Botswana Railways (BR) in collaboration with Business Botswana and the Botswana Investment and Trade Centre (BITC) held an interactive session with potential investors, where it was revealed that the country’s railway line is looking P15 billion worth of investment in its ambitious infrastructure development plan.
As Botswana yearns to advance into high income economy by taking advantage of available natural resources and exploring possible partnerships models to develop industrial and labour-intensive sectors that can absorb many of its unemployed citizenry, infrastructures registers as one of the key missing factors that are desperately imperative in connecting the puzzle in realising the nations ‘s economic aspirations. Infrastructure facilitates trade, linking production sites to regions of demand and the market, in the process unlocking other value chain business opportunities and support industries.
Among investors which BR engaged were also experts and leading personalities and entrepreneurs from Banking, Mining, Assert and Property Management, Fund Managers, Construction and Railway Lines from neighbouring countries and abroad to engage on key national rail projects that Botswana seeks to embark on.
It emerged at this Breakfast briefing held in Masa Square, Central Business District (CBD) Gaborone that these multibillion-pula projects if undertaken and effectively delivered would go a long way into unlocking various economic sectors, deliver higher GDP value and create much needed employment for Batswana especially the youth.
The two projects are the Mosetse –Kazungula and Mmamabula –Lephalale railways links. These projects which are estimated at P15 billion stands to push amongst others Botswana Coal industry which is currently at infant stage despite increasing global demand. The coal resources in Botswana are estimated at over 200 billion tonnes of deposits underground. Currently not even a quarter is unearthed as only Morupule Coal mine is an operating mine with salable coal reaching the market.
When giving an overview of Botswana Railways’ ambition with these projects, Chief Executive Officer Leonard Makwinja reiterated that adequate physical rail Infrastructure is instrumental to the growth and competitiveness of Botswana given its strategic geographical location at the Centre of Southern Africa. “By developing enabling infrastructure, the Government can achieve the goal of transforming the country into a regional hub for Foreign Direct Investment by tapping into both neighbouring and international markets” he said.
P13 billion Mosetse –Kazungula rail project
The Mosetse-Kazungula project is positioned to provide a railway line from Mosetse in Botswana, connecting to Zambia and beyond through the Kazungula bridge. The rail line is part of the North South Corridor (NSC) with numerous benefits such as being gate-way to North African markets promoting inter regional trade, connecting North African region to maritime ports in South Africa, reduction of haulage traffic on roads amongst others.
Botswana railways chief added that the project cultivates an opportunity for tourism industry by providing for tourist trains as it runs through a wildlife rich area with various attractive landscapes and natural beauty of Chobe region. “This also provides alternative transport mode for Agricultural products from Pandamatenga Farms, remember agriculture also comes as one of the sectors we intend to develop as a country to diversify from the mineral revenue dependence,” added Makwinja
He explained that Botswana Railways is open to partner with potential investors noting that the recent State Visit to China by President Masisi has indicated capacity and willingness to participate by Chinese Government. On November 12th Minister of Finance and Economic Development, Kenneth Matambo together with Vice Chairman of China International Development Cooperation Agency signed the letter of Exchange on the technical Survey for projects submitted during the state visit to China by His Excellency President Masisi.
It was explained that as part of the assessment for the projects submitted, it is a requirement to undertake a technical Survey that will guide on the feasible projects after which negotiations for funding will commence between the two Governments. The Mosetse-Kazungula Railway line is one of the earmarked projects under consideration with others including Francistown- Nata Road, Nata-Gweta-Sehithwa-Gumare-Etsha-Mohembo roads.
At the singing of letters of exchange Minister Matambo reiterated that no commitment of funding of these projects was yet sealed, explaining that discussions will ensue once the technical Surveys have been completed for projects deemed feasible. Botswana Railways Chief revealed at the investor briefing that Chinese government might avail only a certain percentage of the total estimated cost considering the fact that there are a number of other key earmarked projects of high imperative competing for the funds such as the Francistown-Nata road which is currently in a poor state.
The Mosetse–Kazungula railway project is estimated to P 13 billion excluding rolling stock requirements with estimated initial tonnage at 2 million tons and is expected to grow to 4 million tons. Makwinja explained that 14 locomotives will be required with traffic geared to mostly be transit with wagons supplied from point of origin. “Line is designed as cape gauge, heavy haul at 26 ton/axle for 367 Km, the line goes through wildlife and agricultural areas and stations will be at Mosetse, Nata, Pandamatenga and Kazungula” he explained.
Mmamabula-Lephalale Rail Link Project
Estimated at P 2 billion to erect, the 56 km Mmamabula Lephalale Rail Link which will connect Mmamabula/Dibete in Botswana to Lephalale in South Africa aims to link Botswana’s over 200 billion coal deposits to South African’s heavy haul lines. One key feature of the project is a bridge across Limpopo River of Chief Executive Makwinja revealed that Botswana Railways and its South African counterparts are to sign a Memorandum of Understanding to facilitate progress of the project.
He further explained that the railway line would be a gate way to South African ports for the coal market providing for a shorter route for North South Corridor coupled with Mosetse-Kazungula line. The rail way line which will be designed as cape gauge, heavy haul at 26 ton/axle with two years initial tonnage estimated at 10.5 MTPA will link the Masama coal fields which are currently explored by Botswana Stock Exchange (BSE) listed Minergy to South African market.
Permanent Secretary in the Ministry of Transport and Communication, Kabelo Ebineng shared that the earmarked undertakings are capital intensive projects that needed Government to think outside the box and approach the private sector so as synergies and areas of collaboration can be identified. “You are all aware that the Kazungula Bridge which has both the road and rail components is nearing completion hence the need for us to give impetus to the Mosetse-Kazungula Rail Line construction,”he said.
“These projects are central to us as a government. I am also aware of the high appetite for Mmamabula- Lephalale within the coal mining entities as this will represent the shortest route for the North South Corridor. As Botswana government we consider all these projects very strategic to our quest for regional integration as a country.”
The Monetary Policy Committee (MPC) of the Bank of Botswana decided to maintain the Bank Rate at 3.75 percent at a meeting held on October 21, 2021. Briefing members of the media moments after the meeting Bank of Botswana Governor Moses Pelaelo explained that Inflation decreased from 8.8 percent in August to 8.4 percent in September 2021, although remaining above the upper bound of the Bank’s medium-term objective range of 3 – 6 percent.
He said Inflation is projected to revert to within the objective range in the second quarter of 2022, mainly on account of the dissipating impact of the recent upward adjustment in value added tax (VAT) and administered prices from the inflation calculation; which altogether contributed 5.2 percentage points to the current level of inflation. Overall, risks to the inflation outlook are assessed to be skewed to the upside.
These risks include the potential increase in international commodity prices beyond current forecasts; persistence of supply and logistical constraints due to lags in production; possible maintenance of travel restrictions and lockdowns due to the COVID-19 pandemic; domestic risk factors relating to regular annual price adjustments; as well as second-round effects of the recent increases in administered prices and inflation expectations that could lead to generalised higher price adjustments.
Furthermore, aggressive action by governments (for example, the Economic Recovery and Transformation Plan (ERTP)) and major central banks to bolster aggregate demand, as well as the successful rollout of the COVID-19 vaccination programmes, could add pressure to inflation. These risks are, however, moderated by the possibility of weak domestic and global economic activity, with a likely further dampening effect on productivity due to periodic lockdowns and other forms of restrictions in response to the emergence of new COVID-19 variants.
A slow rollout of vaccines, resulting in the continuance of weak economic activity and the possible decline in international commodity prices could also result in lower inflation, as would capacity constraints in implementing the ERTP initiatives. Real Gross Domestic Product (GDP) for Botswana grew by 4.9 percent in the twelve months to June 2021, compared to a contraction of 5.1 percent in the corresponding period in 2020.
The increase in output is attributable to the expansion in production of both the mining and non-mining sectors, resulting from an improved performance of the economy from a low base in the corresponding period in the previous year. Mining output increased by 3 percent in the year to June 2021, because of a 3.2 percent increase in diamond mining output, compared to a contraction of 19.3 percent in 2020. Similarly, non-mining GDP grew by 5.4 percent in the twelve-month period ending June 2021, compared to a decrease of 0.7 percent in the corresponding period in 2020.
The increase in non-mining GDP was mainly due to expansion in output for construction, diamond traders, transport and storage, wholesale and retail and real estate. Projections by the Ministry of Finance and Economic Development and the International Monetary Fund (IMF) suggest a rebound in economic growth for Botswana in 2021. The Ministry projects a growth rate of 9.7 percent in 2021, moderating to a growth of 4.3 percent in 2022. On the other hand, the IMF forecasts the domestic economy to grow by 9.2 percent in 2021; and this is expected to moderate to a growth of 4.7 percent in 2022. The growth outcome will partly depend on success of the vaccine rollout.
According to the October 2021 World Economic Outlook (WEO), global output growth is forecast at 5.9 percent in 2021, 0.1 percentage point lower than in the July 2021 WEO update. The downward revision reflects downgrades for advanced economies mainly due to supply disruptions, while the growth forecast for low-income countries was lowered as the slow rollout of COVID-19 vaccines weigh down on economic recovery. Meanwhile, global output growth is anticipated to moderate to 4.9 percent in 2022, as some economies return to their pre-COVID-19 growth levels.
The South African Reserve Bank, for its part, projects that the South African GDP will grow by 5.3 percent in 2021, and slow to 1.7 percent in 2022. The MPC notes that the short-term adverse developments in the domestic economy occur against a growth-enhancing environment. These include accommodative monetary conditions, improvements in water and electricity supply, reforms to further improve the business environment and government interventions against COVID-19, including the vaccination rollout programme.
In addition, the successful implementation of ERTP should anchor the growth of exports and preservation of a sufficient buffer of foreign exchange reserves, which have recently fallen to an estimate of P47.9 billion (9.8 months of import cover) in September 2021. Overall, it is projected that the economy will operate below full capacity in the short to medium term and, therefore, not creating any demand-driven inflationary pressures, going forward.
The projected increase in inflation in the short term is primarily due to transitory supply-side factors that, except for second-round effects and entrenched expectations (for example, through price adjustments by businesses, contractors, property owners and wage negotiations), do not normally attract monetary policy response. In this context, the MPC decided to continue with the accommodative monetary policy stance and maintain the Bank Rate at 3.75 percent. Governor Moses Pelaelo noted that the Bank stands ready to respond appropriately as conditions warrant.
The Special Economic Zones Authority (SEZA) recently launched the Mayor’s forum. The Authority will engage with local governments to improve ease of doing business, boost investment, and fast track the development of Botswana’s Special Economic Zones (SEZs).
The Mayors Forum was established to recognise the vital role that local authorities play in infrastructure development; as they approve applications for planning, building and occupation permits. Local authorities also grant approvals for industrial licenses for manufacturing companies. SEZA Chief Executive Officer (CEO) Lonely Mogara explained that the Mayor’s Forum was conceptualised after the Authority identified local authorities as critical partners in achieving its mandate and improving the ease of doing business. SEZA intends to develop legal instructions for different Ministries to align relevant laws with the SEZ Act, which will enable the operationalisation of the SEZ incentives.
“Engaging with local government will bring about the much-needed transformation as our SEZs are located in municipalities. For us, a good working relationship with local authorities is the special ingredient required for the efficient facilitation of SEZ investors, which will lead to their competitiveness and ultimate growth,” Mogara stated.
The Mayors Forum will focus on the referral of investors for establishment in different localities, efficient facilitation of investors, infrastructure and property development, and joint monitoring and evaluation of the SEZ programme at the local level. SEZA believes that collaborating with local authorities will bring about much-needed transformation in the areas where SEZs are located and ultimately within the national economy. Against this background, the concept of hosting a Mayors Forum was birthed to identify and provide solutions to possible barriers inhibiting ease of doing business.
One of the key outcomes of the Mayors Forum is the free flow of information between SEZA and local authorities. Further, the two will work together to change the business environment and achieve efficiency and competitiveness within the SEZs. Francistown Mayor Godisang Rasesigo was elected as the founding Chairman of the Mayors Forum. The forum will also include the executive leadership of all city, town and district councils, among them Mayors, City or Council Chairpersons, Town Clerks and District Commissioners.
Mogara explained that initial efforts would engage the local government in areas that host SEZA’s eight SEZs: Gaborone, Lobatse, Selebi Phikwe, Palapye, Francistown, Pandamatenga and Tuli Block. Meanwhile, Mogara told WeekendPost that they are confident that a modest 150 000 jobs could be unleashed in the next two to five years through a partnership with other government entities. He is adamant that the jobs will come from all the nine designated economic zones.
This publication gathers that the Authority is currently sitting on about P30 billion worth of investment. The investment, it is suggested, could be said to be locked up in government bureaucracy, awaiting the proper signatures for projects to take off. Mogara informed this publication that the Authority onboard investors who are bringing P200 million and above. He pointed out that more are injecting P1 billion investments compared to the lower stratum of their drive.
SEZA’s mandate hinges on the nine Special Economic Zones – being Gaborone (SSKIA), whose focus is of Mixed-use (Diamond Beneficiation, Aviation); Gaborone (Fairgrounds) for Financial services, professional services and corporate HQ village; Lobatse for Beef, leather & biogas park; Pandamatenga designated for Agriculture (cereal production); Selibe Phikwe area which is also of a Mixed-Use (Base metal beneficiation & value addition), Tuli Block Integrated coal value addition, dry port logistics centre, coal power generation and export; Francistown is set aside for International Multimodal logistics hub/ Mixed Use (Mining, logistics and downstream value-adding hub); whilst Palapye is for Horticulture.
The knowledge economy buzz speaks to SEZA’s agenda, according to Mogara. The CEO is determined to ensure that SEZA gets the buy-in from the government, parastatals and the private sector to deliver Botswana to a high economic status. “This will ensure more jobs, less poverty, more investment, and indeed wealth for Batswana,” quipped the enthusiastic Mogara. SEZA was established through the SEZ Act of 2015 and mandated with establishing, developing and managing the country’s SEZs. The Authority was tasked with creating a conducive domestic and foreign direct investment, diversifying the economy and increasing exports to facilitate employment creation.
De Beers rough diamond production for the third quarter of 2021 increased by 28% to 9.2 million carats, reflecting planned higher Production to meet more robust demand for rough diamonds. In Botswana, Production increased by 33% to 6.4 million carats, primarily driven by the planned treatment of higher-grade ore at Jwaneng, partly offset by lower Production at Orapa due to the scheduled closure of Plant 1.
Namibia’s Production increased by 65% to 0.4 million carats, reflecting the marine fleet’s suspension during Q3 2020 as part of the response to lower demand at that time. South Africa production increased by 34% to 1.6 million carats due to the planned treatment of higher grade ore from the final cut of the Venetia open pit and an improvement in plant performance. Production in Canada decreased by 13% to 0.8 million carats due to lower grade ore being processed.
Demand for rough diamonds continued to be robust, with positive midstream sentiment reflecting strong demand for polished diamond jewellery, particularly in the key markets of the US and China. Rough diamond sales totalled 7.8 million carats (7.0 million carats on a consolidated basis) from two Sights, compared with 6.6 million carats (6.5 million carats on a consolidated basis) from three Sights in Q3 2020 and 7.3 million carats (6.5 million carats on consolidated basis) from two Sights in Q2 2021.
De Beers tightened Production guidance to 32 million carats (previously 32-33 million carats) due to continuing operational challenges, subject to the extent of any further Covid-19 related disruptions. Commenting on the production figures, Mark Cutifani, Chief Executive of De Beers parent company Anglo American, said: “Production is up 2%(1) compared to Q3 of last year, with our operating levels generally maintained at approximately 95%(2) of normal capacity.
The increase in Production is led by planned higher rough diamond production at De Beers, increased output from our Minas-Rio iron ore operation in Brazil, reflecting the planned pipeline maintenance in Q3 2020, and improved plant performance at our Kumba iron ore operations in South Africa. “We are broadly on track to deliver our full-year production guidance across all products while taking the opportunity to tighten up the guidance for diamonds, copper, and iron ore within our current range as we approach the end of the year.
“Our copper operations in Chile continue to work hard on mitigating the risk of water availability due to the challenges presented by the longest drought on record for the region, including sourcing water that is not suitable for use elsewhere and further increasing water recycling.” On Wednesday, De Beers announced the value of rough diamond sales (Global Sightholder Sales and Auctions) for the eighth sales cycle of 2021. The company raked in US$ 490 million for the cycle, a slight improvement when compared to US$467 million recorded in 2020 cycle 8.
Owing to the restrictions on the movement of people and products in various jurisdictions around the globe, De Beers Group has continued to implement a more flexible approach to rough diamond sales during the eighth sales cycle of 2021, with the Sight event extended beyond its normal week-long duration. As a result, the provisional rough diamond sales figure quoted for Cycle 8 represents the expected sales value from 4 October to 19 October. It remains subject to adjustment based on final completed sales.
Commenting on the cycle 8 sales De Beers Group Chief Executive Officer Bruce Cleaver said that: “As the diamond sector prepares for the key holiday season and US consumer demand for diamond jewellery continues to perform strongly, we saw further robust demand for rough diamonds in the eighth sales cycle of the year ahead of the Diwali holiday when demand for rough diamonds is likely to be affected by the closure of polishing factories in India.”