BECI remains the only credit insurance provider in Botswana, and this is because this crucial economic activity is largely commercially un-attractive to private general insurance companies, and this is generally the case world-wide. The importance of this economic activity and BECI’s value add in the economy over the last 10 years is demonstrated in a number of ways;
Facilitation of Trade
BECI has supported credit transactions amounting to P 12.3 billion, thus contributing to the growth of the economy. It must be noted that this entailed trade credit facilitation to local enterprises through products ordinarily not offered by purely commercial entities.
Supporting the Construction Industry
BECI has issued construction guarantees amounting to P 4.2 billion, thus playing a meaningful role in this sector, which over the years has become a noticeable contributor to Botswana’s GDP. The BECI construction bonds are affordable to the target market; citizen owned construction companies, which are also significant employers.
Credit Protection for Local Enterprises
An amount of P33M has been paid in claims against unhonoured debts. BECI’s credit covers has averted impairment of bad debt losses, which could lead to closure of a significant number of companies over the years, which faced potential insolvency due to crippling bad debts. It must be noted that such companies have created and sustained jobs and collectively contribute meaningfully to the economy.
Indemnitee to Contract Employers
BECI has honoured Guarantee claims of P10M. This has ensured that Employers are able to continue with executing their projects without financial loss. Without this support, these Employers could have faced financial challenges as far as completing their projects with a likelihood of failure.
Employment
Employment is sustained through businesses supported by the BECI product offering with credit insurance policy holders employing around 3,912 people and the Bond clients employing around 2487 people over the period ending in June 2019.
Covid-19 Loan Guarantee Scheme (CLGS) Administration
BECI has recently been assigned the mandate to administer the P1 billion CLGS. The scheme is meant to stabilise businesses that have been adversely affected by the Covid-19 pandemic by providing commercial Banks with guarantees for loans extended to qualifying businesses. This relief measure is part of the Government of Botswana economic response initiatives announced by the Minister of Finance and Economic Development on the 2nd of April 2020.
BECI, just like other ECA’s play a role during this crises in supporting working capital in a major way, including direct lending; provide extended cover for pre-shipment risks, provide domestic supply cover for exporters; provide import guarantees; as well as portfolio guarantees to banks. Some ECA’s are even permitting cover for already existing loans which clearly is risk transfer aimed at protecting bank balance sheets.
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