Two of Botswana’s most wealthy men, property-cum-media mogul, Sayeed Jamali and retail tycoon, Ramachandran Ottapathu are not prepared to give up on their attempt to own and operate the national airline, Air Botswana.
Fresh investigations suggest that the duo recently tried to use a roads construction meeting to arm-twist the transport minister into discussing the possibility of taking over the national airliner. Indications are that the duo is convinced it can turn around Air Botswana. Weekend Post is reliably informed that on 6 February 2018 the two businessmen tried to take advantage of a meeting called by Minister of Transport and Communication, Kitso Mokaila to discuss the construction tender of Segoditshane Bridge which was won by Jamali’s company, Universal Builders.
Ministry sources that were at the meeting were “shocked” to see Jamali accompanied by Ottapathu who is not party to the bridge construction tender. During the said meeting, Ottapathu attempted to make a presentation to Mokaila, trying to convince him how the two men can be suitable owners of Air Botswana. However, according to sources, Mokaila flatly refused discussing Air Botswana.
“We called them (Jamali and Ottapathu) to talk about roads. They assumed we would talk about Air Botswana but we declined discussing the airline…we only talked about roads,” said a top official at the transport ministry. As if refusing to give billionaires Jamali and Ram audience to discuss possibility of their Air Botswana take over was not enough, high placed sources at the Government Enclave also revealed to this publication that Mokaila will not give the two an ear on Air Botswana as their initial bid failed. The source authoritatively confirmed that while government is still looking for “suitable investors,” Jamali and Ottapathu have never crossed minister Molaila’s mind as he is “now busy looking elsewhere for more suitable bidders to take over the airliner.”
“Their expression of interest (Jamali and Ottapathu) was not successful and it was over for them. Mokaila stated even in cabinet or intra-ministerial meetings that he is going to improve Air Botswana and make it viable and will not take pressure to talk to any of those whose bids failed. That is the reason why he is re-fleeting. He said we are going to look everywhere for suitable investors and Jamali or Ottapathu’s names were never mentioned,” said a highly placed source at Government Enclave.
Jamali and Ottapathu’s move to own Air Botswana started in February last year, a joint venture proposal through a company called LongLeaf and Weekend Post has seen an initial proposal which was received by the Deputy Permanent Secretary Isaac Moepeng. LongLeaf was among the 17 bidders who coveted ownership of Air Botswana subsequently submitting an Expression of Interest on 28 February 2017. Investigations have revealed that Jamali and Ottapathu made another bid last year September after Wilderness Holdings withdrew from the tender following its success through a Presidential Directive. President Ian Khama has indirect interest in Wilderness Holdings that was given Air Botswana and this caused a public uproar, forcing the tourism operator to withdraw its interest on the national airliner.
Initially LongLeaf wanted to hold 52 percent while government was to own the remaining 48 percent. However in the second bid Jamali and Ottapathu wanted 60 percent of the assets, tangible and intangible “including without limitation; the airline fleet, operation experiences, subject to any obligations contained in disclosed license agreements and all related intellectual property, the other fixed assets of Seller (Government of Botswana), any and all customer lists and the goodwill associated therewith, all free and clear of any security interests, mortgages or other encumbrances.” The second bid or proposal was received by Deputy Permanent Secretary Moepeng who the sources reveal that he “deliberately sat on the bid.”
In the initial bid, Cemair were the favourites to take over Air Botswana according to sources, but Mokaila decided to play hardball as he did not want another controversy like the one which involved Wilderness Holdings. Mokaila would say his intuition was served right as currently 11 out of 12 Cemair planes are grounded by the South African Civil Aviation Authority (SACAA) over regulatory compliance concerns since 2 February 2018.
Incidentally, this grounding also affected the P3 million per month wet lease agreement which Air Botswana gets from Cemair to use its(Cemair) CRJ-100 jet to run the four times weekly Gaborone-Cape Town route. Air Botswana was forced to announce suspension of the Gaborone-Cape Town route on the eve of Valentine’s Day, a week after SACAA declared grounding Cemair planes. As a temporary measure, all Cape Town ticketed passengers were being re-routed via Johannesburg at no extra cost “until a definite solution has been implemented.”
Latest reports from South Africa are that only one of the 12 planes, the domestically used Dash-8 Q400, has been lifted off the ground by SACAA while Air Botswana’s CRJ-100 and other ten Cemair owned airliners remain on the ground. Since last month, SACAA has to run inspections on the 12 Cemair planes concurrently and it is not known when the Gaborone-Cape Town route will be back on the skies, if at all it will pass inspection.
Sources close to development hinted that Jamali and Ottapathu wanted to capitalize on Cemair’s downfall or misfortune because their attempt to coax Mokaila into selling them Air Botswana came just four days after Cemair’s planes were grounded by SACAA. Sources said during the Segoditshane bridge construction meeting Ottapathu made a short presentation that he should take over the Gaborone-Cape Town route with his 30-seater jet. According to a source, Ottapathu also said he can make Gaborone an international travel hub and introduce a direct flight from Germany to Gaborone. Ottapathu has an estimated net-worth of P5 billion which includes his Choppies net-worth estimated to be P2 billion. Jamali on the other hand’s net-worth is estimated to be around P3 billion.
Meanwhile on Wednesday government announced intentions to refleet the national airliner by acquiring a newly manufactured ATR 72-600 turboprop aircraft-with dual-class capacity and more enhancement in the area of performance. A jet will also be added to substitute or add into Air Botswana’s aging fleet.
“Yes we are refleeting. The airline will be well placed to mitigate against the risks of losing its prime routes, which are presently operated by foreign competing airlines. The national airliner will be well-positioned to participate in the process of implementing the open skies policy, as advocated by the African Union,” said Mokaila.
In a brief interview with Weekend Post, Mokaila confirmed the meeting with Jamali and Ottapathu and that he declined talking about Air Botswana. He also said the privatization of Air Botswana is underway and they are looking for suitable investors. On the suspended Gaborone-Cape Town route due to Cemair’s grounding Mokaila reiterated his re-fleeting stance and said the new fleet will help in the future to mitigate against the risks of losing its prime routes like the currently suspended one.
Jamali did not want to be drawn into commenting about Air Botswana, saying his main job is being a builder. Jamali admitted that he was with Ottapathu when they tried to talk Mokaila into discussing Air Botswana but the minister declined. On the other hand Ottapathu denied ever discussing Air Botswana saying “we met the minister to discuss other things apart from Air Botswana.” Ottapathu did not state why he was party to meetings that discusses construction of bridges.
Mowana Copper Mine in Dukwi will finally pay its former employees a total amount of P23, 789, 984.00 end of this month. For over three years Mowana Copper Mine has been under judicial management. Updating members, Botswana Mine Workers Union (BMWU) Executive Secretary Kitso Phiri this week said the High Court issued an order for the implementation of the compromise scheme of December 9, 2021 and this was to be done within 30 days after court order.
“Therefore payment of benefits under the scheme including those owed to Messina Copper Botswana employees should be effected sometime in January latest end of January 2022,” Kitso said. Kitso also explained that cash settlement will be 30 percent of the total Messina Copper Botswana estate and negotiated estate is $3,233,000 (about P35, 563,000).
Messina Copper was placed under liquidation and was thereafter acquired by Leboam Holdings to operate Mowana Mine. Leboam Holdings struck a deal with the Messina Copper’s liquidator who became a shareholder of Leboam Holdings. Leboam Holdings could not service its debts and its creditors placed it under provisional judicial management on December 18, 2018 and in judicial management on February 28, 2019.
A new company Max Power expressed interest to acquire the mining operations. It offered to take over the Mowana Mine from Leboam Holdings, however, the company had to pay the debts of Leboam including monies owed to Messina Copper, being employees benefits and other debts owed to other creditors.
The monies, were agreed to be paid through a scheme of compromise proposed by Max Power, being a negotiated payment schedule, which was subject to the financial ability of the new owners. “On December 9, 2021, Messina Copper liquidator, called a meeting of creditors, which the BMWU on behalf of its members (former Messina Copper employees) attended, to seek mandate from creditors to proceed with a proposed settlement for Messina Copper on the scheme of compromise. It is important to note that employee benefits are regarded as preferential credit, meaning once a scheme is approved they are paid first.”
A savingram the Ministry of Local Government and Rural Development sent to Town Clerks and Council Secretaries explaining why councilors across the country should not have access to their terminal benefits before end of their term has been revealed.
The contents of the savingram came out in the wake of a war of words between counselors and the Ministry of Local Government and Rural Development. The councilors through the Botswana Association of Local Authorities (BALA) accuse the Ministry of refusing to allow them to have access to their terminal benefits before end of their term.
This has since been denied by the Ministry. In the savingram to town councils and council secretaries across the country, Permanent Secretary in the Ministry of Local Government and Rural Development Molefi Keaja states that, “Kindly be advised that the terminal benefits budget is made during the final year of term of office for Honorable Councilors.” Keaja reminded town clerks and council secretaries that, “The nominal budget Councils make each and every financial year is to cater for events where a Councilor’s term of office ends before the statutory time due to death, resignation or any other reason.”
The savingram also goes into detail about why the government had in the past allowed councilors to have access to their terminal benefits before the end of their term. “Regarding the special dispensation made in the 2014-2019, it should be noted that the advance was granted because at that time there was an approved budget for terminal benefits during the financial year,” explained Keaja. He added that, “Town Clerks/Council Secretaries made discretions depending on the liquidity position of Councils which attracted a lot of audit queries.”
Keaja also revealed that councils across the country were struggling financially and therefore if they were to grant councilors access to their terminal benefits, this could leave their in a dire financial situation. Given the fact that Local Authorities currently have cash flow problems and budgetary constraints, it is not advisable to grant terminal benefits advance as it would only serve to compound the liquidity problems of councils.
It is understood that the Ministry was inundated with calls from some Councils as they sought clarification regarding access to their terminal benefits. The Ministry fears that should councils pay out the terminal benefits this would affect their coffers as the government spends a lot on councilors salaries.
Reports show that apart from elected councilors, the government spends at least P6, 577, 746, 00 on nominated councilors across the country as their monthly salaries. Former Assistant Minister of Local Government and Rural Development, Botlogile Tshireletso once told Parliament that in total there are 113 nominated councilors and their salaries per a year add up to P78, 933,16.00. She added that their projected gratuity is P9, 866,646.00.
A surge in consumer spending is expected to be a key driver of Botswana’s economic recovery, according to recent projections by Fitch Solutions. Fitch Solutions said it forecasts household spending in Botswana to grow by a real rate of 5.9% in 2022.
The bullish Fitch Solutions noted that “This is a considerable deceleration from 9.4% growth estimated in 2021, it comes mainly from the base effects of the contraction of 2.5% recorded in 2020,” adding that, “We project total household spending (in real terms) to reach BWP59.9bn (USD8.8bn) in 2022, increasing from BWP56.5bn (USD8.3bn) in 2021.” According to Fitch Solutions, this is higher than the pre-Covid-19 total household spending (in real terms) of P53.0 billion (USD7.8bn) in 2019 and it indicates a full recovery in consumer spending.
“We forecast real household spending to grow by 5.9% in 2022, decelerating from the estimated growth of 9.4% in 2021. We note that the Covid-19 pandemic and the related restrictions on economic activity resulted in real household spending contracting by 2.5% in 2020, creating a lower base for spending to grow from in 2021 and 2022,” Fitch Solutions says.
Total household spending (in real terms), the agency says, will increase in 2022 when compared to 2021. In 2021 and 2022, total household spending (in real terms) will be above the pre-Covid-19 levels in 2019, indicating a full recovery in consumer spending, says Fitch Solutions. It says as of December 6 2021 (latest data available), 38.4% of people in Botswana have received at least one vaccine dose, while this is relatively low it is higher than Africa average of 11.3%.
“The emergence of new Covid-19 variants such as Omicron, which was first detected in the country in November 2021, poses a downside risk to our outlook for consumer spending, particularly as a large proportion of the country’s population is unvaccinated and this could result in stricter measures being implemented once again,” says Fitch Solutions.
Growth will ease in 2022, Fitch Solution says. “Our forecast for an improvement in consumer spending in Botswana in 2022 is in line with our Country Risk team’s forecast that the economy will grow by a real rate of 5.3% over 2022, from an estimated 12.5% growth in 2021 as the low base effects from 2020 dissipate,” it says.
Fitch Solutions notes that “Our Country Risk team expects private consumption to be the main driver of Botswana’s economic growth in 2022, as disposable incomes and the labour market continue to recover from the impacts of the Covid-19 pandemic.” It says Botswana’s tourism sector has been negatively impacted by the Covid-19 pandemic and the related travel restrictions.
According to Fitch Solutions, “The emergence of the Omicron variant, which was first detected in November 2021, has resulted in travel bans being implemented on Southern African countries such as South Africa, Botswana, Lesotho, Namibia, Zimbabwe and Eswatini. This will further delay the recovery of Botswana’s tourism sector in 2021 and early 2022.” Fitch Solutions, therefore, forecasts Botswana’s tourist arrivals to grow by 81.2% in 2022, from an estimated contraction of 40.3% in 2021.
It notes that the 72.4% contraction in 2020 has created a low base for tourist arrivals to grow from. “The rollout of vaccines in South Africa and its key source markets will aid the recovery of the tourism sector over the coming months and this bodes well for the employment and incomes of people employed in the hospitality industry, particularly restaurants and hotels as well as recreation and culture businesses,” the report says.
Fitch Solutions further notes that with economies reopening, consumers are demanding products that they had little access to over the previous year. However, manufacturers are facing several problems. It says supply chain issues and bottlenecks are resulting in consumer goods shortages, feeding through into supply-side inflation. Fitch Solutions believes the global semiconductor shortage will continue into 2022, putting the pressure on the supply of several consumer goods.
It says the spread of the Delta variant is upending factory production in Asia, disrupting shipping and posing more shocks to the world economy. Similarly, manufacturers are facing shortages of key components and higher raw materials costs, the report says adding that while this is somewhat restricted to consumer goods, there is a high risk that this feeds through into more consumer services over the 2022 year.
“Our global view for a notable recovery in consumer spending relies on the ability of authorities to vaccinate a large enough proportion of their populations and thereby experience a notable drop in Covid-19 infections and a decline in hospitalisation rates,” says Fitch Solutions. Both these factors, it says, will lead to governments gradually lifting restrictions, which will boost consumer confidence and retail sales.
“As of December 6 2021, 38.4% of people in Botswana have received at least one vaccine dose. While this is low, it is higher than the Africa average of 11.3%. The vaccines being administered in Botswana include Pfizer-BioNTech, Sinovac and Johnson & Johnson. We believe that a successful vaccine rollout will aid the country’s consumer spending recovery,” says Fitch Solutions. Therefore, the agency says, “Our forecasts account for risks that are highly likely to play out in 2022, including the easing of government support. However, if other risks start to play out, this may lead to forecast revisions.”