The year 2019 started with positive growth in the economy albeit at a slower pace. Even though mining production increased in the first quarter of 2019 it was not the major factor in the swelling Gross Domestic Product (GDP) as is always expected, according to Statistic Botswana. The national statistics agency also reveals a rise in generation of electricity for the first quarter of the year.
According to Statistics Botswana, when looking at the GDP crossover between years of 2018 and 2019, a narrow increase of 0.5 percent was realized. This is the estimated GDP at current prices for the first quarter of 2019 which was P48, 728.9 million compared to P48, 491.6 million registered in the fourth quarter of 2018. The statistical release contains the first quarter of 2019 Gross Domestic Product estimates by economic activity and components of final demand at current and constant prices.
According to the national statistics custodian, during the quarter under review, Trade, Hotels & Restaurants remained the major contributor to GDP by 19.1 percent. The mining and quarrying which was placed with General Government and Finance & Business services at 16.6, 14.5 and 14.3 percent respectively trailed behind the named top contributors of the GDP. Other sectors contribution was below 6.7 percent with Water & Electricity being the lowest at 1.2 percent.
Statistics Botswana says Real Gross Domestic Product for the first quarter of 2019 increased by 4.3 percent and this increase was attributed to the significant growth in real value added of Transport & Communications and Trade, Hotels & Restaurants and industries by 5.9 and 5.7 percent respectively.
Transport and Communications value added increased by 5.9 percent in the first quarter of 2019, according to Statistics Botswana and growth was mainly attributed to the increase in real value added of Post & Communications, Air transport and Road Transport by 7.6, 6.2 and 5.6 percent respectively. According to Statistics Botswana, Trade, Hotels and Restaurants real value added increased by 5.7 percent in the first quarter of 2019 compared to a decrease of 2.0 percent registered in the same quarter of the previous year.
This recorded positive growth is attributed to an increase in real value added of Retail Trade, Hotels & Restaurants and Vehicle Dealers sub industries by 7.1, 6.2 and 4.7 percent respectively. In the first quarter of 2019 Airport Junction undergone rapid expansion and this is said by Statistics Botswana to have been vital in boosting the increase in the Retail Trade value added. New mall around the county were also opened in this quarter of the year also contributing to increase in the Retail Trade Value hence the growth in GDP.
Despite being admired as one of the biggest participant of the local economy Banks was trailing behind at 5.8 percent while Business Services and Real Estate each scored 6.4 and 6.2 percent respectively while contributing in the 5.4 percent increase in the real value added of the Finance and Business Services industry.
The Manufacturing real value added increased by 4.1 percent in the first quarter of 2019 compared to an increase of 4.6 percent registered in the same quarter of the previous year, according to Statistics Botswana. This depiction rounds up an increase in real value added of Other Manufacturing and Beverages sub industries by 4.8 and 1.5 percent respectively. Other Manufacturing comprises of all manufacturing entities except those dealing with Production, processing & preserving of meat, Beverages, Textiles and Leather & leather products. Also, the Other Manufacturing sub industry includes diamond cutting and polishing value added.
In mining whose real value added increased by 3.3 percent was driven by Soda Ash. In production of these two minerals, Soda Ash produced the most with 14.3 percent increase in tonnes while diamond production in carats rose by 3.3 percent. This all happened in the first quarter of 2019. Debswana production increased by 2.0 percent and this was spiked by 12.0 percent increase in production at Jwaneng mine. Orapa was once again an impediment in diamond production
Soda AshThe increase in the real value added of Mining by 3.3 percent was mainly driven by Soda Ash and Diamond value added. Soda Ash production in tonnes went up by 14.3 percent while Diamond production in carats rose by 3.3 percent in the first quarter of 2019 compared to an increase of 11.6 percent recorded in the same quarter of 2018. Debswana production increased by 2.0 percent and this was driven by Jwaneng production which increased by 12.0 percent. Orapa production decreased by 7.0 percent as a result of plant shut down in March 2019. According to Statistics Botswana, non-mining GDP increased by 4.4 percent in the first quarter of 2019 compared to 3.7 percent registered in the same quarter of the previous year.
The Water and Electricity value added at constant 2006 prices for the first quarter of 2019 was P266.2 million compared to P256.3 million registered in the same quarter of 2018, recording an increase of 3.9 percent, according to Statistics Botswana. The national statistics centre says in the first quarter of 2019, Electricity recorded a positive value added of P31.0 million compared to P30.1 million registered in the same quarter of 2018 leading to a positive growth of 3.0 percent.
Statistics Botswana said the increase in the electricity real value added is attributed to a rise in the local electricity production by 13.8 percent. This depiction also sees imports of Electricity going down by 31.8 percent during the first quarter of this year. According to Statistics Botswana, the significant increase in local Electricity production were largely attributed to improved performance of the Morupule B Power Station with a view to meet the country’s electricity demand.
Electricity Generation increases
According to Statistics Botswana, the Index of Electricity Generation (IEG) stood at 184.8 during the first quarter of 2019, reflecting a year-on year increase of 13.8 percent compared to 162.3 recorded during the corresponding quarter in 2018. The quarter-on-quarter comparison shows an increase of 71.5 percent, from 107.7 during the fourth quarter of 2018 to 184.8 during the current quarter.
This statistical brief is intended to apprise on Electricity Generation, Importation and Distribution by presenting Monthly, Quarterly and Yearly Volumes as well as Indices for Electricity Generation in Botswana. Also included are Year-on-Year and Quarter-on-Quarter Percentage Changes in Indices of Electricity Generation from 2009 to the first quarter of 2019. In subsequent sections of this report, emphasis will be on the first quarter of 2019, compared to the fourth quarter in 2018, and the corresponding quarter in 2018.
This report uses 2013 as the base year. The release further shows changes in the volume of electricity generation in a given period against the base year (2013), and hence provides a reflection of the trend in the local electricity sector. Statistics Botswana also studies the local generation and imported electricity to come up with electricity that is available for distribution in Botswana. This does not take into account electricity used for auxiliary services, pumping, network losses as well as production of electricity through incineration of waste, according to Statistics Botswana.
An increase of 0.6 percent (6,068 MWH), from 959,650 MWH during the first quarter of 2018 to 965,718 MWH during the first quarter of 2019 was recorded by Statistics Botswana. From a quarter-on-quarter perspective, distributed electricity increased by 0.3 percent (2,482 MWH), from 963,235 MWH during the fourth quarter of 2018 to 965,718 MWH during the quarter under review, according to Statistics Botswana.
Electricity generated locally contributed 80.4 percent to electricity distributed during the first quarter of 2019, compared to a contribution of 71.1 percent during the same quarter in 2018, according to the statistics parastatal, this gives an increase of 9.3 percentage points. According to Statistics Botswana, on the other hand, a quarter-on-quarter comparison shows that the contribution of electricity generated to electricity distributed during the current quarter increased by 33.4 percentage points compared to the 47.0 percent contribution of locally generated electricity during the fourth quarter of 2018.
A squeaky and glittering metaphoric smile was the look reflected from the Pula against the greenback this week and money market researchers lean this on optimism following Monday’s announcement of another Covid-19 vaccine which is said to have boosted emerging market economies.
With other emerging market currencies, the Pula too reacted to optimism and fanfare on the new Covid-19 vaccine against the weakening US dollar which has been losing its shine since the uncertainty laden US elections.
After bouncing back into the Johannesburg Stock Exchange (JSE) last week Friday, following a year of being in the freezer, the Choppies stock started this week with much fluidity.
Choppies was suspended in both the Botswana Stock Exchange and its secondary listing at the JSE for failure to publish financial results. Choppies suspension on Botswana Stock Exchange was lifted on 27 July 2020. On Friday last week, when suspension was being lifted, Choppies explained that this came into fruition “following extensive engagement with the JSE.”
Choppies stock, prior to suspension, hit a mammoth decline in value of more than 60 percent, especially in September 2018. Waking from a 24 month freezer, last week the Choppies share price was at R0.64 and the stock did not make any movement.
However, Monday was the day when Choppies stock moved vibrantly, albeit volatile. Choppies’ value was on a high volatile mood on Monday, reaching highs of 200 percent. At noon, the same Monday, the Choppies share had reached R1.05. Before taking an uphill movement, Choppies stock slightly slipped by 2 cents. But the Choppies share rode up high and by lunch time the stock had reached the day’s summit of R2.00 and that was at 13:30 when investors were buying the stock for lunch.
The same eventful Monday saw gloom on the faces of Choppies rivals, when Choppies gained by 220.31 percent around lunch time its rivals in the JSE Food & Drug Retailers sector were licking wounds. Spar lost 2.94 percent, Pick Pay fell by 2.43 percent, Shoprite 7.52 percent and Dis-Chem 1.98 percent. The only gainer was Clicks by a paltry 0.51 percent.
In an interview with BusinessPost, Choppies sponsors at the JSE PSG Capital Managing Director Johan Holtzhausen explained that the retailer’s stock was in high demand after a long suspension. He said when a company list or a suspension is lifted the market needs to find itself on the pricing of the share.
“Initially when the suspension was lifted there were more buyers than sellers. As far as we could see this created a shortage of shares so to speak and resulted in the price at which the shares traded going to R1.20 and eventually R2.05 before finding its level around R0.80 sent from a JSE perspective.
This is marked dynamics and reflect that there are investors that are positive about the stock in the long run. This is a snapshot over a short period and one requires a longer period to draw further conclusions,” said Holtzhausen in an interview talking about the Choppies stock.
On Monday this week where the Choppies value grew by 200 percent, the stock took a turn looking down, closing the day at R0.87 from a high of R2.00. According to local stockbroker Motswedi Securities on Monday while there was no movement by Choppies in the local stock exchange as the retailer appeared on the board as 141,000 shares traded at P0.60 each.
However in Choppies’ secondary listing the stock price rallied to over 200 percent during intraday trading on Monday before losing steam and declining to around R0.87 share.
Before press yesterday Choppies opened the market with the stock starting the day at R0.80 then went flat for few hours before taking a slide downward, dropping 5 cents in 30 minutes. Choppies then went flat at R0.75 for 50 minutes yesterday before going up at 10:20 am where it nearly recovered the open day price of 80 cents, but was shy of 1 cent. From 79 cents the price went flat until noon.
Competition and Consumer Authority (CCA) has revealed that in its assessment of the Jet take over by Foschini, there were considerations on possible market rivalry and a clash in targeted classes.
According to a merger decision notice seen by this publication this week, high considerations were made to ensure that Foschini’s takeover of Jet is not anyhow an elimination of rivalry or competition or if the two entities; the targeted and the acquiring enterprise serves the same class of customers or offer the same products, to elude the anti-trust issues or a stretch of monopoly.
The two entities are South African retailers whose services stretched to Botswana shores. Last month local anti-trust body, CCA, received an acquisition proposal from South African clothing retailer, Foschini, stating their intentions to take-over Jet.
South African government’s Business Rescue Practitioners earlier this year after finding out that Jet’s mother company, Edcon, is falling apart, made a decision that Foschini can buy Jet for R480 million. This means that Foschini will 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.
However the main headache for the CCA decision which was released this week, is distinguishing the targeted and the acquiring entity businesses and services.
When doing a ‘Competitive Analysis and Public Interest’ assessment, CCA is said to have discovered that Foschini is classified as a “standard retailer” which targets middle-to-upper income consumers and it competes with stores such as; Truworths and Woolworths. The targeted entity, Jet, is on the lower league when compared to its acquirer, it serves customers of lower classes and is regarded as a discount/value retailer targeting lower income consumers or a mass market. This makes Jet to be in direct competition with Ackermans, Pepkor, Cash Bazaar and Mr Price.
“Therefore, a narrower view of the market is that Foschini through its stores trading in Botswana is not a close competitor to Jet. Additionally, there exist other major rivals who will continue to exercise competitive constraints on the merged enterprise post-merger,” concluded CCA this month.
The anti-trust body continued to explain that in terms of the Acquisition of a Dominant Position, the analysis shows that the acquisition of the target business by Foschini Botswana will result in an insignificant combined market share in the relevant market.
This made CCA reach to a conclusion that there is no case of an acquisition of a dominant position in the market under consideration or any other market on the account of the proposed transaction.
What supports the merger according to CCA is that it is in compliance with regards to ‘Public Interest Considerations’ because the findings of the assessment revealed that the transaction is as a result of the need for a Business Rescue by the target enterprise. This is so because in the event that the proposed transaction fails, it will translate into the loss of the employment positions at the target business.
“On that note the Authority (CCA) found it necessary to ensure that the proposed merger does not result in any retrenchments or redundancies. In light of this, the assessment revealed the critical need to protect the employees of the merged entity from possible merger specific retrenchments/ redundancies,” said CCA.
Before making a determination that the recently proposed transaction is not likely to result in the prevention or substantial lessening of competition or endanger the continuity of the services offered in the relevant market, CCA said it then moved into a concern for public interest which is a protection enshrined in the Competition Act of 2018.
CCA’s concern was mostly loss of livelihood or employment by 126 Batswana workers at Jet stores, stating that possible retrenchments or redundancies may arise as a result of implementation of the proposed merger.
Much to the desire of trade union or labour movements in Botswana and across Southern Africa where the Jet stores are stemmed-who also raised concerns about the retail’s workers job security- CCA subjects Foschini to keep the target entity 126 workers.
“There shall be no merger specific retrenchments or redundancies that may affect the employees of the merged enterprises. For clarity, merger specific retrenchments or redundancies do not include (the list is not exhaustive): i. voluntary retrenchment and/or voluntary separation arrangements; ii. Voluntary early retirement packages; iii. Unreasonable refusals to be redeployed; iv. Resignations or retirements in the ordinary course of business; v. retrenchments lawfully effected for operational requirements unrelated to the Merger; and vi. Terminations in the ordinary course of business, including but not limited to, dismissals as a result of misconduct or poor performance,” said CCA.
CCA also orders that Foschini informs it about all the details of 126 Jet employees within thirty (30) days of the merger approval date. CCA should also know information of when Foschini is implementing the merger, within 30 days of the approval date.
Other conditions include Foschini sharing a copy of the conditions of approval to all employees of the Jet or their respective representatives within ten (10) days of the approval date.
“Should vacancies arise in the target, the merged enterprise shall consider previous employment at one of the non-transferring Jet stores to be a positive factor to be taken into account in the consideration of offering potential employment,” said CCA.
According to CCA, in cases of any job losses, for the Authority to assess whether the retrenchments or redundancies are merger specific, at least three months before (to the extent that this deadline can be practically achieved and in terms of the prevailing and legally required employment practices) any retrenchments or redundancies are to take place, inform the Authority of: i. The intended retrenchments; ii. The reasons for the retrenchments; iii. The number and categories of employees affected; iv. The expected date of the retrenchments.