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Choppies remains towering on FAR Property far-reaching expansion

Botswana Stock Exchange-listed FAR Property Company (FPC) property portfolio continues to go far and its three previous financial reports show a trend of giant retailer Choppies being the mainstay of its evergreen growth.

In FPC latest abridged financial results released this week; Choppies is shown as a towering figure in the company’s property portfolio dominating the FPC portfolio. In the portfolio by Gross leasable area (GLA), industrial property holds majority of 53 percent and it is dominated by Choppies. Also, Choppies takes Grade A of Segment Split by Tenant Grade while local tenants takes Grade B and new start-up companies got Grade C.

“The development and growth of our portfolio was initially fuelled by Choppies’ growing footprint as well as mounting demand for commercial and industrial properties in Botswana,” says FPC. Owners of retail giant Choppies formed FPC in 2010 and according to the property giant this was with a view of establishing a portfolio of properties that could answer the requirements of the ever growing Choppies Group. Former President Festus Mogae, wealthy billionaires Ramachandran Ottapathu and Farouk Ismail on the boards of the two companies; Choppies and FAR Property.  

In 2016 before FPC listing on BSE, stockbrokerage firm Motswedi Securities said the company was positioned to grow with the help or benefit from “Choppies rapid expansion” and the recently released financial results shows the same move. A year after Motswedi Securities horoscopic financial view, FPC and Choppies Chairman Mogae also put the retail giant forth as FPC’s anchor in the property segment.

“FPC has continued to grow its property portfolio. There has been sufficient investment into the land bank for continuing development growth into future years. This, in addition to other tenanting, will assist meeting the needs of the prime tenant, Choppies, particularly with regard to its infrastructural requirements as well as retail outlets,” said Mogae.

According to the recently released financial results, six commercial and two industrial properties are close to completion at the current date these. According to FPC, these will add to revenue growth in 2019, meaning the company’s growth is expected to continue to the next financial year.

FPC revenue increased from P121.8 million for the year to June 2017 to P134 .8 million for the year to June 2018, according to the latest financial results.  This means the revenue increased by 11 percent. FPC profit after net finance cost improved by 6 percent from June last year to June 2018.  While rent yield increased by 7 percent, property portfolio also grew by 5 percent from the last financial year.

FPC PROPERTIES

The investment property portfolio is estimated to have increased to close to P1.3 billion in the current financial year with considerations of new prospects. FPC has in the last financial year expanded out of Botswana borders to Zambia and South Africa. Top properties for FPC include the 10304m2 GLA industrial building called ERF 2282 base in the Rustenburg in South Africa. According to FPC, this is the largest development outside the boundaries of Botswana and it was custom built to cater for the needs of Choppies Warehousing Services (Proprietary) Limited. Last valued at R46 million, is dominated by occupancy of Choppies.

Another development in Rustenburg is the much anticipated ERF 2288 which whose extension must be up by now because in the last financial year as the building was said to be facing completion in this current financial year of 2017/2018. The development is also valued at R46 million.

In August 2017 FPC expanded to Lusaka, Zambia with an acquisition of a USD2,3 million shopping centre which is anchored by giant retailer Choppies. Other tenants of the Lusaka mall are Standard Chartered Bank Zambia Limited, Stanbic Bank of Zambia Limited, Finance Bank of Zambia Limited, First National Bank of Zambia Limited, AB Bank of Zambia Limited and List Café.

In an interview with BusinessPost FPC Director Ottapathu confirmed that the company has reaped better this year because of their new developments. In discussion was also the company’s mall in the country’s second city of Francistown. The 2150 square feet mall was built on the banks of Tati River in the last financial year. “It is doing well and its tenant occupancy is almost 80 percent. It has surely added value to our portfolio as we continue to expand,” said Ottapathu.

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Business

Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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Global CEOs Back Plan to Unlock $3.4 Trillion Potential of Africa Free Trade Area

23rd January 2023

African heads of state and global CEOs at the World Economic Forum Annual Meeting backed the launch of the first of its kind report on how public-private partnerships can support the implementation of the African Continental Free Trade Area (AfCFTA).

AfCFTA: A New Era for Global Business and Investment in Africa outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the AfCFTA, and illustrative examples from successful businesses in Africa to guide businesses in entering and expanding in this area.

The report aims to provide a pathway for global businesses and investors to understand the biggest trends, opportunities and strategies to successfully invest and achieve high returns in Africa, developing local, sub-regional and continental value chains and accelerating industrialization, all of which go hand in hand with the success of the AfCFTA.

The AfCFTA is the largest free trade area in the world, by area and number of participating countries. Once fully implemented, it will be the fifth-largest economy in the world, with the potential to have a combined GDP of more than $3.4 trillion. Conceived in 2018, it now has 54 national economies in Africa, could attract billions in foreign investment, and boost overseas exports by a third, double intra-continental trade, raise incomes by 8% and lift 50 million people out of poverty.

To ease the pain of transition to its new single market, Africa has learned from trade liberalization in North America and Europe. “Our wide range of partners and experience can help anticipate and mitigate potential disruptions in business and production dynamics,” said Børge Brende, President, and World Economic Forum. “The Forum’s initiatives will help to ease physical, capital and digital flows in Africa through stakeholder collaboration, private-public collaboration and information-sharing.”

Given the continent’s historically low foreign direct investment relative to other regions, the report highlights the sense of excitement as the AfCFTA lowers or removes barriers to trade and competitiveness. “The promising gains from an integrated African market should be a signal to investors around the world that the continent is ripe for business creation, integration and expansion,” said Chido Munyati, Head of Regional Agenda, Africa, World Economic Forum.

The report focuses on four key sectors that have a combined worth of $130 billion and represent high-potential opportunities for companies looking to invest in Africa: automotive; agriculture and agroprocessing; pharmaceuticals; and transport and logistics.

“Macro trends in the four key sectors and across Africa’s growth potential reveal tremendous opportunities for business expansion as population, income and connectivity are on the rise,” said Wamkele Mene, Secretary-General, AfCFTA Secretariat.

“These projections reveal an unprecedented opportunity for local and global businesses to invest in African countries and play a vital role in the development of crucial local and regional value chains on the continent,” said Landry Signé, Executive Director and Professor, Thunderbird School of Global Management and Co-Chair, World Economic Forum Regional Action Group for Africa.

The Forum is actively working towards implementing trade and investment tools through initiatives, such as Friends of the Africa Continental Free Trade Area, to align with the negotiation process of the AfCFTA. It identifies areas where public-private collaboration can help reduce barriers and facilitate investment from international firms.

About the World Economic Forum Annual Meeting 2023

The World Economic Forum Annual Meeting 2023 convenes the world’s foremost leaders under the theme, Cooperation in a Fragmented World. It calls on world leaders to address immediate economic, energy and food crises while laying the groundwork for a more sustainable, resilient world. For further information,

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Electricity generation down 15.8%

9th January 2023

Electricity generation in Botswana during the third quarter of 2022 declined by 15.8%, following operational challenges at Botswana Power Corporation’ Morupule B power plant, according to Statistics Botswana Index of Electricity Generation (IEG) released last week.

The index shows that local electricity generation decreased by 148,243 MWH from 937,597 MWH during the second quarter of 2022 to 789,354 MWH during the third of quarter of 2022.

This decrease, according to the index, was mainly attributed to a decline in power supply realized at Morupule B power station. The index shows that as a result of low power supply from the plant, imported electricity during the third quarter of 2022 increased by 76.3 percent (123,831 MWH), from 162,340 MWH during the second quarter of 2022 to 286,171 MWH during the current quarter and Statistics Botswana added that the increase was necessitated by the need to augment the shortfall in generated electricity.

In the index Statistics Botswana stated that Eskom was the main source of imported electricity at 42.0 percent of total electricity imports. “The Southern African Power Pool (SAPP) accounted for 38.4 percent, while the remaining 10.1, 9.1 and 0.5 percent were sourced from Electricidade de Mozambique (EDM), Cross-border electricity markets and the Zambia Electricity Supply Corporation Limited (ZESCO), respectively. Cross-border electricity markets are arrangements whereby towns and villages along the border are supplied with electricity from neighbouring countries such as Namibia and Zambia.”

The government owned statistics entity stated that distributed electricity decreased by 2.2 percent (24,412 MWH), from 1,099,937 MWH during the second quarter of 2022 to 1,075,525 MWH during the third quarter of 2022. The entity noted that electricity generated locally contributed 73.4 percent to electricity distributed during the third quarter of 2022, compared to a contribution of 85.2 percent during the third quarter in 2022 and added that this gives a decline of 11.8 percentage points. “The quarter-on-quarter comparison shows that the contribution of electricity generated to electricity distributed decreased by 11.8 percentage points compared to the 85.2 percent contribution during the second quarter of 2022.”

Statistics Botswana meanwhile stated that the year-on-year analysis shows some improvement in local electricity generation. Recent figures from entity show that the physical volume of electricity generated increased by 36.3 percent (210,319 MWH), from 579, 036 MWH during the third quarter of 2021 to 789,354 MWH during the current quarter. According to Statistics Botswana electricity generated locally contributed 73.4 percent to electricity distributed during the third quarter of 2022, compared to a contribution of 57.7 percent during the same quarter in 2021. This gives an increase of 15.7 percentage points.

 

The entity noted that trends also show an increase in physical volume of electricity distributed from 2013 to the third quarter of 2022, thereby indicating that there are ongoing efforts to meet the domestic demand for power. “There has been a gradual increase of distributed electricity from the first quarter of 2013 to the third quarter of 2022, even though there are fluctuations. The year-on-year perspective shows that the amount of distributed electricity increased by 7.2 percent (71,787 MHW), from 1,003,738 MWH during the third quarter of 2021 to 1,075,525 MWH during the current quarter.”

The statistics entity noted that year-on-year analysis show that during the third quarter of 2022, the physical volume of imported electricity decreased by 32.6 percent (138,532 MWH), from 424,703 MWH during the third quarter of 2021 to 286,171 MWH during the third quarter of 2022. “There is a downward trend in the physical volume of imported electricity from the first quarter of 2013 to the third quarter of 2022. The downward trend indicates the country’s continued effort to generate adequate electricity to meet domestic demand, hence the decreased reliance on electricity imports.”

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