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BITC first five years generates P10.5 billion

Botswana Investment & Trade Centre (BITC) revealed this week that since its inception in 2013, the organization has opened export windows worth over P10 billion. Newly appointed BITC Chief Executive Officer (CEO), Keletsositse Olebile shared this during a round table discussion with the media in Gaborone this week.

“We have developed compelling value propositions  , this are well package documents that says in the beef value chain for example where are the specific opportunities that we can take out to market and not just in beef but also in coal, soda ash just to name but few,” he said. Olebile explained that export-led investment promotion was a key deliverable in the BITC mandate and the organization take pride on considerably satisfactory output in such.

He underscored that this was the export earnings of companies they assisted only, and products uptake they facilitated.  “We only measure our performance in areas and companies we assisted,” he said. Olebile explained BITC pushes the export-led narrative because the local market is small for business.


 “For Botswana it is a reality that we are a very small population and the most pronounced reason why investors pick a particular location to set up shop has been established to be the size of a market, because we are such a limited market it becomes very key for us to though a location in Botswana   find access into the region for our Botswana based factories and commodity producers.  That is why we running some of this commendable drives for export promotion,” explained the new BITC chief.

BITC CEO also highlighted that one of the key export promotion initiatives that b fruits were inter boarder trade to leverage fully on duty free arrangements, SACU and other trades facilitation windows.  “We have also successfully managed to facilitate cross boarder value chain linkages to say, if a certain industry is flourishing in one of our neighboring countries how can we tap in the value chain and supply some commodities required in that particular industry,” he said.


He cited an example of car manufacturing in South Africa. “That is to say for industries such as vehicle manufacturing or assembly plant we  will be on the look out  to identify what we can effectively house in Botswana to be able to accelerate job creation here,” he said.
According to BITC, cross boarder linkages have been able to create a very effective window for Botswana based companies to access established and much bigger regional markets.

 “We emphasize auto components manufacturing to say let companies set up here with a view to supply bigger  industrial  plants in South African for example, and we have successfully delivered that with companies such Kromberg & Schubert, and a number of manufacturing companies in Lobatse, which are doing business without sister government investment arm Botswana Development Corporation(BDC)”  

BITC Director for Export Promotion  shared that for the five year period under the just ended strategy ,leading products which contributed significantly to BITC ‘s  facilitated export earnings basket were salt and soda ash ,coal  and even the struggling beef industry. “We have been working closely with Botswana Ash and we assisted them with improving their effectiveness as an exporter, facilitating them to access established market such as the Zambian & DRC markets which are key consumers of salt and soda ash after South Africa,” she said.

BITC executives further explained that to continue pushing the export-led economy agenda various strategic proposition were already being put in place to harness value chain businesses that can be birthed from salt and soda ash, coal and beef. “We are already in final stages of completing a feasibility study to look at how we can facilitate the setting-up of chemical processing plants and glass manufacturing using the soda ash to ensure that we create the much needed jobs,” shared the Acting Chief Operations Officer, Reginald Selelo.

 
Olebile  highlighted that in the new strategy for BITC deliberate actions will be taken to push and advocate for  the liberation of the beef sector “through regional opportunities mapping, identification of natural endowments that can sponsor economic sectors to thrive in a particular environment, the beef industry has been established as a key sector that we have comparative and competitive advantage as a country so we are pushing for the transformation of BMC and by in large the entire sector so that it performs to its full potential of delivering even more jobs for our people” he said

BITC also revealed that there were plans to resuscitate Ostrich farming industry to further deliver more export earnings.  “We have recently visited the Dibete Ostrich facility where plans were conceived to revitalize the industry with assistance from benchmarking missions in our neighboring South Africa, the latter account for more that 65 percent of global market share, so we have engaged with the Ministry of Agriculture in that regards,” shared the CEO.

It was also signaled that processes were in place to implement Coal value propositions in a bid to unearth the industry value chains. Leading minds in the coal industry have reiterated that Botswana needs not to look any further in creating jobs for its people and diversifying the mining industry from diamond sector dominance. Latest prospected reserves indicate that Botswana sits on over 200 billion tonnes of coal deposits of which contain different segments of grade value as per economically minable mineralization.  

Though a number of companies mostly with Australian origin are already on the ground exploring the economic mineralization of the coal deposits, experts observed that further robust steps must be taken to develop a world class coal industry that can attract global capital and major investment players in turn birthing rigorous industrialization. BITC says in its international missions to lure investors into Botswana such as the recent one in Dubai and upcoming one in China coal industry was one the earmarked sectors to woo external capital into the country.

“We are looking into the entire energy sector, in the areas of renewable energy –coal-methane space, bio gas and bio diesel, we are also working with relevant stakeholders to find investors for the coal-liquid plant which is earmarked to leverage on the abundant coal and make fuel out it, petroleum products, industrial reagents and factory chemical components in turn creating thousands of jobs, boosting our export earnings and growing our economy,” shared Olebile.

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Diamond industry crises not over yet – De Beers Chief

13th January 2021
De Beers Group Chief Executive Officer: Bruce Cleaver

Following a devastating first half of the year 2020 due to COVID-19, the global diamond industry  started gaining  positive momentum towards the end of the year as key markets entered into  thanks giving and holiday season.

However Bruce Cleaver, Chief Executive Officer of De Beers Group cautioned that the industry is not out of the woods yet, citing prevailing challenges ahead into 2021.

The first half of 2020 was characterized by some of the worst challenges in history of global diamond trade.

The midstream, where rough diamonds are traded in wholesale and bulk to cutters and polishers, was for the most part of second quarter 2020, suffocated by international travel restrictions as countries responded to the contagious Corona Virus.

This halted movement of buyers and shipment of  the rough goods , resulting  in unprecedented decline of sales, in turn  ballooning stockpiles as the upstream  operations produced with little uptake by the midstream.

The situation was exacerbated by muted demand in the downstream where jewelry industries and tail end retailers closed to further curb the spread of COVID-19.

However towards the end of third quarter getting into the last quarter of the year, demand in both midstream and downstream started to steadily pick up as countries relaxed COVID-19 restrictions.

De Beers, the world’s largest diamond producer by value started reporting significant recovery in sales in the sixth and seventh cycle, figures began to reflect an upswing in sentiment as well as increase in uptake of rough goods by midstream.

Sales for the sixth cycle amounted to $116 Million, following a sharp downturn in the previous cycles, significant jump was realized during the seventh cycle, registering $320 million, an over 175 % upswing when gauged against the proceeding cycle.

De Beers noted that diamond markets showed some continued improvement throughout August and into September as Covid-19 restrictions continued to ease in various locations.

“Manufacturers focused on meeting retail demand for polished diamonds, particularly in certain product areas, accordingly, we saw a recovery in rough diamond demand in the seventh sales cycle of the year, reflecting these retail trends, following several months of minimal manufacturing activity and disrupted demand patterns in all major markets,” said De Beers Chief Executive, Bruce Cleaver in September last year.

The diamond mining behemoth continued to register impressive sales in the eighth and ninth cycle signaling the industry could end the year on a positive note.

The momentum was indeed carried into the last cycle of the year. The value of rough diamond sales (Global Sightholder Sales and Auctions) for De Beers’ tenth sales cycle of 2020 amounted to $440 million, a significant increase from the 2019 tenth sales cycle value.

Against what seemed like a positive year end that would split into the New Year Bruce Cleaver, CEO, De Beers Group, however warned the industry not to count eggs before they hatch.

“Positive consumer demand for diamond jewellery resulting from the holiday season is supporting the continuation of retail orders for polished diamonds from the diamond industry’s midstream sector. This in turn supported steady demand for De Beers’s rough diamonds at our final sales cycle of 2020,” Cleaver had said in December.

In caution the De Beers Chief noted that “While the diamond industry ends the year on a positive note, we must recognise the risks that the ongoing Covid-19 pandemic presents to sector recovery both for the rest of this year and as we head into 2021.”

All segments of the supply chain were severely impacted by the global lockdown measures introduced in response to the Covid-19 pandemic in the first half of 2020.

After a strong US holiday season at the end of 2019, the rough diamond industry started 2020 positively as the midstream restocked and sentiment improved.

However, from February 2020, the Covid-19 outbreak began to have a significant impact on diamond jewellery retail sales and supply chain, with many jewelers suspending all polished purchases and/or delaying payments to their suppliers.

Rough diamond sales were materially affected by lockdowns and travel restrictions, delaying the shipping of rough diamonds into cutting and trading centers and preventing buyers from attending sales events.

These resulted in significant decline in total revenue for the business in the first six months of 2020. Total revenue decreased by 54% to $1.2 billion from $2.6 billion registered in the prior half year period ended 30 June 2019.

For the entire first six (6) months of the year 2020 De Beers Rough diamonds sales fell drastically to $1.0 billion from $2.3 billion in the prior H1 period ended 30 June 2019. Sales volumes decreased by 45% to 8.5 million carats compared to 15.5 million carats registered in the prior period.

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Gov’t coffers depleting to record low levels 

13th January 2021
Dr Matsheka

Next month Minister of Finance & Economic Development, Dr Thapelo Matsheka will face the nation to deliver Botswana‘s first budget speech since COVID-19 pandemic put the world on devastating economic trajectory.

The pandemic that broke out in late 2019 in China has put the entire world on unprecedented chaos ,killing over P1 million people across the globe , shattering economies and almost rendering  the year 2020 – a 12 months stretch of complete setback.

The 2021/22 budget speech will come at time when Botswana’s economy is still trying to emerge out of this.

National lockdowns and local travel restrictions have hit small medium enterprises hard, while international travel restrictions halted movement of both good and people, delivering by far some of the heaviest and worst catastrophic blows on the diamond industry and tourism sector, the likes of which this country has never seen before on its largest economic sectors.

As Minister Matsheka faces parliament next month, the reality on the ground is that Botswana’s national current cash resource, the Government Investment Account (GIA) is depleting at lightning speed.

On the other hand the COVID-19 economic mess is  prevailing,  the virus is reported to have taken a new dangerous shape of a deadly variant, spreading like fueled veld fire and causing some of the world’s super powers back to tough restrictions of lockdown.

According official figures released by Bank of Botswana, in October 2020 the GIA was running at P6 billion compared to the P18.3 billion held in the account in October 2019.

However reports indicate that the account could be currently holding just about P3 billion.  The draw down from the GIA has been by exacerbated by declining diamond revenue, the country‘s largest cash cow. The sector was experiencing significant revenue decline even before COVID-19 struck.

 

When the National Development Plan (NDP) 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at a 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.

Taking into account the COVID-19 economic mess in 2020/21 financial year, the budget deficit could add up to P20 billion after revised figures.

Drawing down from government cash balances to finance these budget deficits meant significant withdrawals from the Government Investment Account, hence the near depletion of this buffer.

Meanwhile  should Botswana’s revenue streams completely dry up to zero levels; the country would only have 11 months, before calling out for humanitarian  aids and international donors, because  foreign reserves are also on slow down.

During 2019, the foreign exchange reserves declined by 8.7 percent, from Seventy One Billion, Four Hundred Million Pula (P71.4 billion) in December 2018 to Sixty Five Billion, Three Hundred Million Pula (P65.3 billion) in December 2019.

The reserves declined further in 2020, falling by 2.3 percent to Sixty Three Billion, Seven Hundred Million Pula (P63.7 billion) in July 2020.  This was revealed by President Masisi during State of the Nation Address in November last year.

The decrease was mainly due to foreign exchange outflows associated with Government obligations and economy-wide import requirements.

However latest statistics(October 2020)  from Bank of Botswana reveal that Botswana’s foreign reserves are estimated at P58.4 billion, with  government’s share of these funds significantly low.

Government has since introduced several measures to contain costs and control expenditure with the most recent intervention being the halting of recruitment in government departments and parastatals.

Furthermore, Value Added Tax has been signaled to go up  from 12% to 14% in April this year with more hikes and service fees anticipated as government embarks on unprecedented domestic revenue mobilization.

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Cresta signs lease agreement for Phakalane golf estate hotel. continues with growth agenda despite covid-19 impact

13th January 2021

Botswana Stock Exchange listed hotel group Cresta Marakanelo Limited (“CML” or “the Company”) announced the signing of a lease agreement for Phakalane Golf Estate Hotel & Convention Centre, which will see CML extend its footprint by adding the 4 star Gaborone property to its already impressive portfolio.  The agreement is subject to regulatory approvals therefore the effective date of the transaction is expected to be 1 February 2021.

 

CML brings a wealth of expertise to the lease and despite the difficult year for the tourism and hospitality industry, due to the impact of the COVID-19 pandemic, CML remains confident in the recovery of the sector and the need to invest in expanding the Company’s footprint.

CML Managing Director, Mr Mokwena Morulane commented: “Our continued efforts to improve our offerings, understand the market dynamics and modern day trends in the face of global challenges, means we are ready for the changing face of tourism and international travel, and this addition to the Cresta portfolio signals our confidence in the future.  

 

“Despite the headwinds faced in 2020, Management has continued to focus on projects that enhance CML’s product offering such as the refurbishments at Cresta Mowana Safari Resort & Spa in the tourism capital Kasane and the ongoing refurbishment of Cresta Marang Residency in Francistown. The signing of the lease for the 4 star Phakalane Golf Estate Hotel & Conference Centre is a great addition to the Cresta portfolio and will unlock shareholder value in the future.

 

“We remain vigilant to value-enhancing opportunities including acquisitions or leases, after having reconsidered our pipeline against current and expected market conditions.”  

 

Commenting on the lease agreement, the Chief Executive Officer, Mr S Parthiban, speaking on behalf of Phakalane  noted; “No hotel chain holds as much expertise in the region, understands our local culture and tastes and what hospitality is about better than Cresta Marakanelo Limited. We believe that the renovations done to the property has made Phakalane Hotel and Convention Centre a unique product in Botswana and at par with international facilities.  We believe that this lease will benefit not only us as Phakalane , but the market in general as Cresta has run hotels successfully in Botswana for over 30 years and is therefore expected to bring new offerings that appeal to the local and international markets as well as the residents and visitors to the Golf Estate. We look forward to a long mutually beneficial relationship with Cresta.” 

 

CML like the rest of the tourism and hospitality industry and the entire value chain was hard hit by lockdowns  with the surge of COVID-19. By investing during the low period, the company hopes to realise the future value of spending time in preparing for the new consumer dynamics and behaviour.  Despite business interruptions as a result of a six-month long state of emergency and several lock-down periods declared by the Government of Botswana to limit the spread of COVID-19, the Company is starting to record an increase in occupancies, which bodes well for the recovery of the industry and the Company’s future prospects.

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