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Growth in financial sector potential boon for jobs in Botswana

Recent economic data from Botswana shows that the country is bucking the trend of surrounding Southern African countries, with GDP growing by 3.2% for the year ending in June 2017. One of the biggest non-mining sectors showing a lot of potential is the financial services sector, which had an interesting year.

To begin with, First National Bank Botswana (FNBB) and Bank Gaborone opened new branches; Ford Finance developed partnerships in Botswana, and the Southern African operation of Zurich Insurance, now known as Bryte Insurance, launched in Gaborone in February with the intention of expanding into other African countries. Fintech is also taking root in Botswana, with companies like Direct Pay Online opening shop in April, while cryptocurrencies and mobile wallets are gaining more users and offering greater financial inclusion to consumers in the country. 

This investment is good news for a sector that has demonstrated over several years that it is stable and robust. According to the African Economic Outlook 2017, Botswana has been making steady progress in increasing access to financial services for its population. Since 2009, the banked population has increased by 25%. From a low base, cell phone banking rose by over 370% and Internet banking by 200% during the same period.

This growth in the sector is good news, too, for employment, which continues to be a challenge for the Botswana economy. While unemployment is starting to show a slight decrease according to the latest statistics, it is still considered to be too high at 17%. Botswana suffered historic job losses following the global financial crisis, especially in the mining sector. State owned enterprises have also retrenched hundreds of employees over the past decade.

The good news is that there are plenty of opportunities for accounting professionals in the country – the bad news is that there are not currently enough people able to take these up. The Botswana Institute of Chartered Accountants (BICA) says there is a huge need for chartered accountants, professionals and technicians. There are currently 3,136 registered BICA members (1,223 accounting professionals and 1,913 being accounting technicians) which falls short of demand. The shortage means that Botswana has to import expatriates for accounting services. Many qualified accountants also leave the country to work overseas.

To take advantage of growth in this sector in order to reduce unemployment in the country, more needs to be done to ensure that people – especially young people – have the relevant skills and are encouraged to consider a career in the financial sector. Many young people, for instance assume because they are not strong in mathematics at school that finance is not a viable career option for them, but this is in fact not the case. Many thousands of accounting students graduate each year around the world and many of them did not have an A-level in Maths when they started their studies.

So what can government do? According the African Economic Outlook, the Botswana government is already doing a good job of creating an enabling environment for business and ensuring good regulation and oversight of the sector – considered vital for its continued growth. The 2016/17 Global Competitiveness Report ranked the country 65 out of 138 in financial market development.

Government can also intervene more directly in targeted skills development such as it did in 2016, when the Department of Treasury and Funding sponsored 600 students in studies with AAT (the Association of Accounting Technicians) to equip them with skills to work in the fast-growing financial services market.

AAT is not new to Botswana. It is the UK’s leading qualification and professional body for vocational accountants and has offered its AAT Accounting Qualifications in Botswana to over 4,000 students a year – the largest cohort of students outside the UK – for 26 years. AAT works with the Botswana Institute of Chartered Accountants (BICA), to give students the opportunity to gain practical skills that fast track their careers in finance – without the need to go to university or study for many years.

While government involvement is critical, the private sector and business networks also need to step up to create opportunities for employment and advancement in the industry – in the form of internships and other opportunities – or by investing in their employees directly to upskill them.
 

Such an approach benefitted Pyoka Mfuni, a manager at accounting and auditing giant Grant Thornton. Mfuni says that after finishing high school, he noticed that many jobs advertised were finance and audit related so he decided to pursue a career in the field. “That was when I discovered the AAT course at the Botswana Accountancy College. It was shorter than and relatively as good as an accounting degree.” After successfully completing his studies he was able to secure a foot on the ladder that led to his current role.

It is possible to replicate this success story. The World Bank report, Doing Business 2017, ranks Botswana among Africa’s best performers. For the second successive year, the country’s ranking improved, from 72 to 71 out of 190 economies (from 74 to 72 in the previous year), making it the third best performer in Africa. The country is poised for growth and with the right investment and training, its people can take advantage of this.

The added advantage of investing in financial skills is not only will it boost the finance sector itself, it is also good for business and entrepreneurship more broadly, fuelling the growth of the economy in other sectors too. According to the Global Entrepreneurship Monitor, Botswana has one of the most entrepreneurial populations in Africa, but a lack of financial skills is holding it back from making a greater impact on the economy.

The message is clear, investing in finance skills makes sense and should be a priority for business and government alike in 2018. With wise investment and by working together, they can continue to ride the wave of growth towards low unemployment and a high tech future!

Andrew Williamson is Director of Marketing and Commercial at AAT (the Association for Accounting Technicians).

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The  Bulb World CEO selected for Africa’s prestigious award

22nd July 2021

The Bulb World Chief Executive Officer (CEO) and entrepreneur, Ketshephaone Jacob has been selected as a 2021 Top 50 Africa’s Business Hero.

Jacob was chosen from a pool of 12,000 applicants – many of whom are highly-skilled and accomplished entrepreneurs.

Africa’s Business Hero, sponsored by technology entrepreneur, Jack Ma, aims to identify, support and inspire the next generation of African entrepreneurs who are making a difference in their local communities, working to solve the most pressing problems, and building a more sustainable and inclusive economy for the future.

The initiative is as inclusive as possible and applications were open in English and French to entrepreneurs from all African countries, all sectors, and all ages who operate businesses formally registered and headquartered in an African country, and that have a 3 year-track record.

Every year, finalists are selected to compete in the ABH finale pitch competition and participate in a TV Show that will be broadcast online and across the continent.

The finalists will compete for a share of US $1.5 million in grant money.

The Bulb World, is home grown LED light manufacturing company, which was partly funded by Citizen Entrepreneurial Development Agency (CEDA) at the tune of P4 million, to manufacture LED lighting bulbs for both commercial and residential use in 2017.

The Bulb World operate from the Special Economic Zone of Selibe Phikwe. Early this year, The BulB World announced its expansion to South Africa, setting in motion its ambitious Africa expansion plan.

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Mining production down 12 % IN Q1 2021

14th July 2021

During the first quarter of 2021, production in Botswana’s economic nucleus- the mining sector contracted by 12 percent. This is according to Mining Production Index released by Statistics Botswana this week.

The country’s central data body revealed that Index of Mining production stood at 74.4 during the first quarter of 2021, showing a negative year on-year growth of 12.0 percent, from 84.6 registered during the first quarter of 2020.

The main contributor to the decline in mining production came from the Diamonds sector, which contributed negative 11.7 percentage points. Soda Ash was the only positive contributor in the mining production, contributing 0.1 of a percentage point. However Soda Ash’s contribution was insignificant to offset the negative contribution made by Diamonds.

The quarter-on-quarter analysis by Statistics Botswana experts shows an increase of 16.3 percent from the index of 64.0 during the fourth quarter of 2020 to 74.4 observed during the period under review.

Diamond production decreased by 12.1 percent during the first quarter of 2021 compared to the same quarter of the previous year. The decrease was as a result of planned strategy to align production with weaker trading conditions mostly linked to Covid-19 protocols restrictions.

Botswana’s diamond sector is underpinned by Debswana, the country’s flagship rough producer- a 50-50 joint venture between government and global mining giant De Beers Group. The other producer is Canadian based Lucara Diamond Corp through its wholly owned Karowe Mine which is a relatively small but significant production that has made a name for itself worldwide with rare diamond recoveries of unprecedented carat size.

On the other hand, quarter-on quarter analysis shows that production has improved, registering a positive growth of 17.5 percent during the first quarter of 2021 compared to the preceding quarter – 2020 Q4.

Though production was significantly lower in the first quarter, the two producers ended Q2 with rare diamond recoveries. Debswana early last month found the world’s third largest gem diamond – weighing 1098 carat at Jwaneng Mine, its flagship gem quality diamonds producer, also regarded the world’s richest diamond mine.

A week later Lucara  announced its second biggest recovery, the 1174 carat clivage near-gem dug from its Karowe Mine. The diamond is the world third in carat size after the plus-3000 carat Cullinan found in South Africa back in 1905 and the 1758 carat Sewelo unearthed at its Karowe mine in 2019. Debswana and Lucara are investing billions of pulas in underground mining projects to extend the life of its mines, Jwaneng & Karowe respectively.

In terms of Gold which is produced at Mupani mine near Botswana’s second city of Francistown output decreased by 17.9 percent during the first quarter of 2021 compared to the same quarter of the previous year.

Similarly, quarter-on-quarter analysis reflects that production decreased by 21.4 percent during the first quarter of 2021, compared to the preceding quarter. The decrease was as a result of the deteriorating lifespan of the mine as well as the impact of COVID-19 which slowed down the mining activities.

Soda Ash production increased by 11.1 percent during the first quarter of 2021 compared to the same quarter of the previous year. In terms of quarter-on-quarter Soda Ash production also showed an increase, picking up by 2.1 percent during the period under review. The increase in production is attributable to the effectiveness of the plant following refurbishment which occurred in the third quarter of 2020.

Salt production decreased by 34.0 percent during the first quarter of 2021, compared to the same quarter of the previous year. Similarly, the quarter-on-quarter analysis shows that salt production registered a decrease of 32.9 percent during the period under review. Both salt and Sodash are produced by partly government owned Botswana Ash (BotsAsh) operating from Sowa town near Makgadikgadi pans.

Coal production decreased by 11.2 percent during the first quarter of 2021, compared to the corresponding quarter of the previous year. The decrease was attributed to the reduced demand from Morupule B Power Station following the remedial works being undertaken, as one boiler was in operation during the period under review.

Although production fell, Statistics Botswana says there was no shortfall in supply of coal due to stockpiling. On the other hand, the quarter-on-quarter comparison shows that coal production increased by 20.4 percent compared to the preceding quarter.

Botswana’s flagship coal producer is Morupule Coal Mine; a wholly state owned mining company located in Palapye producing primarily for Botswana Power Corporation (BPC)’s power generation plants Morupule A & B.

The other coal producer is Botswana Stock Exchange listed Minergy which operates a 390 MT Coal Resource mine in Masama near Media in the southwestern edge of the Mmamabula Coalfields.

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Gov’t awards mining licence for Gantsi Copper Mine

14th July 2021
Moagi

Department of Mines in the Ministry of Mineral Resources, Green Technology & Energy Security has awarded mining licence to Tshukudu Metals-a subsidiary of Aussie firm Sandfire Resources ,giving the company a green light to start piecing the ground at its Motheo Copper Project near Gantsi.

Lefoko Moagi, minister in charge of mineral resources in Botswana confirmed to weekendpost on Tuesday. Minister Moagi revealed that “the licence has been approved , but Sandfire Resources as a listed company will report to its shareholders and investors then make an official public statement” he said.

Based on a forecast copper price of US$3.16/lb (reflecting current long-term consensus pricing) the Base Case 3.2Mtpa – Ghantsi copper project is forecast to generate US$664 million (over P7 billion) in pre-tax free cash-flow and US$987 million (over P10 billion) in EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation), at a forecast all-in sustaining cost of US$1.76/lb over its first 10 years of operations.

In December 2020, the Board of Sandfire Resources approved the commercial development of the Motheo Copper Mine located in the Kalahari Copper Belt in Botswana, marking a key step in its transformation into a global, diversified, and sustainable mining company.

Tshukudu Metals Botswana (Pty) Limited (Tshukudu) a 100% owned subsidiary will be the owner and operator of the Motheo Copper Mine which is scheduled to produce up to 30,000 tonnes per annum of copper in concentrate over a 12 year mine life.TMB is targeting development of its Motheo Copper Mine in 2021 and 2022, with its first production in 2023.

GOVERNMENT NOT TAKING UP 15 % STAKE ON OFFER

Beginning of this year presentations were made to the Department of Mines as part of the Mining Licence approval process and to the Ghanzi Regional Council, additional information was requested by Department of Mines in April and was duly supplied by the company.

As part of the Mining Licence approval process, the Government of Botswana has a right to acquire up to a 15% fully contributing interest in all mining projects locally. Quizzed on whether government through Mineral Development Corporation Botswana (MDCB) would be taking up stake in the project Minister Moagi said, “No consideration is being made on that regard”.

“Government is not considering taking up a stake in the Ghantsi Copper Mine project, every opportunity is assessed on all risks, but Government makes money all the while from leases, taxes and royalties, remember if you take stake you are liable for liabilities of the project as well,” Moagi said.

MINING CONTRACT

Last month Sandfire announced that it has awarded over P5 billion worth mining contract to African Mining Services (AMS), a subsidiary of Perenti, to deliver the open cast operation.

The contract, which has an estimated value of US$496 million (over 5 billion), is the largest single operational contract for the new Motheo Project covering a period of 7 years and 3 months, with provision for a one-year extension.

The contract according to Sandfire Resources was awarded following a competitive 3-stage tender process which saw a number of key factors taken into consideration when selecting the preferred contractor.

These included Citizen Economic Empowerment, safety culture, equipment suitability and availability, commercial terms and identified improvement opportunities. Under the terms of the contract, AMS has agreed to form a 70:30 Joint Venture with a suitable local Botswana partner or partners.

The JV is expected to be finalized ahead of commencement of mining in early 2022. African Mining Services has been operating in Africa for over 30 years. AMS’ parent company, ASX listed diversified mining services group Perenti, already has a presence in Botswana through Barminco, their underground mining division, at the large-scale Khoemacau Copper Mine located 200km north-east of Motheo.

Last month Sandfire executives said the award of the open pit mining contract represents another key milestone in advancing the Motheo Project towards production, with all components of the contract in line with the key parameters outlined in the December 2020 Definitive Feasibility Study (DFS).

The company said full-scale construction of the US$279 million (over P 3 billion ) mine development is expected to commence immediately upon receipt of the Mining Licence, with mining scheduled to commence in early 2022 ahead of first production in early 2023. This week Sandfire Resources advertised over 10 positions in calling on applications from geologists, mining engineers and geotechnical engineers.

The Motheo mine has an initial mine life of 12.5 years based on production from the T3 pit. The initial development is expected to generate approximately 1,000 jobs during the construction phase and 600 direct full-time jobs during operations, with at least 95% of the total mine workforce expected to be made of up of Botswana citizens.

Later in the week Sandfire Resources announced in the company website that it has received the licence. Sandfire’s Managing Director and CEO, Mr Karl Simich, said the award of the Mining Licence represented a major milestone that would see a significant increase in construction and development activities on site.

“We are absolutely delighted to now be in a position to move to full-scale construction at Motheo, with our construction crews expected to mobilise to site over the next few days. I would like to thank the Government of Botswana for their support throughout the approvals process, which will see Motheo come on-stream in 2023 as one of very few new copper mines commencing production globally.”

Simich said the project is expected to generate approximately 1,000 jobs during construction and 600 full-time jobs during operations, and represents the foundation for Sandfire’s long-term growth plans in Botswana.

“Our vision is that Motheo will form the centre of a new, long-life copper production hub in in the central portion of the world-class Kalahari Copper Belt, where we hold an extensive ground-holding spanning Botswana and Namibia,” he said.

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