Sub-Saharan Africa economy to grow by 3.1% -World Bank
Business
The World Bank has projected that Sub-Saharan Africa’s economy will grow by 3.1 percent in 2018 and will average 3.6 percent in 2019–2020, this is according to Africa’s Pulse, a bi-annual analysis of the state of African economies conducted by the Bank.
The document was released this Wednesday (18th April 2018) at the ongoing World Bank’s Springs meeting in Washington DC. The meeting in United States of America is held in conjunction with the International Monetary Fund (IMF). Also in attendance is Botswana Minister of Finance & Economic Planning Kenneth Matambo.
Mr. Albert Zeufack, Chief Economist for the Africa Region and Ms. Punam Chuhan-Pole, Lead Economist in the Africa Region held a discussion on Africa’s recent economic progress and future challenges in sustaining Africa’s economic growth in a changing global environment. The discussion was aired across African countries by means of a video conference. World Bank Botswana organized the same arrangement for finance and economic journalists at their Gaborone Offices.
Economic growth in Sub-Saharan Africa is estimated to have picked up to 2.6 percent in 2017 from 1.5 percent in 2016. This upswing reflected on the supply side, rising oil and metals production, was encouraged by recovering commodity prices, and improving agricultural conditions following droughts. On the demand side, growth was supported by a rebound in consumer spending as inflation moderated, and a recovery in fixed investment as economic activity picked up among oil and metals exporters.
According to the forecast by the Global lender the economic growth projections are also predominantly premised on expectations that oil and metals prices will remain stable, and that governments in the region will implement reforms to address macroeconomic imbalances and boost investment. Instability of oil and metal commodity prices in the international market space has been a blow for most of African countries in the past years. In the case of Botswana, the drastic plunging of base metal prices, precisely copper & nickel resulted in massive job losses in 2016 when Botswana’s traditional copper & nickel Mine BCL was put shut down following poor performance by metal prices in the global market.
Zeufack says the 3.1 percent growth projection signals a rebound in Sub-Saharan Africa, but warns against celebrations just yet. “We are still far from pre-crisis growth levels. African Governments must speed up and deepen macroeconomic and structural reforms to achieve high and sustained levels of growth,” he advised.
The moderate pace of economic expansion reflects the gradual pick-up in growth in the region’s three largest economies, Nigeria, Angola and South Africa. Elsewhere, economic activity will pick up in some metals exporters, as mining production and investment rise.
Among non-resource intensive countries, solid growth, supported by infrastructure investment, will continue in the West African Economic and Monetary Union (WAEMU), led by Côte d’Ivoire and Senegal.
The World Bank observes that growth prospects have strengthened in most of East Africa, owing to improving agriculture sector growth following droughts and a rebound in private sector credit growth. In Ethiopia, growth will remain high, as government-led infrastructure investment continues.
World Bank Lead Economist and the author of the Africa Pulse Chuhan-Pole reiterated that for many African countries, economic recovery is vulnerable to fluctuations in commodity prices and production. She underscored the need for countries to build resilience by pushing diversification strategies to the top of the policy agenda. In Botswana’s context Word Bank Country representatives underscored and emphasized on economic diversification to push the economy’s dream of autonomy from mineral revenue, the latter has evidently proven not to be sustainable and clearly a ticking time bomb; especially in the area of employment. Botswana’s government revenue still heavily depends on mineral income generation with diamonds, still the country’s lead cash cow.
The Washington headquartered Global lender says public debt; relative to Gross Domestic Product is currently rising in the sub Saharan region, and the composition of debt has changed as countries have shifted away from traditional concessional sources of financing towards more market-based ones. Higher debt burdens and the increasing exposure to market risks raise concerns about debt sustainability. 18 countries were classified at high-risk of debt distress in March 2018, compared with eight in 2013. “By fully embracing technology and leveraging innovation, Africa can boost productivity across and within sectors, and accelerate growth,” highlighted Zeufack.
This issue of Africa’s Pulse has a special focus on the role of innovation in accelerating electrification in Sub-Saharan Africa, and its implications of achieving inclusive economic growth and poverty reduction. The report says that achieving universal electrification in Sub-Saharan Africa will require a combination of solutions involving the national grid, as well as “mini-grids” and “micro-grids” serving small Concentrations of electricity users, and off-grid home-scale systems.
Improving regulation of the electricity sector and better management of utilities remains central to success. “A well-thought-out, evidence-based plan for national electrification is crucial,” states the report. Such a plan should include staged rollouts for grid extension and targeted investments in mini-grid development to expand electricity access for productive uses. In areas with high potential for expanding energy intensive productive uses, new industrial zones could be grid-connected sooner to foster economic development, while other areas with lower potential demands for productive uses could be served by mini-grids.
Over time, as incomes rise and populations agglomerate in higher-productivity locations, the national grid can spread out. Last year Botswana launched the 4.6 billion pula electrification project termed the ‘The North West Transmission Grid (NWTG)’ that will extend the transmission grid to the North West, Chobe and Gantsi Districts of the country. World Bank Country representatives indicate that Botswana is in the right track with Africa’s Impulse recommendations citing that main focus and deliberate efforts needed to be channeled to rigorous economic diversification from mineral revenue.
Business
Grit divests from Letlole La Rona
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.
Business
Stargems Group establishes Training Center in BW
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.
Business
Food import bill slightly declines
The latest figures released by Statistics Botswana this week shows that food import bill for Botswana slightly declined from around P1.1 billion in November 2022 to around P981 million in December during the same year.
This content is locked
Login To Unlock The Content!