Minister of Finance & Economic Development, Dr Thapelo Matsheka has said the contract between Bank of Botswana (BoB) and KPMG through which the latter provides external audit services to the former is not considered for any potential termination before its period lapses.
Minister Matsheka was responding to a question by Member of Parliament for Selibe Phikwe West, Dithapelo Keorapetse this week. Keorapetse had brought the question to Parliament in recognition of the fact that KPMG has been making headlines in both local and international media on scandalous matters that question its creditability as a finance and audit firm.
KPMG SCANDANLOUS HEADLINES
Across oceans in the Unites States where the company’s roots are, KPMG was in June this year slapped with a fine of $50 million for its use of stolen regulatory information to cheat on audit inspections, The Wall Street Journal reported.In South Africa the company was in 2017 under fire and suffered a severe reputational hit after becoming caught up in a corruption scandal surrounding one of the then country’s most powerful families, the Guptas. KPMG was accused of facilitating the Gupta family tax evasion and corrupt dealings.
While the firm denied any wrongdoing, it admitted to missing several “red flags” in relation to the family’s accounts. At least eight senior KPMG South Africa officials resigned in the wake of the scandal, including CEO Trevor Hoole. In Botswana , in 2017 Kingdom Bank Africa Limited liquidator, John Little accused KPMG Botswana of misconduct in signing off the books of the bank which collapsed two years before. The liquidator went on to file a law suit of close to P200 million against the accounting and auditing firm on behalf of creditors.
KBAL was in May 2015 placed under liquidation due to insolvency after an audit assigned by Bank of Botswana (BoB) uncovered an $18.7 million (P200 million) mismatch between assets and liabilities. The liquidator stated that KBAL was already insolvent in 2010, but continued trading until 2014 because over those financial years KPMG falsely reported that the bank was solvent and signed them off as a going concern.
KPMG – BANK OF BOTSWANA CONTRACT
When responding to Keorapetse’s question, Minister Matsheka explained that KPMG has been the external auditor for Bank of Botswana since 2011. He explained that the audit firm was appointed on a 5 year term which was extended into a second and last term in 2016, for another 5 year period lapsing end of 2020.
Matsheka told lawmakers that at the time of its appointment the firm was brought in for this critical job of zooming into the Central Bank’s book based on its track record of global repute “The decision to appoint KPMG the statutory auditors of Bank of Botswana was in line with the banks’ procurement policy, they basically won the tender which was floated in the market,” he said.
Dr Thapelo Matsheka who is also Member of Parliament for Lobatse further explained that the contract is subject for a review by the Bank of Botswana Board Audit and Risk Committee on an annually basis. The Finance Ministry Boss further underscored that the Bank of Botswana audit services specifications of 5 year term subject to renewal into another term are in line with audit rotations recommended by the Botswana Accountancy Oversight Authority (BAOA) which is a maximum of 2 five year terms.
In 2018 The Chief Executive Officer of Botswana Accountancy Oversight Authority (BAOA) Duncan Majinda expressed his concerns about KPMG citing the controversies the firm was facing around the world. Appearing before the Committee on Statutory Bodies and State Enterprises, Majinda said that as the oversight body they were concerned about scandals KPMG is embroiled in particularly because it is auditing most state owned enterprises including government departments.
"I have even talked to the Office of the President that the company must be monitored and look at how they have been doing books as it shows that we might be sitting on a ticking financial bomb," he said adding that almost 70% of companies in Botswana are using the firm. Minister Matsheka however told parliament this week that currently there are no considerations or any decisions by neither executive management nor BOB board to discontinue KPMG’s contact with the bank. “We are aware of wide negative media coverage surrounding KPMG as an audit firm; however these are subject to evaluation and determination of relevance by respective appointing authorities to the basis and criteria for evaluation,” he said.
Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.
According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.
The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.
Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.
Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the companyâ€™s market capitalization.
Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana. Â The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.
African heads of state and global CEOs at the World Economic Forum Annual Meeting backed the launch of the first of its kind report on how public-private partnerships can support the implementation of the African Continental Free Trade Area (AfCFTA).
AfCFTA: A New Era for Global Business and Investment in Africa outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the AfCFTA, and illustrative examples from successful businesses in Africa to guide businesses in entering and expanding in this area.
The report aims to provide a pathway for global businesses and investors to understand the biggest trends, opportunities and strategies to successfully invest and achieve high returns in Africa, developing local, sub-regional and continental value chains and accelerating industrialization, all of which go hand in hand with the success of the AfCFTA.
The AfCFTA is the largest free trade area in the world, by area and number of participating countries. Once fully implemented, it will be the fifth-largest economy in the world, with the potential to have a combined GDP of more than $3.4 trillion. Conceived in 2018, it now has 54 national economies in Africa, could attract billions in foreign investment, and boost overseas exports by a third, double intra-continental trade, raise incomes by 8% and lift 50 million people out of poverty.
To ease the pain of transition to its new single market, Africa has learned from trade liberalization in North America and Europe. â€śOur wide range of partners and experience can help anticipate and mitigate potential disruptions in business and production dynamics,â€ť said BĂ¸rge Brende, President, and World Economic Forum. â€śThe Forumâ€™s initiatives will help to ease physical, capital and digital flows in Africa through stakeholder collaboration, private-public collaboration and information-sharing.â€ť
Given the continentâ€™s historically low foreign direct investment relative to other regions, the report highlights the sense of excitement as the AfCFTA lowers or removes barriers to trade and competitiveness. â€śThe promising gains from an integrated African market should be a signal to investors around the world that the continent is ripe for business creation, integration and expansion,â€ť said Chido Munyati, Head of Regional Agenda, Africa, World Economic Forum.
The report focuses on four key sectors that have a combined worth of $130 billion and represent high-potential opportunities for companies looking to invest in Africa: automotive; agriculture and agroprocessing; pharmaceuticals; and transport and logistics.
â€śMacro trends in the four key sectors and across Africaâ€™s growth potential reveal tremendous opportunities for business expansion as population, income and connectivity are on the rise,â€ť said Wamkele Mene, Secretary-General, AfCFTA Secretariat.
The Forum is actively working towards implementing trade and investment tools through initiatives, such as Friends of the Africa Continental Free Trade Area, to align with the negotiation process of the AfCFTA. It identifies areas where public-private collaboration can help reduce barriers and facilitate investment from international firms.
About the World Economic Forum Annual Meeting 2023
The World Economic Forum Annual Meeting 2023 convenes the worldâ€™s foremost leaders under the theme, Cooperation in a Fragmented World. It calls on world leaders to address immediate economic, energy and food crises while laying the groundwork for a more sustainable, resilient world. For further information,
Electricity generation in Botswana during the third quarter of 2022 declined by 15.8%, following operational challenges at Botswana Power Corporationâ€™ Morupule B power plant, according to Statistics Botswana Index of Electricity Generation (IEG) released last week.
The index shows that local electricity generation decreased by 148,243 MWH from 937,597 MWH during the second quarter of 2022 to 789,354 MWH during the third of quarter of 2022.
This decrease, according to the index, was mainly attributed to a decline in power supply realized at Morupule B power station. The index shows that as a result of low power supply from the plant, imported electricity during the third quarter of 2022 increased by 76.3 percent (123,831 MWH), from 162,340 MWH during the second quarter of 2022 to 286,171 MWH during the current quarter and Statistics Botswana added that the increase was necessitated by the need to augment the shortfall in generated electricity.
In the index Statistics Botswana stated that Eskom was the main source of imported electricity at 42.0 percent of total electricity imports. â€śThe Southern African Power Pool (SAPP) accounted for 38.4 percent, while the remaining 10.1, 9.1 and 0.5 percent were sourced from Electricidade de Mozambique (EDM), Cross-border electricity markets and the Zambia Electricity Supply Corporation Limited (ZESCO), respectively. Cross-border electricity markets are arrangements whereby towns and villages along the border are supplied with electricity from neighbouring countries such as Namibia and Zambia.â€ť
The government owned statistics entity stated that distributed electricity decreased by 2.2 percent (24,412 MWH), from 1,099,937 MWH during the second quarter of 2022 to 1,075,525 MWH during the third quarter of 2022. The entity noted that electricity generated locally contributed 73.4 percent to electricity distributed during the third quarter of 2022, compared to a contribution of 85.2 percent during the third quarter in 2022 and added that this gives a decline of 11.8 percentage points. â€śThe quarter-on-quarter comparison shows that the contribution of electricity generated to electricity distributed decreased by 11.8 percentage points compared to the 85.2 percent contribution during the second quarter of 2022.â€ť
Statistics Botswana meanwhile stated that the year-on-year analysis shows some improvement in local electricity generation. Recent figures from entity show that the physical volume of electricity generated increased by 36.3 percent (210,319 MWH), from 579, 036 MWH during the third quarter of 2021 to 789,354 MWH during the current quarter. According to Statistics Botswana electricity generated locally contributed 73.4 percent to electricity distributed during the third quarter of 2022, compared to a contribution of 57.7 percent during the same quarter in 2021. This gives an increase of 15.7 percentage points.
The entity noted that trends also show an increase in physical volume of electricity distributed from 2013 to the third quarter of 2022, thereby indicating that there are ongoing efforts to meet the domestic demand for power. â€śThere has been a gradual increase of distributed electricity from the first quarter of 2013 to the third quarter of 2022, even though there are fluctuations. The year-on-year perspective shows that the amount of distributed electricity increased by 7.2 percent (71,787 MHW), from 1,003,738 MWH during the third quarter of 2021 to 1,075,525 MWH during the current quarter.â€ť
The statistics entity noted that year-on-year analysis show that during the third quarter of 2022, the physical volume of imported electricity decreased by 32.6 percent (138,532 MWH), from 424,703 MWH during the third quarter of 2021 to 286,171 MWH during the third quarter of 2022. â€śThere is a downward trend in the physical volume of imported electricity from the first quarter of 2013 to the third quarter of 2022. The downward trend indicates the countryâ€™s continued effort to generate adequate electricity to meet domestic demand, hence the decreased reliance on electricity imports.â€ť