Connect with us
Advertisement

GDP swells

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.

Continue Reading

Business

Choppies back to profitability

21st September 2021
Choppies CEO - RamachandaranOttapathu

Choppies Holdings Limited, Botswana’s largest Fast Moving Consumer Goods (FMCG) retail group, is back to its glory days of profitability.

On Wednesday, Choppies signalled its shareholders in a circular published on the Botswana Stock Exchange website that a massive comeback is in the offing. The retail giant, which trades on both Botswana and Johannesburg Stock Exchange, notified its investors that it is currently finalising its financial results for the 12 months ended 30 June 2021 (FY2021).

As per the Listings Requirements of the Botswana Stock Exchange (BSE) and the Johannesburg Stock Exchange Limited (JSE), that requires companies to publish a trading statement as soon as they become reasonably certain that the financial results for the period to be reported on next will differ by more than 10% (in the case of the BSE) or more than 20% (in the case of the JSE) from the financial results reported for the previous corresponding period, Choppies notified the market about the expected financials.

In the circular, Choppies said it expects the consolidated Profit after Tax, including discontinued operations for the period FY2021, to be between 106% to 126% better than the Loss after Tax of BWP 370.6 million reported for the period FY2020, representing a Profit after Tax of between BWP 22.6 million and BWP 96.7 million.

The Profit before Tax for FY2021 is expected to be between 1% and 21% higher (BWP 105.7 million and BWP 126.7million) than the Profit before Tax of BWP 105.0 million reported for the period FY2020. The Choppies come back is against the backdrop of a devastating past three(3) financial years where the company endured some of the worst headwinds ever since its establishment over two decades ago.

Following reports of internal boardroom wars, the crisis exploded to fireworks. The retail giant was suspended on both Botswana and Johannesburg Stock Exchange for failing to publish its audited financials as per the regulatory requirement for all publicly listed companies. Following suspension from trading, Choppies’s value deteriorated to record low levels, triggering massive governance restructuring before reconfiguring its portfolio, divesting and exiting some markets, retreating to regroup in its spiritual home ground of Botswana.

In the process, the retailer stayed on news headlines for all the wrong reasons, boardroom infighting, shareholder tussles and disagreements between founders and back to back conflicts with its external auditors. At some point, Choppies founder, Chief Executive Officer and talisman, Ramachandran Ottapathu, was suspended and later reinstated in a dramatic turn of events. Furthermore, the fallout saw the longest-serving Chairperson, former President Dr Festus Mogae, resign as board chair.

The delayed 2018 year-end financial results, released a year and a half later in December 2019, delivered a shock to shareholders, with many pundits announcing Choppies’s funeral. Choppies registered a whooping BWP 445 million loss for the full year ended June 2018. Another shocking loss of BWP170 million for 2017 was initially reported as a BWP 74. 6 million profit when KPMG was still the auditor.

The Choppies loss-making crusade spilt over to 2019, registering in loss BWO 428 million before drowning again into a loss of BWP 370.6 million for the full financial year ended June 2020. In July this year, Choppies biggest individual shareholders Ramachandran Ottapathu and Farouk Ismail, revealed they would be levelling a lawsuit against former Choppies auditors Price Water Coopers (PWC).

The duo blames the auditors for alleged lapses, incompetence, and deliberate sabotage that led to the company’s regulatory non-compliance and subsequent suspension from the Botswana Stock Exchange in 2018 and a massive deterioration in value. In the Annual Report for the financial year ended June 2020, released in November that year, newly appointed Board Chair Uttun Corea announced that Choppies had appointed new auditors, Mazars, regarding FY19 and FY20.

The new board further announced a massive reconfiguration strategy to return the company to glory. The Board Investment Committee recommended disposal of loss-making operations in South Africa and the closure of operations in Mozambique, Kenya and Tanzania, which according to Mr Corea, helped return the Group to profitability.

“Our other markets also proved economically challenging with a struggling and volatile Zimbabwean economy, currency devaluation in Zambia, and a lack of economies of scale in Namibia. However, we believe a focused approach in these regions and the numerous opportunities for growth in Botswana present the Group with solid prospects.

This conditions, together with the favourable conditions following the introduction of funds by the founding shareholders, together with additional security, and given the renegotiation of our banking facilities which will see our monthly payments lower, put the Group on a firm going concern footing,” the board Chair said last year.

Continue Reading

Business

Cresta Marakanelo exits Zambia market 

21st September 2021
Cresta Marakanelo

Cresta Marakanelo Limited (CML), Botswana’s most prominent hotels and hospitality group, has decided to exit the Zambian market, the company announced on Wednesday. 

CML, a Botswana version of the larger Southern African Cresta Hotels Group, revealed in a circular to its shareholders on Wednesday that “it will not be renewing the lease agreement with Golfview Hotels Limited for the rental of Cresta Golfview Hotel in Lusaka, Zambia.” The Botswana Stock Exchange (BSE) listed hotels group explained it would be withdrawing from the Cresta Golfview Hotel operations on 30 September 2021.

CML explained in the circular that for continuity of operations, the landlord, Golfview Hotels Limited, will be taking over the management of the hotel and will endeavour to absorb the majority of the staff.

“The consideration to not renew the lease came after a review of the financial viability of continuing with the lease agreement. The decision to exit the lease is therefore in the best interests of CML shareholders,” Cresta Marakanelo Board explained on Wednesday.

For the year ended 31 December 2020, Cresta Golfview Hotel accounted for 5% of the CML Group’s revenue and 2% of the Group’s loss before tax. The company said it would continue to operate the 11 hotels in Botswana.

The Board of Directors of Cresta Marakanelo went on express gratitude to its dedicated staff at Cresta Golfview Hotel, “The men and women who personified our Cresta brand essence; Where One Smile Starts Another and lived our Cresta mantra of Hospitality with African Heart and Soul consistently over the years.” The Board further thanked its business partners in Zambia: the valued guests, suppliers, stakeholders, and the Zambian community at large during the time CML has operated in Lusaka.

“We look forward to welcoming you to our other properties under the CML portfolio,” the statement said. Early this year, Cresta Marakanelo attempted to expand its Botswana footprint, nearly taking in Phakalane Golf Estate & Hotels Property under its wing. In January 2021, Cresta Marakanelo announced that it had signed a 10-year lease agreement for the hotel and the golf course, located in the Gaborone high-end suburbs, with an option to renew for a further ten year period.

In addition, Cresta had planned to pay Phakalane P10.7 million as a once-off for moveable assets, including furniture, fittings and equipment, with the amount payable over 24 months. Two months later, CML directors told shareholders that the conditions necessary to finalise the deal had not been fulfilled, and as a result, the transaction could not materialise.

Cresta Marakanelo is the operating company for, until this Zambia exit, the 12 Cresta Hotels in Botswana and Zambia. The company was formed in 1987 with an initial portfolio of fewer than 290 rooms, and until this September end exit, Cresta Marakanelo has been managing over 1000 rooms in Botswana and Zambia.

Since its establishment, Cresta Marakanelo Limited (CML) has maintained its position as the largest hotel group in Botswana. The company was established in 1987 when Cresta Hospitality was awarded the Management contract for the Marakanelo Hotels in Botswana by the Botswana Development Corporation.

Cresta Marakanelo was listed on the Botswana Stock Exchange in 2010. Its largest shareholders are the Botswana Government, through the Botswana Development Company, at 30 percent and Cresta Holdings Botswana at around 29 percent, with other shareholders being Motor Vehicles Accident Fund Botswana, Botswana Insurance Company, amongst others.

Established in 1970, the Botswana Development Company is the investment arm of the Botswana Government. BDC’s main aim is to be the country’s principal agency for commercial and industrial development. The Government of Botswana owns 100 percent of the issued share capital of the Corporation. BDC has interests in industry, property development and management, agribusiness and services.

Cresta Holdings Botswana is ultimately owned by Masawara Plc, a Jersey Registered Company listed on the London Stock Exchange’s Alternative Investment Market, with an investment portfolio that extends from Botswana to Zambia, South Africa and Zimbabwe. The Group’s portfolio spans the Hospitality, Insurance, Investment Management and Agrochemical sectors.

Its hospitality arm, Cresta Hospitality Holdings, is one of Southern Africa’s largest hotel management groups, managing or operating hotels in Botswana, Zimbabwe and Zambia.  Cresta Hospitality started hotel operations as far back as 1958. Cresta Holdings is a hotel management company registered in Botswana.

Continue Reading

Business

ABSA posts improved results  

21st September 2021
Keabetswe Pheko-Moshagane

Absa Bank Botswana released their condensed consolidated interim financial statements for the period ended 30 June 2021. Profit before tax grew significantly by 125% against the previous year, a material recovery from the June 2020 position.

According to the company directors, the performance was driven mainly by the positive performance of the impairment line together with the positive momentum on cost lines. Pre-provision profit has also grown year on year by 9%.

Consequently, the bank’s Return on Equity (ROE) went up to 19%. Total revenue declined 1% year-on-year. Net interest income fell 8% due to margin compression driven by interest rate cuts in 2020. However, the sales and transactional banking franchise realised impressive recovery rates with volumes going up to almost pre-COVID-19 levels, and fee revenue grew 20% year on year.

Absa boasted that their operating costs remain well contained, on a reducing trend compared to the prior year. On a statutory basis, operating expenses totalled P460 million, representing a 7% decrease year-on-year. This was achieved by an overall reduction in spending as the bank continues to leverage on a leaner, rotational and digitally-led operating model.

Costs in the current year have benefited from the absence of the Voluntary Staff Separation exercise that happened in the first half of 2020, together with a significant reduction in separation expenses as the rebranding exercise has been completed. Cost-to- income ratio declined 4% and ended at 58% for the period under review. On a year-on-year basis, our credit losses decreased materially by 74%.

This significant drop was driven primarily by the better-than-expected performance of the macroeconomic variables, predominantly GDP, which carries a higher weighting in the bank risk models. With improved and stable portfolio performance, the loan loss rate improved to less than 1% for the period ended 30 June 2021.

Absa balance sheet continued on its growth trajectory with an overall growth of 14%. Customer loans and deposits remained key. components of the balance sheet and the key drivers of balance sheet growth. The balance sheet position remains solid at a total financial position of P21.5 billion. Customer loans grew by 9% year-on-year to P14.8 billion.

“We have seen increased momentum in our loan conversion rates, especially in RBB where growth was driven by scheme loans, mortgage loans and Enterprise Supply-chain Development (ESD) loans,” the bank said in a commentary that accompanied the financials.

Directors explained that growth is in line with their strategy to continue to lend a hand to the bank customers who need support during this period and support the initiatives around citizen economic empowerment and economic diversification. Customer deposits have registered good momentum growing 15% compared to last year, reaching P16 billion as of 30 June 2021.

“Although we have seen tightening liquidity in the market, our client penetration, acquisition and retention strategy has borne much fruit, especially in our CIB segment. We have noted a stable upward trend in our deposit book, a momentum which is expected to last into the rest of the months of 2021,” Directors observed.

Directors further noted that the solid balance sheet position and recovery in profitability had further strengthened the bank’s capital position, which stands at P2.9 billion and represents a capital adequacy ratio of 18% against a regulatory requirement of 12.5%. The liquid assets ratio stood at 14.6%, well above a regulatory limit of 10%.

Zooming deep into segmental performances, corporate and Investment Banking (CIB)closed off the first half of 2021 with a year-on-year decline of 3% on total income; this is on the back of the slow recovery in economic activity felt in crucial economic sectors which have previously contributed positively to revenue.

Business sentiment and confidence remain subdued even in 2021 as uncertainty continues due to the impact of COVID-19. However, the profitability of CIB is on the move, on an upward trajectory with 36% growth year-on-year. This performance was supported by the non-funded income lines’ resilience and the impairment lines’ performance.

For the Retail Banking segment the first half of the year, both loans and advances and deposits due to customers grew by 14% and 16% year-on-year, respectively. Overall revenue has remained flat year-on-year. Growth was realised from non-interest income. This is in line with the bank’s strategy to become the go-to transactional and digitally-led bank.

In the future, Absa directors noted the volatile, unpredictable environment that continues to prevail due to the COVID-19 pandemic, which comes with new waves of infections and variants, restricted movement and trade.

” However, we remain resolute in executing our refreshed strategy and focus on offering our employees and customers support in collaboration with the various stakeholders that we have partnered with.

As part of our strategy to provide customer-centric transactional banking solutions, we will continue to roll out enhancements to our existing digital platforms and develop new solutions that offer our customers convenience and safety.” For the period, Absa Bank Botswana Limited Board approved an interim dividend of 9.74 thebe per share, amounting to a total dividend of P83 million.

Continue Reading
Do NOT follow this link or you will be banned from the site!