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Botswana courts Dubai business community

In a bid to woo the international business community and attract global capital to Botswana, Ministry of Investment, Trade & Industry (MITI), Botswana Investment & Trade Centre (BITC) in collaboration with the Embassy of Botswana in Kuwait undertook a targeted investment and trade promotion mission to the United Arab Emirates from the 12th –15th March 2018.

The Botswana delegation was lead by Minister of Investment Trade & Industry Vincent Seretse. According to BITC the rationale of this undertaking was that the United Arab Emirates has over the years successfully transformed its economic landscape and positioned itself as the economic centre of the Middle East, having attracted multiple investments into the region.

BITC Director of Corporate Communication Kutlo Moagi told WeekendPost that over the next decade the UAE is expected to be one of Middle East's economic outperformers. “Its diversified economy and solid operational framework will see exports and investment continue to drive its growth.” Moagi said, adding that the UAE therefore presents potential for Botswana to attract foreign direct investment and take advantage of opportunities for joint venture partnerships and strategic alliances.  


She further explained that the main objective of the mission was to explore investment and trade opportunities, position Botswana as an investment destination of choice to the UAE business community, as well as facilitate for possible joint-venture arrangements between interested investors from both countries. Moagi also revealed to this publication that a total delegation of 17 private companies and government institutions with sectors of focus in Agriculture, Manufacturing, Mining, International Financial Services (IFSC), Tourism and Transport and Logistics embarked on the trip to Dubai.

“Engagements with the UAE business community were carried out through a Business Conference in partnership with the UAE Ministry of Economy and Dubai Chamber of Commerce and Industry. In addition, a series of pre-planned business to business meetings in both Dubai and Abu Dhabi took  place for participating companies to explore opportunities for mutually beneficial partnerships with their counterparts in the UAE,”  she said.

When delivering a key note address at the Business Conference Botswana Minister Seretse  said  Botswana stands to learn a lot from the United Arab Emirates, especially in the area of sustainable economic diversification.“We wish to learn how you have successfully managed to diversify your economy, by creating other thriving strategic sectors such as: Tourism, Financial and Business Services, Transport and Logistics, as well as Manufacturing, to name but a few. I have noted the firm resolves of the United Arab Emirates to have 64% of your GDP being derived from non-oil reserves by the year 2030,” Minister Seretse told the business conference.

He also added that given the negative trade balance in favour of Botswana, there were a lot of opportunities for the UAE to export more goods and services to Botswana. He that Botswana currently exported goods worth US$708 million per annum to the United Arab Emirates, mostly diamonds, while the United Arab Emirates exports US$21 million of diamonds and other consumables to Botswana. He encouraged the Arabs to consider locating a production facility in Botswana providing access to multiple preferential trade arrangements, such as the SADC-EU Economic Partnership Agreement, the Africa Growth and Opportunities Act (AGOA), the Southern Africa Customs Union (SACU), and Southern African Development Community (SADC).   

“We seek stronger strategic and commercial partnerships with a nation that has successfully moved from humble beginnings to become the globally recognized economic powerhouse that the United Arab Emirates clearly is today.  Beyond the partnerships, we are keen to see actual investments happening across our two nations.”


Seretse called on United Arab Emirates Investors to collaborate with Botswana companies in the area of manufacturing and services, including ICT, transport & logistics particularly aviation and pharmaceuticals among others. He cited Botswana’s beef industry saying the country already meets the agriculture stringent requirements of the European Union market and that it was compelling for Botswana to explore selling beef and livestock development solutions to the United Arab Emirates.   

The minister further promoted the country’s tourist sites, “In the area of tourism, I wish to invite you to Botswana’s UNESSCO listed world heritage sites, the pristine Okavango Delta, and the mystical Tsodilo Hills. Botswana with its diversified tourism offering, presents extensive opportunities for tourists, investors and tour operators in the United Arab Emirates to visit, invest, and explore the peace and tranquillity prevailing in the Botswana environment.”

For his part, Vice President of the Dubai Chamber of Commerce and Industry Hassan Al Hashemi underscored that Botswana offered plenty of attractive trade and investment opportunities in a variety of economic sectors. “The country has the potential to leverage its position in the region to serve as a gateway to the southern African market,” he said adding that Botswana has taken a proactive approach to diversifying its economy beyond commodities and attracting foreign direct investment.  

He shared that over the last five years, non-oil trade between Dubai and Botswana has nearly tripled to exceed $1 billion in the first nine months of 2017. Bilateral non-oil trade is currently dominated by pearls, precious/semi-precious stones and metals, valued at around $1 billion, followed by machinery and electrical equipment at $6 million, and transport equipment at $1.3 million.

“As one of the world’s largest producers and exporters of diamonds, Botswana can greatly benefit from strengthening its cooperation with the UAE, which has become a major re-export hub for diamonds. In fact, $10 billion worth of diamonds were re-exported through the UAE in the first half of 2017; accounting for 12% of the country’s total re-exports.  Yet, we see huge potential to expand the scope of bilateral trade and investment to other key sectors such as tourism, agriculture, healthcare, manufacturing and ICT,” said Al Hashemi.

He said that companies in Botswana can leverage on the UAE’s strategic geographical position between Africa, Asia and Europe, to attract new visitors.  “These are all advantages that can help us build on existing ties and take our trade relations to the next level.” He said that Dubai’s strong trade relationship with Botswana was symbolic of Dubai’s strategy of reaching out to promising markets of the world.

Al Hashemi said his organization was committed to protecting the interests of Dubai’s business community and providing all facilities and resources to ensure that that the emirate’s ties with Botswana continue to strengthen and develop. Keletsositse Olebile, the Acting CEO for Botswana Investment and Trade Centre said Botswana was finalizing the implementation of the enablers for investment such as double taxation avoidance both UAE companies in Botswana adding that UAE citizens going into Botswana were not required a Visa.

Olebile noted that a reciprocal arrangement by the UAE was being put in place to allow Botswana Citizens to access UAE without Visa requirements. Botswana Development Corporation Chief Executive Officer Bashi Gaetsaloe and SPEDU Head Dr Makubung Mokubung also presented on existing partnerships and investment opportunities facilitated by their respective organizations.

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Business

Botswana records first trade surplus since January

7th October 2021
Botswana-records-first-trade-surplus-

Botswana has recorded its first trade surplus for 2021 since the only one for the year in January.

The country’s exports for the month of July surpassed the value of imports, Statistics Botswana’s July International Merchandise Trade data reveals.

Released last Friday, the monthly trade digest reports a positive jump in the trade balance graph against the backdrop of a series of trade deficits in the preceding months since January this year.

According to the country’s significant data body, imports for the month were valued at P7.232 billion, reflecting a decline of 6.6 percent from the revised June 2021 value of P7.739 billion.

Total exports during the same month amounted to P7.605 billion, showing an increase of 6.1 percent over the revised June 2021 value of P7.170 billion.

A trade surplus of P373.2 million was recorded in July 2021. This follows a revised trade deficit of P568.7 million for June 2021.

For the total exports value of P7.605 billion, the Diamonds group accounted for 91.2 percent (P6.936 billion), followed by Machinery & Electrical Equipment and Salt & Soda Ash with 2.2 percent (P169.7 million) and 1.3 percent (P100.9 million) respectively.

Asia was the leading destination for Botswana exports, receiving 65.2 percent (P4.96 billion) of total exports during July 2021.

These exports mostly went to the UAE and India, having received 26.3 percent (P1. 99 billion) and 18.7 percent (P1.422 billion) of total exports, respectively. The top most exported commodity to the regional block was Diamonds.

Exports destined to the European Union amounted to P1.64 billion, accounting for 21.6 percent of total exports.

Belgium received almost all exports destined to the regional union, acquiring 21.5 percent (P1.6337 billion) of total exports during the reporting period.

The Diamonds group was the leading commodity group exported to the EU. The SACU region received exports valued at P790.7 million, representing 10.4 percent of total exports.

Diamonds and Salt & Soda Ash commodity groups accounted for 37.8 percent (P298.6 million) and 6.2 percent (P48.7 million) of total exports to the customs union.

South Africa received 9.8 percent (P745.0 million) of total exports during the month under review. The Diamonds group contributed 39.9 percent (P297.4 million) to all goods destined for the country.

 

In terms of imports, the SACU region contributed 62.7 percent (P4.534 billion) to total imports during July.

The topmost imported commodity groups from the SACU region were Fuel; Food, Beverages & Tobacco, and Machinery & Electrical Equipment with contributions of 33.3 percent (P1.510 billion), 17.4 percent (P789.4 million) and 12.7 percent (P576.7 million) to total imports from the region, respectively.

South Africa contributed 60.1 percent (P4.3497 billion) to total imports during July 2021.

Fuel accounted for 32.1 percent (P1.394 billion) of imports from that country. Food, Beverages & Tobacco contributed 17.7 percent (P772.0 million) to imports from South Africa.

Namibia contributed 2.0 percent (P141.1 million) to the overall imports during the period under review. Fuel was the main commodity imported from that country at 82.1 percent (P115.8 million).

During the months, imports representing 63.5 percent (P4.5904 billion) were transported into the country by Road.

Transportation of imports by Rail and Air accounted for 22.7 percent (P1.645 billion) and 13.8 percent (P996.2 million), respectively.

During the month, goods exported by Air amounted to P6, 999.2 million, accounting for 92.0 percent of total exports, while those leaving the country by Road were valued at P594.2 million (7.8 percent).

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Business

The 2021/2022 Stanford Seed Transformation Program Begins

7th October 2021

Founders from twenty companies have been accepted into the program from Botswana, Namibia, and South Africa

The 4th Cohort of the Stanford Seed Transformation Program – Southern Africa (STP), a collaboration between Stanford Graduate School of Business and De Beers Group commenced classes on 20 September 2021. According to Otsile Mabeo, Vice President Corporate Affairs, De Beers Global Sightholder Sales: “We are excited to confirm that 20 companies have been accepted into the 4th Seed Transformation Programme from Botswana, Namibia, and South Africa. The STP is an important part of the De Beers Group Building Forever sustainability strategy and demonstrates our commitment to the ‘Partnering for Thriving Communities’ pillar that aims at enhancing enterprise development in countries where we operate in the Southern African region”. Jeffrey Prickett, Global Director of Stanford Seed: “Business owners and their key management team members undertake a 12-month intensive leadership program that includes sessions on strategy and finance, business ethics, and design thinking, all taught by world-renowned Stanford faculty and local business practitioners. The program is exclusively for business owners and teams of for-profit companies or for-profit social enterprises with annual company revenues of US$300,000 – US$15million.” The programme will be delivered fully virtually to comply with COVID 19 protocols. Out of the 20 companies, 6 are from Botswana, 1 Namibia, and 13 South Africa. Since the partnership’s inception, De Beers Group and Stanford Seed have supported 74 companies, 89 founders/CEOs, and approximately 750 senior-level managers to undertake the program in Southern Africa.

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Minergy overcomes challenges – improves revenue and produces record breaking coal sales to date

7th October 2021
Minergy

Minergy, the coal mining and trading company with the Masama coal mine, this week released results for the year ended 30 June 2021. The company achieved revenue of P193 million (2020: P81 million) with significant improvement in sales volumes surpassing 415 000 tonnes sold for the year.

The performance was divided into two distinct periods with very different operating environments. The first eight-month period (July 2020 – February 2021), was negatively impacted by delayed funding, COVID-19 impacts and excessive rain; and the last four-month period (March – June 2021), was a more stable production environment moving toward nameplate capacity.

According to Minergy CEO, Morné du Plessis, production and sales initially recovered in July and August 2020 with the easing of COVID-19 restrictions and recoveries were further bolstered by the successful launch of the rail siding. Delays experienced in concluding the funding contributed to contractors limiting operations to manage arrears.

“However, the heavy rains we experienced from December 2020 through February 2021 flooded the mine pit making access difficult and impacting both production and sales. Fortunately, the rain subsided in March 2021, and we entered a more stable environment, with a positive impact on operations. Good recoveries in production and sales were experienced during the last four-month period of the year, with the mine moving closer toward a breakeven position.”

“Despite these operational constraints, including the effects of COVID-19 on logistics and manning of shifts, we expect to reach consistent nameplate capacity in the 2022 financial year,” du Plessis added.

FINANACIAL REVIEW

In addition to the revenue reported above, the company incurred costs of sales of P256 million (2020: P150 million) with operating costs of P23 million (2020: P31 million). This effectively resulted in an operating loss of P86 million (2020: P100 million). Finance costs of P51 million (2020: P17 million) were incurred, bringing the net loss before taxation to P136 million (2020: P117 million).

Du Plessis explains that the adverse conditions in the first eight-month period contributed to 86% of the gross loss, while the more stable four-month period alone contributed to 50% of total sales value, helping to decrease monthly gross losses, albeit below breakeven levels.

The company benefited from a strengthening in the South African Rand (“ZAR”) supporting higher back-on- mine sales prices.

“As announced, we’re pleased to have secured P125 million of additional convertible debt funding through the Minerals Development Company Botswana (Proprietary) Limited (“MDCB”). Minergy remains grateful for this support.”

He added that the first tranche of additional funding provided by the MDCB had been received in December 2020, which allowed Minergy to settle the majority of the contractor’s arrears and allowed their teams to be remobilised. The second and final tranche was paid post the financial year-end and will allow the business to reach nameplate capacity in the new financial year.”

COAL SALES AND MINE PERFORMANCE

Sales volumes increased by 110%, supported by increased sales in Botswana and internationally in South Africa and Namibia. Sales for June 2021 exceeded 56 000 tonnes, a record since the inception of the mine, with pricing increasing late in the financial year on the back of buoyant international prices and a strengthening ZAR.

Minergy also concluded a further 12-month off-take agreement to the existing off-take agreement, with a further agreement finalised post year end.

Overburden moved during the reporting period increased by 86% and extracted coal by 50%. Coal mined in June 2021 alone exceeded 100 000 tonnes. “This is a good performance considering the challenges faced such as sacrificing pre-stripping activities for a period to manage arrears, excessive rain and COVID-19,” du Plessis indicated.

“The wash plant was initially starved of coal due to the factors noted already. Despite this, overall plant throughput performance was 37% higher than 2020. Consistent output was supported by the completion of the Stage 2 rigid crushing section as well as the water saving dewatering screen with filter press contributing to a reduction in water usage of 60% per tonne of coal. A record throughput of more than 84 000 tonnes was achieved in March 2021 and this consistency has been maintained.”

OUTLOOK

According to du Plessis, the completion of Stage 4 of the Processing Plant, the rigid screening and stock handling section, remains a key optimisation step, which has associated benefits. “The completion was unfortunately delayed by a southern African wide shortage of structural steel but was commissioned post year-end.”

Minergy expects the positive momentum in international coal pricing for southern African coal to remain in place. Higher coal prices have resulted in coal being withdrawn from the inland market in favour of lucrative international markets. Du Plessis added that the regional market is currently under- supplied with sized coal, which supports higher pricing and new customer opportunities for Minergy.

“Our objective for the 2022 financial year is to achieve nameplate capacity by completing final ramp-up of operations. This will enable the company to generate sufficient cash flow to stabilise the business at breakeven or better. The bullish coal market is also providing support. COVID-19 will still be closely managed, and we look forward to the lifting of the State of Emergency, as announced, and trust that vaccination programmes will achieve herd immunity in Botswana during the next 12 months.”

Du Plessis expressed his excitement on prospects stating that, “The Eskom due diligence process is continuing, and we are hopeful of receiving feedback during the current financial year. In addition to this opportunity, Minergy is also investigating participation in the request by the Government of Botswana to provide a 300MW power station for which the company has been shortlisted.”

The approved process to issue shares for cash is showing positive leads and he concluded by saying that a listing in London is still being investigated.

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