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Tsogwane speaks in favour of decentralised Gov’t

Local Authorities play a critical role in implementing government policies and delivering allocated national resources to the rural settlers and ordinary citizenry, therefore they have to be capacitated and well-resourced to be in a position to unearth the economic potential of their constituents better and effectively deliver government programs.

 This emerged at the Botswana Association of Local Authorities (BALA) National Members Assembly held in Gaborone this week. When officially opening the two day meet Vice President Slumber Tsogwane said transformation of local authorities to resource and capacitate them with strategic and efficient service delivery mechanisms cannot be over emphasised. Tosgwane, who was responsible for local authorities as Minister of Local Government and Rural Development prior to taking up He noted that one of the cardinal requirements was transforming the institutions leadership.

 He said today ‘s local authorities were faced with challenges of  localizing  development agendas  explaining that transformative leadership was  key to strengthening local democracy , mitigate in administrative disputes and management challenges as well as  promote good governance. Vice President underscored that local government leaders need to be academically equipped to be able to mitigate the challenges that come with leadership demand.

“There is need for local government discipline to develop training modules to equip local government leadership and its institution practitioners, we need transformational leadership that comes with imaginative and creative solutions to local community problems” he said.
 Further deliberations at the BALA assembly also suggested that local authorities have to be autonomous so as to actually be able to make investment decisions and better tap into the ideals of special economic zones, Public Private Partnerships and other developmental agendas for major infrastructural developments and significant economic undertakings.

The current government structure houses Local Authorities under one Ministry , being Local Government & Rural Development .Central government makes all key economic decisions and administration undertakings ranging from economic planning, financial management and national resources allotments.  Local authorities being implementers of government policies and actual resident administrators do so with little input on budgetary processes, developmental planning and domestic resources mobilization.

 This   was reiterated as an impediment that does not only make local authorities toothless spectators in economic planning and policy formulation but also result in poor implementation of the very government initiatives. Observers not that dependence of local authorities on central government for development process planning, maintenance, human resources recruitment and training needs, is an impediment to efficient implementation of plans and economic policies. Planning by local authorities is observed as frustrating as it is not normally clear how much funds a district or local authority will   be allocated from the national treasury.

Vice President Tsogwane said localising sustainable development goals, national economic framework, urban development plans requires a decentralized government administration system. “We need to identify and close on bottlenecks that are currently hindering the decentralization policy because local authorizes are key partners in implementation of government economic programs” he said.

 Tsogwane revealed that decentralisation has been identified as critical in realising the vision of a fairer, more equitable and sustainable future for all, explaining that President Masisi’s administration has prioritised making the vision a reality. Strategic public administration experts note that decentralising government administration and giving local authorities and district councils more administrative powers and economic decision making control automatically enhances their autonomy and confidence in economic undertakings.

“Local administrative set ups should have full  authority in making key economic  decisions from land  usage and allocation  ,investments approvals, mega  development projects undertakings  and  intra-national  trade regulations ,that will not only improve service delivery in  their  respective districts  but  also unleash various economic potential as per  different district  geographical setup, climate conditions and  natural resources available,” shared Janoslaw Wleczork Wleczork economist and  public administration expert at the International Monetary Fund(IMF).

A government administration set-up in which agricultural policies, trade regulations, investment decision making to name a few are collectively crafted, processed and disseminated from one centre without an immures and intense consideration of different regional factors from district to district has been noted as a an array of bottlenecks that does not only cause delay in service delivery but deters full utilisation of natural resources and economic ability of the respective districts.

Wleczork highlighted in various IMF  commentary on Botswana , that for developing country with an upcoming economy that Botswana is, decentralization is not only a reform strategy to be adopted but it is increasingly seen as an integral part of the development process.
 “Some of the factors that cartelized developing countries to consider decentralization are among others the anticipated improved efficiency, improved governance & equal resources distribution”  he shared.

However in Botswana despite the previous decentralisation policy adoption made over years since independence, the powered institutions being local authorities and district council remain economic toothless entities. According to a research conducted by Theophilus Tebetso Tshukudu published in May 2014 on decentralisation of public administration , the decentralisation process adopted appears to have been un-integrated and uncoordinated as delegation of economic powers and developmental duties by the central government to lower levels appears illusive.

 “Some of the functions that are ostensibly decentralised to the local authorities are actually not, or are only partially so. These include financial management, human resources management, and management of information technology services” observed Tshukudu.
The research highlights that regional development planning has been faced with a number of limitations, constraints and challenges.

The constraints relate to plan formulation, implementation and monitoring, administrative guidance, vertical and horizontal communication that has coursed a gap between the intension of decentralisation and the reality on the ground. Tshukudu observes that Decentralization must be done earnestly and with strategic plan put in place for its implementation.“The central government must ensure through its various mechanisms the effective cascading of ownership and custodianship by the local authority on issues of economic and development planning” he said.

The study further suggested that it is however very imperative for Local Authorities themselves to rise to the occasion and strengthen their economic structures and development committees. “District paramount chieftaincy, District councils through council secretariats and political leadership need to come up with economic development strategies and plans that are integrated and aligned to central government National Development Plans at the same time fitting their own district and regional developmental requisites”

“Every District in Botswana has different vegetation, climate conditions and way of life of the inhabitant people, it is entirely upon the Local Authorities to craft economic undertakings that can develop their district and generate revenue for the authority. That includes taking advantage of available opportunities to attract investors, tap into public private partnership (PPPs) projects to enhance infrastructural development and business facilitations which will eventually result in employment creation and improved lives of their local people” recommended Tshukudu.

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Pula smiles at COVID-19 vaccine

25th November 2020
COVID-19 vaccine

A squeaky and glittering metaphoric smile was the look reflected from the Pula against the greenback this week and money market researchers lean this on optimism following Monday’s announcement of another Covid-19 vaccine which is said to have boosted emerging market economies.

With other emerging market currencies, the Pula too reacted to optimism and fanfare on the new Covid-19 vaccine against the weakening US dollar which has been losing its shine since the uncertainty laden US elections.

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Choppies high on JSE rollercoaster volatility

25th November 2020
CHOPPIES

After bouncing back into the Johannesburg Stock Exchange (JSE) last week Friday, following a year of being in the freezer, the Choppies stock started this week with much fluidity.

Choppies was suspended in both the Botswana Stock Exchange and its secondary listing at the JSE for failure to publish financial results. Choppies suspension on Botswana Stock Exchange was lifted on 27 July 2020. On Friday last week, when suspension was being lifted, Choppies explained that this came into fruition “following extensive engagement with the JSE.”

Choppies stock, prior to suspension, hit a mammoth decline in value of more than 60 percent, especially in September 2018. Waking from a 24 month freezer, last week the Choppies share price was at R0.64 and the stock did not make any movement.

However, Monday was the day when Choppies stock moved vibrantly, albeit volatile. Choppies’ value was on a high volatile mood on Monday, reaching highs of 200 percent. At noon, the same Monday, the Choppies share had reached R1.05. Before taking an uphill movement, Choppies stock slightly slipped by 2 cents. But the Choppies share rode up high and by lunch time the stock had reached the day’s summit of R2.00 and that was at 13:30 when investors were buying the stock for lunch.

The same eventful Monday saw gloom on the faces of Choppies rivals, when Choppies gained by 220.31 percent around lunch time its rivals in the JSE Food & Drug Retailers sector were licking wounds. Spar lost 2.94 percent, Pick Pay fell by 2.43 percent, Shoprite 7.52 percent and Dis-Chem 1.98 percent. The only gainer was Clicks by a paltry 0.51 percent.

In an interview with BusinessPost, Choppies sponsors at the JSE PSG Capital Managing Director Johan Holtzhausen explained that the retailer’s stock was in high demand after a long suspension. He said when a company list or a suspension is lifted the market needs to find itself on the pricing of the share.

“Initially when the suspension was lifted there were more buyers than sellers. As far as we could see this created a shortage of shares so to speak and resulted in the price at which the shares traded going to R1.20 and eventually R2.05 before finding its level around R0.80 sent from a JSE perspective.

This is marked dynamics and reflect that there are investors that are positive about the stock in the long run. This is a snapshot over a short period and one requires a longer period to draw further conclusions,” said Holtzhausen in an interview talking about the Choppies stock.

On Monday this week where the Choppies value grew by 200 percent, the stock took a turn looking down, closing the day at R0.87 from a high of R2.00. According to local stockbroker Motswedi Securities on Monday while there was no movement by Choppies in the local stock exchange as the retailer appeared on the board as 141,000 shares traded at P0.60 each.

However in Choppies’ secondary listing the stock price rallied to over 200 percent during intraday trading on Monday before losing steam and declining to around R0.87 share.

Before press yesterday Choppies opened the market with the stock starting the day at R0.80 then went flat for few hours before taking a slide downward, dropping 5 cents in 30 minutes. Choppies then went flat at R0.75 for 50 minutes yesterday before going up at 10:20 am where it nearly recovered the open day price of 80 cents, but was shy of 1 cent. From 79 cents the price went flat until noon.

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Foschini-Jet merger, a class and rivalry conundrum dissection

25th November 2020
Foschini

Competition and Consumer Authority (CCA) has revealed that in its assessment of the Jet take over by Foschini, there were considerations on possible market rivalry and a clash in targeted classes.

According to a merger decision notice seen by this publication this week, high considerations were made to ensure that Foschini’s takeover of Jet is not anyhow an elimination of rivalry or competition or if the two entities; the targeted and the acquiring enterprise serves the same class of customers or offer the same products, to elude the anti-trust issues or a stretch of monopoly.

The two entities are South African retailers whose services stretched to Botswana shores.  Last month local anti-trust body, CCA, received an acquisition proposal from South African clothing retailer, Foschini, stating their intentions to take-over Jet.

South African government’s Business Rescue Practitioners earlier this year after finding out that Jet’s mother company, Edcon, is falling apart, made a decision that Foschini can buy Jet for R480 million. This means that Foschini will add Jet to its portfolio of 30 retail brands that trade in clothing, footwear, jewellery, sportswear, homeware, cell phones, and technology products from value to upper market segments throughout more than 4085 outlets in 32 countries on five continents.

However the main headache for the CCA decision which was released this week, is distinguishing the targeted and the acquiring entity businesses and services.

When doing a ‘Competitive Analysis and Public Interest’ assessment, CCA is said to have discovered that Foschini is classified as a “standard retailer” which targets middle-to-upper income consumers and it competes with stores such as; Truworths and Woolworths. The targeted entity, Jet, is on the lower league when compared to its acquirer, it serves customers of lower classes and is regarded as a discount/value retailer targeting lower income consumers or a mass market. This makes Jet to be in direct competition with Ackermans, Pepkor, Cash Bazaar and Mr Price.

“Therefore, a narrower view of the market is that Foschini through its stores trading in Botswana is not a close competitor to Jet. Additionally, there exist other major rivals who will continue to exercise competitive constraints on the merged enterprise post-merger,” concluded CCA this month.

The anti-trust body continued to explain that in terms of the Acquisition of a Dominant Position, the analysis shows that the acquisition of the target business by Foschini Botswana will result in an insignificant combined market share in the relevant market.

This made CCA reach to a conclusion that there is no case of an acquisition of a dominant position in the market under consideration or any other market on the account of the proposed transaction.

What supports the merger according to CCA is that it is in compliance with regards to ‘Public Interest Considerations’ because the findings of the assessment revealed that the transaction is as a result of the need for a Business Rescue by the target enterprise. This is so because in the event that the proposed transaction fails, it will translate into the loss of the employment positions at the target business.

“On that note the Authority (CCA) found it necessary to ensure that the proposed merger does not result in any retrenchments or redundancies. In light of this, the assessment revealed the critical need to protect the employees of the merged entity from possible merger specific retrenchments/ redundancies,” said CCA.

Before making a determination that the recently proposed transaction is not likely to result in the prevention or substantial lessening of competition or endanger the continuity of the services offered in the relevant market, CCA said it then moved into a concern for public interest which is a protection enshrined in the Competition Act of 2018.

CCA’s concern was mostly loss of livelihood or employment by 126 Batswana workers at Jet stores, stating that possible retrenchments or redundancies may arise as a result of implementation of the proposed merger.

Much to the desire of trade union or labour movements in Botswana and across Southern Africa where the Jet stores are stemmed-who also raised concerns about the retail’s workers job security- CCA subjects Foschini to keep the target entity 126 workers.

“There shall be no merger specific retrenchments or redundancies that may affect the employees of the merged enterprises. For clarity, merger specific retrenchments or redundancies do not include (the list is not exhaustive): i. voluntary retrenchment and/or voluntary separation arrangements; ii. Voluntary early retirement packages; iii. Unreasonable refusals to be redeployed; iv. Resignations or retirements in the ordinary course of business; v. retrenchments lawfully effected for operational requirements unrelated to the Merger; and vi. Terminations in the ordinary course of business, including but not limited to, dismissals as a result of misconduct or poor performance,” said CCA.

CCA also orders that Foschini informs it about all the details of 126 Jet employees within thirty (30) days of the merger approval date. CCA should also know information of when Foschini is implementing the merger, within 30 days of the approval date.

Other conditions include Foschini sharing a copy of the conditions of approval to all employees of the Jet or their respective representatives within ten (10) days of the approval date.

“Should vacancies arise in the target, the merged enterprise shall consider previous employment at one of the non-transferring Jet stores to be a positive factor to be taken into account in the consideration of offering potential employment,” said CCA.

According to CCA, in cases of any job losses, for the Authority to assess whether the retrenchments or redundancies are merger specific, at least three months before (to the extent that this deadline can be practically achieved and in terms of the prevailing and legally required employment practices) any retrenchments or redundancies are to take place, inform the Authority of:  i. The intended retrenchments; ii. The reasons for the retrenchments; iii. The number and categories of employees affected; iv. The expected date of the retrenchments.

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