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RDC moves to develop a lucrative hotel in JHB CBD

Botswana Stock Exchange (BSE) listed real estate group RDC Properties Limited will by early 2021 own an over 220 beds space lucrative hotel facility in the heart of one o Johannesburg elites centers. The company disclosed in a statement on Thursday.

Speaking alongside announcement of their unaudited financial results for the period ended 30 June 2019; the company says the standout highlight of the last 6 months is the finalization of the sale and development agreement for the acquisition of a hotel in Rosebank, Johannesburg on a turnkey basis with a well-known developer, Intaprop. RDC says on or about 01 February 2021, they will  be,  subject to regulatory and final funding approvals, acquiring a fully operational 222-bed Hotel branded as Radisson RED on Oxford Road in the heart of Rosebank’s CBD.

The total cost of the land, development, inclusive of furniture, fittings, operating equipment is in excess of R400 million. The developer will be paid on transfer of the property anticipated to be after the opening of the hotel, earliest 01 February 2021 with RDC management having an oversight on the development process.

“We are excited by the prospect of owing a Radisson RED branded property, as it is arguably one of the prime operators worldwide and well know in RSA. The design with its contemporary feel intends to put “a twist on the normal to make it unforgettable”, and by being in a perfect location we are confident that it matches the company’s strategy of investing in prime properties and contributing to the improvement of the quality of life in developing countries,” said G R Giachetti, RDC Group Executive Chairman.

On the financial performance  ,figures posted by RDC  for the six month period ended on the financial results  shows growth in both revenue and operations profit. Notably against difficult trading environments across the company’s geographical footprints revenue registered during the period went up by 12% compared to the corresponding period in 2018 to close the half year  at P74 million. This resulted in a 6% increase in profit from operations.

RDC investment and property portfolio realized a 4 % hike to a half year end of P1.96 billion. For Botswana in particular the company reports that new property investment and acquisition are still at due diligence stage. “As a welcome addition to our Botswana portfolio , the retirement and frail care / step down development being envisaged in Tlokweng has obtained the building & planning approval and therefore we anticipate the company to soon break grounds on this exciting development,” revealed RDC Executive Chair.

Giachetti says the Group portfolio of properties in Cape Town, held through a 63% stake in Capitalgro, has performed exceptionally well been resilient under tough market conditions in South Africa. In rand terms Capitalgro had a 29% increase in profit before tax over the comparative period.

 “The redevelopment and construction of a 5-storey office block in the vibrant and growing Woodstock corridor is still in the planning phase as we await City of Cape Town building approvals, our participation in the development company is on a 50-50 basis. A ‘turn-key’ rental enterprise will be sold to Capitalgro upon completion end-2020. Our development in the United States is proving positive as we expect pay-outs shortly.”

Across the ocean in the United States Giachetti says RDC is currently reviewing its investments in the region. He said the company has since taken a decision to retain some US Dollar exposure as hedge to the local currencies. On other markets fronts the BSE listed property outfit has been receiving challenges pertaining to regulatory approvals and sluggish economic circumstances “We are still awaiting the finalization of the land acquisitions of our properties in Namibia before starting the developments, while the economy in Mozambique is still experiencing difficulties,” said Giachetti.

However RDC Boss  says the outlook is much improved as the “go ahead” to exploit the large finds in the oil and gas sector is been announced with a positive effect  expected to  be felt as the works progress and more substantially once the gas fields are in operation.
“The tenanting of the Xai Xai development is now staring with line shops having expressed interest in this unique centre for the area. In Zimpeto, Maputo, we expect to commence with the petrol station component of the planned convenience centre,” he said.

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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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