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Mascom: BPOPF, Masiyiwa in stalemate

In one morning of 2017, Boitumelo Molefe Chief Executive Officer of Botswana’s largest pension fund (BPOPF), and third largest in Africa got a demanding correspondence from one of her service providers Capital Management Botswana (CMB) that she signs an offer to purchase a minority (7%) of Mascom shares owned by Strive Masiyiwa through his company Econet by the aftyernoon on of the same day.  

CMB wanted to purchase the shares from Masiyiwa on behalf of the BPOPF.  CMB as an investment manager to the Fund one, and on the face of value would say there is nothing wrong with that. Sources close to the events state that, “There were problems on many fronts. BPOPF was given not only a subjective valuation of the shares, but there were also obscenely overpriced. 

CMB was requesting that the shares to be purchased don’t come from their allocated portion of money that they managed, but that BPOPF inject more money to them in order to buy the shares.  The timeline in which the CEO of BPOPF was to sign and accept the offer was impossible.  She literally had a few hours not to consider the offer but to agree to it.   Surely being put in the shoes of the BPOPF CEO Boitumelo Molefe, I would smell something sinister about this offer,” said the source.

“Fast forward two years down the line, the same would-be seller being Strive Masiyiwa at a joint Youth Leadership conference with government recently wants to buy more of the same shares he wanted to sell prior, and then list the company.  One might say, there’s nothing wrong in a man changing his mind.  But that’s not the point here.  Industry insiders and pension activists say the country should read a lot on the intentions of Strive Masiyiwa on Mascom.”

They decry that Masiyiwa may not be ideal for the 250,000 plus members of the BPOPF.  “BPOPF portion of shares have long been of interest from various groups.  First it was the usual ‘Big Men’ of town who wanted to take the Fund’s shares.  MTN then followed in wanting to consolidate their holdings.  Then Cater Morupisi claiming to represent government also got involved,” states the source.

Boitumelo Molefe is thought to have refused flat out to entertain the hostile purchase of Masiyiwa’s portion of shares in 2017 by CMB on behalf of BPOPF.  And this is one of many decisions that caused her relationship to go sour with her then Chairman Morupisi.  At the time BPOPF had valued Mascom at P3.5 billion pula, and yet CMB requested P700 million to purchase the 7% of Masiyiwa’s Econet shares.  At that amount it put the valuation of Mascom at P7 billion, which was way too high. 

Directly, or indirectly one then has to question the integrity of CMB.  Like any entrepreneur, Strive would have wanted maximum return for his shares.  But unfortunately for him the would-be transactors being CMB had questionable motives. “He needs to tell his side of his story, but one thing for sure he can’t fault us for wanting so desperately to question his renewed interest in Mascom.  “Once beaten, twice shy as the English language says.

At the Youth Conference, Econet Founder Strive Masiyiwa spoke of his intentions of buying MTN shares in Mascom, and then floating the company on the Botswana Stock Exchange.  He further went on to say that he would like Batswana and Mascom employees to actively participate in the IPO (Initial Public Offering).  This IPO media houses reported the listing could actually come within this year. BPOPF is thought to have had first refusal, and purchase the MTN shares but opted not to.

Said an analyst, “my considered view is that the same Strive Masiyiwa returning years later to buy more of the very same shares he wanted to sell should be put to a serious ethical test.  “More so that the actors whom he was perceived to be in cohorts with haven’t necessarily disappeared. The investment analyst continued to say hard questions should be asked of BPOPF why they didn’t exercise their right to buy more shares of Mascom. 

“Yes, a very lazy and easy excuse is that they are not in the business of telecommunications, or something along the lines that will increase their risk in the investment by buying more shares of the company…. blah blah…. blah.  “Mascom is no just a telecommunications company.  “It is a pride of the nation, just like Letshego, or a Kgalagadi Breweries. 

“What stopped BPOPF with each huge cash reserves doing exactly what Strive is going to be doing, buying the MTN shares and then listing them to reduce their concentration investment risk on the company?  “Strive Masiyiwa and his company are the only ones going to be smiling all the way to the bank.  “My gut feeling is that everything relates to this So called “Youth Conference” which was actually attended by adults, wanna-be CEOs of town. 

“Those that have long wanted to take Mascom away from us Batswana have now come wearing different clothes because it proved impossible before to do that.  “It is really upsetting that we continuously miss commercial opportunities and rather have foreigners come take what we could have done here.  “The loser here is BPOPF, and Botswana at large.”

“All said and done, we ought to question the Strive Masiyiwa transaction with MTN and Mascom.  Bad experiences unfortunately give us reason to doubt the integrity of the transaction.  “I won’t be surprised in a few years down the line we find that there were some within government that were stoking the fire at Mascom.  “Watch the space”, signed off the analyst. Contacted for comment, Molefe refused to go in detail with the deal saying it was confidential, “safe to say MTN approached them with information that they intend to sell their shares.”

BPOPF PUSHES FOR 73%

But it has since surfaced that BPOPF has taken a hardline approach to the issue and wants to own 73% stake in Mascom. BPOPF is of the view that the proposed transaction by Econet will result in change of controller hence they must be a choice to exercise their pre-emptive rights as the shareholders agreement. Masiyiwa is said to have raised an unsolicited offer to buy the shares currently held by MTN.

It is said that the parties involved in this proposed transaction do not agree with the interpretation of clause 12 of the shareholders agreement that deals with sale of shares and change of controller. The regulator, Botswana Communications Regulatory Authority (BOCRA) is said to have demanded certain information from Mascom but it is not forthcoming because the parties cannot agree on its release. The Mascom Board, which is made up of three BPOPF representatives and three MTN representatives is expected to meet to discuss the matter, but a stalemate is projected.

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Pan-African risk advisor Minet Group and Botswana’s Africa Lighthouse Capital acquire Aon Botswana

21st May 2021
Pan-African-risk-advisor-Minet-Group-

Strategic partnership offers inherent benefits of global knowledge, African insights, and local expertise and commitment

Minet Group and Africa Lighthouse Capital today announced that they have received regulatory approval and fulfilled all requirements to acquire Aon’s shareholding in Aon Botswana, and consequently will begin the process to rebrand to Minet Botswana.

Minet Group is a well-known and trusted pan-African risk advisory firm and Aon’s largest Global Network Correspondent and has been rapidly expanding its African footprint since 2017 through the acquisition of operations from global professional services firm Aon in Kenya, Lesotho, Malawi, Mozambique, Namibia, Tanzania, Uganda, and Zambia.   Minet has been delivering world class products and services across Africa for over 70 years.

Africa Lighthouse Capital (ALC) is a leading Botswana citizen-owned private equity firm focused on investing in Botswana companies and propelling them into regional champions, with over BWP 500 million in funds under management.

The new entity will be rebranded to Minet and will inherit deeply rooted respect by its clients for their innovative and locally relevant solutions, responsiveness, and efficient processes. Furthermore, it shall have the benefit of consistency in leadership and staffing, with Barnabas Mavuma, previously Managing Director of Aon Botswana, continuing to lead the business as the MD supported by the local management team.

 “The addition of Minet Botswana to our growing African network affirms our belief in the great opportunities for growth that Africa offers, driven by rising consumer demand, huge investment in infrastructure and quick adoption of new technology,” says Joe Onsando, CEO at Minet Group.

“This transaction significantly adds to the diversity and skills base of our team and will have a positive impact on the range of products and services we provide. Our Correspondent agreement with Aon gives us access to global expertise and data driven insights and uniquely positions us to deliver risk advisory solutions that reduce volatility, thus driving improved performance for our clients. This is a very exciting time to be Minet in Africa.”

“The significantly increased Botswana citizen shareholding effected by this transaction gives rise to an exciting era of local market focus and growth for Minet Botswana,” says Bame Pule, Founder and CEO of Africa Lighthouse Capital.  “We intend to work with Minet Botswana’s local management team to further localise the business in terms of product development, while at the same time investing in local skills development and business development.  We look forward to this exciting journey, which will result in a significantly enhanced service offering for Minet Botswana’s clients.”

Consequently, and similar to the other members of the Minet Group, Minet Botswana becomes an Aon Global Network Correspondent, retaining its access to Aon’s resources, technology, and best practises, combined with the benefit of independent, local agility. This transaction furthermore significantly increases local shareholding, enabling operations to become even nimbler and better positioned to unlock new and existing growth opportunities.

Clients of Minet Botswana will experience continuity of product and service delivery standards in the short term. In the near future, they can expect an enhanced offering that combines agility with technology and product innovation, tailormade for their specific needs.

Together, Minet and ALC bring a sound understanding of local market conditions, strong governance, and an established track record in the region. These qualities, combined with Aon’s global capabilities and expertise, will bring clear benefits for clients.

This transaction vastly increases citizen ownership with shareholders who are going to be active in the business. The transfer of equity interests in Botswana to investors with local and regional expertise, presence and commitment will allow the businesses to move quickly in line with market movements, and to introduce products that are tailored to the local market.

“Minet’s commitment and drive to incessantly adapt to changing market conditions, and to innovate to meet the unique insurance demands of the African continent, while maintaining the high standards customers have come to expect – Onsando concludes – will continue to grow and give Minet a powerful competitive edge within the African market”.

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Africa scores $285 Billion IMF deal

21st May 2021
IMF-Managing-Director-Kristalina-Georgieva

French President Emmanuel Macron received 21 Heads of state and government officials from Africa during the recent summit on the Financing of African Economies that focused on Africa to take full advantage of the tectonic shifts in the global economy and the call for a joint effort for financial and vaccination support for the continent.

President Emmanuel Macron stressed that “Most regions of the world are now launching massive post-pandemic recovery plans, using their huge monetary and fiscal instruments. But most African economies suffer the lack of adequate capacities and such instruments to do the same. We cannot afford leaving the African economies behind.

We, the Leaders participating to the Summit, in the presence of international organizations, share the responsibility to act together and fight the great divergence that is happening between countries and within countries.

This requires collective action to build a very substantial financial package, to provide a much-needed economic stimulus as well as the means to invest for a better future. Our ambition is to address immediate financing needs, to strengthen the capacity of African governments to support a strong and sustainable economic recovery and to reinforce the vibrant African private sector, as a long-term growth driver for Africa.”

For her part, International Monetary Fund (IMF) Managing Director Kristalina Georgieva highlighted that “there is urgency to focus on financing Africa. Last year, the pandemic-caused recession shrank the GDP of the Continent by 1.9 percent – the worst performance on record. This year, we project global growth at 6 percent, but only half that 3.2 percent for Africa.” Adding that Africa needs to grow faster than the world at 7 to 10 percent to meet the aspirations of its youthful populations, and become more prosperous and more secure.

Georgieva revealed that the price tag on the shot is estimated to be “$285 billion through 2025. Of this $135 billion is for low-income countries. This is the bare minimum. To do more – to get African nations back on their previous path of catching up with wealthy countries – will cost roughly twice as much. These are large numbers. They may seem out of reach. But to quote Nelson Mandela: impossible until it is done.”

The main areas of interest to achieve this include; first, end the pandemic everywhere, 40 percent of the population of all countries is targeted to get vaccinated by the end of 2021, and at least 60 percent by mid-2022.

Second, bilateral and multilateral development financing grants and concessional loans ought to go up. Over the last year, the IMF have swiftly ramped their financing for the Continent, including providing 13 times their average annual lending to sub-Saharan Africa. And are working to do much more. The IMF has also received support to increase access limits so they can scale up their zero-interest lending capacity through the Poverty Reduction and Growth Trust.

The IMF has also devised exceptional measures. Their membership backs an unprecedented new allocation of Special Drawing Rights (SDR) of $650 billion, by far the largest in their history. Once approved, which is intended to be achieved by the end of August, it will directly and immediately make about $33 billion available to African members. It will boost their reserves and liquidity, without adding to their debt burden.

Over the course of the last year, the IMF has built experience in facilitating the on lending of SDRs – thus managing to triple their concessional lending capacity as a result.

The Third being, actions at home. According to Georgieva “a crisis is an opportunity for transformational domestic reforms that increase domestic revenue, improve public services, and strengthen governance. For instance, digitalization can improve tax administration and revenue collection, and the quality of public spending. And with radical transparency, Africa can tap into new sources of finance – such as carbon offsets.

There is ample scope for countries to encourage private investment, including in social and physical infrastructure. New IMF research, published today, highlights that domestic and international investors could provide at least 3 percent of GDP per year of additional financing by the end of this decade.”

Reforms of international taxation can also support Africa’s growth. For a long time, the IMF has been in favor of minimum corporate tax rates to reduce the race to the bottom and tax avoidance. And they strongly support an international agreement on digital tax, something France has been a leading voice for. It is important to secure fair distribution of tax revenues, so they can contribute to closing Africa’s financial gap.

Georgieva called on to each and every one to step up. Reminding the attendees that from history they are all familiar with what a shock of this magnitude can do if not countered forcefully and effectively.

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Indian COVID-19 variant hits Botswana diamond sales

20th May 2021
Indian-Covid--19-variant-hit-rough-diamonds-sales---De-Beers-

De Beers’ Group, the world’s number one diamond producer by value, this week attributed the downfall of its sales for the fourth cycle week to the second wave of the Covid-19 variant (B.1.617.2) which was first discovered in India.

Diamond trading conditions have been hit by the Covid-19 crisis in India which is a major cutting and polishing centre for the world’s diamond trade.

The outbreak of the new variant has led to a humanitarian crisis with 280, 284 fatalities of the disease reported.

The London headquartered company said the sales in its fourth cycle fell to $380m (about P4.1 billion) down from $450m (about P4.8 billion) in the third cycle though it was higher than the fifth cycles of last year when the group shifted only $56m (P600 million).

De Beers emphasized that they continued to implement a more flexible approach to rough diamond sales during the fourth sales cycle of 2021, with the Sight event extended beyond its normal week-long duration.

The De Beers group Chief Executive Officer (CEO), Bruce Cleaver said the company continues to see robust demand for diamond jewellery in the key US and China consumer markets.

“However, the scale of the second wave of Covid-19 in India, where the majority of the world’s diamonds are cut and polished, has led to reduced midstream capacity and subsequently lower rough diamond demand, during what is already a seasonally slower time of year for midstream purchases,” said Cleaver.

Meanwhile Botswana health officials have confirmed the new Covid-19 variant in Botswana. The Ministry of Health and Wellness -through a press statement- informed members of the public that the variant (B.1.617), was confirmed in Botswana on 13th May 2021.

According to Christopher Nyanga, spokesperson at the Ministry, this followed a case investigation within Greater Gaborone, involving people of Indian origin who arrived in the country on the 24th April 2021.

Moreover the World Health Organization (WHO) recently announced that the Indian Covid-19 variant was a global concern, with some data suggesting that the variant has “increased transmissibility” compared with other strains.

The India variant (B.1.617.2) – is one of four mutated versions of the coronavirus which has been designated as being “of concern” by transitional public health bodies, with others first being identified in Kent, South Africa and Brazil.

Nevertheless when speaking at Bank of America Global Metals and Mining conference, Anglo American Chief Executive Officer, Mark Cutifani said the company portfolio is increasingly tilted towards future enabling products and those that need to decarbonise energy and transport in order to meet consumers’ needs – from home appliances, electronics and infrastructure, to food and luxury goods.

“We see material opportunity for Anglo American to continue to set itself apart in terms of the performance of our diversified business, further enhanced through sector-leading 25% volume growth over the next four years, led by copper and the platinum group metals,” said Cutifani.

“Most importantly, as the supplier of such critical materials, it is the duty of our industry to ensure that in everything we do, we act responsibly and deliver enduring value for our full breadth of stakeholders, including our planet.”

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