Good morning, let’s get into it!
NB: My previous article seems to be jumbled up at the start, the one from yesterday, as some points appear before the intro. If you notice that, there seems to be a glitch of some sort because, as I was trying to fix it, there was no way I could edit it because it appeared fine. I don’t know how to really attend it, when it does that, my apologies.
source: Facebook
If you’ve walked into a private clinic this week, you’ve likely seen the signs: “We are unable to assist patients using BPOMAS.” While the headline looks like a healthcare crisis, the underlying data suggests something much bigger—a liquidity crunch that is starting to show up in the financial reports of the Botswana Stock Exchange’s (BSE) heavy hitters, most notably BIHL Group.
The Tipping Point: BPOMAS & The "Private Health Collapse"
The notice you see at clinics is the result of a massive backlog. BPOMAS (the country’s largest medical aid scheme) has faced significant delays in remitting payments to healthcare providers. When the scheme doesn't pay, the clinics can't buy supplies or pay staff, forcing them to demand cash upfront.
Why this matters for investors: BPOMAS isn't just a medical fund; it’s a massive pool of capital. That capital is invested back into the Botswana economy. When the "big money" stops moving, the whole system feels the friction.
The BIHL Paradox: Massive Assets, Negative Earnings
Recent data for BIHL Group (owners of Botswana Life and Bifm) reveals a confusing picture for the casual observer:
The Loss: BIHL recently reported Earnings of -P43.2m and a negative Earnings Per Share (EPS) of -0.15.
The Valuation Gap: Despite this dip, the stock is trading at roughly P23.02, which some models suggest is overvalued by over 800% relative to current earnings.
The Strength: On paper, BIHL is still a fortress, holding P18.8B in short-term assets.
So, if they have billions, why are they losing money? The answer lies in Bifm (Botswana Insurance Fund Management). As the nation’s leading asset manager, Bifm handles the investments for major schemes. When institutional clients like BPOMAS face liquidity issues, it forces asset managers to deal with volatile market conditions, lower management fees, and the potential for forced asset liquidations.
Connecting the Dots: The "Contagion" Effect
A viral post recently warned that a failure in the country’s biggest funds could lead to a "stock market collapse." While "collapse" is a strong word, the "contagion" is real:
Liquidity Squeeze: The Bank of Botswana has already been forced to drop primary reserve requirements to zero to help banks manage a lack of cash.
Market Sentiment: If BPOMAS and the BPOPF (Pension Fund) are perceived to be in trouble, investors panic and sell shares in financial companies like BIHL.
Real-World Loss: BIHL’s negative earnings are a reflection of this environment—high claims, lower investment returns, and a cautious market.
The clinic notice and the BIHL earnings report are two sides of the same coin. We are witnessing a systemic liquidity squeeze. BIHL remains a giant with a massive balance sheet, but its current "Fair Value" is being tested by the reality of the Botswana economy's cash flow problems.
The Watchlist: Keep a close eye on the next BSE cautionary announcements. If BPOMAS doesn't find its footing soon, the "847% overvaluation" in financial stocks may face a sharp correction.
Sources
simplywallst
Facebook post Brain Bonds
