Corporate lawyer, Parks Tafa has finally bowed out of Wilderness Holdings after spending the entire just ended financial period on the sidelines owing to ill-health. Tafa has served Wilderness for the past eight years and has been chairman of the board since 2013. Tafa decided to retire as chairman of Wilderness Holdings by rotation with effect from 30 August 2018.
BusinessPost understands that Tafa has been suffering from ill-health since the past financial year and former deputy chairman Micheal Tollman had to stand in for him for the whole period. Tafa never attended all the required four board meetings of Wilderness. “Unfortunately, the Group’s Chairman, Parks Tafa, has been indisposed for some time and I have agreed to deputize for him in this letter. We wish Parks all the best for a speedy and complete recovery,” said Tollman.
As suggested by his company, Tafa had to take advantage of the company’s constitution which states that a third of the directors retire by rotation each year and are eligible for re-election by shareholders at the annual general meeting. Other directors who joined Tafa in exiting Wilderness Holdings door are the Tollmans; Michael and Gavin Tollman who resigned from the ecotourism company last month. Michael served the board since 2005 while Gavin who only attended one board meeting in the last financial year’s service was for the last eight years.
The billionaire Tollman family which boasts a travel and hospitality empire disinvested from Wilderness as the largest single shareholder in the company through Wine Investment Limited. The Tollman family had 80 697 582 ordinary shares translating to 33.99 percent shareholding. Through Wine Investment the Tollmans sold their entire stake to The Rise Fund. They are estimated to have sold the shares for P472.9 million.
After pocketing an estimated P472.9 million the Tollmans bought an entity called Great Exploration from Wilderness for P16, 8 million. Micheal Tollman was part of the board that sold Great Explorations to his own company Mountbatten. During the transaction Mountbatten was considered to be a related party in view of the fact that Gavin Tollman was a member of board of directors for both Wilderness and Wine Investments which is owned by Mountbatten.
The company that is now owned by the Tollmans, Great Exploration, owns Xigera Camp located in the tourism wealthy Paradise Island in Okavango. Wilderness explained that it sold Xigera because “has performed below expectations in the preceding five years and requires a substantial capital investment for refurbishment.”
In a previous interview with BusinessPost, Micheal Tollman said they are going to turn Xigera into a five star hospitality hub. After the sale of Xigera it was stated in Wilderness reports that “Mountbatten is willing to inject the required capital investment into the Camp.” Also exiting Wilderness with the Tollmans and Tafa is independent director Roux Marnitz who resigned by rotation with effect from 30 August 2018. Martinitz chose not to offer himself for re-election during the company’s AGM.
Tafa and the Tollmans leave the company with increased revenue by 9 percent to P1 209 million (2017: P1 107 million) driven by the increase in bednights sold. According to the Wilderness financial report, overall bednight sales increased by 8 percent to 178 347 (2017: 165 864); excluding Governors’, bednight sales grew by 4 percent. The Group’s occupancy rate was up slightly to 59 percent (2017: 58 percent).
On the low the Pula gained more than 5 percent against the US Dollar over the year impacting negatively on revenue, and this was also the cause of the large foreign exchange losses on conversion of the Group’s foreign currency position. Also, EBITDA margin declined from 19 percent to 17 percent, primarily due to the higher foreign exchange losses as well as lower ‘Other gains’. The financial report also state that these gains primarily comprise insurance proceeds and net profit on disposal of assets, and have declined from P16 million to P1 million in the current year.
According to Wilderness financial report, impairment losses amounted to P9.6 million and relate to the impairment of decommissioned camp assets and camp assets damaged by flooding. Net finance costs were 108 percent higher at P19.2 million (2017: P9.2 million), being a consequence of the inclusion of Governors’ and the increased debt to finance capital investment and acquisitions, according to the financial report.
This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.
The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.
Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.
He was speaking in Parliament on Tuesday delivering Parliament’s Finance Committee report after assessing a motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.
Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.
The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.
The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.
The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.
This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.
Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.
Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.
However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.
Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.
When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.
This as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.
Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.
The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.
Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.
In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.
Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.
Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.
Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.
Acknowledging the need to draw down from GIA no more, current Minister of Finance Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”
He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”