Statutory instruments on import ban bear fruits – MITI
Since beginning of 2018, Ministry of Investment Trade & Industry (MITI) has been making use of it statutory powers on cross boarder trading. The Ministry has been restricting importation of some selected goods from outside Botswana, forcing the market to source the commodities locally. This is done predominantly to give space for locally produced and packaged goods and push for their retail and shelve uptake by the domestic market.
MITI says the country has reaped positive results. Improved participation of Botswana produced and packaged goods in the market have been birthed, this was revealed at the Stanbic Bank Botswana Fast Moving Consumer Goods (FMCG) seminar held in Gaborone this week. Deliberating on this, Director of Industrial Affairs at the Ministry of Investment, Trade & Industry, Obusitwe Tiroesele said some trading and industrial licenses will continue to be reserved for citizens and companies wholly-owned by citizens of Botswana.
Tiroesele cited licenses such as bottling water, brick-moulding and welding among others. “Since the implementation of the statutory instrument for the restriction of importation of bottled water, 41 enterprises have been established, a total of 22 companies operating in the water bottling sector and the employment level has increased from 196 to 417,” she said. MITI implemented the statutory Instrument No.44 of 2018 to ban importation of bottled natural and mineral water in order to give space for the local industry to flourish and birth more jobs for citizens.
The instrument was introduced in April 2018 to impose these restrictions under the Control of Goods , prices and other Charges Act , alongside temporary ban of importation of some product commodities that are viewed as noncomplex for Botswana based and citizen owned companies to produce and meet full national demand. The statutory instrument also later extended to restriction of importation of salt to promote salt packaging locally and attract more investment, which would, in turn, create employment by prohibiting importation of salt in quantities less than 100kg.
MITI revealed at the seminar that since inception of the instrument, investment levels of salt packaging companies has increased from P9.925 million to P21.94 million and the number of companies packaging salt increased from six to 15 with an employment level also increased from 56 to 90 employees. Speaking on behalf of Stanbic Bank Botswana, Head of Corporate Investment Banking, Sheperd Aisam, said the seminar was held as part of the Bank’s continued commitment to developing innovative solutions for home-grown African multi-nationals and promotion of local growth.
She said the seminar intended to ultimately map a way forward for all stakeholders to collectively work together for the benefit of the sector and the wider economy. According to Stanbic the initiative was intended to rigorously unpack challenges within the Fast-Moving Consumer Goods (FMCG) sector in Botswana relating them to regional and global trends as well as derive solutions towards sustainable economic growth. Sherped Aisam said: “We have the responsibility to extend ourselves as a financial partner beyond just banking: we must add value by providing exposure, information and our expertise to our clients to foster an environment that facilitates their growth and success.”
To support the FMCG industry Stanbic provides expertise and relationships to assist clients, and negotiate complex financial and regulatory cross-border environments trade deals. Aisam noted that with engagements from leading minds, industry experts and business leaders the FMCG seminar was an interactive session which afforded the Bank an opportunity to engage with the clients and create an environment where they are able to demonstrate the Bank’s potential and solutions in the Trade Financing space relevant to the clients in the sector.
“Stanbic Bank Botswana is more than just a bank, we are a true partner, dedicated to helping Batswana build their businesses and create their own legacies. We are wholly driven by a nuanced desire to ensure progress through collaboration. For us, it is not just about having a partner on the journey; it is being more and doing more. It is about someone who sees how far you can go in the distance because with Stanbic Bank Botswana Corporate & Investment Banking, your story is our story,” he said.
Giving an overview of the FMCG sector in Botswana, Stanbic Bank Head of Transactional Products and Services, Ms Tebogo Giddie said from a research perspective there are currently global trends such as environmental awareness whereby a lot of consumers were more cognizant of the negative effects of the development of products and by-products that influence consumer habits.
Business
LLR transforms from Company to Group reporting
Botswana Stock Exchange listed diversified real estate company, Letlole La Rona Limited (“LLR” or “the Company” or “the Group”), posted its first set of group financial statements which comprise the Company and Group consolidated accounts, which show strong financial performance for the six months ended 31 December 2023, with improvements across all key metrics.
The Company commenced the financial year with the appointment of a Deputy Chairperson, Mr Mooketsi Maphane, in order to bolster its governance and enhance leadership continuity through the development of a Board and Executive Management Succession Plan.
At operational level, LLR increased its shareholding in Railpark Mall from 32.79% to 57.79% and proudly took over the management of this prime asset.
The CEO of LLR, Ms Kamogelo Mowaneng commented “During the period under review, our portfolio continued to perform strongly, with improvements across all key metrics as a result of our ongoing focus on portfolio growth and optimisation.
“We are pleased to report a successful first half of the 2024 financial year, where we managed to not only grow the portfolio through strategic acquisitions and value accretive refurbishments but also recycled capital through the disposal of Moedi House as well as the ongoing sale of section titles at Red Square Apartments. The acquisition of an additional 25% stake in JTTM Properties significantly uplifted the value of our investment portfolio to P2.0 billion at a Group level. Our investment portfolio was further differentiated by the quality of our tenant base, as demonstrated by above market occupancy levels of 99.15% and strong collections of above 100% for the period”.
The growth in contractual revenue of 9% from the prior year’s P48.0 million to the current year P52.2 million, increased income from Railpark Mall, coupled with high collection rates, has enabled the company to declare a distribution of 9.11 thebe per linked unit, which is in line with the prior year.
In line with its strategic pillars of ‘Streamlined and Expanded Botswana Portfolio’ as well as ‘Quality African Assets’, the Group continuously monitors the performance of its investments to ensure that they meet the targeted returns.
“The Group continues to explore yield accretive opportunities for balance sheet growth and funding options that can be deployed to finance that growth” further commented the CEO of LLR Ms Kamogelo Mowaneng.
Ms Mowaneng further thanked the Group’s stakeholders for their continued support and stated that they look forward to unlocking further value in the Group.
Business
Botswana’s Electricity Generation Dips 26.4%
The Botswana Power Corporation (BPC) has reported a significant decrease in electricity generation for the fourth quarter of 2023, with output plummeting by 26.4%. This decline is primarily attributed to operational difficulties at the Morupule B power plant, as per the latest Botswana Index of Electricity Generation (IEG) released recently.
Local electricity production saw a drastic reduction, falling from 889,535 MWH in the third quarter of 2023 to 654,312 MWH in the period under review. This substantial decrease is largely due to the operational challenges at the Morupule B power plant. Consequently, the need for imported electricity surged by 35.6% (136,243 MWH) from 382,426 MWH in the third quarter to 518,669 MWH in the fourth quarter. This increase was necessitated by the need to compensate for the shortfall in locally generated electricity.
Zambia Electricity Supply Corporation Limited (ZESCO) was the principal supplier of imported electricity, accounting for 43.1% of total electricity imports during the fourth quarter of 2023. Eskom followed with 21.8%, while the remaining 12.1, 10.3, 8.6, and 4.2% were sourced from Electricidade de Mozambique (EDM), Southern African Power Pool (SAPP), Nampower, and Cross-border electricity markets, respectively. Cross-border electricity markets involve the supply of electricity to towns and villages along the border from neighboring countries such as Namibia and Zambia.
Distributed electricity exhibited a decrease of 7.8% (98,980 MWH), dropping from 1,271,961 MWH in the third quarter of 2023 to 1,172,981 MWH in the review quarter.
Electricity generated locally contributed 55.8% to the electricity distributed during the fourth quarter of 2023, a decrease from the 74.5% contribution in the same quarter of the previous year. This signifies a decrease of 18.7 percentage points. The quarter-on-quarter comparison shows that the contribution of locally generated electricity to the distributed electricity fell by 14.2 percentage points, from 69.9% in the third quarter of 2023 to 55.8% in the fourth quarter. The Morupule A and B power stations accounted for 90.4% of the electricity generated during the fourth quarter of 2023, while Matshelagabedi and Orapa emergency power plants contributed the remaining 5.9 and 3.7% respectively.
The year-on-year analysis reveals some improvement in local electricity generation. The year-on-year perspective shows that the amount of distributed electricity increased by 8.2% (88,781 MWH), from 1,084,200 MWH in the fourth quarter of 2022 to 1,172,981 MWH in the current quarter. The trend of the Index of Electricity Generation from the first quarter of 2013 to the fourth quarter of 2023 indicates an improvement in local electricity generation, despite fluctuations.
The year-on-year analysis also reveals a downward trend in the physical volume of imported electricity. The trend in the physical volume of imported electricity from the first quarter of 2013 to the fourth quarter of 2023 shows a downward trend, indicating the country’s continued effort to generate adequate electricity to meet domestic demand, has led to the decreased reliance on electricity imports.
In response to the need to increase local generation and reduce power imports, the government has initiated a new National Energy Policy. This policy is aimed at guiding the management and development of Botswana’s energy sector and encouraging investment in new and renewable energy. In the policy document, Minister of Mineral Resources, Green Technology and Energy Security Lefoko Moagi stated that the policy aims to transform Botswana from being a net energy importer to a self-sufficient nation with surplus energy for export into the region. Moagi expressed confidence that Botswana has the potential to achieve self-sufficiency in electric power supply, given the country’s readily available energy resources such as coal and renewable sources.
Business
MMG acquires Khoemacau in a transaction valued at P23Bn
MMG Limited, the Hong Kong-based mining company specializing in base metals, has successfully concluded the acquisition of Khoemacau Copper Mine, a state-of-the-art, world-class copper asset nestled in the northwest of Botswana.
On Monday, MMG announced that the acquisition of Khoemacau Mine in Botswana was finalized on 22nd March 2024. “This acquisition enriches the company’s portfolio with a top-tier, transformative growth project and signifies a monumental milestone in the Company’s journey,” MMG communicated in an official statement published on the Hong Kong Stock Exchange.
Upon completion of the acquisition, MMG remitted to the Sellers an Aggregate Consideration of approximately US$1,734,657,000 (over P23 billion), a sum subject to potential adjustments post-Completion.
In addition to the Aggregate Consideration, MMG, in accordance with the Agreement, advanced an aggregate amount of approximately US$348,580,000 (over P4.5 billion) as the Aggregate Debt Settlement Amount, to settle certain debt balances of the Target Group (Cuprous Capital/Khoemacau).
On November 21, 2023, Khoemacau announced that the shareholders of its parent company [Cuprous Capital] had agreed to sell 100% of their interests to MMG Limited.
MMG is a global resources company that mines, explores, and develops copper and other base metals projects on four continents. The company is headquartered in Melbourne, Australia, and has a significant shareholder, China Minmetals Corporation, which is China’s largest metals and minerals group owned by the Government of the People’s Republic of China.
On December 22, 2023, Khoemacau Copper Mining (Pty) Ltd received the approval from the Minister of Minerals and Energy of Botswana regarding the transfer of a controlling interest in the Project Licenses and Prospecting Licenses associated with the Khoemacau Copper Mine, a result of the Acquisition.
The Botswana Competition & Consumer Authority (CCA) on January 29, 2024, notified the market that it had given its approval for the takeover of Khoemacau Copper Mining by MMG Limited.
On January 29, 2024, the CCA issued a merger decision to the market, stating that after conducting all necessary assessments, it was ready to proceed.
The Competition Authority affirmed that the structure of the relevant market would not significantly change upon implementation of the proposed merger as the proposed transaction is not likely to result in a substantial lessening of competition, nor endanger the continuity of service in the market of mining of copper and silver ores and the production, and sale or supply of copper concentrate in Botswana.
Furthermore, the CCA stated that the proposed merger would not have any negative impact on public interest matters in Botswana as per the provisions of section 52(2) of the Competition Act 2018.
Earlier this month, Minister of Minerals & Energy, Lefoko Maxwell Moagi, informed parliament that his Ministry was endorsing the Khoemacau acquisition by MMG Limited. He noted that not only was the company acquiring the existing operation but also committing to an expansion program that would cost over $700 million to double production, create more jobs for Batswana, and increase taxes and royalties paid to the Government.