYNOTE ADDRESS BY HIS HONOUR, THE VICE PRESIDENT OF THE REPUBLIC OF BOTSWANA HONOURABLE MOKGWEETSI E. M. MASISI AT THE CEO FORUM OF THE WORLD FEDERATION OF DEVELOPMENT FINANCE INSTITUTIONS (WFDFI)

Director of Ceremonies;

Deputy Chairperson of the African Union Commission, H.E Mr Erastus Mwencha

Minister of Investment Trade and Industry, Honourable Vincent T. Seretse;

Cabinet Ministers;

Leader of the Opposition; Mr Duma Gideon Boko

Ambassadors/High Commissioners;

Honourable Members of Parliament;

His Worship the Mayor of the Gaborone City Kagiso Thutlwe;

Chairman of Ntlo ya Dikgosi, Kgosi Puso Gaborone;

District Commissioner, Mrs Grace Seitshiro;

All Permanent Secretaries;

Chairman of the World Federation of Development Finance Institutions, Mr Arjun Fernando;

Chairman of the Association of African Development Finance Institutions, Mr Patrick Dlamini;

CEDA Chairman and fellow members of the Board of Directors;

CEO, CEDA Mr Thabo Thamane;

Distinguished Guests;

Ladies and Gentlemen;

Good Morning.

1. It is a pleasure for me to perform the official opening of the Joint Chief Executive Officers’ Forum of the World Federation of Development Finance Institutions (WFDFI), which is hosted by the Citizen Entrepreneurial Development Agency (CEDA) in collaboration with the Association of African Development Finance Institutions (AADFI).

2. I wish to thank the WFDFI, together with other Development Finance Institutions (DFIs) and their associations from around the world for giving us the honour to host such a prestigious event. This is in recognition of the befitting representation of CEDA at the AADFI and WFDFI and in particular, the confidence you have on Botswana to host this Forum.

3. Distinguished Guest, Ladies and Gentlemen, this theme of year’s Conference is “DFIs Sustaining Relevance in the Age of Disruption.” While DFIs continue to play a major role in facilitating development, their relevance is threatened by shifts in demographics, societal needs, economic and market conditions as well as political, legal and regulatory regimes. The theme therefore challenges DFIs to tackle ‘disruption’ by redefining their objectives, optimizing board and government systems, improving efficiency in operations and accelerating progress and sustainability. It emphasises the role of DFIs as a vehicle in driving global economic development.
4. Ladies and Gentlemen, I am reliably informed that this is a biennial event which brings together participants from WFDFI member Associations in over 100 countries, CEO’s, Government Officials, representatives from Central Banks and private financial institutions as well as Ministers of Trade and Finance. The Forum is aimed at developing closer working relationships amongst CEOs of DFIs in Africa, Latin America, and Asia and the Pacific; to share and learn best practices in development financing operations.

5. It also presents an opportunity to develop networks for cross-border financing and investment promotion by DFIs in the respective continents. Further, the Forum offers support towards promotion of inclusive socio-economic development within the continents through south-south cooperation amongst DFIs.

6. As you might all know, one of the fundamental principles in setting up DFIs was to address prevailing market failures and reach underserved segments. The main reason being that private entities maximise profit and have low or no interest in offering services to low income individuals in remote communities or more generally in financing unprofitable projects with positive social externalities. Due to the associated burden of assisting SMMEs which include: lack of collateral, the cost of administering and monitoring their loans and substantial default rates; DFIs have been instituted to close the gap and finance this important sector of the economy.

7. Ladies and Gentlemen, notwithstanding the important role played by DFIs, there has been recent debate regarding their relevance. There is evidence that DFIs have an important role to play in the development of our economies. DFIs are now generally expected to address broader developmental policy objectives, including employment creation, income distribution, import substitution and developing new industrial sectors or boosting weak ones.

8. Based on the above, it is clear that the role of DFIs in developing countries have gone beyond addressing market failures to, more broadly, addressing developmental failures. This challenges you to reconsider your countries’ financial systems and regulatory regimes and comply with international best practice in corporate governance and risk management. As part of your strategy, you need to balance conflicting responsibilities of remaining financially sustainable while fulfilling your policy mandate.

DFIs as instruments to deliver inclusive growth

9. It is a well-known fact that, like other DFI’s from around the world CEDA faces a number of challenges. By their very nature, DFIs make long-term investments at subsidised rates in enterprises that are often shunned by private capital because they are viewed as too risky.
10. Therefore, they have a higher risk tolerance and a longer investment horizon. At the same time, DFIs are expected to generate profits from their investments for the benefit of future generations. It goes without saying that the role of DFIs is somewhat contradictory. While pursuing profit, they must also absorb high risk and long term investments at subsidised interest rates for the benefit of citizen enterprise development.

11. Rapid changes in financial systems and economic structures are also posing a poignant threat to the role, institutional structure, funding sources and success rates of DFIs. Domestic sources of capital are increasing and financial institutions are embracing markets that they previously shunned. While innovative financial institutions have introduced e-banking and mobile money services, DFIs have been slow in embracing technology. This is a clear indication that DFIs are operating in the age of disruption hence, the relevance of this Conference’s theme.

Botswana Government recognises entrepreneurship development as a tool for sustainable development

12. Ladies and Gentlemen, the World economy has seen sustained economic downturn over the last 3 years, weighed down by factors such as, subdued industrial production due to investment weaknesses and decline in growth of the global value chain, asset market volatility and loss of growth momentum in advanced economies.

13. The Botswana economy has not been spared from this recession as the economy also declined by 1.9% in 2015. Although there has been improvement in the two quarters of 2016, with real GDP growth of 1.6% in the 2^nd quarter of 2016, these have been below the country’s historical averages. In the case of Botswana, the decline in economic growth is attributed to lower commodity prices and subdued demand for diamonds. It is this challenging economic outcome and outlook that underpins the important role of DFIs and the need for them to become innovative and efficient in delivering their services to uplift the livelihoods of their citizens.

14. The Botswana Government has historically recognised the important role of DFIs in inculcating the spirit of entrepreneurship among its citizens to achieve sustainable economic development. In this regard, Government has over the years established institutions and programmes to support the development of the economy and address market failures.

15. The National Development Bank (NDB), which is wholly owned by Government, was established under an Act of Parliament in 1963. Its main objective is to provide a varied range of financial services to Botswana’s business sector and the public at large. The Bank provides loan financing for new and existing undertakings in different economic sectors.

16. Government further established the Botswana Development Corporation (BDC) in 1970 to promote commercial and industrial development. BDC's role is to provide financial assistance to investors with commercially viable projects; support projects that generate sustainable employment for Batswana and promotes skills development of the local workforce; encourages citizen participation in business ventures; and fosters linkages with the local industry.

17. In addition, Government established the Citizen Entrepreneurial Development Agency (CEDA) in 2001 to provide financial and technical support for the development of small, medium and large scale businesses, with a view to promoting viable and sustainable citizen-owned enterprises. This was done in order to address gaps in commercial financing by providing capital, training and mentoring for citizen-owned businesses. Government recognised that capital is often not readily available for budding entrepreneurs, especially in developing economies. Therefore, CEDA is one of the citizen empowerment initiatives aimed at supporting development of sustainable citizen-owned enterprises and increasing citizen participation in the development of the economy.

18. Since its inception, CEDA has financed 6 055 projects in different sectors of the economy, valued at P4.2 billion and created over 52 000 employment opportunities. The institution has 12 branches across the country to ensure accessibility for their services and reach out to all sectors of society, including: women, youth, people living with disabilities and remote area dwellers.

19. Director of Ceremonies, Government continues to develop relevant policies, programmes and the necessary skills and capabilities of its citizens, to ensure effective and meaningful participation in economic development. Among such initiatives is the development of the National Entrepreneurship Policy which is currently under review. As part of the human capital development, Government introduced entrepreneurship education at secondary school level to inculcate the spirit of entrepreneurship at the formative stage. In addition, CEDA and the Local Enterprise Authority (LEA) also provide training and mentoring programs that are aimed at boosting skills in business related functions such as management in the fields of: marketing, finance, operations and human resources management.

20. Directors of Ceremonies, I am told this Forum will discuss how DFIs can mobilize resources to ensure successful implementation of Sustainable Development Goals (SDGs). This is a matter that is close to my heart and I am proud to say that Botswana has committed to implementing SDGs and putting Batswana on a sustainable path by 2030. We have made great strides in eradicating abject poverty, creating decent jobs, addressing climate change, ensuring good governance, upholding human rights and gender equality as well as respecting the rule of law.

21. In closing, let me once again remind you to focus on your vital role of advancing economic and social development by providing financial and technical support to small, medium and large scale businesses. By sharing the financial risk, providing subsidised loans, taking minority equity investments and providing training and mentoring to budding entrepreneurs, DFIs have played a major role in boosting the economy of African countries and the world at large.

22. Director of Ceremony, Distinguished Guests, Ladies and Gentlemen, it is now my singular Honour and privilege to declare the 2016 Joint Chief Executive Officers’ Forum of the World Federation of Development Finance Institutions, officially open.

PULA!