It has emerged that Botswana got P17 billion from Anglo American as total tax and economic contribution for its precious stones in the company’s last financial year.
This was revealed through Anglo American’s recently latest Tax and Economic Contribution 2018 report which was released concurrently with the mining company’s Integrated Annual Report for the year ended 31 December 2018. Anglo American’s P17 billion contribution is an improvement from last year which was a billion Pula less at P16 billion. Anglo American is a major stakeholder of De Beers Group- a company it jointly owns with Botswana government. Botswana government owns 15 percent of De Beers while Anglo American holds 85 percent.
De Beers also has a 50 year 50:50 partnership with Government of Botswana on Debswana, a mining company which is the biggest contributor of rough diamonds to De Beers and generates more than 80 percent of profits for Botswana. Debswana owns the Jwaneng mine, one of the world’s richest diamond mines by value, a contributor to 70 percent of Debswana’s total revenue. Debswana’s Orapa mine is one of the largest resources by volume. Debswana, in turn contribute approximately 50 per cent of public revenue, 33 per cent of GDP, and over 80 per cent of foreign earnings to Botswana.
According to the Tax and Economic Contribution 2018 report, Anglo American spent almost P1 billion ($98.6 million) on Capital Investment. Capital investment is defined as cash expenditure on property, plant and equipment, including related derivatives, proceeds from disposal of property, plant and equipment and direct funding for capital expenditure from non-controlling interests, according to Anglo American, and these includes capitalized operating cash outflows.
For the year ended 31 December 2018, according to Anglo American, the mining company employed 1,524 people in Botswana. This came at a cost of P915 million($86.0) for Wages and related payments which Anglo American explains as, “payroll costs in respect of employees, excluding contractors and certain associates’ and joint ventures’ employees, and including a proportionate share of employees within joint operations.”
In the latest report released by Anglo American, the company’s Global Head of Tax says, “this report (Tax and Economic Contribution 2018) demonstrates the enduring nature of our economic contribution to society and our commitment to the countries in which we operate.” Furthermore in Total Taxes Borne and Collected Botswana made almost P9.31 billion ($874.8m). This broken down is P4.5 billion ($448.8) of corporate income tax which is calculated based on profits and includes withholding taxes.
There is also P3.26 billion ($326.6 million) as Royalties and Mining Taxes which are revenue, production and profit based royalties. Botswana got P570 million ($5.7 million) as other payments borne which are simply other payment directly incurred by Anglo American. Botswana pocketed P937 million ($93.7 million) as taxes collected for the year ended 31 December 2018 and this reflects taxes paid by Anglo American on behalf of other parties as a result of the Group’s economic activity.
Apart from paying wages and taxes Anglo American show it has spent P6.73 billion ($672 .8million on “total procurement” which refers to addressable expenditure only (excludes public sector spend) and includes all supply chain related spend from third party suppliers. According to Anglo American, this includes opex- and capex-related transactions and inter-business unit procurement.
For local procurement which is procurement of goods or services from within the same immediate area as the operation, as defined by each operation Anglo American spent P5.52 billion or $551.8 million. According to the mining company, a localized supplier is a supplier that meets the business unit criteria for localized procurement, allowing goods or services to be procured from within the same immediate area as the operation. This is defined using the same parameters and definitions as set out in SEAT Tool 2A – Profiling the Local Area.
In Corporate Social Investment (CSI) Anglo American contributed P20. 5 million or $2.5 million. Anglo American’s CSI contribution refers to all social investment spend that is not related to impact management, either from allocated budgets or established foundations. According to Anglo American’s Integrated Annual Report for 2018, the company has made an operating profit of P60 billion ($6.1 billion) as compared to the P55 billion in 2017 or $5.5 billion. The 2018 revenue was around P280 billion or $27.6 billion when compared to 2017’s P262 billion ($26.2 billion). As for diamonds, Botswana’s economic mainstay, De Beers comes forth with P1.2 billion underlying EBITDA.
Lucrative and highly anticipated national lottery tender that saw several Batswana businessmen partnering to form a gambling consortium to pit against their South African counterparts, culminates into a big power gamble.
WeekendPost has had a chance to watch lottery showcase even before the anticipated and impending national lottery set-up launches. A lot has been a big gamble from the bidding process which is now set for the courts next year January following a marathon legal brawl involving the interest of the gambling fraternity in Botswana and South Africa.
Households representing more than half of Botswana’s population-mostly residing in rural areas- do not know where their next meal will come from, but neither do they take into consideration the quality and/or quantity of the food they consume.
This is according to the latest Prevalence of Food Insecurity in Botswana report which was done for the 2018/19 period and represents the state of food insecurity data even to this time. The Prevalence of Food Insecurity was released by Statistics Botswana and it released results with findings that the results show that at national level 50.8 percent of the population in Botswana was affected by moderate to severe food insecurity in 2018/19, while 22.2 percent of the population was affected by severe food insecurity only.
According to the report, this translates to 27 percent of the population being food secure that is to say having adequate access to food in both quality and quantity. According to Statistician General, Burton Mguni, when explaining how the food data was compiled, Food and Agriculture Organization of the United Nations (FAO), is custodian of the “Prevalence of Undernourishment (PoU)” and “Prevalence of moderate or severe food insecurity in the population based on the Food Insecurity Experience Scale (FIES)” SDG indicators, for leading FIES data analysis and the resultant capacity building.
“The FIES measures the extent of food insecurity at the household or individual level. The indicator provides internationally comparable estimates of the proportion of the population facing moderate to severe difficulties in accessing food. The FIES consists of eight brief questions regarding access to adequate food, and the questions are answered directly with a yes/no response. It (FIES) complements the existing food and nutrition security indicators such as Prevalence of Undernourishment.
According to the FIES, with increasing severity, the quantity of food consumed decreases as portion sizes are reduced and meals are skipped. At its most severe level, people are forced to go without eating for a day or more. The scale further reveals that the household’s experience of food insecurity may be characterized by uncertainty and anxiety regarding food access and compromising the quality of the diet and having a less balanced and more monotonous diet,” says Mguni.
The 50.8 percent of the population in Botswana which was affected by moderate to severe food insecurity are characterized as people experiencing moderate food insecurity and face uncertainties about their ability to obtain food. These people have been forced to compromise on the quality and/or quantity of the food they consume according to the report on food insecurity.
Those who experience severe food insecurity, the 22.2 percent of the population, are people who have typically run out of food and, at worst, gone a day (or days) without eating. According to the statistics, rural area population experienced moderate to severe food insecurity at 65 percent while urban villages were at 46.60 percent and cities/town were at 31.70 percent. Those experiencing the most extreme and severe insecurity were at rural areas making 33.10 percent while urban villages and towns were at 11.90 percent and 17.50 respectively.
According to a paper compiled by Sirak Bahta, Francis Wanyoike, Hikuepi Katjiuongua and Davis Marumo and published in December 2017, titled ‘Characterization of food security and consumption patterns among smallholder livestock farmers in Botswana,’ over 70 percent of Botswana’s population reside in rural areas, and majority (70%) relies on traditional/subsistence agriculture for their livelihoods.
The study set out to characterize the food security situation and food consumption patterns among livestock keepers in Botswana. “Despite the policy change, challenges still remain in ensuring that all persons and households have access to food at all times. For example, during an analysis of the impacts of rising international food prices for Botswana, BIDPA reported that food prices tended to be highest in the rural areas already disadvantaged by relatively low levels of income and high rates of unemployment,” said the study.
According to the paper, about 9 percent of households were found to be food insecure and this category of households included 6 percent of households that ranked poorly and 3 percent that were on the borderline according to the World Food Programme’s (WFP) definition of food security.
Media reports state that the World Bank has warned that disruption to production and supply chains could ‘spark a food security crisis’ in Africa, forecasting a fall in farm production of up to 7 percent, if there are restrictions to trade, and a 25 percent decline in food imports.
Food security in Botswana or food production was also attacked by the locust pandemic which swept out this country’s vegetation and plants. The locust is said to have contributed to 25 percent loss in production.
Global lockdown have been a thorn in diamonds having shiny sales, but a lot of optimism shows with the easing of Covid-19 restrictions, the precious stones will be bought with high volumes towards festive season. The diamond market is however warned of the resurgence of Covid-19 in key markets presents ongoing risks amid the presence and optimist about the new Covid-29 vaccines.
The latest findings published as De Beers Group’s latest Diamond Insight ‘Flash’ Report, which looks at the impact of the pandemic on relationships and engagements, has revealed that in the US that more couples than ever are buying diamond engagement rings. Bridal sales is mostly the primary source of diamond jewellery demand in recent months, De Beers said.
According to De Beers, interviews with independent jewellers around the US revealed that the rate of couples getting engaged has increased compared with the period when Covid-19 first had an impact in the US in the spring.
“In addition, despite challenging economic times, consumers were spending more than ever on diamond engagement rings – often upgrading in colour, cut and clarity, rather than size. Several jewellers speculated that with consumers spending less on elaborate weddings and/or honeymoons in the current environment, they had more to spend on choosing the perfect ring,” said De Beers.
According to De Beers, a national survey of 360 US women in serious relationships, undertaken in late October in collaboration with engagement and wedding website, The Knot. This survey is said to have found that the majority of respondents (54%) were thinking more about their engagement ring than the wedding itself (32%) or the honeymoon (15%), supporting jewellers’ hypothesis that engagement ring sales were benefiting from reduced wedding and travel budgets in light of Covid-19 restrictions.
When it came to researching engagement rings, online was by far the predominant channel for gaining ideas/inspiration at 86% of consumers surveyed, with 85% saying they had saved examples of styles they liked, according to De Beers. According to the survey, only a uarter of respondents said they had looked in-store at a physical location for design inspiration.
“For many couples, the pandemic has brought them even closer together, in some instances speeding up the path to engagement after forming a deeper connection while experiencing lockdown and its associated ups and downs as a partnership. Engagement rings are taking on even greater symbolism in this environment, with retailers reporting couples are prepared to invest more than usual, particularly due to budget reductions in other areas,” De Beers CEO Cleaver said.
According to De Beers Group, its Diamond Insight Flash Report series is focused on understanding the US consumer perspective in light of Covid-19 and monitoring how it evolves as the crisis evolves. Also, the company said, it is augmenting its existing research programme with additional consumer, retailer and supply chain touch-basis to understand the pain points and the opportunities for stakeholders across the diamond pipeline.
Demand for diamonds is as hard and resilient as the precious stone itself. De Beers pocketed US$ 450 million in its recently held ninth rough diamond sales cycle, and the company says it is more flexible approach to rough diamond sales during the ninth sales cycle of 2020, with the Sight event extended beyond its normal week-long duration.
“Steady demand for De Beers Group’s rough diamonds continued in the ninth sales cycle of the year, reflecting stable consumer demand for diamond jewellery at the retail level in the US and China, and expectations for reasonable demand to continue throughout the holiday season. However, the resurgence of Covid-19 infections in several consumer markets presents ongoing risks,” said De Beers CEO Bruce Cleaver recently.
High expectations are on diamonds being a sentimental gift for holiday season or as the most fetished gift. However the ninth cycle was lower than the eighth which registered US$ 467 million. For the last year period which corresponds with the current one, De Beers managed to raise US$ 400.