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Botswanas employed are underemployed

Jobs statistics in Africa continue to show shocking high unemployment rates across countries which will take some doing to correct. Concerns about the high levels of youth unemployment and the social   mayhem this might cause have been widely expressed.

A recent report (2017) shows that Botswana has the lowest unemployment rate in Africa, something that economists do not dispute but rather they suggest what is termed employment in Botswana amounts to underemployment. This basically means that Botswana has workers who are highly skilled but working in low paying jobs, workers who are highly skilled but working in low skill jobs and part-time workers who would prefer to be full time.

Botswana has a population of about two million people. It is one of the fastest growing economies in the world with unemployment rate reported to be around 18 percent. At 25.9% in 2016 and 26.7% in 2018 South Africa's rate is higher than other African countries also classified by the World Bank as upper-middle-income countries. Botswana’s unemployment rate is at 18.4%, Gabon at 18.5% and Namibia at 25.5%.

The government increased its goods and services exports by 7.2 per cent in 2015 to boost employment. The introduced initiatives to fight unemployment include Ipelegeng, a project that was initially made to hire unskilled people but over the years the situation changed due to the reported unemployment and even the skilled are now part of the programme. Livestock Management and Infrastructure Development and Integrated Support Programme for Arable Development was one of the initiatives introduced through the years and a host of other initiatives have been added to the list.

The country awaits the release of the 2018/2019 minimum wage rates. Scores of workers in various industries are optimistic that under the presidency of Mokgweetsi Masisi the rates will change for the better. The current minimum wage has raked in a 6 percent increment across industries. Indications are that the world’s unemployment and underemployment rate remain high as reported by the Global risk Report 2018.

The report shows that headline economic indicators suggest that the world is finally getting back on track after the global crisis that destabilized economies 10 years ago. A broad-based pickup in Gross Domestic Product (GDP) growth rates is under way, stock markets have never been higher and the world’s major central banks are cautiously preparing to unwind the exceptional policies of the post-crisis period.

However, the Global Risk report states that this relatively upbeat picture masks numerous concerns. This has been the weakest post-recession recovery on record, it noted. The report says that productivity growth remains puzzlingly weak. Investment growth has been subdued, and in developing economies it has slowed sharply since 2010. In many countries the social and political fabric is reported to have been badly frayed by many years of stagnating real incomes. 

The reassuring headline is explained to be indicators mean that highlight that economic and financial risks are becoming a blind spot: business leaders and policy-makers are less prepared than they might be for serious economic or financial turmoil. The risks can be divided into two categories consisting of familiar vulnerabilities that have grown, mutated or relocated over time; and newer fragilities that have emerged in recent years.

The report further shows that the third long-standing risk is the health of the financial system, even though much has been done to restore the banking system to stability after its near-collapse in 2008. The report says regulators have overseen an increase in the core capital ratios of 30 globally systemic banks, from 10.3 percent at the end of 2011 to 12.6 percent at the end of 2016.

Widespread changes in the structure of the sector include collapses, mergers, and a politically sensitive supranational “banking union” in the Eurozone. Restrictions such as the Volcker Rule, which since 2015 has prohibited banks in the United States from making market bets with their own capital have been put on the risks that banks are allowed to take. And there has been a winding down of the sector’s reliance on wholesale inter-bank lending, a potentially volatile source of funding that evaporated in 2008 as banks began to lose trust in each other’s credit worthiness.

Bond valuations are reported to be even more dramatic. In mid-2017, around 9 trillion US dollars’ worth of bonds were trading with a negative yield, meaning that investors were, in effect, paying bond issuers for the privilege of holding their risky financial instruments. This reflects anomaly to the impact of the huge asset-purchase programmes launched by central banks in the wake of the crisis, which seem to have divorced asset prices from assessments of their underlying riskiness. In Europe it has been explained that during 2017, yields on high-risk corporate bonds converged with yields on US government debt, the global financial system’s risk-free benchmark.

It is not just stocks and bonds that have seen their prices rise. The International Monetary Fund (IMF)’s index of global house prices is explained to be close to its pre-crisis peak again and signs of stretched valuations are evident in numerous cities including Hong Kong, London, Stockholm, and Toronto. Inflation in all these traditional asset classes has been dwarfed by more speculative assets such as the crypto currency Bitcoin, which increased in value by around 1200 percent in 2017.

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CA SALES revenues rose to R9.5 billion

27th March 2023

The Botswana and Johannesburg Stock Exchange listed distributor of fast-moving consumer goods

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Grit divests from Letlole La Rona

22nd March 2023

Grit Services Limited, a member of the pan African real estate group, London Stock Exchange listed Grit Real Estate Income Group is divesting from Letlole La Rona Limited (LLR), a local real estate company established by government investment arm Botswana Development Corporation over a decade ago.

The Board of Directors of Letlole La Rona Limited this week announced in a statement to Unitholders that Grit Services Limited (‘Grit’) has informed them of its intention to exit its investment in the company.

Grit has been a material shareholder in LLR since 2019. On 07 March 2023, Grit sold 6 421 000 linked units, representing 2.29% of the Company’s total securities in issue, at a market value of BWP 22 537 710.

This trade follows previous sales of 6.79% in December 2022, as communicated to Unitholders on 10 January 2023, as well as a further sale of 4.78% (representing 13 347 068 linked units) on 24 February 2023 to various shareholders.

In aggregate, Grit has sold 13.9% shareholding in the Letlole La Rona between December 2022 and March 2023, resulting in current shareholding of 11.25% in the Company.

Letlole La Rona said in the statement that the exit process will take place in an orderly manner so as to maintain stability of the Company’s share price.

The statement explained that Grit’s sale of its entire shareholding in LLR is in line with its decision to exit investments where it does not have majority control, or where it has significant exposure to currencies other than US dollar, Euro or hard-currency-pegged revenue streams.

“Grit has announced similar decisions pertaining to certain of its hospitality assets in Mauritius recently. The Company would like to advise Unitholders that it remains focused on long-term value delivery to all stakeholders” LLR said

In July last year as part of their Go-to-Africa strategy Letlole La Rona acquired an initial 30% equity stake in Orbit Africa Logistics, with an option to increase this investment to 50%. OAL is a special purpose vehicle incorporated in Mauritius, owning an industrial asset in a prime industrial node in Nairobi, Kenya.

The co-investment was done alongside a wholly owned subsidiary of London listed Grit. The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of Nairobi center, serving the main industrial node, the port of Mombasa and the industrial town of Athi River and is strategically located 11 kilometers south of the international airport and 9.6 kilometers from the Inland Container Depot.

Grit shareholding in Letlole La Rona was seen as strategic for LLR, for the company to leverage on Grit’s already existing continental presence and expand its wings beyond Botswana borders as already delivered by Kenya transaction.

Media reports have however suggested that LLR and Grit have since late last year had fundamental disagreements on how to go about the Go-to-Africa strategy amongst other things, fuelled by alleged Botswana government interference on the affairs of LLR.

Government through LLR founding shareholder – Botswana Development Corporation has a controlling stake of around 40 percent in the company. Government is the sole shareholder of Botswana Development Corporation.

Letlole La Rona recently released their financial results for the six months ended December 2022, revenue increased by 4% to P50.2 million from P48.4 million in the prior comparative six months, whilst operating profit was up 8% to P36.5 million. Profit before tax of P49.7 million was reported, an increase of 8% on the prior comparative six months.

“We are encouraged by the strong results, notwithstanding a challenging economic environment. Our performance was mainly underpinned by annual lease escalations, our quality tenant base and below average market vacancy levels, especially in our warehouse portfolio,” Kamogelo Mowaneng, Letlole La Rona Chief Executive Officer commented.

LLR reported a weighted average lease expiry period of 3.3 years and escalation rates averaging 6.8% per annum for the period ended 31 December 2022.Its investment portfolio value increased by 14% year-on-year to close the period at P1.4 billion, mainly driven by the acquisition of a 30% stake in OAL in July 2022.

The Company also recorded a significant increase in other income, predominantly due to foreign exchange gains on the OAL shareholder loan. “We continue to explore pipeline opportunities locally, and regionally in line with our Go-to-Africa strategy and our interest remains on value-accretive investments,” Mowaneng said.

An interim distribution of 9.11 thebe per linked unit was declared on the 6th of February 2023 for the half-year period to 31 December 2022, comprising of a dividend of 0.05 thebe and debenture interest of 9.06 thebe per linked unit which will be paid to linked unit holders registered in the books of the Company at the close of business on 24 February 2023.

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Stargems Group establishes Training Center in BW

20th March 2023

Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.

The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.

“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.

In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices.  Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.

“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.

Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy,  Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.

“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.

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