Botswana Railways courts investors for P15 billion mega rail projects
Business
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.”
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Business
Grit divests from Letlole La Rona
Grit Services Limited, a member of the pan African real estate group, London Stock Exchange listed Grit Real Estate Income Group is divesting from Letlole La Rona Limited (LLR), a local real estate company established by government investment arm Botswana Development Corporation over a decade ago.
The Board of Directors of Letlole La Rona Limited this week announced in a statement to Unitholders that Grit Services Limited (‘Grit’) has informed them of its intention to exit its investment in the company.
Grit has been a material shareholder in LLR since 2019. On 07 March 2023, Grit sold 6 421 000 linked units, representing 2.29% of the Company’s total securities in issue, at a market value of BWP 22 537 710.
This trade follows previous sales of 6.79% in December 2022, as communicated to Unitholders on 10 January 2023, as well as a further sale of 4.78% (representing 13 347 068 linked units) on 24 February 2023 to various shareholders.
In aggregate, Grit has sold 13.9% shareholding in the Letlole La Rona between December 2022 and March 2023, resulting in current shareholding of 11.25% in the Company.
Letlole La Rona said in the statement that the exit process will take place in an orderly manner so as to maintain stability of the Company’s share price.
The statement explained that Grit’s sale of its entire shareholding in LLR is in line with its decision to exit investments where it does not have majority control, or where it has significant exposure to currencies other than US dollar, Euro or hard-currency-pegged revenue streams.
“Grit has announced similar decisions pertaining to certain of its hospitality assets in Mauritius recently. The Company would like to advise Unitholders that it remains focused on long-term value delivery to all stakeholders” LLR said
In July last year as part of their Go-to-Africa strategy Letlole La Rona acquired an initial 30% equity stake in Orbit Africa Logistics, with an option to increase this investment to 50%. OAL is a special purpose vehicle incorporated in Mauritius, owning an industrial asset in a prime industrial node in Nairobi, Kenya.
The co-investment was done alongside a wholly owned subsidiary of London listed Grit. The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of Nairobi center, serving the main industrial node, the port of Mombasa and the industrial town of Athi River and is strategically located 11 kilometers south of the international airport and 9.6 kilometers from the Inland Container Depot.
Grit shareholding in Letlole La Rona was seen as strategic for LLR, for the company to leverage on Grit’s already existing continental presence and expand its wings beyond Botswana borders as already delivered by Kenya transaction.
Media reports have however suggested that LLR and Grit have since late last year had fundamental disagreements on how to go about the Go-to-Africa strategy amongst other things, fuelled by alleged Botswana government interference on the affairs of LLR.
Government through LLR founding shareholder – Botswana Development Corporation has a controlling stake of around 40 percent in the company. Government is the sole shareholder of Botswana Development Corporation.
Letlole La Rona recently released their financial results for the six months ended December 2022, revenue increased by 4% to P50.2 million from P48.4 million in the prior comparative six months, whilst operating profit was up 8% to P36.5 million. Profit before tax of P49.7 million was reported, an increase of 8% on the prior comparative six months.
“We are encouraged by the strong results, notwithstanding a challenging economic environment. Our performance was mainly underpinned by annual lease escalations, our quality tenant base and below average market vacancy levels, especially in our warehouse portfolio,” Kamogelo Mowaneng, Letlole La Rona Chief Executive Officer commented.
LLR reported a weighted average lease expiry period of 3.3 years and escalation rates averaging 6.8% per annum for the period ended 31 December 2022.Its investment portfolio value increased by 14% year-on-year to close the period at P1.4 billion, mainly driven by the acquisition of a 30% stake in OAL in July 2022.
The Company also recorded a significant increase in other income, predominantly due to foreign exchange gains on the OAL shareholder loan. “We continue to explore pipeline opportunities locally, and regionally in line with our Go-to-Africa strategy and our interest remains on value-accretive investments,” Mowaneng said.
An interim distribution of 9.11 thebe per linked unit was declared on the 6th of February 2023 for the half-year period to 31 December 2022, comprising of a dividend of 0.05 thebe and debenture interest of 9.06 thebe per linked unit which will be paid to linked unit holders registered in the books of the Company at the close of business on 24 February 2023.
Business
Stargems Group establishes Training Center in BW
Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.
The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.
“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.
In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices. Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.
“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.
Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy, Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.
“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.