Choppies is running at a high speed in a race against time to avoid the risk of being delisted from the Botswana Stock Exchange Limited (BSEL) end of this month.
Release of financials remains a thorn for Choppies as many believe the retail giant is a sinking ship following explosive speculations on its financial operations, delay of financial results and a fight for shares at Choppies Zimbabwe. Earlier this week, BSEL warned Choppies to release audited financial statements for the ended June 2018 or face strict repercussions. According to a statement released by BSEL, Choppies is in contravention with the BSEL Listing Requirements and “is under threat of suspension and possible termination.”
In an interview with BusinessPost this week, Choppies CEO Ramachandran Ottapathu promised that they will release the results before the stipulated time and that the retailer will not be delisted. Motswedi Securities Head of Research Garry Juma said in an interview that he personally does not think Choppies will risk being delisted. He was confident that before the end of October, Choppies would have listed.
Choppies failure to release financial results saw the local grocer being suspended from the BSEL on 21 September resulting in its share price dropping drastically from P1.25 to 40 thebe. The suspension of Choppies took six days, and prompted a lot of activity in the JSE where its value fell by 85 percent. After the fall, the price rebounded by 22 thebe in the BSEL to trade at 62 thebe.
According to Motswedi Securities recent Weekly Financial Markets Highlights, it will take time for the retailer to recover from its crash. “…the likelihood of the stock recovering all of the losses , of which currently stand at -74.4%, in the remaining three months are very slim, considering that they have already notified the public that they expected a profit after tax decline of 20% or more in a trading statement on the 21st of September,” said Motswedi Securities.
Motswedi Securities has also observed that investor confidence in the stock has waned considerably and without any further clarification on the company’s situation, a lot of uncertainty may cloud the performance of the stock. Choppies is estimated to have lost about P1.7 billion in value following the drop in share price. Ottapathu has relieved that on paper in the past weeks Choppies would have lost almost quarter of a billion but “everything is going well operationally despite all the speculations.”
Ottapathu believes the Choppies fall in value is due to delay of financial statements which created a lot of perception and speculation in the market. A change of auditors from KPMG to PricewaterhouseCoopers (PwC) is blamed in delay of financial results and Choppies recently released a statement saying:
“The Board of Directors of Choppies Enterprises Limited advises that they have instructed management to perform more detailed procedures on verification and valuation of inventory in conjunction with the new external auditor PricewaterhouseCoopers (PwC), appointed on 31 January 2018. This process will only be completed by 30 April 2018 and hence creates uncertainty regarding the impact of any potential adjustments, if any, on the results.”
Choppies share price over-punished and the JSE effect
Market researcher Juma is of the view that the Chopppies price was “over-punished” because of Zimbabwe shareholder fight and the delay of financial results. He believes that Choppies should have made a quick statement of clarification on any issue which threatens to mar its reputation or lessen investor confidence. According to him, clarity should have been made on delay of financial results and the Zimbabwe shareholder war.
Juma also stated that the Choppies share price fall in BSEL was because of the influence from the big market that is the Johannesburg Stock Exchange (JSE). Juma said Choppies fall in value was a trend set in South Africa where investors were having fears over the Zimbabwe shareholding saga and delay of financial results, the retailer was following suit of what is happening in the JSE.
Juma explained that JSE is a huge market which can influence market trends of smaller markets like the BSEL. The researcher explained the sensitivity of the South African economy which can be ‘touched by anything’ as the South African Rand also thrives in “free floating exchange rate.” He was explaining a scenario of if JSE catches flu, BSEL would catch flu too.
Choppies, Shoprite scramble for Africa
Choppies, built from humble beginnings from a hilly beef town of Lobatse, grew in leaps and bounds and became a force to be recon with for years. In 2012 Choppies listed on BSEL with market capitalization of P2.4 billion and three years later it got its secondary listing on JSE and listed about 277-million ordinary shares at R4.90 per share. After JSE listing Choppies embarked on a crusade of taking over Africa retail markets and market its presence in neighboring countries like South Africa.
But there was another bull on the kraal in Shoprite, a big player for decades, to compete with Choppies. Market observers believe Choppies has failed in the South Africa market and according to Juma, the South African retailer remains with an upper hand over the local grocer. As Choppies’ rise almost diminished the presence of Shoprite in Botswana, the case is vice versa at South Africa and Juma believes this market dynamics will take a long time to change.
Just days after the last month’s decline in Choppies market value, a South African analyst predicted in the Business Day that the fall in the local retail price could make it a target for the likes of Shoprite while Choppies was still under pressure. The analyst sees Choppies as a “small player in a big pond. Also, this publication has recently intercepted information that Shoprite may be planning to “take Choppies out of the game” by a hostile takeover following the local retailer’s market misfortunes. Information from the JSE suggests that Shoprite may be involved in “fronting for Choppies shares.” Ottapathu was not aware of such move by Shoprite and the South African retailer did not respond to our questions on the issue before press time.
However some market enthusiasts are doubtful that Shoprite sees Choppies as a rival, but it is “just an irritant.” According to observers, it is unlikely that there was anyone buying a lot of Choppies shares without buying during the past couple of days as this may be a possibility for a hostile takeover to happen.
Juma also does not buy the logic that Choppies may be up for a hostile takeover, putting his confidence on two major shareholders Ottapathu and Farouk Ismail, saying they will not let that happen so easy. He said “not now, not anytime soon.” Juma reminded how the two men build Choppies from humble beginnings to a retailer giant it is today.
Adamant and unmoved by the recent market misfortunes that happened for Choppies, Ottapathu told BusinessPost that a hostile takeover by anyone whether bigger than Choppies or small, is impossible. Ottapathu was unfazed saying business will go on like normal and financial results will soon be released in few days. Shoprite refused to comment allegation of its attempted hostile take-over of Choppies but said: “Regrettably we cannot comment on any public speculation.”
In today’s digital age, banking is no longer just about visiting a branch during business hours. It’s about putting you, the customer, in the driver’s seat of your financial journey. But what exactly is self-service banking, and how do you stand to benefit from it as a customer?
Self-service banking is all about giving you the power to manage your finances on your terms. Whether you want to check your account balance at midnight, transfer money while on vacation, or deposit cash without waiting in line, self-service banking makes it possible. It’s like having a virtual branch at your fingertips, ready to assist you 24/7.
This shift towards self-service banking was catalyzed by various factors but it became easily accessible and accepted during the COVID-19 pandemic. People of all ages found themselves turning to digital channels out of necessity, and they discovered the freedom and flexibility it offers.
Anyone with a bank account and access to the internet or a smartphone can now bank anywhere and anytime. Whether you’re a tech-savvy millennial or someone who’s less comfortable with technology, you as the customer have the opportunity to manage your finances independently through online banking portal or downloading your bank’s mobile app. These platforms are designed to be user-friendly, with features like biometric authentication to ensure your transactions are secure.
Speaking of security, you might wonder how safe self-service banking really is. Banks invest heavily in encryption and other security measures to protect your information. In addition to that, features like real-time fraud detection and AI-powered risk management add an extra layer of protection.
Now, you might be thinking, “What’s the catch? Does self-service banking come with a cost?” The good news is that for the most part, it’s free. Banks offer these digital services as part of their commitment to customer satisfaction. However, some transactions, like wire transfers or expedited bill payments, may incur a small service fee.
At Bank Gaborone, our electronic channels offer a plethora of services around the clock to cater to your banking requirements. This includes our Mobile App, which doesn’t require data access for Orange and Mascom users. We also have e-Pula Internet Banking portal, available at https://www.bankgaborone.co.bw as well as Tobetsa Mobile Banking which is accessible via *187*247#. Our ATMs also offer the flexibility of allowing you to deposit, withdraw cash, and more.
With self-service banking, you have the reins of your financial affairs, accessible from the comfort of your home, workplace, or while you’re on the move. So why wait? Take control of your finances today with self-service banking.
Duduetsang Chappelle-Molloy is Head: Marketing and Corporate Communication Services
Botswana has recently recorded a significant trade deficit of over P6 billion. This trade deficit, which occurred in November 2023, follows another deficit of P4.7 billion recorded in October of the same year. These figures, released by Statistics Botswana, highlight a decline in export revenues as the main cause of the trade deficit.
In November 2023, Botswana’s total export revenues amounted to P2.9 billion, a decrease of 24.3 percent from the previous month. Diamonds, a major contributor to Botswana’s exports, experienced a significant decline of 44.1 percent during this period. This decline in diamond exports played a significant role in the overall decrease in export revenues. However, diamonds still remained the leading export commodity group, contributing 44.2 percent to export revenues. Copper and Machinery & Electrical Equipment followed, contributing 25.8 percent and 10.1 percent, respectively.
Asia emerged as the leading export market for Botswana, receiving exports worth P1.18 billion in November 2023. The United Arab Emirates, China, and Hong Kong were the top destinations within Asia, receiving 18.6 percent, 14.2 percent, and 3.8 percent of total exports, respectively. Diamonds and Copper were the major commodity groups exported to Asia.
The Southern African Customs Union (SACU) received Botswana’s exports worth P685.7 million, with South Africa being the main recipient within SACU. The European Union (EU) received exports worth P463.2 million, primarily through Belgium. Australia received exports worth P290 million, while the United States received exports valued at P69.6 million, mostly composed of diamonds.
On the import side, Botswana imported goods worth P9.5 billion in November 2023, representing an increase of 11.2 percent from the previous month. The increase in imports was mainly driven by a rise in Diamonds and Chemicals & Rubber Products imports. Diamonds contributed 23.3 percent to total imports, followed by Fuel and Food, Beverages & Tobacco at 19.4 percent and 15.0 percent, respectively.
The SACU region was the top supplier of imports to Botswana, accounting for 77.7 percent of total imports. South Africa contributed the largest share at 57.2 percent, followed by Namibia at 20.0 percent. Imports from Asia accounted for 9.8 percent of total imports, with Diamonds, Machinery & Electrical Equipment, and Chemicals & Rubber Products being the major commodity groups imported. The EU supplied Botswana with imports worth 3.2 percent of total imports, primarily in the form of Machinery & Electrical Equipment, Diamonds, and Chemicals & Rubber Products.
Botswana’s recent trade deficit of over P6 billion highlights a decline in export revenues, particularly in the diamond sector. While Asia remains the leading export market for Botswana, the country heavily relies on imports from the SACU region, particularly South Africa. Addressing the trade deficit will require diversification of export markets and sectors, as well as efforts to promote domestic industries and reduce reliance on imports.
The business sector in Botswana is optimistic about the year 2024, according to a recent survey conducted by the Bank of Botswana (BoB). The survey collected information from businesses in various sectors, including agriculture, mining, manufacturing, construction, and finance, among others. The results of the survey indicate that businesses expect trading conditions to improve in the first quarter of 2024 and remain favorable throughout the year.
The researchers found that firms anticipate improvements in investment, profitability, and goods and services exported in the fourth quarter of 2023 compared to the previous quarter. These expectations, combined with anticipated growth in all sectors except construction and real estate, contribute to the overall confidence in business conditions. Furthermore, businesses expect further improvements in the first quarter of 2024 and throughout the entire year.
Confidence among domestic market-oriented firms may decline slightly in the first quarter of 2024, but overall optimism is expected to improve throughout the year, consistent with the anticipated domestic economic recovery. Firms in sectors such as mining, retail, accommodation, transport, manufacturing, agriculture, and finance are driving this confidence. Export-oriented firms also show increased optimism in the first quarter of 2024 and for the entire year.
All sectors, except agriculture, which remains neutral, are optimistic about the first quarter of 2024 and the year ending in December 2024. This optimism is likely supported by government interventions to support economic activity, including the two-year Transitional National Development Plan (TNDP) and reforms aimed at improving the business environment. The anticipated improvement in profitability, goods and services exported, and business investment further contributes to the positive outlook.
Firms expect lending rates and borrowing volumes to increase in the 12-month period ending in December 2024. This increase in borrowing is consistent with the expected rise in investment, inventories, and goods and services exported. Firms anticipate that domestic economic performance will improve during this period. Domestic-oriented firms perceive access to credit from commercial banks in Botswana to be relaxed, while export-oriented firms prefer to borrow from South Africa.
During the fourth quarter of 2023, firms faced high cost pressures due to increased input costs, such as materials, utilities, and transport, resulting from supply constraints related to conflicts in Ukraine-Russia and Israel-Hamas. According to the survey report, the firms noted that cost pressures during the fourth quarter of 2023 were high, mainly attributable to increase in some input costs, such as materials, utilities, and transport arising from supply constraints related to the Ukraine-Russia and Israel-Hamas wars. “However, firms’ expectations about domestic inflation decreased, compared to the previous survey, and have remained within the Bank’s 3 – 6 percent objective range, averaging 5.4 percent for 2023 and 5.4 percent for 2024. This suggests that inflation expectations are well anchored, which is good for maintenance of price stability,” reads the survey report in part.
However, firms’ expectations about domestic inflation decreased compared to the previous survey, and inflation expectations remained within the Bank’s objective range of 3-6 percent. This suggests that inflation expectations are well anchored, which is beneficial for maintaining price stability.
In terms of challenges, most firms in the retail, accommodation, transport, manufacturing, construction, and finance sectors considered the exchange rate of the Pula to be unfavorable to their business operations. This is mainly because these firms import raw materials from South Africa and would prefer a stronger Pula against the South African rand. Additionally, firms in the retail, accommodation, transport, and mining sectors cited other challenges, including supply constraints from conflicts in Russia-Ukraine and Israel-Hamas, as well as new citizen economic empowerment policies that some firms considered unfavorable to foreign direct investment.
On the positive side, firms highlighted factors such as adequate water and electricity supply, a favorable political climate, an effective regulatory framework, the availability of skilled labor, and domestic and international demand as supportive to doing business in Botswana during the fourth quarter of 2023.
Overall, the business sector in Botswana is optimistic about the year 2024. The anticipated improvements in trading conditions, supported by government interventions and reforms, are expected to drive growth and profitability in various sectors. While challenges exist, businesses remain confident in the potential for economic recovery and expansion.