The Botswana Development Corporation (BDC) reported a significantly wider loss for the six months ended December 31, 2025, as rising credit impairments and higher financing costs weighed on performance despite modest growth in trade income.
The state-owned investment arm posted a group net loss of P144.9 million, more than four times deeper than the P34 million loss recorded in the same period last year. Total income declined to P208 million from P233 million, reflecting weaker interest income and lower dividend inflows from investee companies.
A major drag on earnings was a sharp increase in expected credit losses, which surged to P77.5 million from P27.5 million, driven by the reassessment of a single distressed investment exposure currently under restructuring. At the same time, finance costs rose to P103.7 million, reflecting additional drawdowns on debt facilities used to fund BDC’s growing investment pipeline, while the July 2025 pula devaluation further increased funding costs and prompted a shift toward natural hedging strategies.
Operating expenses rose 9% year-on-year, linked to continued investment in strategic projects such as Lobatse Clay Works and Milk Valley Farm. Despite broader pressure on earnings, trade income increased slightly to P49.4 million, supported by improved margins and higher volumes in an automotive investee as well as contributions from newly operational projects.
This was offset by a steep decline in interest income, which fell to P46.8 million from P113.2 million, highlighting slower deal closures and reduced returns from the loan portfolio during the period. BDC’s total assets grew modestly by 2% to P6 billion, largely driven by increased cash holdings from recently accessed funding facilities, while borrowings rose following a US$20 million drawdown earmarked for new investments.
Equity declined by around 3%, reflecting cumulative losses, although the corporation said its capital base remains sufficient to support its long-term strategy. As part of a broader transformation, BDC is repositioning itself from a traditional balance sheet lender into a fund manager and investment enabler, with plans to deploy P1.39 billion over the next two years across sectors including agriculture, manufacturing, healthcare, renewable energy and financial services.
Management expects performance to improve in the second half of the financial year as transactions in the investment pipeline close and interest income recovers, supported by a stabilising economic outlook that is expected to see Botswana’s economy rebound to 3.1% growth in 2026. However, risks remain, including rising inflation, liquidity constraints in the financial sector and continued exposure to global economic uncertainty, underscoring the challenges of balancing BDC’s developmental mandate with financial sustainability.