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Over a million people have access to banking services – Bank of Botswana??

Over 1.1 million people now have access to banking services in the country, translating to 70 percent of the adult population and an increase of 10.7 percent compared to 2017, the Bank of Botswana (BoB) announced in its Banking Supervision Annual Report for 2018.



In 2017, the bankable adult population stood at 64.4 percent translating to one million people then.

"Access to banking services, as measured by the ratio of number of depositors to adult population, improved from 64.4 percent in 2017 to 70 percent in 2018. The number of depositors grew by 10.7 percent from 1 million in 2017 to 1.1 million in 2018, while adult population increased by 2.1 percent from 1.56 million," the BoB said.



During the period under review, Botswana had 10 licensed commercial banks and three statutory banks.

"During 2018, five bureaux de change were licensed, while nine bureaux de change licences were revoked.  As a result, the number of licensed bureaux de change decreased from 61 in 2017 to 56 in 2018," BoB said in its review of the banking sector operations in 2018.

The ongoing restructuring operations by banks resulted in the opening of new branches and closure of some.  As a result, banking operations increased from 143 to 147 in 2018. 

The number of automated teller machines (ATMs) also increased from 473 to 523.

"Most of the new ATMs have more functions, including deposit taking capabilities, thus improving convenient access to transactional banking services.  With respect to geographical distribution of the branch network, the South East District, which includes the capital city, Gaborone, led the concentration of branches at 64, followed by the Central District at 33. 

Central District had an increase of one branch, while the branch network for the other districts was unchanged," BoB said.

Commercial banks maintained a dominant share of total industry asset , deposits, loans and advances compared to statutory banks.  On the other hand, the market shape of statutory banks fell slightly with respect to total assets, deposits, loans and advances, with 6.7 percent, 5.8 percent and 7.7 percent at the end of 2018, respectively, compared to 7.5 percent, 6 percent and 8.1 percent in 2017.



"Five banks continued to dominate the banking sector and accounted for 88.7 percent, 87.9 percent and 87.8 percent of total assets, total deposits, and total loans and advances, respectively, in 2018, although slightly lower than the respective proportions of 89.5 percent, 88.5 percent and 88.7 percent reported in 2017."

On pension fund assets, the ratio fell from 45.5 percent in 2017 to 41.6 percent in 2018, owing to a slight decrease of 3.7 percent in valuation of pension funds.

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The aggregate household savings in the banking sector and pension funds was P92.8 billion compared to the household borrowing of P35.1 billion.  On this measure, the household sector was, therefore, a net saver in the economy," BoB said.

It added that total loans and advances were at P58.3 billion compared to P54.2 billion in 2017, while foreign currency dominated loans increased by 19.1 percent.
"As result, the ratio of foreign currency dominated loans to gross loans and advances increased to 7.8 percent in 2018, while it was 7.1 percent in 2018.

"All banks complied with the Foreign Currency Exposure Directive by maintaining foreign currency exposure to unimpaired capital ratios within the required 15 percent, five percent and 30 percent limits for major, minor and overall foreign currency exposures,
respectively."



Total credit to the household sector increased by 6.2 percent from P33.1 billion in 2017 to P35.1 billion.  The shape of mortgages, however, declined to 27 percent in 2018 compared to 28 percent in 2017, while the proportions for credit cards and motor vehicles were unchanged at three percent and five percent respectively.

The private sector maintained the highest share of deposits of 71 percent, while the share deposits for the public (Government and Parastatals) and household  sector remained at nine percent and 20 percent, respectively, in the same period.

On employment in the banking sector, BoB said the number of people directly employed increased from 5 176 in 2017 to 5 270, representing a 1.8 percent growth, albeit at a slower pace than the 2.4 percent in 2017.

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While there was an increase in staff complement for some banks, there was a decrease with respect to seven banks.  The decline in employment at these banks was due to retrenchments, staff resignation and closure or merging of branches by some banks.

"The number of expatriates employed by the banking industry fell from 66 in 2017 to 60 in 2018.  Overall, the staff complement for small banks increased by 3.1 percent, from 485 in 2017 to 500 in 2018, for the large banks, the level of employment rose by 2.2 percent from 4 137 in 2017 to 4 226," the BoB announced.

Banks also continued to diversify, develop and improve their products and services to meet evolving customer needs and to accommodate and harness industry and market innovation in areas of potential business growth.

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During 2018, banks introduced 14 new products and services covering a wide range of banking services, namely, transactional accounts and mobile-banking services were designed to foster growth of customer base and retention of existing ones (thus financial inclusion), hence mainly featured enhancements and lower service fees," it said.

The BoB also conducted on site examination of 10 bureaux de change to access their compliance with the Bank's regulations.

"The on-site examination indicated that one bureau de change complied with all the provisions of the regulations, while all others violated various aspects of the provisions of regulations.  Six bureaux de change were fined a total of P12 320 for violating regulations. 

Two bureaux de change were cautioned for non-compliance, while another had its licence suspended for three months.  The suspended bureau de change subsequently ceased operation and voluntarily surrendered its licence," the Bank said.

It noted that most of the recurring violations by bureaux de change related to failure to take reasonable measures to obtain information about the true identity of persons on whose behalf financial transactions were conducted and failure to continually train employees.

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P300m Phikwe Citrus project first harvest milestone

18th March 2024

The P300 million Selebi Phikwe Citrus project in Botswana has reached its first harvest milestone, with the first export dispatched to the UAE and Saudi Arabia last week. This project, aimed at diversifying the country’s export earnings from diamond mining, is a significant step towards achieving this goal.

The project, which has successfully planted 840,000 seedlings in Phase 1 and completed a 17,000 square meter pack house, is set to employ 1,000 people and create business opportunities across various value chains. These opportunities include manufacturing of juice and packaging materials, transport and logistics, and honey production.

The first export from the Selebi Phikwe Citrus project marks a major achievement for Botswana, as it opens up lucrative export markets in the Middle East and beyond. The project has met market access requirements for countries such as the EU, Canada, China, The Philippines, UAE, and Saudi Arabia, paving the way for future exports to these regions.

The economic impact of the project on the SPEDU region, where it is located, is already being felt. The construction of a 12 km water pipeline and the installation of a power line have driven infrastructure development in the area, benefiting businesses in the vicinity at minimal cost.

The project’s success is the result of collaborative efforts between various government departments and agencies, including the Botswana Investment & Trade Centre (BITC) and SPEDU. Through the BITC’s One Stop Services Centre (BOSSC), the project was able to access red-carpet investor facilitation services and unlock necessary business enablers.

The Ministry of Trade & Industry and the Ministry of Agriculture have played crucial roles in facilitating market access for the project. The Department of Plant Health has opened up protocol and permit markets for citrus exports, ensuring that the project can access international markets with ease.

Botswana has met the European Union (EU), Canada, China, The Philippines, United Arab Emirates and Saudi Arabia market access requirements. “I am happy to report that our desire to export has been actualised as the first consignment was dispatched last week to the United Arab Emirates and Saudi Arabia” Minister Kgafela revealed.

The Selebi Phikwe Citrus project is not only beneficial for the project sponsors but also for other citrus growers in Botswana. With 172 citrus growers in the country, over 90% of whom are small-scale farmers, the project presents opportunities for growth and expansion in the citrus industry.

Massive value chain opportunities are presented by the project, including fertilizer and agrochemical supplies, agro-processing opportunities, and more. The project’s spending on imports presents an opportunity for local production, further boosting the country’s economy.

On 21s March 2024, His Excellency Dr Mokgweetsi EK Masisi will officiate at a ceremony to mark the first harvest of the Selebi Phikwe Citrus project and officially open the pack house. Harvest from this multimillion pula project is expected to reach the United States, Europe and other lucrative export markets.

The project was first launched on the 11th December 2020 with a ground breaking by President Masisi. This multimillion pula private sector funded agricultural enterprise, the likes of which this country has never seen before, is widely touted as a major catalyst to revitalising and catapulting the SPEDU region back to economic glory following the closure of BCL mine in 2016.

The project promoters leased 1500 hectors of land from Mmadinare Multi- Purpose Cooperative Society which will benefit directly through proceeds.

Highlighting the ripple economic impact of the project to the SPEDU region, Assistant Minister of Trade & Industry Honourable Beauty Manake said the Selebi Phikwe Citrus project has been able to drive the development of infrastructure in the area, with the construction of a 12 km water pipeline and ensured the installation of a power line.

She said during a briefing in Gaborone on Thursday that businesses within the vicinity have tapped into these infrastructural developments at minimal cost.

The Selebi Phikwe Citrus project came into being through collective efforts of various government departments and agencies. The Botswana Investment & Trade Centre (BITC) in collaboration with SPEDU courted the investors from South Africa to venture into the project.

Through the Botswana One Stop Services Centre (BOSSC) under the BITC, the project was able to establish and take off by enjoying red-carpet investor facilitation services to unlock required business enablers.

BITC has also through its export promotion arm, facilitated the project by identifying potential export markets in the European Union (EU) and lend crucial support to the Citrus Project to access the identified markets.

About 70 percent of the produce from the Selebi Phikwe Citrus will be exported, while 30% will remain in the country. Assistant Minister Manake revealed that the Ministry of Trade of Industry has been working closely with the project sponsors to explore export markets and facilitate entry into those markets.

The Selebi Phikwe Citrus project’s first harvest and export mark a significant milestone in Botswana’s efforts to diversify its export earnings. With the potential for growth and expansion in the citrus industry, this project is set to have a lasting impact on the country’s economy and agricultural sector.

 

 

 

 

 

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Botswana’s first coal-gas fired power station to start commercial production

18th March 2024

Botswana is set to achieve a significant milestone with the upcoming commencement of commercial production at the country’s first coal-gas fired power station. Tlou Energy Limited, an Independent Power Producer listed on multiple stock exchanges, has been at the forefront of developing this groundbreaking project, which is expected to start generating electricity for both the local and export markets later this year.

Situated in the Central District, just 100 km west of Serowe, the coal-gas fired power station represents a major step towards reducing Botswana’s reliance on expensive power imports. Tlou Energy has confirmed the presence of abundant coal-gas resources in the area, making it suitable for commercial power production. The company has obtained all the necessary approvals, including environmental assessments, production licenses, power generation licenses, and a Power Purchase Agreement, to move forward with the project.

One of the key achievements for Tlou Energy has been the completion of a 100km 66kV transmission line, connecting the power station directly to Botswana’s power grid and the Southern African Power Pool. This connection opens up a vast market for the project, allowing for the sale of electricity both domestically and regionally. The company’s Managing Director, Tony Gilby, expressed optimism about the project’s progress, stating that they are on track to start generating revenue soon.

In terms of the project’s timeline, Tlou Energy is currently focused on completing the construction of the power station, installing generators, and finalizing the gas gathering line. The initial target is to generate around 2MW of power, with plans for rapid expansion to 10MW, generating approximately $10 million in revenue per annum. The company is also in discussions with investors to secure the necessary funds for project completion.

The key remaining items to be completed prior to first power sales, according Tlou Energy, include completing the construction of the power station, installation of generators, completing the short gas gathering line (from the gas wells to the generators) and energizing the power line. “Minor finishing works on the transmission line and the addition of switchgear at Serowe will also be completed prior to first power.  The initial target is ~2MW of power, followed by rapid expansion to 10MW, generating approximately $10m in revenue per annum.” The company has confirmed that it’s in discussions with some investors to secure funds required for project completion.

Tlou’s power is expected to help reduce Botswana’s reliance on expensive power imports. In addition to supplying power in Botswana, the company may sell electricity to the regional market via the Southern African Power Pool, a development which could open up a bigger market for the project.

The successful operation of Botswana’s first coal-gas fired power station will not only contribute to the country’s energy security but also have a positive impact on the regional market. By potentially selling electricity through the Southern African Power Pool, Tlou Energy could tap into a larger market, further solidifying its position as a key player in the energy sector.

Overall, the progress made by Tlou Energy in developing Botswana’s first coal-gas fired power station is a testament to the company’s dedication and vision. With the project nearing completion and commercial production on the horizon, Botswana is poised to enter a new era of energy independence and sustainability.

 

 

 

 

 

 

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Food prices could go up in 2024/2025

18th March 2024

Food prices could potentially go up in 2024/2025 due to the current El Niño conditions in Southern Africa, as reported by the Food and Agriculture Organization (FAO) of the United Nations. The update released by FAO indicates that countries in the region, including Botswana, may experience a decrease in food production, leading to higher food inflation.

The update highlights that Southern Africa has been experiencing below-average rainfall, with key cropping zones in countries such as Malawi, Mozambique, Zambia, Zimbabwe, and Namibia receiving only up to 80 percent of average rainfall quantities between November 2023 and February 2024. This has resulted in significant rainfall deficits, particularly in February, which is a critical period for crop development. The warmer than average temperatures and erratic distribution of rains have further exacerbated the situation, leading to stressed vegetation conditions and potentially lower crop yields in 2024.

In South Africa, the leading cereal producer in the region, a dry spell between late January and February 2024 has negatively impacted crop production prospects. Maize production is expected to fall this year, further contributing to the potential decrease in cereal production in the region.

As a result of the anticipated decline in cereal production in Southern Africa, import needs are projected to increase in the 2024/25 year. This could lead to the importation of cereals from outside of the region, such as the United States of America, Mexico, Brazil, Australia, and Argentina. However, importing food from global markets comes with higher transport costs and import tariffs, which may put upward pressure on food prices in Botswana.

FAO projects that based on the likely scenario of a fall in cereal production in Southern Africa, import needs are set to increase in the 2024/25 year. “Furthermore, if production declines in South Africa and Zambia materialize in 2024, cereal export availabilities in the region would be low and this could necessitate the importation of cereals from outside of Southern Africa.” According to analysts from the organization cereal prices were at higher levels in December 2023 and January 2024 in Southern Africa, reflecting the cumulative impacts of weather shocks on 2023 domestic production, elevated international commodity prices and weak currencies that intensified exchange rate pass-through effects to domestic prices. “Farther ahead, a key risk to the price growth is represented by the impact of El Niño-related rainfall deficits on cereal production in 2024.”

Some local analysts believes that Botswana could import sorghum, maize and wheat from as far as United States of America, Mexico, Brazil, Australia and Argentina as South Africa and Southern African countries which are potential suppliers of cereals, are highly likely to record decline in crop production as a result of the impact of El Niño-related rainfall deficits on cereal production in 2024. The analysts added that food imports from the global markets come with higher transport costs and import tariffs which may have an upward pressure on food prices in Botswana.

Overall, the impact of El Niño-related rainfall deficits on cereal production in 2024 poses a significant risk to food prices in the region. It is important for policymakers and stakeholders to closely monitor the situation and take necessary measures to mitigate the potential increase in food prices in 2024/2025.

 

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