The Russian Federation has commenced a systematic undertaking to court the African continent, in a bid to rope in the world’s wealthiest natural resources continent in its fold as it embarks on its global power house ambitions.
Led by its controversial President, Vladimir Putin the leading diamond producing countries in the word has now joined the tow world largest economies United States and China in the new scramble for Africa wave. The former Soviet Union Cold war powerhouse last week hosted African Head of States, Top government officials, business leaders, and investors to a two day Russia Africa summit at Black Sea resort in Sochi.
When officially opening the summit President of the Russia Federation Vladmire Putin said the event was organized to facilitate meaningful discussions on a wide variety of aspects related to economic cooperation between Russia and Africa.The leader of one of the world’s military powerhouse added that his country and Africa was eager to assess the potential to expand trade, economic ties, and investment; to develop transport, utilities, and energy infrastructure; to introduce advanced technology; and to implement environmental initiatives.
“The theme of this year’s forum is dedicated to the unifying role that the business community has been tasked with fulfilling on this vast territory, stretching from the Atlantic to the Pacific. The Russia –Africa summit discusses and closed in a number of deals geared towards increasing partnership between the two countries,” he said.
At the summit Russia offered nuclear power plants, fighter jets and missile defense systems to African countries in what experts says is bit to buy back influence on the continent, at a summit low on concrete trade and investment deals but high on congeniality. Reports from Moscow indicate that $12.5bn worth of deals were struck during the first ever Russia-Africa Summit, though majority of that were memorandums of understanding that may not result in any investment.
“Let’s drink to the success of our joint efforts to develop full-scale mutually beneficial co-operation, wellbeing, peaceful future and prosperity of our countries and people,” said Russian president. Russian state owned military export agency revealed at the summit that the Russian Federation has defense orders worth $14bn from African countries. Sales to the continent account for about a third of Moscow’s military exports. President Putin said Russia had agreed military technical co-operation agreements with more than 30 African states, to supply weapons.
DOING BUSINESS IN AFRICA
The Russia- Africa summit underscored that Africa possesses high investment potential, noting that in the next 20 years the African population will reach 2.5 billion people. According to the Institute of Africa of the Russian Academy of Sciences, during the past 10 years Russian investment into Africa grew by 185% and reached USD 17 billion.
President of the Russian Union of Industrialists and Entrepreneurs Alexander Shokhin explained that significant share of these investments came from the members of his union. “However, we still can and should do more both in terms of increasing the trade volume and investment activity,” he said.
The summit also underscored that there are prevailing impediments that hinder easy of doing business in Africa. President of the Republic of Unganda Yoweri Museveni, noted Underdeveloped infrastructure was one of the key issues “Above all, we are missing a developed infrastructure, as any successful business requires minimizing the costs. More than anything, business must make profit, but you cannot make any profit if the production costs are this high,” he said.
COLLABORATIONS IN THE ENERGY SECTOR
At present, African countries have 14.4 trillion cubic metres of natural gas reserves.The share of natural gas produced by African countries in the total volume of commercial gas production around the world will increase and exceed 10.4% by 2050, this was said by Yury Sentyurin, Secretary General of the Gas Exporting Countries Forum.
It was noted that Africa is a place that offers a great return on investment. “I think that Russia needs to take the bull by the horns and understand the market. You have already made an effort in this direction. Perhaps within 10 -15 years we will be able to achieve global dominance”, said Wale Tinubu, Group Chief Executive of Oando PLC , a Russian Gas Powerhouse.
Pavel Sorokin, Deputy Minister of Energy of the Russian Federation said all can be achieved by joining efforts, including in terms of cooperation between Russia and Africa. “We will all have a larger market on which competing technologies will emerge. This all ties our interests together, and if we share these views, we will be successful,” he said.
COLLABORATION IN THE DIAMOND INDUSTRY
Yury Truntney Deputy Prime Minister of the Russian Federation – Presidential Plenipotentiary Envoy to the Far Eastern Federal District of the Russian Federation said Africa and Russia essentially have majority stake in the global diamond mining industry. Taken together, Russia and Africa control approximately 75% of the industry.
Russia is the world‘s leader in diamond reserves, mining, and export. It has over 1 billion carats in reserves; mines over 43 million carats, through state owned Alrosa, Just above Botswana under the hospices of De Beers, Debswana. The majority of diamonds mined in Russia are exported. Its primary export destinations are Belgium, India, and the United Arab Emirates.
Russia has underscored Africa as a strategic partner. “Africa is a friend in our efforts to facilitate the sustainable development of the entire industry. We have a long history of friendly, tried-and-true business relations with the Republic of Angola, we have mining enterprises, geological exploration, and we are discussing a number of technologies for the sorting and categorization of diamonds,” said Sergei Ivarnovy- Special Presidential Representative for Environmental Protection, Ecology and Transport.
In the coming months prices will go up and inflation will shoot sharply above the target of 3 percent to 6 percent towards the third quarter of 2021, the Bank of Botswana on the other hand will continue to withhold its knife on the Bank Rate. This is according to a forecast made by Kgori Capital in its recent Market Watch Segment.
Statistics from Statistics Botswana show that the recent 1.8 percent increase in the September inflation, from 1 percent in August, was a reflection of the upward adjustment in public transport fares (Transport (from -6.9 to -3.9 percent) in September 2020, which is estimated to have increased inflation by approximately 0.64 percentage points.
Local anti-trust body, Competition and Consumer Authority (CCA), this month received back to back acquisition proposals from South African clothing retailers to wipe out their former rivals, Edcon, from Botswana malls.
Last week BusinessPost was in possession of Merger Notice No 23 of 2020 whereby a South African clothing retailer owner, Retailability Proprietary Limited, through Oclin Proprietary Limited, proposed to acquire parts of the Edgars business conducted by Edcon in Botswana (through Edcon Botswana), as a going concern, consisting of certain assets and identified liabilities.
South African government’s Business Rescue Practitioners earlier this year announced that Retailability will buy Edgars, after the latter filed for a business rescue plan in April after it failed to pay suppliers. This move will see Retailability add Edgars to its portfolio consisting of brands such as; Legit, Beaver Canoe and Style.
Retailability landed on Botswana shores 18 years ago with its flamboyant urban fashion Style which had 17 stores. Style, having almost the same target market as Edgars as it offers men’s and ladies’ contemporary and formal fashion, gave the 91 year old legendary clothing retailer a run for its money, and has won the battle as its parent company has taken over Edgars.
Retailability brands are synonymous with Botswana shopping centres and there are currently five (5) Beaver Canoe stores, 10 Style stores and seven (7) Legit stores across this country. The Beaver Canoe stores sell clothing apparel for men and boys only. The Legit stores have a fashion store format which focuses on the retailing of clothing, footwear, accessories, colour cosmetics and cellular products.
Retailability operates in over 460 stores across South Africa, Namibia, Botswana, Lesotho, and Eswatini. Many observers suggest that because of the deal with Retailability to swallow Edcon, most Edgars stores in Botswana will change their name and be branded Style. A sad tale for religious consumers of the Edgars trademark who got used to love their favourite brand for years.
According to CCA’s Merger Notice No 23 of 2020, Retailability is controlled by Clifford Raymond Lines (through a company which functions solely as a holding company of his interests in Retailability) and Metier Investment and Advisory Services Proprietary Limited (“Metier”). Metier is a private equity enterprise with investments in a number of industries spanning from healthcare, hospitality, FMCGs and telecommunications.
Retailability directors are mostly South Africans; Clifford Raymond Lines, Mark Richard Friday and Norman Victor Drieselmann. Only Nasreen Essack, who was appointed February this year, is a Motswana. He comes after Brian Thuto Tsima left on the same date. Retailability 100 percent owns Oclin Proprietary Limited, the company it is acquiring Edgars with, by a capacity of 3000 shares.
The target business, Edgars, offer textiles, cosmetics and cellular products. Edcon has a Motswana director, Charles Mzwandile Vikisi, a South African, Shane Van Niekerk and Zimbabwean Jethro Kamutsi.
“The Target Business comprises of two (2) Edgars franchise brands and private label stores across Botswana. These stores target middle to upper income customers and are home to a range of private label brands such as Free2BU, Charter Club and Stone Harbour, and a wide range of market label brands (such as Levi’s and Guess) for clothing, footwear and cosmetics.
In addition, the Target Business operates iconic Edgars Home and Edgars Beauty stores as store-in-store formats rounding out the department store offering in Botswana,” said CCA. Foshini also lines up to take Jet Botswana from Edcon.
The Foschini Group (TFG) released a statement confirming its latest intentions to acquire Edcon assets or Jet for a cash purchase consideration of R480 million. This was after the business rescue practitioners offered TFG to buy Jet by that amount.
CCA is currently mulling on a proposed merger by TFG to take over Jet operations in Botswana. Merger Notice No 21 of 2020 from TFG came a few days before the Retailability proposal. In this merger TFG, acting through Foschini Botswana, want to take over “parts” of the Jet business conducted by Edcon through Jet Supermarkets Botswana.
TFG will be willing to add Jet to its portfolio of 30 retail brands that trade in clothing, footwear, jewellery, sportswear, homeware, cell phones, and technology products from value to upper market segments throughout more than 4085 outlets in 32 countries on five continents. TFG will also get Jet’s distribution centre located in Durban and certain stores in Botswana, Lesotho, Namibia and Eswatini. Also part of this fat deal is that the company is looking to also acquire JET Club and all existing JET stock of no less than R800 million.
Johannesburg listed TGF owns Foschini Retail Group which owns the local operations called Foschini Botswana, the acquiring enterprise according to CCA merger notice. “TFG is not controlled by any enterprise/s and for completeness, the three largest shareholders of TFG holding shares greater than 5% as at 27th March 2020 are: Government Employees Pension Fund (16.2%) Public Investment Corporation (13.2%); Old Mutual Limited (6.7%); and Investec Asset Management (6.3%). The remaining issued share capital in TFG is widely held,” said the merger notice.
Only Abdool Rahim Khan is a Motswana in the Foschini Botswana directorship, the rest; Ganeswari Shani Naidoo, Anthony Edward Thunström and Gustav Jansen (alternate director) are South Africans.
According to the CCA merger, the Jet Business is Edcon’s discount department store division, selling clothing, footwear, homeware and some cosmetics as well as cellular products and targets lower-to-middle income consumers throughout Botswana. The Jet Business does not directly or indirectly control any enterprises, says the notice. CCA seeks any stakeholder views for or against the proposed merger, which may be sent within 10 days from date of this publication to the following address.
Botswana Communications Regulatory Authority BOCRA signed a memorandum of Agreement (MoA) with the Ministries of Transport and Communications (MTC), Basic Education (MoBE) as well as Local Government and Rural Development (MLGRD).
The MoA seeks to continue the collaboration that dates back to 2016 when the three parties first agreed to work together in a project aimed at computerizing and providing broadband Internet to primary schools in remote and underserved areas of Botswana.
The project benefitted 68 primary schools and 9 secondary schools through the construction of Local Area Network (LAN) in each primary school, provision of 5 Mbps dedicated broadband Internet to each Primary School and provision of Wi-Fi enabled tablets, laptops and related peripherals such as printers and copiers.
Further, the project will see the augmentation of computers in 9 Junior Secondary Schools with 30 laptops per identified school and employment of Information Technology (IT) officers at each primary school.
When speaking at the signing ceremony in Gaborone, Chief Executive of BOCRA and Chairperson of Universal Access and Service Fund (UASF) Board of Trustees Martin Mokgware said the project’s ultimate goal is to facilitate pupils in schools and host villages to be able to play a meaningful role in the digital economy.
Mokgware indicated that this necessitates upgrading of existing Telecommunications infrastructure to high capacity broadband that will support delivery of education, accessibility to the quality Internet and usage of ICTs.
The Fund began its inaugural programme by sponsoring the provision of WiFi hotspots in public areas around the country as its first project. Following the successful implementation of public WiFi hotspots, the Fund identified Kgalagadi, Ghanzi and Mabutsane areas for mobile network upgrades, schools computerization and internet provision.
Conscious that the project would not be possible without buy-in and support from MoBE, MTC and MLGRD, the Fund facilitated the signing of the first MoU between the three parties in 2016 for implementation of the project.
BOCRA Chief Executive said the signing of this agreement is aimed at benefitting the Kweneng District, adding that they have already assessed the area and have determined that they will be covering 62 underserved villages and 119 schools, 91 of which are primary schools.
“This is a project for which the partner Ministries need to re-commit for its success. Lessons from the previous schools’ computerization and internet connectivity project require that we increase our involvement and resources dedicated to the project for it to be successful. It is my belief as the project coordinator, that we will not do things the way we did them during the first project, for if we do, then we will not have learnt anything,” he said at the signing ceremony.
The purpose of learning is so that there can be continuous improvement to minimize the length of time and amount of resources utilized, he said expressing confidence that their partners will step up to the plate and ensure they play their part in the implementation of the project and that it will progress smoothly having already tread along a similar path.
UASF’s role lies mainly in funding and project management. According to Mokgware, once the project is completed, the work to integrate ICTs into the classroom begins in earnest. Therefore, he said, the project will not succeed without full cooperation and oversight of partners.
“MoBE will put in place the necessary content and ensure that the curriculum is available to all. MLGRD will provide, among others, the enabling environment by ensuring readiness of the school’s infrastructure and necessary security.”