Botswana ‘s home grown diversified retail & wholesale group Sefalana ,which portfolio runs across Southern Africa successfully managed to emerge from 2017 difficult trading environment. The Group recorded a whopping 34 percent increase in profit before tax for the year ended 30 April 2018, raking in P232 million.
This is in comparison to the prior year which ended 30th April 2017, a year which the Group operations faced one of the most difficult trading circumstances in years, especially in its major market, Botswana. This was predominately because of the effects of 2016 closure of some major mining companies and parastatals, which spilled over into 2017 and shrunk macroeconomic cash flows as well as domestic purchasing power.
For the year under review, the Botswana Stock Exchange(BSE) listed diversified goods and commodities conglomerate put in place several cost saving initiatives in a bid to extract value from the company‘s well diversified group of businesses across the Region. Sefalana Operates in Botswana, Namibia, and Lesotho and of late entered the lucrative South African market and the Zambian property space.
According to the company’s audited financials released this week several customer services nectarines such as online shopping beard fruits as the Group registered a total comprehensive income of P189.1 million representing a 21 percent increase on the prior year. The Group‘s revenue hit P4.8 billion mirroring a satisfactory rise of 12 percent compared to the prior year.
“We are pleased to report that through this approach, we have been able to close this year on a very positive note. We are confident that our shareholders and potential investors will be pleased with our performance and will be enthused with the forward-looking prospects of our business,” said Chandra Chauhan, Sefalana Group Managing Director this week when addressing stakeholders on the Group performance. One of Sefalana‘s key market is Botswana. The company was conceived in Botswana in the early years of Botswana‘s economic development epoch.
During the year under review Botswana operations continued to contribute significantly to the Group‘s financial performance. Though the division businesses experienced increased pressure on margins for both wholesale and retail segments the operations registered a 3 percent increase in turnover, collecting P2.6 billion compared to 2.52 billion gathered during the financial year ended April 2017. Sefalana Cash & Carry Limited contributed 54 percent and 23 percent of the Group’s revenue and profit before tax for the year, respectively.
However, overall profitability for the division fell significantly. “Efforts are being made to limit the impact of these pressures as we anticipate restored market conditions and improved results in the ensuing year,” underscored the Group Sefalana boss. At the beginning of the financial year, Sefalana operated three Hyper Stores, 25 Cash and Carry stores and 23 supermarket retail stores across the country, giving the Group a total of 51 stores in Botswana.
“We have taken a cautious approach to new store openings over the last three years as we recognize the saturation levels in the market, and have tried to avoid increasing our overhead costs in any particular area where the market size remains unchanged,” he said. According to Sefalana Executives, strategic approaches enabled the Group to cut cost and save for more profitable operations given the unfavorable trading circumstances that the year under review was.
“Where we are present, we strive to work towards offering our customers a one stop-shop experience and pride ourselves on being first in the market to introduce a number of initiatives” added The Group MD. Sefalana launched several initiatives to enhance customer service, convenience and efficiency in the process also cashing in big for the company through cost cutting and reduced overheads. This includes Sefalana Online shopping site, Sefalana Mobile App, Sefalana rewards and credit facilities amongst others.
According to Sefalana Executives, the Sefalana Online Shopping site which the company prides itself for being Botswana ‘s first FMGG online purchasing offering did exceptionally well as it started off in Gaborone and surrounding areas gathering satisfactory feedback. “Initially, the online service was only offered to our customers in and around Gaborone. In November 2017, we extended this service to Francistown and Maun where our customers in the area requested that we also offer this service to them.”
Namibia operations contributed 32 percent and 23 percent of revenue and profit before tax for the year, respectively. Turnover amounted to P1.5 billion, a growth of 15 percent on the prior year. Profit before tax for the Namibia division amounted to P54 million, up 19 percent from the prior year. “Our operations in Namibia continue to grow from strength to strength, making a larger contribution to overall Group results each year, as we enhance our customer engagement and offering,” reads the statement.
During the year under review Sefalana pursed expansion plans in Namibia in a bid to broaden market access and performance for existing stores. The Group’s division in Lesotho which has been operating for the past year and half delivered strong financials for the company: “We are delighted to have built a strong presence in the market in a very short space of time, “said Chauhan. Lesotho operations registered total turnover of P388 million for the year under review, contributing 8 percent of total Group revenue.
The segment achieved an EBITA of P9.5 million for the year, and a profit before tax of P2.1 million after taking into account finance charges. This according to Sefalana executives is a significant improvement on the loss of P5.6 million experienced in the first six months of trading since acquisition. “We operate in a very low margin environment in Lesotho and therefore look to improve the profitability of this business through top line growth and by offering our customers an excellent service,” he said.
Sefalana also operates heavy duty commodities dealership in Botswana which consists of Commercial Motors (Pty) Limited and Mechanized Farming (Pty) Limited, under this segment the company pushes industrial locomotives, automotives, cars and farming machinery amongst others. The segment contributed 3 percent and 9 percent to Group turnover and profit before tax, respectively.
CML historically relied on tender business, and over recent years has been focusing on growing its private sales as a result of a general decline in tender activity. During the year, the business secured the sale of a number of vehicles to the private sector thereby improving its performance compared to the prior year. Another segment, Manufacturing, consists of Foods Botswana (Pty) Limited, the division contributed 5 percent and 9 percent to Group turnover and profit before tax for the year respectively.
Chauhan, said a greater level of profitability was achieved as compared to the prior year, mainly due to short term orders placed by Government and growth of our house brands within the Beverages division. The company underscores that for the Milling and Beverages more strategies and expansion efforts were being put in place to diversify business windows for the two divisions in a bid to reduce reliance on government tenders. On the 26th of July 2018, the Board of Directors of Sefalana Holding Company Limited declared a final gross dividend of 23 thebe per ordinary share.
“Our focus will continue to be on our core segments that generate strong returns for the Group. We identified the need to expand into the Region and have successfully done this through a careful and cautious expansion plan into three countries over the last four years, taking into account the impact of the various macro-economic environments and also considering the foreign exchange risk of retranslation of returns,” said Managing Director Chauhan.
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
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.
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 BusinessPostthat 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.”