Botswana Investment & Trade Center (BITC) newly appointed Chief Executive Officer (CEO), Keletsositse Olebile this week delivered a new strategic path for the investment wooing and trade facilitation agency.
Olebile who has been with BITC since inception fully ascended to the helm beginning of August this year after the organization went for more than a year without a substantive Chief Executive. This came about after both founding Chief Executive Sejoe Letsebe and Meshack Tshekedi’s resignations. The latter was Acting CEO after the former resigned early 2017.
Mandated with facilitation of both Foreign and Domestic Investment, employment creation and export earnings value amongst others BITC was established in 2012 by an act of parliament as a merger between Botswana Export Development and Investment Authority (BEDIA) and the Botswana International Financial Services (IFSC) to become an integrated Investment and Trade Promotion Authority (ITPA).
Olebile revealed that since its inception in 2012 Botswana Investment Trade Centre has delivered annual corporate performance of around 80 percent on average with the least being 73.8 percent in the 2016/17 financial year. “Overall performance as evaluated against strategic focus areas over the past five year as been above our 80 percent target on average at 83.95 percent, “he said.
Olebile explained that since its establishment BITC has delivered a total of over 12 billion pula in capital investment with Actual foreign Direct Investment accounting for 6.162 billion pula and Domestic Investment accounting for over 5.8 billion pula. “From all this a total of 11 881 jobs were created, this is measured from business facilitated and accredited by BITC only, we have taken a deliberate decision to gauge our performance within the investments we facilitated only, on the national economic space as per the Central Bank statistics and Statistics Botswana figures the number obviously in tens of volumes of billions more than this” he said.
Transiting from the lapsing strategy which took-off in 2013 ending this year, Olebile shared that the strategic direction was based on two themes, notably, ‘Effectiveness’ and ‘Growth’. He deliberated that the effectiveness theme focused on improvement of service effectiveness through effective coordination, technology optimization, service quality, process optimization and partner performance.
On the part of ‘Growth’ the just ended strategy premised on expanding and growing the market through targeted promotion, service differentiation, focused value proposition, sector prioritization and optimization of funding opportunities. Going forward, after five years of formative years, setting-up of operational structures and creating cordial relationships with local economic growth stakeholders as well external investment promotion authorities, BITC now seeks to take investment promotion to the next level with a new 5 year strategy that will run from this year until 2023.
The new captain explained that his organization borrowed a number of lessons from the past strategy such as a compelling need to continuously raise the level of attractiveness of the country’s value offering to investors, the need for effective stakeholder alignment in facilitating opportunities for investors. “We also took home the need to engage more in strategic advocacy agenda with various stakeholders,” he said.
Further deliberating on the new strategy Olebile echoed that the new path will be anchored around and aligned to Botswana‘s macro economics goals as outlined in the National Vision 2036; National Development Plan 11 and the Ministry of Investment, Trade & Industry (MITI) strategic plan. “We seek to archive alignment to national plans and strategic objectives , for instance the National Vision 2036 already dictates to us the key sectors we have to promote , they are well defined in the document as Botswana ‘s national priorities,” he said.
With the new strategy national investment wooing vehicle also intends to align to global trends and best practice in a bid to keep the agency at par if not ahead of other competitors. “We have crafted the strategy in such a way that it provides a window of continued updating and aligning of our deliverables to keep base and with times of evolving global economic & investment trends,“ noted Olebile.
The CEO also echoed that the main strategic drive behind BITC’s support to the macro-economic landscape was anchored on positioning Botswana as a destination of choice for investment, to accelerate local and foreign investment and equally facilitate export development and promote the Nation’s Brand.
“With this new strategic blueprint we seek to transform BITC into a leading Investment and Trade Promotion Agency, and by extension, propel Botswana into a renowned and globally acclaimed trade and investment destination,” he said. Another key goal in the Botswana Investment & Trade Centre new paths is the ambition to expand revenue generated in-house.
Currently BITC‘s budget is 85 percent resourced by government subvention which is in the region of 95 million pula annually while 15 percent of the budget is self generated from in-house revenue sources such as 47 000 hectors of industrial factory shells rented to BITC accredited investors.
“Our aspiration also as per encouragement from our principals, being government, is to increase our self-generated income by exploring various avenues such as industrial property space, we seek to increasingly move towards winning ourselves from government funding, we believe with some of these targeted investments in property and other asset portfolios as permitted by underpinning act that established us we can ultimately with time relieve the government of the subvention funding.
BITC as the organization also tasked with the National image building and global awareness revealed that more deliberate actions will be taken to further package and promote Botswana‘s image and brand on the global space as an ideal place for business. Bame Moremong, Executive Director of Brand Management Botswana shared that BITC has engaged Botswana National Sports Commission (BNSC) and Botswana National Olympic Committee (BNOC) on how the country can leverage on the exceptional performance of local athletes on international competitions to raise further awareness on Brand Botswana and facilitate the investment attraction narrative. BITC revealed that going forward the institution would engage international media corporations such as BBC for raising global awareness about Botswana.
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.
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.
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.