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Debswana Pension Fund expansion quest bares fruits

Botswana’s second largest and the country’s best Private sector Fund Debswana Pension Fund (DPF) continues t grow with its total asset now sitting at over 7 billion pula.

 Recent report on the Fund’s 12 month performance ended December 2017 on its investment portfolio shows a modest outcome. According to the Fund’s E-Brief released recently the fund’s financial figures reflects a much improved performance relative to the 2016 year end.
For the period under review the top performing sector was Global Emerging Markets Equities, posting a return of 26.3 percent. The next top performing asset class was Global Equities, posting a return of 12.6 percent for the period, as measured by the MSCI Word (BWP).

For the Fund, Global Equities were up 16.8 percent for the period, outperforming the benchmark by 4.2 percent. Orbis was the top performer in this space, posting a net return of 19.2 percent for the 12 months to December, outperforming the benchmark by 6.6 percent. “All global equities managers in the Fund outperformed the benchmark net of fees” states the report. The fund was established in 1984, and its housing and expanding retirement dues for one the world’s largest diamond companies and Botswana’s largest private sector employer Debswana.

 DPF says its worst performing asset class was Local Equities, posting a return of -5.8 percent for 12 months to December 2017 while Global Bonds returned -0.5 percent over the 12 months to December 2017. PIMCO outperformed the benchmark by 1.47% DPF also note in the brief report that taking into account its history the Fund’s approach towards local asset manager mandates has been to award balanced or generalized mandates, however given the growing DPF asset base, the DPF Board of Trustees has since found it prudent to change from that tradition and re-issue specialist mandates for the local market going forward.

“This is mainly for the purpose of ensuring focused and optimal performance by the local managers. A request for proposals was issued in 2016 and the new specialist manager appointments were finalized in Q1 of 2017 as follows” reads the report. The Fund also reports that as part of the ongoing implementation of the Fund’s investment policy and manager service level agreements, the DPF Board of Trustees resolved in the Board sittings of Q2 and Q4 2017 to disinvest from Aberdeen and Kgori Capital respectively.

The Debswana Pension Fund prides itself with a sparkling investment performance history. Prior to the year 2004, the DPF investment strategy was based on a smoothed return process. Through this strategy, members were awarded investment return bonuses equally across the board based on market performance subsequent to bonus declarations.  In the 6 years up to 2003, the Fund was fortunate enough to earn record returns well above inflation.  

The market downturn of 2001/2002 however brought about new lessons for the Fund. Near retirees were hardest hit by the -12.13% loss on their fund credits, hence therefore leaving the immediate retirees with reduced pension savings in that year by the Trustees. Following from that experience the DPF Board of Trustees reviewed and identified the Life Stage Investment Model as the best way to mitigate and minimize future potential losses for vulnerable members.

The general principle of the life stage model is to invest member funds based on their presumed risk appetite. Capital preservation for near retirees is therefore pursued through reduced exposure of their assets to high risk investment instruments.  Conversely, Members far from retirement are invested aggressively in high risk-high yield vehicles. Under life staging, member assets are split into three portfolios that have different investment objectives. Market portfolio (18-53) Conservative Portfolio (age 57-60) and a Pensioner Portfolio (above 60). The Life stage investment model was affected in 2004.

In 2014, DPF revised its investment strategy to increase domestic property investment exposure to 12.5% of assets over the next 3 years while also developing a strategy to take advantage of local and African investment opportunities. The DPF in its quest to fulfill its investment strategy and according figures and financial performance the Gosego January led fund is on the right track.

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China’s GDP expands 3% in 2022 despite various pressures

2nd February 2023
China’s Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.

The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The country’s fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.

In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.

Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.

China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.

Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.

On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.

According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry 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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