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Buoyant MVAF joins big guns in property market

Motor Vehicle Accident Fund (MVAF) finally got approval to purchase shares in a company that owns the lucrative Airport Junction Mall-one of the Fund’s biggest investment this year, after months of waiting,

MVAF acquired 24.85 percent shareholding in Feune Pty Ltd from Exrod Pty Ltd. Feune owns Airport Junction Mall meaning the Fund now owns the plush mall which is adjacent to; the A1 road which goes to the north and the Airport road heading to Sir Seretse Khama International Airport. The MVAF-Exrod merger which was under the keen perusal of the Competition Authority finally got approved by the antitrust body last week.

The antitrust body said it has determined through the analysis of the facts of the merger that, “the 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 markets under consideration. The market structure in the relevant market will not be altered, and as such this transaction does not raise any competition concerns. In addition, there are no public interest concerns that could arise as a result of the proposed transaction.”

MVAF provides universal compensation to people affected by road accidents, hence does not sell any products or services for a fee.  In its latest financial statement released last week, 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. In its bid to increase its revenues, MVAF has perpetually advocated for the increase of the fuel levy rate for years. According to MVAF CEO Micheal Tlhagwane in the Fund’s latest financial results, the accident compensation fund is planning  “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. The other revenue source, Third Party cover, 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.  

The investment income comprises of the of the following: (a)Interest income which is recognized 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.  Even though the investment income has decreased by P78 million from being P94 million in 2016 to P16 million in the current year, the Airport Junction Mall will directly falls in this portfolio.

The latest MVAF investment venture, Airport Junction mall, will be buoyed by currently undergoing extension where there will be 30 shops and 488 parking area according to information reaching this publication.  There are currently 74 tenants, 51 145m² of two retail floors, 104 stores and 2378 parking bays. Since its inception Airport Junction has always been a money spinning venture according to property experts and investors with a space of 41 445m².

Property expert Sethebe Manake said for anyone investing in property; whether an individual or a company, it will depend on how deep the pocket is because currently there are lots of risks involved in the property venture. She said she hopes anyone in the property venture knows what they are doing given the fact that household utility or the cost of living is currently higher-cushion needs to be exercised.

With a huge decline in investment income, MVAF hopes that buying Airport Junction mall will boosts its investment in property.  According to the MVAF the Fund’s Investment Portfolio was valued at P3.73 billion as at 31st December 2017, recording a marginal increase of P10.0 million from P3.72 billion reported as at 31st December 2016. According to MVAF CEO, the year 2017 was another challenging year in the history of MVA Fund, as for a second successive year, the Fund recorded a high total comprehensive loss owing to depressed primary sources of income like the fuel levy, high unrealized offshore foreign exchange losses and high claims provisions.

However on a positive, the Fund received 2 934 claims during 2017, representing a decline of 3% when compared to 3 019 claims received in 2016 and the decline was attributable to reduction in serious injuries. But the Fund failed to settle claims well as the settled claims were 2 340 in 2017 unlike 2 568 claims settled in 2016.According to MVAF chairman Abraham Botes, 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.

The Airport Junction Mall will join others in MVAF property portfolio which consists of the MVA Fund Head Office building, residential property investments in Gaborone and Francistown as well as retail partnership properties in Palapye, Francistown and Maun.  According to MVAF, the portfolio was valued at P155.5 million as at 31st December 2017, recording an increase of P22.0 million from P133.5 million recorded in 31st December 2016. “The overall impact of the negative performance by the local equities as well as the decrease in money market instruments affected the asset growth despite the strong run by the offshore investments,” said the MVAF financial statement.

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The Bulb World starts operations in South Africa

8th April 2021

Homegrown LED light manufacturing company, The Bulb World, has kick started operations in South Africa, setting in motion the company’s ambitious continental expansion plans.

The Bulb World, which was partly funded by Citizen Entrepreneurial Development Agency (CEDA) at the tune of P4 million, to manufacture LED lighting bulbs for both commercial and residential use in 2017, announced last year that it will enter the South African market in the Special Economic Zone (SEZ) of North West province under the auspices of North West Development Corporation (NWDC).

The company has already secured a deal with South Africa authorities which entails production factory shells and tax incentives arrangements.

The company founder and Chief Executive Officer, Ketshephaone Jacob has also previously stated that the company is looking for just under P50 million to finance its expansion strategy and is reaching out to institutional investors such as Botswana Public Officers Pensioners Fund (BPOPF) and government investment arm, Botswana Development Corporation (BDC).

However, Jacob told WeekendPost that instead of sitting and waiting for expansion funding the company has started hitting the ground running.

“We have decided to get in the streets of SA, start selling lights from door to door, ” said Jacob who is in currently in Rusternburg to oversee the introduction of The Bulb World products in the market.

Jacob explained more brand activations will be undertaken in South Africa. “The plan is to do it the whole of North West and Limpopo province, through hawkers, we give the hawkers the lights to sell at a factory price and they put a mark up and make a living,” he said.

The Bulb World operates from Selibe Phikwe, it currently employees 65 young people, 80 % of which are Phikwe youth. The company plans to add 100 jobs this year alone as it forges ahead with its regional and continental expansion plans.

In July this year Bulb World products will hit South African Shelves:  Pick n Pay, Checkers and Africa’s largest retailer Shoprite.

The Bulb World has been registered as a company in South Africa; the company will start producing lights from Mogwasa after striking a special economic zones deal with North West Development Corporation in North West Province South Africa.

“Over the next 10 years we are looking to create over 5,000 jobs in Africa. Through our expansion into all of Africa we will be able to create employment for various individuals in different sectors namely; manufacturing, distribution electronics and retail,” Jacob told this publication earlier this year.

Jacob said if all goes well, the plan is to have taken over Africa or rather penetrated, and have prevalent presence in the African market.

“We are gunning to have at least 30 percent market share by then. According to a 2016 Market Survey, the total valuation of sales for LED Lighting was 57BN, a portion of which we plan to have taken over by then,” he said.

 

While the company has set its eyes on Africa, Jacob said, the company has not fully exploited its local growth, indicating that there could be strategic factories built to supply neighbouring countries of Angola and Zimbabwe.

“There is potential for further local expansion as well to other areas of Botswana if things run smoothly as anticipated. Hopefully in the long-term if our fellow Africans and all these markets receive us well we are planning to build another factory,” he said.

“We are looking to build another factory in the Chobe/Ngamiland Area that will give priority to markets in Zimbabwe and Angola,” he said

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‘Oil exploration will have minimal impact’

30th March 2021
Okavango-River-Basin

The Maun based Okavango Research Institute (ORI) has downplayed the impacts of oil and gas exploration in part of Okavango delta arguing that given the distance proposed the likelihoods of negative impacts drilling these exploration wells on the surface water systems is likely to be negligible.

The Institution released a position paper titled ‘Proposed Petroleum (Oil and Gas) Exploration Operations in the Petroleum Exploration License (PEL) No. 73,’ with findings stating that, in the event of discovery of economically viable hydrocarbon deposits, much more careful consideration of the impacts and economic benefits of development of the resource will be needed.

For example, the fracking process for gas and oil extraction is known to require large volumes of underground water.

It further argues that increased extraction of the underground water is likely to affect the water table level and further affect the overall water availability in the river-basin.

“The effect on water availability and use may become worse if surface water is reticulated or sourced by any means from the Kavango River. Should the exploration and fracking for oil and gas expand to Block 1720, 1721 and 1821, the impact on water availability and quality will be significant, especially if the wastewater is not well managed,” said the paper.

The research unit recommends close communication between the relevant Basin State Ministries (Mineral Resources, Environment) and the Permanent Commission on the Okavango River Basin, OKACOM, and other stakeholders must be facilitated.

This will facilitate sharing of the correct information on the desired intentions of the basin states and compromises sought for the sustainability of the ecosystems in the downstream of the Cubango-Okavango river Basin, states the position paper.

ORI as a key stakeholder with scientific information says it is positioned to provide scientific advice and guidance to decision-makers on the potential impacts of both exploration and development and operation activities.

It also recommends that while the impacts might be minimal at the exploration stage, environmental impacts during the development and extraction process are significant.

Findings also state that the SADC Protocol places a mandatory duty to make a notification of planned measures undertaken in any riparian state in cases where such measures hold the potential to cause ‘significant adverse effects.’

It further states that where the planned development is trivial and not expected to cause any significant harm, the development state is not under duty to notify other riparian states.

Given that the drilling in the Kavango Region in Nambia is merely for exploratory purpose and the possibility of harm is minor, it is therefore not surprising that the Namibian government did not inform Botswana.

However, should it be found that the oil can be profitably or economically exploited, the Namibian government would be under a duty to notify both Angola and Botswana.

The institution further states that to ensure sustainable development in the Okavango Delta the following in the context of exploration for and potential development of hydrocarbon deposits within the Cubango-Okavango River Basin, it must be considered that the Okavango Delta is a World Heritage Site listed in 2014 by UNESCO and one of the binding requirements of the listing is the non-permissible commercial mining of any mineral, gas or oil within the World Heritage Site.

It states that the Okavango Delta is also a RAMSAR site in which mining is not allowed.

Should the exploration for minerals, oil and gas be allowed, there is a high chance that a mineral, oil or gas may be found given that the Delta is sitting on karoo sediments and shale rocks which in other parts of the world have been found to be sources of oil and gas deposits. Should oil or gas be discovered, there will be a strong socio-economic pressure to mine oil or gas and create jobs for the masses.

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Pakmaya yeast penetrates local market

30th March 2021
Pakmaya Africa Sales Manager: Cem Perdar

Manufactured in Turkey, Pakmaya Instant Dry Yeast can be used in the production of various fermented products, as it is suited for both traditional and industrial baking processes. All kinds of breads, buns and fermented pastry products are typical examples of applications.

Pakmaya Africa Sales Manager Cem Perdar says Pakmaya has 4 plants in across the world, further indicating that all of the plants have the highest standards of quality certificates and approvals. Regarding raw material, molasses is the main ingredient for yeast. Concerning production activities, yeast manufacturing requires high know-how and capability. Pakmaya has all those capabilities and aspects more than 45 years.

According to Perdar, Pakmaya has been existent in African markets since 30 years. From South to North, Central to East and West, a consumer can find Pakmaya in nearly every part of Africa continent.

“With its high quality, rich product selection and good service, our brand has become the favorite yeast of many Africans. On the other hand, our distributors in African countries are working very hardly and loyally in order to promote our products in their markets. After some time, we are becoming like families with our exclusive distributors in Africa and this enables both parts to work harder and keeps our product sustainable in market,” he said in an interview this week.

The yeast manufacturing giant made its way to Botswana market. The company has been smoothly working with Kamoso Distribution, a local distribution company. Perdar told BusinessPost that two entities have been working hard to earn is market locally.

“At the moment we have a good market share with them in Botswana market. I’m sure during 2021 long, we will be increasing our sales and market position. Soon we are going to start a marketing campaign in Botswana, so that means Batswana will see and recognize Pakmaya more and more. Pakmaya wants to be the best friend of bakers in bakeries and ladies at homes in Botswana.”

As per global COVID-19 regulations to curb the spread of the COVID-19, Botswana just like other country closed borders. Providentially, the restrictions did not affect the company destructively.

Perdar says “Kamoso Africa is a very important and strong partner in Botswana territory. With Kamoso’s hard work and strict measurements, we have done a very good job. So as Pakmaya, we have not suffered any distribution problem. Our partner is doing the needful at the reaching our products to end users.”

He further said “We are doing well in Botswana market and hoping to make much more. Our aim is to enter every single corner in Botswana territory. With our new marketing campaigns, we are planning to be the most preferred yeast in Botswana market.”

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