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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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Sefalana releases best ever HY Financial results

23rd February 2021
Sefalana MD: Chandra Chauhan

Sefalana released their best ever half year financial results. Revenue grew by 2.3% to BWP2.91 billion (HY 2019: BWP2.85 billion). Gross profit increased by 17.4% to BWP215.1 million (HY 2019:

BWP183.3 million) yielding an improved gross profit margin of 7.4% (HY 2019: 6.4%). Administrative expenses went up by 7.8% to BWP97.0 million (HY 2019: BWP90.0 million). EBITA shot up by 31.5% to BWP138.6 million (HY 2019: BWP105.4 million) translating to EBITA margin of 4.8% (HY 2019: 3.7%).

Investment income was BWP22.8 million (HY 2019: BWP28.2 million). Profit before tax increased by 22.8% to BWP148.7 million (HY 2019: BWP121.1 million). Effective tax rate was lower at 23.9% (HY 2019: 28.4%) translating to a 30.7% hike in profit after tax to BWP113.2 million (HY 2019: BWP86.7 million).

Local Trading consumer goods segment was resilient despite a marginal decline in revenue. Revenue declined by 1.6% to BWP1.59 billion (HY 2019: BWP1.62 billion), however a 2.0% decline in cost of goods sold offset decline in revenue to see gross profit increase by 7.6% to BWP75.6 million (HY 2019: BWP70.3 million), an improved gross profit margin of 4.8% (HY 2019: 4.3%) was realized as a result.

Profit for the period was down 2.4% to BWP34.8 million (HY 2019: BWP35.7 million) mainly impacted by restrictions on liquor sales which have been in place for the entire reporting period. At the beginning of the financial year, the group manned 4 Hyper Stores (“Sefalana Hyper”), 25 Cash& Carry stores (“Sefalana Cash& Carry”) and 29 supermarket retail stores (“Sefalana Shopper”).During the period, Sefalana Shopper retail store in Shakawe, Sefalana Liquor outlet in Tlokweng were opened, and Sefalana Shopper Molepolole store was refurbished.

Lesotho has seen its revenue increase by 30.9% to BWP295.7 million (HY 2019: BWP225.8 million). Profit before tax spiked 162.4% to BWP1.9 million (HY 2019: -BWP3.1 million). Namibia has performed well to place it as the largest contributor to profit before tax. The segment’s revenue increased by 5.5% to BWP896.8 million (HY 2019: BWP850.2 million). Gross profit rose by 25.4% to BWP60.9 million (HY 2019: BWP48.6 million) translating to an improved gross profit margin of 6.8% (HY 2019: 5.7%). Profit before tax went up by 40.6% to BWP39.8 million (HY 2019: BWP28.3 million).

The Manufacturing arm had an excellent performance. Revenue rose by 26.7% to BWP125.0 million (HY 2019: BWP98.7 million). Gross profit increased by 39.4% to BWP28.6 million (HY 2019: BWP20.5 million), producing a gross profit margin of 22.9% (HY 2019: 20.8%). Profit before tax shot up by 96.5% to BWP16.0 million (HY 2019: BWP8.1 million). The profitability of this business is largely driven by the timing of orders placed by Government for its various feeding schemes and availability of raw material.

The milling division has for all six months manufactured and supplied in full to the Government, however only one third of the total contract volumes was awarded to the business in respect of the 24 month contract issued in April 2020. Raw materials have been procured and contracts entered into for procurement of grain to fulfill any additional volumes that the Government might require.

Beverages division was awarded a 24 month supply of milk tender to the Government for the children’s feeding scheme in March 2019 which is currently being fulfilled. There has been a shortage in raw materials in the region due to a reduced number of dairy cows during the pandemic as farmers placed more focus on meat production. Despite an underway catch up on reinstating dairy cow population the business expects shortages to continue in early 2021.

The Trading others segment experienced a decline on its top and bottom line figures. Revenue went down by 43.9% to BWP42.2 million (HY 2019: BWP75.2 million). Gross profit went down by 23.9% to BWP11.5 million (HY 2019: BWP15.1 million). Profit before tax went down 56.8% to BWP3.2 million (HY 2019: BWP7.4 million). The segment was impacted by a reduction in sales of motor vehicles as customers prioritized spending on essential goods and services.

The Property segment in Botswana performed well, with all most all properties tenanted for leases ranging between two-six years. Setlhoa site is complete, comprising of Sefalana Shopper store, petrol station and rentals to Ital Tiles and CTM. Just over 5000sqm of land remains vacant. The space initially set out for the group’s Motor Dealership will be considered for other alternative options in a bid to optimize return from the site. In contra, Zambia performed below the previous period as the past two years elapsed in search of replacement tenants for their premises due to an influx of similar properties.

A 3000sqm warehouse space is expected to commence development in February 2021 to house bottled water and fruit juice plants. Milling division anticipates expansion by the end of 2021, the expansion is to include a wheat milling plant which will leverage on existing infrastructure and complement existing milling activities.

A phase 2 investment in Australian business is expected in May 2021. Five more stores will be acquired through this investment to bring the stores to a total of 12 in that market. The investment amount is anticipated to be around P80 million, to be funded through existing cashflows.

The preference share agreement on the South African consortium matures in July 2022. The group’s appetite for conversion of its investment in to a 30% equity stake will be influenced by the covid-19 pandemic impact. As such a decision will be made closer to maturity date.

The group maintains that its 40% interest in Grow Mine Africa (Pty) Limited, the Preferred Bidder in the National Lottery remains in place. According to management, the judgement of urgent application was in favor of Grow Mine and the formal ruling by the courts will be issued next week. Accordingly, further negotiations with the Gambling Authority are expected in quarter one of 2021.

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Botswana Diamonds secures funding for CKGR exploration

23rd February 2021
Sekaka-Diamonds-Exploration

Botswana Diamond PLC, a Botswana Stock Exchange (BSE) listed exploration company has moved a step closer towards developing it’s much talked about gem deposits around the Central Kalahari area in Botswana.

On Tuesday the company notified its shareholders through a circular published on the BSE, that it has entered into a cooperation agreement to fund exploration of its prospecting licence assets in Botswana with Diamexstrat Botswana Pty Ltd (DESB), which in turn has an alliance agreement with Burgundy Diamond Mines Limited, an Australia Stock Exchange (ASX) listed mining company.

BOD’s prospecting assets comprise the recently acquired Sekaka Diamonds Exploration Pty Ltd (Sekaka) database and Prospecting Licenses, as well as the Prospecting Licences held by BOD’s subsidiary, Sunland Minerals Pty Ltd (Sunland Minerals).

According to the statement from Botswana Diamond, Diamexstrat Botswana and its partner, Burgundy would earn up to a 70% interest in BOD’s Botswana Sunland Minerals and Sekaka’s Prospecting Licences.

On the other hand BOD can earn a 15% interest in Prospecting Licences held by Diamexstrat and its partners on the first US$1.5m spent on exploration by Diamexstrat where BOD’s database assists in the discovery of a primary kimberlite.

On 3rd party Prospecting Licences where targets are identified in BOD’s database, a joint earn-in will be negotiated at the time. For new Botswana Prospecting Licences, Diamexstrat, and its partner, Burgundy can earn up to 70%.  Under the Agreement, the parties have agreed to utilize BOD’s diamond exploration database, which it acquired in last year as part of the acquisition of Sekaka Diamonds Exploration Pty Ltd (Sekaka).

The database contains the results of work undertaken by Sekaka’ former owner, Petra Diamonds, since 2005, and includes data in respect of airborne, including the Falcon survey, and ground magnetics (including gravity and EM), in addition to heavy mineral sampling.

DESB has six months to conduct an initial review of BOD’s database , in order to identify exploration targets within any of BOD’s existing Sunland and Sekaka Prospecting Licences (excluding the KX36 Kimberlite held by Sekaka) (the “Designated PL”).

DESB will be entitled to earn a 50% interest in a Designated PL by meeting the annual minimum exploration expenditure commitment on the Designated PL and in addition either discovering a kimberlite through the intersection of kimberlite in any drill holes or a potential secondary diamondiferous alluvial deposit through the intersection of gravels in a drill hole or pit.

DESB shall be entitled to earn an additional 1%, to hold 51% in any Designated PL, by proving the primary kimberlite or alluvial deposit to be diamondiferous through funding the required micro-diamond analysis or bulk sampling.

DESB will also be entitled to earn a further 19%, to hold 70% in the Designated PL, by subsequently funding and delivering a bankable feasibility study. Any Prospecting Licence not selected by DESB at the end of the six-month period will remain wholly-owned by BOD.

Where it is agreed that geological data present in the database that was not previously available to DESB has assisted in the discovery of a kimberlite or a secondary alluvial deposit within the Exploration Area , BOD shall be granted a 15% free carry for the initial approved US$1.5 million of Exploration Expenditure by DESB on the discovery. Once the Exploration Expenditure has been incurred, each party will contribute funding in accordance with its interest or be diluted pro-rata.

Sunland Minerals holds 12 active Prospecting Licences in the Gope/CKGR (Kalahari) area. As at 30 June 2020, the audited carrying value of BOD’s Sunland Minerals assets amounted to £1.1 million and Sunland’s loss before tax amounted to £43,101.

In the year ended 30 June 2020, Sunland’s Exploration Expenditure, mainly comprising licence fees and the costs of maintaining the licence in good standing, together with agreed fixed costs and expenses, amounted to £65,760.

On 30 November 2020, Botswana Diamonds completed the acquisition of Sekaka which holds three Prospecting Licences in the Central Kalahari Game Reserve in Botswana, PL169/2019, PL058/2007 and PL224/2007, which includes the KX36 kimberlite pipe.

The acquisition also included an extensive database. The consideration comprised a cash payment of US$300,000 and a 5% royalty on future revenues.  The first deferred consideration cash payment of US$150,000 will be payable on 27 November 2021, being the first anniversary of completion of the acquisition and the balance on or before 27 November 2022.

In Sekaka’s audited annual financial statements for the year ended 30 June 2019, Sekaka reported a loss before taxation of Pula 16,875,179 (equivalent to approximately £1.16 million, which included a non-cash foreign exchange loss of Pula 11,688,432 (equivalent to approximately £0.8 million) on the carrying value of the historic intercompany debt which was extinguished on acquisition.

As at 30 June 2019, Sekaka had audited total assets of Pula 6,565,700 (equivalent to approximately £425k). Diamexstrat is a privately owned company focused on diamond exploration in Botswana chaired by Gerard de la Vallee Poussin and with Barry Bayly as the Chief Executive Officer. Both Gerard and Barry have extensive experience in the exploration for diamondiferous kimberlites in Africa.

Commenting on the cooperation between BOD and Diaexstrat , James Campbell, Managing Director, of BOD said the partnership will progress the extensive and highly prospective exploration assets in Botswana which comprises Sekaka Diamonds and with our own drill-ready prospects in Sunland Minerals.

“I look forward to working with the Diamexstrat and Burgundy teams made-up of complimentary highly experienced and leading experts in the field of diamond exploration and project development”.  John Teeling, Chairman of Botswana Diamonds Board of Directors said Botswana is one of the world’s best addresses for diamond exploration. He explained that the combination of a fresh approach and advanced technology, supported by a recovering diamond market, presents both parties with significant opportunities.

“I am delighted to announce this partnership with experienced Diamexstrat, and its ASX listed-partner, Burgundy, which expands and deepens our exploration work.”

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Tlou Energy announces first carbon neutral plant

23rd February 2021
Tlou-Enegery

As countries continue to battle climate change which is a result of increased carbon dioxide in the atmosphere, local coal-bed Methane (CBM) exploration outfit, Tlou Energy this week revealed intent to make the Lesedi Power project the first carbon neutral power project in Botswana.

The multi-listed company, which is focused on generating cleaner power in Botswana for supply into the local and regional power markets said they have already negotiated land access and leasing agreements with relevant land-holders for the power generation facility and new field operations camp.

According to a statement from Botswana Stock Exchange (BSE) listed energy entity, there have been recent steps taken to acquire additional land for carbon sequestration and there is also availability of land and labour within the Lesedi project which favours Tlou Energy in developing carbon neutral power project.

Carbon sequestration involves capturing and storing carbon dioxide from the atmosphere so that it potentially reduces its contribution to global warming.  It is essentially the long-term storage of carbon in soil, plants, and geological formations. Carbon sequestration can occur naturally and as a result of human activities and typically refers to the storage of carbon that has the immediate potential to become carbon dioxide gas.

Tlou Energy Managing Director, Tony Gilby commented: “There is considerable scope for using the savanna ecosystem of the Lesedi region for carbon sequestration by protecting it from burning and intensive grazing leading to an increase in the ability of the vegetation to store carbon over time.” “This will assist Tlou to be able to supply carbon neutral power to the considerable number of potential customers in the region.”

Gilby also revealed that the regional power consumer, Orapa diamond mine operated by Debswana and located north of Tlou’s gas fields has publicly stated their objective to decrease their carbon footprint. According to Tlou Energy MD, the Lesedi project area is considered as shrub savanna containing various tree species. He however noted that subdivisions found within Tlou’s project area are predominantly rural with most of the land being deployed due to livestock agriculture.

“Tlou  is  in  the  process  of  negotiating  the  acquisition  of  land  to  reduce  livestock numbers  and  implement  fire mitigation measures. This will substantially increase the amount of available woody biomass which can be used to claim carbon credits within the project area,” he said.

The company said carbon credits will be offset against the carbon dioxide associated with Lesedi’s gas fired power generation component noting that the gas will in any event produce considerably less carbon dioxide compared to the ones generated by coal and diesel.

“Carbon reduction is part of Tlou’s commitment to the environment and part of the company’s Environmental, Social and Governance (ESG) program aimed at enhancing the lives of the local population and regional communities,” said Tlou energy MD.

“Tlou has a track record of supporting local charities and youth groups and looking to grow local employment with investment in community ventures. This includes programs aimed at growing higher nutritional value crops for local livestock so grazing could be reduced and biomass preserved, as well as promoting wildlife.”

Meanwhile, last month Botswana Government through Ministry of Mineral Resources, Green Technology & Energy Security (MMGE) underscored its intention to support power generation through Coal-Bed- Methane (CBM). Tlou’s MD Gilby commented, “It is great to see that Botswana is open for business and the Government is motivated to get the gas industry up and running.

Gilby revealed that his company plans to start development of the Lesedi project as soon as possible noting that “confirmation of the Government’s enthusiasm to provide the necessary support to ensure commercial development of CBM is very well received.” “In addition, we have also recommenced negotiations with Botswana based project financiers this month as we aim to close a deal for funding as soon as possible.

After what was an extremely challenging year the Company is already making progress in 2021 and anticipate further advancement on all fronts in the coming term. We look forward to updating the market with further developments in due course,” he concluded.

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