A Silver Lining Emerges For Technology Entrepreneurs
As the National Innovation Fund Committee Takes Office
Entrepreneur Larry Alton says entrepreneurs face many challenges in today’s ultra-competitive business world. “Entrepreneurship comes with a host of challenges, rewarding challenges, but harsh challenges nonetheless.” He says although the potential rewards for entrepreneurship are great, starting a new business at a young age is especially fraught with risk. For younger people, the challenges are unique, multiplied and particularly difficult to overcome. Lack of experience, inadequate financial resources, and a lack of self-confidence all contribute in one way or another to make it tougher for a young entrepreneur than an older counterpart.
Almost all new ventures require seed capital to support the business through the first rocky months or even years until it can generate cash and turn a profit. This initial investment may come from several sources such as personal savings, love money or soft loans from family and friends, venture capital and angel investors as well as government grants and subsidies.
In small developing economies like Botswana, innovative and talented entrepreneurs struggle to find seed funding from local investors. The Bloomberg U.S. Startup Barometer points to rigid regulations, lagging economies and the high risks of doing business in Africa as factors responsible for the low appetite of venture capitalists and angel investors in these markets. Botswana’s appeal for backup and risk capital for startups is no different.
To close this gap, the government of Botswana in line with the country’s key national priorities of spearheading the drive to using innovation as a lever for economic growth, established Botswana Innovation Hub to coordinate the establishment of a functional and integrated national innovation ecosystem. Key to this development is the creation of a National Innovation Fund that promotes innovation through technology, products and business development in the private sector by providing cash grants to companies and organisations registered with Botswana Innovation Hub.
Established under the Finance Management Act. Statutory Instrument Number 93 of 2017, the National Innovation Fund was created to close the existing gap in early stage financing for key projects of national relevance in the private sector. The fund will specifically, provide cash grants to companies or organisations registered with the Botswana Innovation Hub which may subcontract part of the development work to universities and research organisations.
In addition, the National Innovation Fund serves to encourage companies and organisations awarded funds to transfer skills to citizen employees by providing cash grants to be utilised for institutional training and on the job training programmes.
To this end, a governance structure for the administration of the National Innovation Fund has been set up with Botswana Innovation Hub assuming the secretarial role and administrative office of the Fund and a National Innovation Fund Committee has been appointed to provide crucial oversight role in the Funds establishment and implementation.
Speaking at the announcement of the Committee members, the Minister of Tertiary Education, Research, Science and Technology, Dr Alfred Madigele said, “Government is spearheading the drive to use innovation as a trajectory for economic growth. To this end the establishment of the National Innovation Fund would assist to close a gap in early stage financing for key projects of national importance.”
“Government has set aside P12 million pula to be used for funding projects in the current financial year and we have put in place a robust governance framework to allow evaluation and awards from this fund,” he announced. The National Innovation Fund Committee consists of five independent members of the public as well as representation from the private sector and the business community.
Deputy Permanent Secretary in the Ministry of Tertiary Education, Research, Science and Technology, Dr Kekgonne Baipoledi assumes the Chairmanship of the committee. With a career spanning over 25 years, Dr Baipoledi has previously held various senior positions within government, specifically at the Ministry of Agriculture where he has held the posts of Head of National Veterinary Laboratories, Deputy Director, Veterinary Services and Deputy Permanent Secretary responsible for Technical Services.
General Manager of Botswana Vaccine Institute, Dr. George Matlho has been roped in from industry. Dr Matlho possesses vast experience spanning over many years within the veterinary sector with emphasis on research and business development. He has previously held a number of senior positions at Botswana Vaccine Institute and Department of Animal Health and Production.
Dr Thapelo Matsheka has been appointed to the Committee from the private sector. Dr Matsheka is currently Managing Director at Fiducia Services Limited. He is an economist and an academic with vast experience from the University of Botswana before pioneering the establishment of the government-funded Citizen Entrepreneurial Development Agency (CEDA) as Chief Executive Officer. He later moved from CEDA to Aon Botswana as the Managing Director prior assuming his current position.
Representing academia is Vice Chancellor of the University of Botswana, Prof David Norris. Previous to his appointment at UB, Professor Norris was Deputy Vice Chancellor, Research and Innovation at BIUST. Prof Norris has more than 20 years in Research and Innovation where he has published extensively and attracted much research funding. Before his appointment to BIUST, Prof Norris worked in different positions in Botswana, South Africa and the USA.
Also representing the private sector on the Committee is Oteng Sebonego. Sebonego is currently Investment Principal at NORSAD Finance and Founder at CabIT Africa an innovative venture. He bring on board, broad experience in assessment of project investments portfolio to ascertain their commercial level readiness. His experience in business enterprise development spans from both a local and regional perspective.
Heading the National Innovation Fund secretariat as Innovation Fund Coordinator is Sithembile Dingake. Dingake is trained in financial management and has worked extensively in the banking industry, development and enterprise finance and in fund management in Botswana and South Africa. Her experience straddles organizations such as Enablis Finance Corporation, Industrial Development Corporation of South Africa and Barclays Bank.
Among the Innovation Fund Committees roles and responsibilities is the approval of the fund guidelines, procedures for operation of the Fund, approval of grant application processes and subsequent applications. The Committee will also be responsible for appointment of special experts, auditors and receiving and approving of reports from audits, programme evaluation reports and reports on grant applications and approvals.
Hon. Dr Madigela said, “The Fund’s grant scheme shall follow an annual plan approved for implementation each year with agreed set targets. The criteria for funding shall take into consideration several factors which include Intellectual Property (IP), sustainability, social impact and scalability among others. He emphasized that the Fund is intended to provide grant funding to deserving projects which promote innovation through technology, product and business development in the private sector.”
Botswana Innovation Hub target sectors are Mining Technologies, Clean Technologies, BioTechnologies, Information and Communications Technologies (ICT), Indigenous Knowledge Systems and Knowledge Intensive Business Services.
Hon. Dr Madigele urged the Committee to, “Hit the ground running to ensure that the first grants are disbursed during the current financial year to give financial support to eligible entrepreneurs in the technology and innovation space.”
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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.
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.