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Pension funds face bleak future – Report

The retirement funds industry is faced with a bleak future due to a number of factors, among them, insufficient legislation as well as the growing number of the ageing population, a Whitepaper published by the World Economic Forum has revealed.  

 The World Economic Forum, a not-for-profit international organisation which promotes public-private cooperation and publishes several other reports such as The Global Competitiveness Report, has indicated in the whitepaper titled ‘How can we save our future’ that several governments around the globe should look into their legislation to save the situation.

“Retirement systems worldwide are currently under strain. While examples of progress made to improve systems are numerous, further reforms are required in many parts of the world to ensure they are sustainable, inclusive and able to provide future generations with financial security in their retirement,” said the report. As part of averting the impending crisis, the whitepaper recommends that governments around the world to be cognisant of this and act in a manner that would secure the future of its working population.

  “Many countries’ retirement systems are organized in a multi-pillar framework, usually resulting in the involvement of many different ministries, government agencies and other organizations. Responsibility is typically split across government departments, and often a holistic vision is lacking,” the whitepaper indicated. “Governments must take responsibility to understand their population’s retirement savings needs, ensure retirement systems have clearly stated objectives or goals, and measure and monitor the metrics on a regular basis.”

THE BOTSWANA STORY

Zooming into Botswana, the pension fund industry has been marred by controversy in recent years, most ranging from political interference, corruption and other forms of maladministration. Earlier this year, an audit conducted on the Botswana Public Employees Pension Fund (BPOPF), the biggest pension fund in Botswana, revealed that close to 1.5 billion pula worth of funds have no trace of active pension members, raising suspicion of possible corruption from some of the fund administrators.

This has been compounded by recent decisions of the BPOPF to cut ties with a number of independent fund managers owing to alarming level of mismanagement of funds as well as acts of corruption.  BPOPF is the third largest pension fund in Africa, with assets value worth over P55 billion, making it bigger than Botswana’s entire banking sector.

The battles for its money, mostly from predatory independent fund managers have seen BPOPF bleeding in several battles in court over its money. The involvement of key senior government officials, such Carter Morupisi, the Permanent Secretary to the President who has been BPOPF board chairman have also added salt to injury.

Morupisi has since left the chairmanship position, but in his trail, after a short stint industry players have seen battles over the BPOPF money. Morupisi has also been subject of Directorate on Corruption and Economic Crime (DCEC) in connection with several contractual obligations that the fund entered into during his stewardship of the board.

According to the World Economic Forum whitepaper the key driver of the challenges facing retirement systems globally is increasing life expectancy and a falling birth rate, which leads to a smaller workforce supporting an ever growing population of retirees.
One of the problems identified as a threat is the long-term, low-growth environment, as indicated in the preceding whitepaper published in 2017 titled ‘We’ll Live to 100 – How Can We Afford It?’

“Given past strong performance in equity and bond markets, future expectations for long-term investment returns are significantly lower than historic averages. Equities are expected to perform ~5% below historic averages and bond returns are expected to be ~3% lower. In addition, low interest rates have grown future liabilities and future investment returns are unlikely to make up the growing pension shortfall,” indicated the report.

“Taken together, these factors put increased strain on pension funds as well as on long-term investors that have commitments to fund and meet the benefits promised to current and future retirees. Individuals will also be impacted as they will likely see smaller.” The whitepaper further recommend that governments should strive to make systems inclusive so that the pillars of a pension system are coordinated holistically to meet the needs of all individuals and provide support for marginalized groups.

Key challenges facing retirement systems include:

Greater longevity, resulting in higher levels of savings required to sustain longer lifetimes and ageing populations, putting a strain on the sustainability of payas-you-go systems

Increasing responsibility for individuals to ensure adequate retirement income, largely driven by trends among governments and employers to move away from traditional defined benefit (DB) systems towards defined contribution (DC) systems. Also, trends in labour markets are resulting in less traditional employment patterns and more contingent and self-employed workers who are unlikely to have access to employer-facilitated plans

Low levels of savings by individuals

Poor financial literacy in an environment where responsibility has shifted to individuals

A lower expected investment return environment, placing more importance on the level of contributions

Lack of access to savings vehicles -one of the biggest barriers to saving for retirement.

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Business

Food prices continue to rise, but at a slower rate

28th November 2022

Prices for cereals or staple foods in Botswana and other Southern African countries continue to rise at a slower pace, following trends in the global markets, according to the latest November 2022 Food Price Monitoring and Analysis by Food Agricultural Organization (FAO) of the United Nations.

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Business

Still doing business the old way?

18th November 2022

It’s time to get business done better with MTN Business Botswana’s ICT Solutions.

Running a digital businessMTN Business Solutions Botswana, popularly known as MTN Business is an Internet Service Provider. We are a subsidiary of MTN Group Limited, a multinational telecommunications Group headquartered in South Africa, which operates in 19 markets across Africa and the Middle East.

More and more, clients are looking for ways to keep their staff productive in a dynamically changing business environment. Whether your people are working from home, the office or abroad, there is a growing recognition that digitising your operations can offer unprecedented commercial value in flexibility, productivity and growth. This new, digital reality means that it is more important than ever to stay agile – if there is anything that can slow a business down, it is being burdened by othatld technology.

Having made substantial investments in fibre technology, high-speed terrestrial and undersea networks and new frequency spectrum across the markets wherein it operates, MTN is perfectly positioned to respond to this shift in the market.

A few years ago, MTN also made the decision to build an IP capable radio network for its mobile services, giving its core network the ability to seamlessly integrate with enterprise IP networks. The mobile towers deliver services to enterprise clients absolutely anywhere it has a network, shortening the last mile and removing complexity and cost.

Now there is increasing demand from clients to connect their remote sites in all areas, including rural and semi- rural. MTN has assisted clients with overcoming this connectivity hurdle, enabling their staff to get the job done wherever they are.
MTN’s evolution

For MTN, the focus has shifted from just being a core telecommunications services provider, towards also becoming a technology solutions provider. The service offering now also includes Unified Communications, Data Hosting and Cloud Solutions, Security-As-A-Service and Managed Network Services. The scope has changed to being client and industry specific, so the requirements and service portfolio vary from one client to the next. The expectation is that a company like MTN must respond to these challenges, helping clients to get business done better as they shift from old to new technologies.

As many businesses continue to grapple with a digitally dynamic world, they face new challenges that have to be solved. This environment will benefit those that are more digitally enabled and agile. It is a brave new world that will favour online over on-site, wireless over wired and fluid over formulaic. Businesses will seek out partners and suppliers that are every bit as flexible and forward-looking as they are.
Ultimately, clients need partners like MTN Business that will invest in infrastructure, deliver the services they require, have market credibility, are financially sound and have a long-term commitment to their market presence.

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Business

BIE to vitalize the Dignity of Engineers

9th November 2022

Botswana Institution Of Engineers (BIE), has last week hosted a gala dinner in  which they appreciated engineers who worked tirelessly and with dedication for 10 years from 1983 to steer the BIE to its current status.

The event that was held at the Phakalane Golf Estate had brought together young, experienced and veteran engineers and was held under the theme “Vitalize the dignity and eminence of all professional engineers”.

Explaining the theme, the institution’s treasurer, Thanabalasingam Raveendran said that engineers were looked upon reverentially with respect as the educated but with time it seems to have deteriorated. He indicated that there is a need to change the narrative by all means.

“The BIE exists for the welfare and the betterment of us Botswana engineers, we need to recognize specialised units within our Institution. We Engineers strongly believe in Engineers make it happen” Raveendran said.

He indicated that under the theme they appeal to all engineers to energize, to attain quality of being worthy of honour and respect and to achieve recognized superiority amongst the Society.

Raveendran stated that engineers need to ensure their end product is of good quality satisfying the end users expectations and engineers must be honest in their work.

“Approximately 8000 engineers registered with Engineering Regulatory Board (ERB) are not members of the BIE, engineers need to make every effort to recruit them to BIE” he said.

He alluded that BIE being a society, it currently needs to upgrade itself at par with professional institutions elsewhere like the UK and USA.

He further stated that BIE has to have engineering units of specialised disciplines like Civil/Mechanical/electrical etc

“As President Masisi indicated in his inaugural speech, the young people, who make 60 percent of the population of this country, are the future leaders and therefore investing in them is building the bridge to the future” said Raveendran

Kandima indicated that BIE has a memorandum of Understanding with Engineers Registration Board (ERB), where BIE is a recognised provider of CPD training, mentorship programmes and more importantly IPD undertaking to upgrade the skills and know-how of our engineers.

“For us to achieve our mandate and make worthwhile changes to engineering in Botswana, we have to be totally focused and act with intent” said Kandima.

Furthermore, Stephen Williams, past president of the BIE from 1986-1988 told the engineers that  the BIE provides a fertile environment where they can meet, share ideas and grow professionally.

“The BIE is also a nesting place for graduate engineers to learn from their peers and seniors, it also cater for engineering technicians and technologists and so nobody in the technology field is left out” he said.

He further indicated that Botswana Government provides a conductive environment for growth of engineering professionals.

“It must be stated that the Botswana Government recognises the existence of BIE and it can further be stated that the government enables ERB to carry out its mandate as a regulator of engineering professionals” said Williams

He plead with engineering companies to recognize and support BIE as it is the only source of engineering personnel’s for various Industries .

Furthermore, when giving his farewell speech, Michael Pinard , a past president of the institution  said how they are viewed as engineers by the general public might be due to some lack of appreciation as to exactly what role they play in the development of the country.

“The BIE slogan is aptly coined-Engineers make it happen, in other words, what man dreams engineers create” Said Pinard.

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