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BPOPF buying manufacturing space

The P66 billion Botswana Public Officers Pension Fund (BPOPF) is licking wounds after several of its investment ventures went up in smoke last year and has vowed in its recent AGM to dust itself off and grow tall. 

The pension fund with its appetite for growth, is working on investing on a modest manufacturing business in Gaborone. BPOPF has recently notified the anti-trust body being the Competition Authority, proposing to the acquisition of Lot 20596, Extension 34, Gaborone owned by Master Joinery. The target enterprise Master Joinery is into design, supply, manufacture and installation of all wood, timber, glass / aluminum and contracting for the Civil Engineering and Building.

It is said that BPOPF is also working on taking the Gaborone plant underlying lease as a growing concern from Twinco Enterprises (Pty) Ltd, which is trading as Master Joinery & Aluminum (Twinco). In the merge proposed to Competition Authority, the target enterprise Twinco is incorporated in accordance with the Laws of the Republic of Botswana and is wholly owned by Yufei Liu.

Twinco, trading as Master Joinery, is the certified owner of Lot 20596, Extension 34, Gaborone and uses the property to operate its businesses of manufacturing and warehousing. Specifically, Master Joinery or Twinco is involved in the production of kitchen cabinetry and other joinery products and the Director of Twinco is Bing Liu.

The BPOPF will acquire the property in Gaborone, through its property investment vehicle being Letsema Property Fund II. Letsema Property Fund II currently owns the acquirer properties in Gaborone and Francistown and is working on increasing its portfolio. BPOPF’s Board of Trustees are Solomon Mantswe; Ketlhalefile Motshegwa; Ruth Maphorisa; Topias Marenga; Emma Peloetletse; Tobokani Rari; Legomela Dittah Molodi; Agang Gabana; Rutang Moses and Neo Joel.

A contribution pension fund for public officers established in 2001, BPOPF moved from being a P1.6 billion to a P66 billion assets fund in less than a decade. It has over 150 000 members and has currently issued an advertisement looking for a renewed Strategic Plan Review Service. BPOPF is also looking for a Pension Fund Administration and Investment Management. This follows its troubles with allegations of poor management of its funds, causing a lot of negative media scrutiny.

BPOPF’s big property business is the luxury hotel located at Central Business District (CBD) Hilton Garden Inn (hotel). The P300 million hotel was developed by Fleming Asset Management and it comprises hotel rooms, leisure and other uses such as conferences and restaurants.

At the recent AGM, BPOPF leadership promised its members that it is working on spreading its wings and going for the success story of Chinese economic opportunities. At the AGM held in Gaborone, pensioners were told that the Chinese market is better than the US and elsewhere in the world. BPOPF expects high returns in China and has already found some Fund Managers for the Asian economic giant in an endeavor which will kick start next year.

BPOPF also has an eye for Africa and has discovered opportunities. The pension fund has already identified Fund Managers for Africa ventures, but is aware of many uncertainties which are found in the continent. In Botswana, BPOPF is looking to invest in infrastructure projects.

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P230 million Phikwe revival project kicks off

19th October 2020
industrial hub

Marcian Concepts have been contracted by Selibe Phikwe Economic Unit (SPEDU) in a P230 million project to raise the town from its ghost status.  The project is in the design and building phase of building an industrial hub for Phikwe; putting together an infrastructure in Bolelanoto and Senwelo industrial sites.

This project comes as a life-raft for Selibe Phikwe, a town which was turned into a ghost town when the area’s economic mainstay, BCL mine, closed four years ago.  In that catastrophe, 5000 people lost their livelihoods as the town’s life sunk into a gloomy horizon. Businesses were closed and some migrated to better places as industrial places and malls became almost empty.

However, SPEDU has now started plans to breathe life into the town. Information reaching this publication is that Marcian Concepts is now on the ground at Bolelanoto and Senwelo and works have commenced.  Marcian as a contractor already promises to hire Phikwe locals only, even subcontract only companies from the area as a way to empower the place’s economy.

The procurement method for the tender is Open Domestic bidding which means Joint Ventures with foreign companies is not allowed. According to Marcian Concepts General Manager, Andre Strydom, in an interview with this publication, the project will come with 150 to 200 jobs. The project is expected to take 15 months at a tune of P230 531 402. 76. Marcian will put together construction of roadworks, storm-water drains, water reticulation, street lighting and telecommunication infrastructure. This tender was flouted last year August, but was awarded in June this year. This project is seen as the beginning of Phikwe’s revival and investors will be targeted to the area after the town has worn the ghost city status for almost half a decade.

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IMF projects deeper recession for 2020, slow recovery for 2021

19th October 2020

The International Monetary Fund (IMF) has slashed its outlook the world economy projecting a significantly deeper recession and slower recovery than it anticipated just two months ago.

On Wednesday when delivering its World Economic Outlook report titled “A long difficult Ascent” the Washington Based global lender said it now expects global gross domestic product to shrink 4.9% this year, more than the 3% predicted in April.  For 2021, IMF experts have projected growth of 5.4%, down from 5.8%. “We are projecting a somewhat less severe though still deep recession in 2020, relative to our June forecast,” said Gita Gopinath Economic Counsellor and Director of Research.

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Botswana partly closed economy a further blow of 4.2 fall in revenue

19th October 2020

The struggle of humanity is now how to dribble past the ‘Great Pandemic’ in order to salvage a lean economic score. Botswana is already working on dwindling fiscal accounts, budget deficit, threatened foreign reserves and the GDP data that is screaming recession.

Latest data by think tank and renowned rating agency, Moody’s Investor Service, is that Botswana’s fiscal status is on the red and it is mostly because of its mineral-dependency garment and tourism-related taxation. Botswana decided to close borders as one of the containment measures of Covid-19; trade and travellers have been locked out of the country. Moody’s also acknowledges that closing borders by countries like Botswana results in the collapse of tourism which will also indirectly weigh on revenue through lower import duties, VAT receipts and other taxes.

Latest economic data shows that Gross Domestic Product (GDP) for the second quarter of 2020 with a decrease of 27 percent. One of the factors that led to contraction of the local economy is the suspension of air travel occasioned by COVID-19 containment measures impacted on the number of tourists entering through the country’s borders and hence affecting the output of the hotels and restaurants industry. This will also be weighed down by, according to Moody’s, emerging markets which will see government losing average revenue worth 2.1 percentage points (pps) of GDP in 2020, exceeding the 1.0 pps loss in advanced economies (AEs).

“Fiscal revenue in emerging markets is particularly vulnerable to this current crisis because of concentrated revenue structures and less sophisticated tax administrations than those in AEs. Oil exporters will see the largest falls but revenue volatility is a common feature of their credit profiles historically,” says Moody’s. The domino effects of containment measures could be seen cracking all sectors of the local economy as taxes from outside were locked out by the closure of borders hence dwindling tax revenue.

Moody’s has placed Botswana among oil importers, small, tourism-reliant economies which will see the largest fall in revenue. Botswana is in the top 10 of that pecking order where Moody’s pointed out recently that other resource-rich countries like Botswana (A2 negative) will also face a large drop in fiscal revenue.

This situation of countries’ revenue on the red is going to stay stubborn for a long run. Moody’s predicts that the spending pressures faced by governments across the globe are unlikely to ease in the short term, particularly because this crisis has emphasized the social role governments perform in areas like healthcare and labour markets.

For countries like Botswana, these spending pressures are generally exacerbated by a range of other factors like a higher interest burden, infrastructure deficiencies, weaker broader public sector, higher subsidies, lower incomes and more precarious employment. As a result, most of the burden for any fiscal consolidation is likely to fall on the revenue side, says Moody’s.

Moody’s then moves to the revenue spin of taxation. The rating agency looked at the likelihood and probability of sovereigns to raise up revenue by increasing tax to offset what was lost in mineral revenue and tourism-related tax revenue. Moody’s said the capacity to raise tax revenue distinguishes governments from other debt issuers.  “In theory, governments can change a given tax system as they wish, subject to the relevant legislative process and within the constraints of international law. In practice, however, there are material constraints,” says Moody’s.

‘‘The coronavirus crisis will lead to long-lasting revenue losses for emerging market sovereigns because their ability to implement and enforce effective revenue-raising measures in response will be an important credit driver over the next few years because of their sizeable spending pressures and the subdued recovery in the global economy we expect next year.’’

According to Moody’s, together with a rise in stimulus and healthcare spending related to the crisis, the think tank expects this drop in revenue will trigger a sizeable fiscal deterioration across emerging market sovereigns. Most countries, including Botswana, are under pressure of widening their tax bases, Moody’s says that this will be challenging. “Even if governments reversed or do not extend tax-easing measures implemented in 2020 to support the economy through the coronavirus shock, which would be politically challenging, this would only provide a modest boost to revenue, especially as these measures were relatively modest in most emerging markets,” says Moody’s.

Botswana has been seen internationally as a ‘tax ease’ country and its taxes are seen as lower when compared to its regional counterparts. This country’s name has also been mentioned in various international investigative journalism tax evasion reports. In recent years there was a division of opinions over whether this country can stretch its tax base. But like other sovereigns who have tried but struggled to increase or even maintain their tax intake before the crisis, Botswana will face additional challenges, according to Moody’s.

“Additional measures to reduce tax evasion and cutting tax expenditure should support the recovery in government revenue, albeit from low levels,” advised Moody’s. Botswana’s tax revenue to the percentage of the GDP was 27 percent in 2008, dropped to 23 percent in 2010 to 23 percent before rising to 27 percent again in 2012. In years 2013 and 2014 the percentage went to 25 percent before it took a slip to decline in respective years of 2015 up to now where it is at 19.8 percent.

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