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Sub-Saharan Africa need to increase fertilizer use to unlock agric potential

According to consulting firm McKinsey, sub-Saharan Africa excluding South Africa, will need to increase the use of fertilisers and improved seeds by eight and six times, respectively, to unlock its full agricultural potential.

At least 8 Billion US Dollars of investment in basic storage and 65 Billion US Dollars spending on irrigation will be necessary in order to boost total irrigated area to 15 per cent from its 2019 level of 5 per cent. Furthermore, additional investment will be needed in basic infrastructure such as roads, ports and power. It is estimated that more than 60 per cent of the sub-Saharan population is comprised of smallholder farmers. Although the number of medium-sized- which span 5 ha to 100 ha- farms is rising, small-scale plantations still account for the vast majority of cultivated land throughout the continent. In Nigeria there are currently fewer than 100 farmers throughout the whole country who operate at least 50 ha of land.

Small-scale commercial farmers, who own cultivated farms bigger than subsistence farming, produce about 85 per cent of Africa’s agricultural output, while the remaining 15 per cent comes from subsistence farmers and large-scale plantations. Though many of Africa’s subsistence farmers live below the poverty line, this is not necessarily the case for small-scale commercial farmers. However, the lack of education, difficulties in gaining access to funding and the low use of inputs can all have a substantial and negative impact on productivity levels.

In many African countries women account for at least half of the labour force. The average age of farmers in Africa is 60 years, according to the FAO. However, this may change in coming years as the increased use of technologies in agriculture on the continent, especially in precision farming, may assist young people and women in moving into farming.

Beyond public investment, according to the report, access to finance is a major issue for most of the continent’s farmers, especially for smallholders. Estimates show that only about 10 per cent of African households in rural areas are connected to formal financial institutions.
However, innovations such as microfinance and mobile banking are opportunities to boost African farmer’s access to loans. As mobile penetration has increased to reach 44 per cent in 2017, local entrepreneurs and international institutions have developed digital financial solutions for Africa’s farmers.

These solutions are wide in scope and variety, including products like e-wallets that can be used as business accounts by farmers or mobile phone apps, such as Farm Drive, that can help farmers to develop much-needed credit history. The report further said mobile applications providing micro-insurance and index-based crop insurance are also being developed across emerging markets, including Africa.

The World Bank, for example, is developing an index-based agricultural insurance in Cote d’Ivoire for Ivorian farmers who are increasingly vulnerable to climate change and extreme weather events. A pilot phase was launched in 2018 for four crops- cocoa, cotton, rice and corn. The World Bank listed index insurance as a good tool to improve the farmers resilience, helping them boost their yields and get access to desirable funding.

Further, the report said Africa has vast swathes of uncultivated area. In 2013 the World Bank said the continent had 200m ha of suitable land that could be used to grow crops, which is almost half of the world’s usable and cultivated land. However, the region faces major issues hindering the development of additional land. It said over 90 per cent of rural land in Africa is undocumented, making it vulnerable to land grabbing. In Cote d’Ivoire, where most of the rural area indeed remains unregistered, the land continues to be extremely fragmented, making it difficult to develop profitable businesses on some of the larger plats of land.

In Egypt, meanwhile, almost 85 000 acres of agricultural land have been lost to illegal construction projects since the 2011 unrest, according to data from the Ministry of Agriculture. This prompted the Egyptian government to crack down on people building illegally on farmland. In some countries, women are also banned from land rights due to customary laws that are regularly enforced.

Recent analysis cited in an article from consulting firm Mckinsey said the majority of the unused land across Africa is located in areas barely reachable due to poor road networks and infrastructure, while some others are located in conflict of forest areas. It is estimated that only approximately 20m to 30m ha of additional land in sub-Saharan Africa- which is mostly located in nine countries and would represent a potential increase of 10 per cent- has the potential to be turned into cultivated area in the shorter-term.

The report said large land deals are also underising scrutiny in Africa. In 2018 India’s Karaturi Global asked for compensation from the Ethiopian government, which had cancelled the company’s lease, saying it failed to reach progress targets. According to McKinsey, 420 large agricultural deals, that each span 10m ha have been signed in Africa during 2000-16, but few of them have yet to be effectively implemented.

It also noted that most countries in Africa have greatly underdeveloped agro-industrial sector. That means that Africa’s exports are mostly comprised of raw products like agricultural commodities, including cocoa and coffee, and that finished goods account for the majority of the continent’s many imports. According to African Development Bank, ‘’little attention has usually been paid to the value chain through which agricultural commodities and products reach the final consumers within the country and abroad.’’ In the areas of Africa that are considered more rural, agro-processing is usually non-existent or quite basic, a fact that can sometimes result in significant harvest losses, the bank said.

Despite the challenges ahead, prospects for Africa’s agricultural sector are relatively positive. UN institutions expect cultivated areas to expand and farmers to increase their use of inputs, such as fertilisers, pesticides, improved seeds, irrigation systems and mechanisation. Innovations and greater access to technologies are expected to aid in developing smart and precision farming techniques and promoting their widespread use.

The report said, despite increased production, food security will continue to depend on global markets and significant imports of finished goods for the medium term. Contributing to this, food consumption is projected to surge as the population is expected to double by 2050 and become increasingly urbanised. At the same time, the continent is facing growing challenges.

Climate change is anticipated to be the most influential and is already directly affecting millions of farmers and households across the continent. In this context, experts have called for African governments to increase investment in the sector, including in infrastructure and agri-business and to continue improving their policies and governance. These challenges, according to the report, would encourage agriculture to truly transform into one of the strongest pillars of Africa’s successful long-term economic development.

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The  Bulb World CEO selected for Africa’s prestigious award

22nd July 2021

The Bulb World Chief Executive Officer (CEO) and entrepreneur, Ketshephaone Jacob has been selected as a 2021 Top 50 Africa’s Business Hero.

Jacob was chosen from a pool of 12,000 applicants – many of whom are highly-skilled and accomplished entrepreneurs.

Africa’s Business Hero, sponsored by technology entrepreneur, Jack Ma, aims to identify, support and inspire the next generation of African entrepreneurs who are making a difference in their local communities, working to solve the most pressing problems, and building a more sustainable and inclusive economy for the future.

The initiative is as inclusive as possible and applications were open in English and French to entrepreneurs from all African countries, all sectors, and all ages who operate businesses formally registered and headquartered in an African country, and that have a 3 year-track record.

Every year, finalists are selected to compete in the ABH finale pitch competition and participate in a TV Show that will be broadcast online and across the continent.

The finalists will compete for a share of US $1.5 million in grant money.

The Bulb World, is home grown LED light manufacturing company, which was partly funded by Citizen Entrepreneurial Development Agency (CEDA) at the tune of P4 million, to manufacture LED lighting bulbs for both commercial and residential use in 2017.

The Bulb World operate from the Special Economic Zone of Selibe Phikwe. Early this year, The BulB World announced its expansion to South Africa, setting in motion its ambitious Africa expansion plan.

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Business

Mining production down 12 % IN Q1 2021

14th July 2021

During the first quarter of 2021, production in Botswana’s economic nucleus- the mining sector contracted by 12 percent. This is according to Mining Production Index released by Statistics Botswana this week.

The country’s central data body revealed that Index of Mining production stood at 74.4 during the first quarter of 2021, showing a negative year on-year growth of 12.0 percent, from 84.6 registered during the first quarter of 2020.

The main contributor to the decline in mining production came from the Diamonds sector, which contributed negative 11.7 percentage points. Soda Ash was the only positive contributor in the mining production, contributing 0.1 of a percentage point. However Soda Ash’s contribution was insignificant to offset the negative contribution made by Diamonds.

The quarter-on-quarter analysis by Statistics Botswana experts shows an increase of 16.3 percent from the index of 64.0 during the fourth quarter of 2020 to 74.4 observed during the period under review.

Diamond production decreased by 12.1 percent during the first quarter of 2021 compared to the same quarter of the previous year. The decrease was as a result of planned strategy to align production with weaker trading conditions mostly linked to Covid-19 protocols restrictions.

Botswana’s diamond sector is underpinned by Debswana, the country’s flagship rough producer- a 50-50 joint venture between government and global mining giant De Beers Group. The other producer is Canadian based Lucara Diamond Corp through its wholly owned Karowe Mine which is a relatively small but significant production that has made a name for itself worldwide with rare diamond recoveries of unprecedented carat size.

On the other hand, quarter-on quarter analysis shows that production has improved, registering a positive growth of 17.5 percent during the first quarter of 2021 compared to the preceding quarter – 2020 Q4.

Though production was significantly lower in the first quarter, the two producers ended Q2 with rare diamond recoveries. Debswana early last month found the world’s third largest gem diamond – weighing 1098 carat at Jwaneng Mine, its flagship gem quality diamonds producer, also regarded the world’s richest diamond mine.

A week later Lucara  announced its second biggest recovery, the 1174 carat clivage near-gem dug from its Karowe Mine. The diamond is the world third in carat size after the plus-3000 carat Cullinan found in South Africa back in 1905 and the 1758 carat Sewelo unearthed at its Karowe mine in 2019. Debswana and Lucara are investing billions of pulas in underground mining projects to extend the life of its mines, Jwaneng & Karowe respectively.

In terms of Gold which is produced at Mupani mine near Botswana’s second city of Francistown output decreased by 17.9 percent during the first quarter of 2021 compared to the same quarter of the previous year.

Similarly, quarter-on-quarter analysis reflects that production decreased by 21.4 percent during the first quarter of 2021, compared to the preceding quarter. The decrease was as a result of the deteriorating lifespan of the mine as well as the impact of COVID-19 which slowed down the mining activities.

Soda Ash production increased by 11.1 percent during the first quarter of 2021 compared to the same quarter of the previous year. In terms of quarter-on-quarter Soda Ash production also showed an increase, picking up by 2.1 percent during the period under review. The increase in production is attributable to the effectiveness of the plant following refurbishment which occurred in the third quarter of 2020.

Salt production decreased by 34.0 percent during the first quarter of 2021, compared to the same quarter of the previous year. Similarly, the quarter-on-quarter analysis shows that salt production registered a decrease of 32.9 percent during the period under review. Both salt and Sodash are produced by partly government owned Botswana Ash (BotsAsh) operating from Sowa town near Makgadikgadi pans.

Coal production decreased by 11.2 percent during the first quarter of 2021, compared to the corresponding quarter of the previous year. The decrease was attributed to the reduced demand from Morupule B Power Station following the remedial works being undertaken, as one boiler was in operation during the period under review.

Although production fell, Statistics Botswana says there was no shortfall in supply of coal due to stockpiling. On the other hand, the quarter-on-quarter comparison shows that coal production increased by 20.4 percent compared to the preceding quarter.

Botswana’s flagship coal producer is Morupule Coal Mine; a wholly state owned mining company located in Palapye producing primarily for Botswana Power Corporation (BPC)’s power generation plants Morupule A & B.

The other coal producer is Botswana Stock Exchange listed Minergy which operates a 390 MT Coal Resource mine in Masama near Media in the southwestern edge of the Mmamabula Coalfields.

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Gov’t awards mining licence for Gantsi Copper Mine

14th July 2021
Moagi

Department of Mines in the Ministry of Mineral Resources, Green Technology & Energy Security has awarded mining licence to Tshukudu Metals-a subsidiary of Aussie firm Sandfire Resources ,giving the company a green light to start piecing the ground at its Motheo Copper Project near Gantsi.

Lefoko Moagi, minister in charge of mineral resources in Botswana confirmed to weekendpost on Tuesday. Minister Moagi revealed that “the licence has been approved , but Sandfire Resources as a listed company will report to its shareholders and investors then make an official public statement” he said.

Based on a forecast copper price of US$3.16/lb (reflecting current long-term consensus pricing) the Base Case 3.2Mtpa – Ghantsi copper project is forecast to generate US$664 million (over P7 billion) in pre-tax free cash-flow and US$987 million (over P10 billion) in EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation), at a forecast all-in sustaining cost of US$1.76/lb over its first 10 years of operations.

In December 2020, the Board of Sandfire Resources approved the commercial development of the Motheo Copper Mine located in the Kalahari Copper Belt in Botswana, marking a key step in its transformation into a global, diversified, and sustainable mining company.

Tshukudu Metals Botswana (Pty) Limited (Tshukudu) a 100% owned subsidiary will be the owner and operator of the Motheo Copper Mine which is scheduled to produce up to 30,000 tonnes per annum of copper in concentrate over a 12 year mine life.TMB is targeting development of its Motheo Copper Mine in 2021 and 2022, with its first production in 2023.

GOVERNMENT NOT TAKING UP 15 % STAKE ON OFFER

Beginning of this year presentations were made to the Department of Mines as part of the Mining Licence approval process and to the Ghanzi Regional Council, additional information was requested by Department of Mines in April and was duly supplied by the company.

As part of the Mining Licence approval process, the Government of Botswana has a right to acquire up to a 15% fully contributing interest in all mining projects locally. Quizzed on whether government through Mineral Development Corporation Botswana (MDCB) would be taking up stake in the project Minister Moagi said, “No consideration is being made on that regard”.

“Government is not considering taking up a stake in the Ghantsi Copper Mine project, every opportunity is assessed on all risks, but Government makes money all the while from leases, taxes and royalties, remember if you take stake you are liable for liabilities of the project as well,” Moagi said.

MINING CONTRACT

Last month Sandfire announced that it has awarded over P5 billion worth mining contract to African Mining Services (AMS), a subsidiary of Perenti, to deliver the open cast operation.

The contract, which has an estimated value of US$496 million (over 5 billion), is the largest single operational contract for the new Motheo Project covering a period of 7 years and 3 months, with provision for a one-year extension.

The contract according to Sandfire Resources was awarded following a competitive 3-stage tender process which saw a number of key factors taken into consideration when selecting the preferred contractor.

These included Citizen Economic Empowerment, safety culture, equipment suitability and availability, commercial terms and identified improvement opportunities. Under the terms of the contract, AMS has agreed to form a 70:30 Joint Venture with a suitable local Botswana partner or partners.

The JV is expected to be finalized ahead of commencement of mining in early 2022. African Mining Services has been operating in Africa for over 30 years. AMS’ parent company, ASX listed diversified mining services group Perenti, already has a presence in Botswana through Barminco, their underground mining division, at the large-scale Khoemacau Copper Mine located 200km north-east of Motheo.

Last month Sandfire executives said the award of the open pit mining contract represents another key milestone in advancing the Motheo Project towards production, with all components of the contract in line with the key parameters outlined in the December 2020 Definitive Feasibility Study (DFS).

The company said full-scale construction of the US$279 million (over P 3 billion ) mine development is expected to commence immediately upon receipt of the Mining Licence, with mining scheduled to commence in early 2022 ahead of first production in early 2023. This week Sandfire Resources advertised over 10 positions in calling on applications from geologists, mining engineers and geotechnical engineers.

The Motheo mine has an initial mine life of 12.5 years based on production from the T3 pit. The initial development is expected to generate approximately 1,000 jobs during the construction phase and 600 direct full-time jobs during operations, with at least 95% of the total mine workforce expected to be made of up of Botswana citizens.

Later in the week Sandfire Resources announced in the company website that it has received the licence. Sandfire’s Managing Director and CEO, Mr Karl Simich, said the award of the Mining Licence represented a major milestone that would see a significant increase in construction and development activities on site.

“We are absolutely delighted to now be in a position to move to full-scale construction at Motheo, with our construction crews expected to mobilise to site over the next few days. I would like to thank the Government of Botswana for their support throughout the approvals process, which will see Motheo come on-stream in 2023 as one of very few new copper mines commencing production globally.”

Simich said the project is expected to generate approximately 1,000 jobs during construction and 600 full-time jobs during operations, and represents the foundation for Sandfire’s long-term growth plans in Botswana.

“Our vision is that Motheo will form the centre of a new, long-life copper production hub in in the central portion of the world-class Kalahari Copper Belt, where we hold an extensive ground-holding spanning Botswana and Namibia,” he said.

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