Botswana’s first home grown trader and Fast Moving Consumer Goods (FMCG) retailer Sefalana Holdings Limited presented another impressive set of results for their half year period ended October 2018, announcing 25 percent growth in profits before tax.
The group which operates in five Southern African countries raked in P103.6 million in profits during the period. When presenting the financials this Friday, Sefalana executives told its shareholders that the H1 results are a spillover from another impressive performance by the company during the 2017/18 financial year.
“At the April 2018 year end, we reported to our Shareholders, our best ever results to date. We had focused on cost saving initiatives and identified ways in which to extract additional value from our existing businesses. We had also benefited from the first tranche of returns from our South African investment following over 18 months of refining our model of investment,” said Sefalana Group Managing Director CD Chauhan when giving a background of the group‘s performance .
Chauhan highlighted that Sefalana’s focus during the period under review was very much aligned with the previous financial year’s approach. “We further progressed with overhead cost saving programs and improved processes and structures within the Group, streamlining operations so as to maximize return from these businesses,” he said.
When interpreting the figures, Sefalana Chief Financial Officer Mohamed Osman highlighted that on overall the group exceeded the P2.5 billion turnover threshold, and generated the impressive profit before tax of P103.6 million. The Group’s revenue grew by 13 percent to P2.6 billion dispatching into 9 percent increase in Gross profits to end the period P152.5 million. Earnings before interest, tax and amortization (EBITA) ended the six month period under review at P85.5 million, mirroring 21 percent increase when compared to 2017 H1.
Zooming into the Group’s geographical segments and business divisions, Sefalana Cash & Carry Limited under the Botswana basket contributed 55 percent and 23 percent of the Group’s total revenue and profit before tax for the reporting period, respectively. The division turnover amounted to just over P1.4 billion, up by 16 percent when compared to the previous period. “We experienced increased pressure on margins in both our wholesale and retail operations as we strive to remain competitive and increase market share,” explained Osman.
The Group’s overall profitability for the Botswana division recorded a hike of 2 percent compared to the prior period. Osman said the slight increase follows a period where the company experience reduction in profitability as a result of heightened competition. In Namibia, one of Sefalana’s emerging market the business under Sefalana Metro banner contributed 31 percent and 24 percent of the total revenue and profit before tax for the period, respectively. Turnover amounted to P797 million, indicating a growth of 9 percent on the prior period. Profit before tax amounted to P25 million, up 13 percent from the prior period.
“Our operations in Namibia continue to grow despite sluggish economic conditions,” he said. Figures received from Lesotho businesses where Sefalana has been operating for two years , turnover closed the six months period at P191 million mirroring an increase of 14 percent when gauged against previous period , contributing just over 7 percent of total Group revenue.
Sefalana report noted that margins are however, very slim and the segment achieved a break even EBITA of P0.3 million for the period, and a loss before tax of P3.9 million after taking into account finance charges. “We are delighted to have built a strong presence in the market in a very short space of time however we are disappointed with performance from this unit and look to improve in the second half of the year.” Noted Osman.
Sefalana’s other Trading segments which consist of Commercial Motors and Mechanized Farming Limited contributed 3 percent and 7 percent to Group turnover and profit before tax, respectively. Under the Manufacturing business, Foods Botswana Limited contributed 5 percent and 7 percent to Group turnover and profit before tax for the period respectively. A lower level of profitability was achieved as compared to the prior period, mainly due to timing of orders placed by Government in respect of the various feeding schemes.
The Botswana Stock Exchange listed Group also operates property businesses in Botswana and Zambia. Botswana property portfolio continued on a positive note contributing 1 percent and 14 percent to Group revenue and profit before tax respectively. Sefalana’s Zambian property business is still struggling with occupancy after significant increase in supply of warehouse and office space in Lusaka over the last few years which resulted in two of the company’s largest tenants moving to alternative premises in April 2017.
“Since then we have been in search of replacement tenants and have now managed to secure an occupancy rate of around 70%. We will continue to look for suitable tenants for the remaining space. Performance by this segment has therefore slightly improved compared to the previous period,” explained Osman. Going forward Sefalana Group which has been in existence for over 40 years says it will be entering the lucrative catering services business in the next few months.
“This division will focus on serving the large hospitality industry with frozen foods in wholesale size units. We will continue to pursue process improvements and efficiencies to maximize returns from our existing businesses and look at providing our customer base with a wider product and service offering,” said Chauhan ,Sefalana Group MD
The Board of Directors of Sefalana Holding Company Limited declared an interim gross dividend of 10 thebe per ordinary share. “We will also explore and evaluate other neighbouring regions as part of our Regional expansion drive. This will however, continue to be a cautious and measured approach.” He said
As the preparations for the Botswana Democratic Party (BDP) congress are about to kick off, reports on the ground suggest that the party’s Deputy Treasurer Jackdish Shah will not defend the position in August as he contemplates relocation.
According to sources, the businessman who joined the BDP Central Committee in 2015 at the 36th Congress held in Mmadinare is ready to leave the party’s politburo. It is said he long made up his mind not to defend the position last year. A prominent businessman, Shah, when he won the position to assist Satar Dada in 2015 was expected to improve the party’s financial vibrancy. By then the party was under the leadership of Ian Khama.
According to close sources, Shah long decided not to contest because he has fallen out of favour with the party leadership. It is said he took the decision after some prominent businessmen who are BDP members and part of football syndicate decided to push him out and they used their proximity to President Mokgweetsi Masisi to badmouth him hence the decision.
“The fight at the Botswana Football Association (BFA) and Botswana Football League (BFL) has left him alone in the desert and some faces there used their close access to the President to isolate him,” said a source. Media reports say, Shah does not see eye to eye with BFA President MacLean Letshwiti who is also Masisi’s buddy hence the decision.
BFL Chairman Nicholas Zackhem is said to be not in good terms with Shah, who at one point Chaired the then Botswana Premier League (BPL). “He is seriously considering quitting because of what is unfolding at the team (Township Rollers) which is slowly not making financial gains and might be relegated and he wants to sell while it is still worth the investment,” said a highly placed source.
Shah is a renowned businessman who runs internet providing company Zebra net, H &G, game farm in Kasane, cattle farm in Ghanzi region and lot of properties in Gaborone. He also has two hotels in USA, his advisors have given him thumbs up on the possible decision of relocating provided he does not sell some of the investments that are doing well.
Asked about whether he will be contesting Shah could not confirm nor deny the reports. It is said for now it is too early as a public decision will have to be taken after the national council meeting and prior to the national congress. “As a BDP Central Committee member he cannot make that announcement now,” a BDP source said.
BDP is expected to assemble for the National Council during the July holidays while the National Congress is billed for August. It is then that the party will elect a new CC members. The last time BDP held elective congress was at Kang in 2019. The party is yet to issue writ.
The government has failed to implement some commitments and agreements that it had entered into with unions to improve conditions of public servants.
Three years after the government and public made commitments aimed at improving conditions of work and services it has emerged that the government has ignored and failed to implement all commitments on conditions of service emanating from the 2019 round of negotiations.
In its position paper that saw public service salaries being increased by 5%, the government the government has also signalled its intention to renege on some of the commitments it had made. “Government aspires to look into all outstanding issues contained in the Labour Agreement signed between the Employer and recognised Trade Union on the 27th August 2019 and that it be reviewed, revised and delinked by both Parties with a view to agree on those whose implementation that can be realistically executed during the financial years 2022/23, 2023/24 and 2024/25 respectively,” the government said.
Furthermore, in addition to reviewing, revising and de-linking of the outstanding issues contained in the Collective Labour Agreement alluded to above and taking on a progressive proposal, government desires to review revise, develop and implement human resource policies as listed below during the financial year 2022/23,2023/24,2024/25
They include selection and appointment policy, learning and development policy, transfer guidelines, conditions of service, permanent and pensionable, temporary and part time, Foreign Service, expatriate and disciplinary procedures.
In their proposal paper, the unions which had proposed an 11 percent salary increase but eventually settled for 5% percent indicated that the government has not, and without explanation, acted on some of the key commitments from the 2019/2020 and 2021/22 round of negotiations. The essential elements of these commitments include among others the remuneration Policy for the Public Service.
The paper states that a Remuneration Policy will be developed to inform decision making on remuneration in the Public Service. It is envisaged that consultations between the government and relevant key stakeholders on the policy was to start on 1st September 2019, and the development of the policy should be concluded by 30th June 2020.
The public sector unions said the Remuneration Policy is yet to be developed. The Cooperating Unions suggested that the process should commence without delay and that it should be as participatory as it was originally conceived. Another agreement relate to Medical Aid Contribution for employees on salary Grades A and B.
The employer contribution towards medical aid for employees on salary Grades A and B will be increased from 50% to 80% for the Standard Option of the Botswana Public “Officers’ Medical Aid Scheme effective 1st October 2019; the cooperating unions insist that, in fulfilling this commitment, there should be no discrimination between those on the high benefit and those on the medium benefit plan,” the unions proposal paper says.
Another agreement involves the standardisation of gratuities across the Public Service. “Gratuities for all employees on fixed term contracts of 12 months but not exceeding 5 years, including former Industrial class employees be standardized at 30% across the Public Service in order to remove the existing inequalities and secure long-term financial security for Public Service Employees at lower grades with immediate effect,” the paper states.
The other agreement signed by the public sector unions and the government was the development of fan-shaped Salary Structure. The paper says the Public Service will adopt a best practice fan-shaped and overlapping structure, with modification to suit the Botswana context. The Parties (government and unions) to this agreement will jointly agree on the ranges of salary grades to allow for employees’ progression without a promotion to the available position on the next management level.
“The fan-shaped structure is envisaged to be in place by 1st June 2020, to enable factoring into the budgetary cycle for the financial year 2021/22,” the unions’ proposal paper states. It says the following steps are critical, capacity building of key stakeholders (September – December 2019), commission remuneration market survey (3 months from September to November 2019), design of the fan-shaped structure (2 to 3 months from January to March2020) and consultations with all key stakeholders (March to April 2020).
The unions and government had also signed an agreement on performance management and development: A rigorous performance management and reward system based on a 5-point rating system will be adopted as an integral part of the operationalization of the new Remuneration System.
Performance Management and Development (PMD) will be used to reward workers based on performance. The review of the Performance Management System was to be undertaken in order to close the gaps identified by PEMANDU and other previous reports on PMS between 1st September 2019 and 30th June 2020 as follows; internal process to update and revise the current Performance Management System by January 2020.
A job evaluation exercise in the Public Service will also be undertaken to among others establish internal equity, and will also cover the grading of all supervisory positions within the Public Service. Another agreement included overtime Management. The Directorate of Public Service Management (DPSM) was to facilitate the conclusion of consultations on management of overtime, including consideration of the Overtime Management Task Team’s report on the same by 30th November 2019.
A public health expert, Dr Edward Maganu who is also the former Permanent Secretary in the Ministry of Health has said that unlike many who are expressing shock at the population census growth decline results, he is not, because the 2022 results represents his expectations.
He rushed to dismiss the position by Statistics Botswana in which thy partly attributes the low growth rates to mortality rates for the past ten years. “I don’t think there is any undercounting. I also don’t think death rates have much to do with it since the excessive deaths from HIV/AIDS have been controlled by ARVs and our life expectancy isn’t lower than it was in the 1990s,” he said in an interview with this publication post the release of the results.
Preliminary results released by Statistics Botswana this week indicated that Botswana’s population is now estimated to be 2,346,179 – a figure that the state owned data agency expressed worry over saying it’s below their projected growth. The general decline in the population growth rate is attributed to ‘fertility’ and ‘mortality’ rates that the country registered on the past ten years since the last census in 2011.
Maganu explained that with an enlightened or educated society and the country’s total fertility rate, there was no way the country’s population census was going to match the previous growth rates. “The results of the census make sense and is exactly what I expected. Our Total Fertility Rate ( the average number of children born to a woman) is now around 2.
This is what happens as society develops and educates its women. The enlightened women don’t want to bear many children, they want to work and earn a living, have free time, and give their few children good care. So, there is no under- counting. Census procedures are standard so that results are comparable between countries.
That is why the UN is involved through UNFPA, the UN Agency responsible for population matters,” said Maganu who is also the former adviser to the World Health Organisation. Maganu ruled out undercounting concerns, “I see a lot of Batswana are worried about the census results. Above is what I have always stated.”
Given the disadvantages that accompany low population for countries, some have suggested that perhaps a time has come for the government to consider population growth policies or incentives, suggestions Maganu deems ineffective.
“It has never worked anywhere. The number of children born to a woman are a very private decision of the woman and the husband in an enlightened society. And as I indicated, the more the women of a society get educated, the higher the tendency to have fewer children. All developed countries have a problem of zero population growth or even negative growth.
The replacement level is regarded as 2 children per woman; once the fertility level falls below that, then the population stops growing. That’s why developed countries are depending so much on immigration,” he said.
According to him, a lot of developing countries that are educating their women are heading there, including ourselves-Botswana. “Countries that have had a policy of encouraging women to have more children have failed dismally. A good example is some countries of Eastern Europe (Romania is a good example) that wanted to grow their populations by rewarding women who had more children. It didn’t work. The number of children is a very private matter,” said Maganu
For those who may be worried about the impact of problems associated with low growth rate, Maganu said: “The challenge is to develop society so that it can take care of its dependency ratio, the children and the aged. In developed countries the ratio of people over 60 years is now more than 20%, ours is still less than 10%.”
The preliminary results show that Mogoditshane with (88,098) is now the biggest village in the country with Maun coming second (85,293) and Molepolole at third position with 74,719. Population growth is associated with many economic advantages because more people leads to greater human capital, higher economic growth, economies of scale, the efficiency of higher population density and the improved demographic structure of society, among many others.