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Stanchart rolls out new strategy to emerge from 2017 losses

Botswana’s oldest bank, Standard Chartered, is taking a new and refreshed shape to return to sustainability and profitability and emerge from 2017 trading losses. Stan Chart is one of the 3 commercial banks that registered losses in the 2017 financial year.

According to the bank’s annual report released this week the bank which realized few management shifts early last year with its Chief Executive officer Moses Lekaukau resigning, did not perform well in the period ended December 2017. StanChart underscores in the report that the annual net loss was predominantly due to a tough operating environment and a once off loan impairment which affected overall profits.

Chairman of Standard Chartered Bank, Professor Bojosi Otlhogile highlights in the report that the company has put in place robust measures and taken bold positive steps going forward to improve its financial strength, culture and conduct agenda in order to ensure sustainability profitability. “The work is ongoing as external trends impacting the banking sector continue to evolve,” he said

During the period under review the bank registered a 6 % decline in income compared to the previous year ended December 2016. This was a result of slight contraction in the company’s market liquidity and persistent low interest rates. Another contributing factor to StanChart losses was material increase in loan impairments primarily on the back of one exposure in Corporate and Institutional Banking from the Diamond and Jewellery Sector. The company has since as part of the re-bounce strategy decided to exit the sector.

The Board Chairman observed that the exit has been completed and that there are no expected risks in future. However, despite losses and unfavourable operating circumstance which cut across the entire banking Sector StanChart, has managed to comply with all capital and primary reserve ratios. StanChart Chief Executive Officer Mpho Masupe observed that his company like other banks was not spared from the wrath of a stretched operating environment in 2017.

He noted that for his company, subdued top line growth and increased costs slowed performance and contracted the profit output much more significantly than their competitors.  Masupe highlighted that while 2017 interest rates reduction by Bank Of Botswana was a major contributing factor across the banking sector, his company also had to endure the negative impact of a poorly performed Corporate Institutional Banking (CIB). “A single big loan impairment in the CIB segment ultimately caused the greatest attrition to our performance however the interest rates cuts by the regulator also put pressure on interest margins,” he said.

Further the report reveals that the Bank’s net income declined by 3 percent points. The margin compression is reported to have been led mainly by increasing costs of deposits. Operational expenses excluding impairment increased by 15 % due to continuing technical support and investment in staff. The Bank’s chief executive however notes that even under the circumstances his company has shown resilience for growth as overall deposits grew by over 9 percent to registers a whopping P 13 billion.  Loans and advances to customers realized a slight decline of 0.9 percent.

Further, the bank’s performance per segment reveals that Corporate & Institutional Banking revenue shrunk by a whopping 57 million pula as expenses rose by 40.5 %. Retail banking performed very well, registering a profit before tax of 123 million pula and a decline on impairment of 80.2 %. The bank’s commercial segment also contributed to the company’s losses in this period under review by recording a loss before taxation of 4.6 million pula. The Bank however managed to reduce the segment‘s operating expenses by 49 %.

The Botswana Stock Exchange (BSE) listed company which has been operating in Botswana for the past 120 years puts hopes the new strategy that was launched by the Group Chief Executive Officer of Standard Chartered Global, Bill Winters last year will help it bounce back. The strategy is enshrined in the new purpose statement “Driving commerce and prosperity through our unique diversity.”

Masupe noted that his company will draw from its vast emerging market expertise to revamp and return to profitability. “As we embark on the journey to return to sustainability growth and sustainability the guiding principle will remain to meet clients’ needs and demands which are convenient banking and excellent customer services,” he said.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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Global CEOs Back Plan to Unlock $3.4 Trillion Potential of Africa Free Trade Area

23rd January 2023

African heads of state and global CEOs at the World Economic Forum Annual Meeting backed the launch of the first of its kind report on how public-private partnerships can support the implementation of the African Continental Free Trade Area (AfCFTA).

AfCFTA: A New Era for Global Business and Investment in Africa outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the AfCFTA, and illustrative examples from successful businesses in Africa to guide businesses in entering and expanding in this area.

The report aims to provide a pathway for global businesses and investors to understand the biggest trends, opportunities and strategies to successfully invest and achieve high returns in Africa, developing local, sub-regional and continental value chains and accelerating industrialization, all of which go hand in hand with the success of the AfCFTA.

The AfCFTA is the largest free trade area in the world, by area and number of participating countries. Once fully implemented, it will be the fifth-largest economy in the world, with the potential to have a combined GDP of more than $3.4 trillion. Conceived in 2018, it now has 54 national economies in Africa, could attract billions in foreign investment, and boost overseas exports by a third, double intra-continental trade, raise incomes by 8% and lift 50 million people out of poverty.

To ease the pain of transition to its new single market, Africa has learned from trade liberalization in North America and Europe. “Our wide range of partners and experience can help anticipate and mitigate potential disruptions in business and production dynamics,” said Børge Brende, President, and World Economic Forum. “The Forum’s initiatives will help to ease physical, capital and digital flows in Africa through stakeholder collaboration, private-public collaboration and information-sharing.”

Given the continent’s historically low foreign direct investment relative to other regions, the report highlights the sense of excitement as the AfCFTA lowers or removes barriers to trade and competitiveness. “The promising gains from an integrated African market should be a signal to investors around the world that the continent is ripe for business creation, integration and expansion,” said Chido Munyati, Head of Regional Agenda, Africa, World Economic Forum.

The report focuses on four key sectors that have a combined worth of $130 billion and represent high-potential opportunities for companies looking to invest in Africa: automotive; agriculture and agroprocessing; pharmaceuticals; and transport and logistics.

“Macro trends in the four key sectors and across Africa’s growth potential reveal tremendous opportunities for business expansion as population, income and connectivity are on the rise,” said Wamkele Mene, Secretary-General, AfCFTA Secretariat.

“These projections reveal an unprecedented opportunity for local and global businesses to invest in African countries and play a vital role in the development of crucial local and regional value chains on the continent,” said Landry Signé, Executive Director and Professor, Thunderbird School of Global Management and Co-Chair, World Economic Forum Regional Action Group for Africa.

The Forum is actively working towards implementing trade and investment tools through initiatives, such as Friends of the Africa Continental Free Trade Area, to align with the negotiation process of the AfCFTA. It identifies areas where public-private collaboration can help reduce barriers and facilitate investment from international firms.

About the World Economic Forum Annual Meeting 2023

The World Economic Forum Annual Meeting 2023 convenes the world’s foremost leaders under the theme, Cooperation in a Fragmented World. It calls on world leaders to address immediate economic, energy and food crises while laying the groundwork for a more sustainable, resilient world. For further information,

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