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Barclays bags 13 percent in profits

The bank with the second largest stock in the market has announced a 13 percent or P 558 million profits before tax. Barclays Bank Botswana, which will be operating as ABSA in July 2018 notes that it strives for excellence and they will continue holding on to the rights to trade as Barclays in Bank in Botswana.

The bank highlights that its Retail Banking market which was characterized by continued job losses in the mining sector and industries affected by the closure of a key mine in 2016 remain slightly affected. The Barclays Botswana Managing Director Reinette Van Der Merwe, has on Thursday highlighted that they have necessitated a revision of the lending criteria to the affected customer segments.

The released statements for the year which ended December 2017 show that there had been a continuous modest growth in household income which resulted in constrained demand for credit from households. The pressure on household incomes consequently led to a reduction in the savings and deposits from individuals and therefore a decrease in the Bank’s retail customer deposits. Despite the headwinds in the market, Retail Banking registered a strong overall performance. Profitability increased year-on-year driven by a marked improvement in impairments. While total revenue remained flat year-on-year, non-interest income registered a notable growth of 9 percent

The Bank Financial Director (FD), Mumba Kalifungwa notes that they forecast inflation to be at an average of 3.7 percent in 2018. This forecast comes after Inflation had been stable and averaged 3.3 percent in 2017. The moderate increase in economic activity, alongside slow growth in personal incomes which resulted in weak activity resulted in low inflationary pressures. As the cost of living including fuel, electricity, service tariffs, transport and water rose, the results note that it did not do much harm as it only moderately impacted inflation in 2017.

Imported inflation therefore is reported to have been restrained given low inflation among trading partner countries and the relatively stable Pula exchange rate. However in 2018, they note they expect inflation to pick up gradually on the back of rising international oil prices and expansionary government budget.

In line with their business strategy to grow fee income, the bank stresses that it will continue seeking better and improved ways of service provision. Deposits are reported to have grown by 6 percent while loans balances increased by 3 percent year-on-year. Barclay’s financial results show that significant strides were made in delivering strategic priorities during the 2017 financial year.  The FD explained that they will continue to review the number and location of their physical distribution channels as increasing number of customers continue migrate from brick and mortar to digital channels.  

The Business Banking strategy continued to deliver results with an 11 percent year-on-year growth in profit before tax. This growth in profitability is evident to have been driven by both net interest income and fee commission income. The main driver to net interest income was on the back of strong asset growth on loans and advances to customers then business strategy forecast shows that there will be a continued focus on embedding strong banking relationship in order to deliver client service that would differentiate service to customers.

The results show that the Bank through the launch of the Enterprise Supply Development (ESD) is positive the initiative will enable them to serve the Small Medium Enterprise (SME) market better through supporting the corporate value chain. “We will be rolling out new products and services during the year which we believe will continue to enhance our offering and in implementing our strategy,”

Loans and advances to customers increased by 14 percent year-on-year to P10.7 billion. This growth is largely associated with Corporate, Retail and Business Banking segments that grew by 36 percent and 6 percent respectively. This bank notes was mainly in their chosen business segments, where various debt and transactional banking solutions were offered. Customer liabilities decreased by 2 percent year-on-year largely driven by corporate deposits where we saw a reduction of 4 percent to P6 billion. We continue to strive to improve our customer service and product offering to existing and potential customers with a view of providing access to finance as well as various payment solutions.

This has continued to contribute positively to the momentum that the bank continues to build on. The results emphasizes that it remains important to insure there is growth in the fee income remains critical to their strategy and this will continue to be an area of focus in expanding the banks revenue base. The bank notes that it will continue to focus on controlling costs, and managing impairments by selective credit processes and maintaining the focus on collections throughout 2018.

The FD highlighted that their balance sheet remains solid at a total position of P15 billion, with strong liquidity and capital levels. He explained that they remained well above the regulatory Liquid Asset Ratio (LAR) requirement of 10 percent for the year ended 31 December 2017 ending at 15.49 percent. The Bank’s regulatory capital position was P2 billion representing a ratio of 19.8 percent above the regulatory limit of 15 percent.

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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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Food import bill slightly declines

20th March 2023

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.

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