The news that should come as early Christmas for Batswana is that the much anticipated projects of Special Economic Zones Authority (SEZA) are now showing signs of commitment, like an aircraft starting engine for take-off the Sir Seretse Khama International Airport (SSKIA) Special Economic Zone (SEZ) project is now ready for shovel on the ground work.
BusinessPost has established that already P100 million has been released to commit on a 1.8 kilometre road which is part of the Phase 1 strategic plan for the initial development of the Sir Seretse Khama International Airport (SSKIA) SEZ. According to SEZA, this project will open up a 90 hectares development near the SSKIA. The national airport has been declared as a multi-use SEZ and its boundary has been approved by Gaborone City Council (GCC), according to SEZA. A plan is that economic activities at the SSKIA-SEZ be more focused on innovation and diamond value addition; while also catering for opportunities in pharmaceutical manufacturing and distribution.
“Other miscellaneous economic activities will include industrial, commercial, air-related logistics and distribution. From a real estate, financial and fiscal standpoint it made sense to integrate the Innovation Hub and the Diamond Hub into the SSKIA-SEZ,” said SEZA Acting Chief Executive Officer Thatayaone Ndzinge in an interview with this publication.
The legislation enacted the Special Economic Zones Act in 2015 with a mandate, “to make provision for the establishment, development and management of special economic zones; for creating a conducive environment for local and foreign investment; to facilitate expansion of employment opportunities, attainment of economic growth targets and to provide for matters related therewith and incidental thereto.”
Government has zoned seven land spaces to be used as SEZs; Lobatse 70 hectares, Sir Seretse Khama International Airport 780 hectares, Fairgrounds 50 hectares, Palapye 500 hectares, Selibe Phikwe 1100 hectares, Francistown 700 hectares, Tuli Block 400 hectares and Pandamatenga 41000 hectares.
The SEZs has been divided into phases and in the first phase there is Sir Seretse Khama International Airport (added with the Diamond Hub as industrial and business transport zone); Selibe Phikwe(like base metal beneficiation, chemical manufacturing and agro business and Francistown(mining and logistics).
In the second phase there is; Lobatse(meat and leather hub), Palapye(coal benefication), Tuli Block(horticulture), Pandamatenga(agro-business) and Gaborone Fairgrounds(financial services hub.Last month Bothakga Burrow won tender number 014/03/2019 for constructing: “detailed urban scheme, detailed infrastructure services design and production of construction tender documentation for the designed Boulevard one of the Sir Seretse Khama International Airport Special Economic Zone (SSKI-SEZ East) in Gaborone.” This tender should be completed by next year August according to the contract.
According to SEZA, the project will also include a design scheme for provision of underground services like water, fiber, power and CCTV. “We are committed to delivering a quality project within time and budget. The success of this project will no doubt set the tone for the SSKIA-SEZ,” Ndzinge told BusinessPost.
Botswana’s SEZA was benchmarked from leading economies like Singapore, Malaysia, South Korea, Mauritius and China. Already P145 million has been approved for SEZA projects. Gabana Architects Consortium is awarded a tender to construct the P8 million Lobatse SEZ and is expected to finish this project next year June.
In Gaborone, apart from the SSKIA, SEZA has a zone at Fairgrounds commercial area where SEZA is headquarted and this tender was given Royal Haskoning at a tune of P13 million, also expected to have left the construction site by June 2020. Gabana Architects Consortium took another SEZ tender to construct the Selibe Phikwe economic zone before July 2020. Like Gabana, Royal Haskoning is lucky for the second time in snatching the building of the Francistown SEZ. However the Pandamatenga and Palapye SEZ projects are yet to be awarded. Ndzinge promised that early next year these projects will take off. He said at Palapye they are still marketing the area and awaiting an investor.
Land issue for SEZA
Last year September it was revealed by the SEZA’s Director Investor Attractions and Monitoring Joel Ramaphoi during the Business Botswana Annual General Meeting that the process of acquiring land and change or transfer of land use in Botswana has been delaying the Authority in doing its mandate. Ramaphoi said the issue of land allocation or availability of land to be zoned prove to be a big impediment before SEZA.
“Land acquisition has been a big problem. There are always delays in land acquisition and it is a big challenge. We need to get enough land which will enable to carry out our mandate,” said SEZA director, Ramaphoi who also gave an example of Lobatse where they struggled to acquire 200 hectres for SEZA as “it took too long to get land.”
During last year’s National Business Conference President Mokgweetsi Masisi said his government is working on legislation “that will fast track the processing of applications for the change of land use so that the land owners can benefit from its optimal utilization.” Masisi revealed that the target date for finalization of the legislation would December last year.
In an interview, Ndzinge said land is not a huge issue for SEZA, but there is a specific zone being the Tuli Block which could have been referred to by Ramaphoi. He said SEZA has a lot of land for SEZ safe for the Tuli Block area which is not necessarily a top priority area. He said land at Tuli Block is mostly privately owned hence the difficulty in its acquisition. But that is not a train smash according to Ndzinge as Tuli Block is not top on the list and SEZA cannot do all the eight zones at a go.
The legislative debate on SEZA
When telling Parliament of SEZ last year the then assistant Minister of Investment, Trade and Industry Moiseraele Goya said that year conferring of all the eight SEZs will be finalized during 2018 and land servicing of the seven sites was intended to be completed by December 2018 and March 2020 respectively. He further revealed that the sale and marketing of all sites started in April 2018.
This led to the debating of the Special Economic Zones Bill No. 10 of 2015 which was lauded by the former Sefhare-Ramokgonami legislator Dorcas Makgato saying the initiative of SEZs would expedite industries competitiveness in the global market, hence strengthening the country’s export earnings. Boteti East legislator Lelatisitswe Sethomo who supported the Bill wanted people in the SEZs to be empowered.
However the late Mochudi East NP Isaac Davids shot down the SEZ idea, saying that even though the Bill was a good initiative, it was going to be hampered by shortage of water and power in the country where the SEZs are located. The then Maun East MP Kostantinos Markus complained that his region was left out of the zoning even though it is a tourism attraction area. During last year Business Botswana AGM, SEZA director Ramaphoi said they have decided to start with 8 zones. He said they have been benchmarking on China which has only 4 SEZs but is successful economically.
SEZA already zoomed and zoned four investors
Ndzinge has also revealed that they have so far found four investors who are committing to convert soon and come do business in Botswana in April next year. He said their investor attraction mission which led them to Dubai, South Africa and Germany bore fruits as they talked to 30 investors, including the four who are almost ready to convert. He said most of businesses who are interested in coming to Botswana are impressed by regulations and reforms which were put in place for Doing Business.
Incentive packages for investors
On July this year cabinet approved that a company will be given 5 percent Corporate Tax incentive for its first ten years in Botswana. After ten years the incentive becomes ten percent. There will also be zero rated VAT on raw materials for manufacturing for export. Cabinet sought to put the issue of land shortage by allowing fast allocation of land for investors.
Foreign investors will also be offered long term renewal land leases. There will also be an advantage of a waiver on transfer duty on land and property and a Property Tax exemption for 5 years. Government will also duty free imports for specialist plants and machinery manufacturing purposes. Government of Botswana will ensure that there is no exchange controls but full repatriation of profits and capital.
This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.
“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.
Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.
A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.
Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.
A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.
Each Placing Share, according to Botswana Diamond Executives has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from, 7th September 2020, being the date of the Placing Warrants issue.
In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.
The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.
In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.
Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.
The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”
In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.
Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.
The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.