MVAF bleeds P100 million as 1152 lose blood on Botswana roads
Business
The Motor Vehicle Accident Fund (MVAF) keeps bleeding money out of its coffers to pay out for claims made by people who lost blood on Botswana roads. In the current financial year, for 2,934 claims, MVAF paid a whopping P100 million to claimants and service providers.
According to 2017 MVAF Annual Report which was released recently, 444 people lost their lives on Botswana roads last year, while those who were seriously injured were 1,152. The P100 million payments to claimants and service providers make 2,934 of the claims made and 63. 7 percent was paid for medicals. In 2016 the claims were higher than those of 2017 taking a whopping P112 million of the fund’s money.
Since 2013, payments to claims made to MVAF have been increasing together with the number of claimants. In 2016 fatalities were 450 and went down to 444 in 2017. Furthermore, MVAF has set aside close to P130 million for loss of support by those who perished or got injured on Botswana roads. For those who are doing medical undertakings, MVAF will pay around P35 million which was set aside last year. No one has ever been paid for loss of life according to the recently released annual report.
MVAF chairman Abraham Botes said: “As the target year draws near, we believe Botswana will have contributed towards the reduction of road traffic crashes and road traffic fatalities even though the country may not achieve the targeted reduction of 50% by year 2020. The Fund will continue to commit resources within its means, to address the respective pillars of the Decade of Action for Road Safety in order to meet its targets.”
MVAF, the universal compensation provider to people affected by road accidents, hence does not sell any products or services for a fee. In its latest annual report, MVAF recorded that total assets increased from P3.82 billion in 2016 to P3.83 billion in 2017 on the back of increases in non-current assets from P3.0 billion to P3.1 billion while current assets reduced from P808.7 million to P727.2 million.
Also, according to the Fund financial results, the reserves reduced from P2.7 billion in 2016 to P2.6 billion in 2017 while non-current liabilities increased from P794.6 million in 2016 to P999.9 million in 2017. Current liabilities on the other hand reduced from P313.0 million in 2016 to P247.2 million in 2017 according to the fund’s financials.
The revenue streams of the Fund are the fuel levy, third party cover, investment income and Government subvention. The fuel levy rate is 5 thebe per litre of petroleum product sold. The Fuel levy revenue comprises fuel levy charged to fuel importers into Botswana. This levy income is accounted for on an accrual basis and its rate is 5 thebe per litre. According to the latest financial results, the net fuel levy income increased by 3.6% from P50.1million in 2016 to P52.0 million in 2017.
According to MVAF CEO Micheal Tlhangwane, the Fund perpetually advocates for the increase of the fuel levy rate for years so that MVAF can increase its revenues. Tlhangwane said the Fund has, “engagement with government for the restoration of fuel levy to its previous rate of 9.5 thebe per litre are ongoing as the Fund now heavily relies investment income to meet the costs of claims and operating costs, which poses serious financial risks.”
Tlhagwane said the Fund will also initiate a limited legislative review to ensure that both the MVA Fund Act of 2007 and the MVA Fund Regulations of 2008 are relevant to the current operating environment geared towards improving administration of claims. When giving an economic performance on the 2017 annual report, MVAF chairman Botes said the local economy is yet to recover and this has a direct impact on the operations of the Fund.
He said most mines have closed due to depressed international prices of base metals which affected the local economy. According to Botes, most of the mines use fuel driven machinery for their operations and closure of these mines resulted in lower utilization of fuel, translating into lower fuel levy income.
MVAF also has another revenue source, Third Party Cover, which comprises of premiums charged on foreign registered vehicles which enter the country. The Third Party Cover decreased by P2 million from P10 million in 2016 to P8 million in 2017.
MVAF’s former money spinner, the Investment Income source of revenue, has registered a huge decline of P78 million. In 2016 it was P94 million and it went down to P16 million in 2017, a drastic fall in a source of revenue.
The investment income comprises of the of the following: (a)Interest income which is recognised on a time proportion basis, taking account of the principal outstanding and the effective rate over the period to maturity, when it is determined that such income will accrue to the Fund. (b)Dividends are recognised when the right to receive payment is established. These relate to investments in local and offshore investments.
Lastly, the other part of Investment income is (c) rental income revenue includes gross rental income, service charges and management charges from properties and income from property trading. Rental income is accrued on a straight-line basis over the contractual periods as and when the Fund becomes entitled to the income.
MVAF chairman Botes has hinted that the drastic downflow of revenue coming from the Investment income challenges in the property sector. Botes said the property sector continues to experience challenges owing to oversupply of residential houses on account of difficult economic situation and the restructuring by major parastatals resulting in job losses and releasing of many houses into the rental market.
“The banking sector has also not performed well owing to reduction in the bank rate and difficult trading conditions. The bank rate closed the year at 5.0% following a cut by 50 basis points cut during the third quarter of 2017. Headline inflation was at 3.20% which was within the Bank of Botswana’s objective rate of 3% – 6%. The Fund was affected negatively by unrealized foreign exchange losses on offshore investments as the Botswana Pula continued to strengthen against the United States Dollar,” said Botes.
According to Botes, the Board will, in 2018 review its governance documents and develop tools to enable Board performance evaluations. He said MVAF continues to work closely with Public Enterprises, Evaluation and Privatization Agency (PEEPA) to develop the relevant Corporate Governance Frameworks to remain up to date with best practices.
“The Fund remains optimistic that the economic conditions will improve. We commit to do all possible within our means, to reverse our current financial deficits, and re-build the strength of our financial reserves. We will continue to engage Government for the possible reinstatement of the fuel levy rate to 9.5 thebe per litre, to ensure the sustainability of the Fund,” said Botes.
Botes also said MVAF will also review its investment strategies to align with the prevailing market conditions and target better returns. He also said the provision of compensation, medical and rehabilitative assistance to our claimants will remain our priority.
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.
Business
Food import bill slightly declines
The latest figures released by Statistics Botswana this week shows that food import bill for Botswana slightly declined from around P1.1 billion in November 2022 to around P981 million in December during the same year.
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