DTCB looks to process non-De Beers stones
Business
Diamond Trading Company Botswana (DTCB) is looking into the possibility of taking diamonds from non-De Beers mines for sorting and valuing. This was revealed by DTCB Managing Director, Mr Tobake Kobedi on Wednesday.
Speaking to the concept of more capacity to take more work from other customers, the Managing Director reiterated that as an organization DTCB desires not to only be limited to receiving Debswana Diamonds. “Currently our shareholder agreement as mandated by our establishment we sort diamonds from De Beers mines in Botswana only, but we want to make propositions to our shareholders context of building a legacy for Botswana that shall exist beyond diamond depletion, that look we have to be at the base and host of the entire value chain as a country because we recover the most valuable stones from our local pits,” said Kobedi.
He said DTCB plant capacity can sort and value over 33 million carats of Diamond in 12 months but currently only receiving 22 million carats from Debswana mines. “Why can’t we take rough diamonds from Lucara, Ghagoo and other mines? Currently the resuscitation of Zimbabwe speaks possibilities of new diamond discoveries, why can’t we ready ourselves to propose intake from them and other mines in the region?” Kobedi posed these questions explaining the intention of DTCB strategy 2020 and its vision towards to ensuring that Botswana remains a Diamond Hub beyond depletion of the stones.
According to Kobedi positioning DTCB as a world class organisation was a pivotal conversation for the future of Botswana, he said it was imperative for Botswana to think beyond diamonds. “Diamonds are not finite and currently the discovered ore combined with tailings will take us just beyond 2050,” he said.
“What will happened after that? We need to start training our people in different disciplines of the diamond industry ,polishing , sales and so forth and build facilities and capacity that shall translate into Botswana being the Diamond hub of the world , and DTCB has a role to play here , for us as a country to start thinking of jewellery manufacturing and retail DTCB has to have volumes of diamonds sorted and valued here from mines worldwide hence our quest as inclined in this strategy , this is a starting point for a revolution that will birth Botswana into a Diamond country with huge stake in the whole value chain and diamond pipeline subsequently the much needed economic transformation.”
Kobedi said his company desires to improve its performance and delivery to customers. He indicated that through the Strategy 2020, DTCB was re-aligning itself as a processing organisation with resultant impacts on processes, structures, systems and culture.
“When we commenced this realignment we had to part ways with about 75 of our employees not because there were ineffective and incompetent but because our business remodelling dictated that some of the duties were redundant and over lapping hence the retrenchments,” he explained.
By 2020 when a new sales agreement is penned down, DTCB intends to have improved its efficiencies and effectiveness as a rough diamond sorting and valuing operation. “We are creating a flexible and agile organisation, capable to respond to market needs and this in the context of transforming DTCB into an operationally excellent processing organisation as well as position DTCB to have capacity to take on more work for other customers,” Kobedi said.
Joseph Ithobogeng, DTCB Chief Operations Officer shared that by 2020 DTCB intends to have attained recognition as a world-class processing organisation, be a more reliable, with repeatable and consistent delivery to customers as well as reduced pipeline and increased market flexibility and responsiveness. “We will have reduced rework through efficient quality systems, reduced business risk and increased customer confidence in meeting sales deadlines by 2020,” he said.
Further deliberating on this the DTCB Management observed that to be a world class processing organisation that can take rough diamonds from diversified clientele out of De Beers recovery mines portfolio, increased cost efficiency with streamlined structures and stock holding costs cannot be over emphasized.
“We are building a capable, motivated workforce with high productivity levels and optimised capacity to enable new opportunities, we are half way into this 5 year strategy, launched in 2015 and we are confident by 2020 we will be able to submit and propose to our shareholder that we are ready for exploration of new opportunities to broaden our clientele in the rough diamond value chain and pipeline.”
DTCB recently commissioned state of the art Diamond Cleaning Plant, a laboratory of sophisticated chemical processes of quantum physics operations and complex scientific techniques of cleansing, valuing and sorting stones of intricate mineralogical occurrences that diamonds are. The plant is far much enhanced from precious facility housed in Jwaneng. DTCB is a 50-50 venture between Botswana Government and De Beers, the company avails 85 % of their sorted and valued diamonds to De Beers Sight holder Sales and 15 % to Okavango Diamonds which is wholly owned by Botswana Government.
Business
Botswana financial sector safe despite high unsecured household loans – IMF
Botswana’s financial sector has been deemed safe and resilient by the International Monetary Fund (IMF), despite the presence of high levels of unsecured household loans. The IMF’s 2023 report on the country’s financial sector highlights the robustness of Botswana’s banking system and its ability to withstand various shocks.
According to the report, credit risk is the largest risk in Botswana’s banking system, with a significant portion of total assets comprising loans concentrated in the household sector. Specifically, 70 percent of bank loans to households in Botswana are personal loans, primarily in the form of unsecured consumer credit. However, the IMF notes that a large share of lenders collect repayments through direct salary deduction, resulting in a generally low level of non-performing household loans.
The IMF’s assessment confirms that most banking entities in Botswana have strong capital buffers, which would enable them to survive even in the event of an increase in non-performing loans in the household sector. While a 20 percent transition of performing loans into non-performing loans would result in some banks experiencing a significant capital shortfall, the majority of banks possess robust total capital buffers and would remain unaffected by severe shocks to household loans.
Furthermore, the IMF team conducted Bank Solvency Stress Tests, which demonstrated that Botswana’s banking system remains profitable and resilient to severe macro-financial shocks. The stress tests revealed that the aggregate capital depletion in an adverse scenario is relatively small, amounting to less than 0.02 percent of GDP. Although credit risk increases significantly under the adverse scenario, the impact on the capital ratio from rising non-performing loans is outweighed by the increase in net interest income.
The IMF’s assessment also indicates that Botswana’s financial sector weathered the Covid-19 pandemic well. The authorities have made notable progress in strengthening financial supervisory and regulatory frameworks since 2007. The financial sector is deemed stable, sound, and resilient, with risks primarily related to banks’ high concentration of short-term deposits from retirement funds and insurance companies, volatility in diamond prices, geopolitical developments, and tightening global financial conditions. However, the financial system remains resilient to a wide range of shocks associated with these risks, although some vulnerabilities exist.
The Financial Stability Council (FSC), a statutory body led by the Governor of the Bank of Botswana, also recently affirmed the resilience and safety of the domestic financial system. The FSC’s assessment found that the financial sector in Botswana is robust, safe, and unconstrained in providing a range of financial services to support the economy. This resilience is attributed to strong capital and liquidity buffers, profitability, continuous innovation and adaptability, and a robust regulatory environment. The FSC believes that the macroeconomic environment, characterized by positive economic growth, well-managed government fiscal position, and modest inflation, further supports financial stability. Stress tests conducted on banks validate their strong solvency and resilience.
IMF concludes that Botswana’s financial sector remains safe and resilient, despite the presence of high levels of unsecured household loans. The IMF’s assessment highlights the strong capital buffers of banking entities, their ability to withstand shocks, and the overall stability of the financial system. The country’s financial sector has also demonstrated its resilience during the Covid-19 pandemic. The Financial Stability Council further affirms the safety and effectiveness of the financial system in providing financial services to support the economy.
Business
Botala Energy debuts on the BSE
Botala Energy, an Australian energy company, recently made its debut on the Botswana Stock Exchange (BSE), joining a growing number of energy development companies trading on the exchange. The company, established in 2018, is focused on exploring and developing natural gas and renewable energy opportunities in Botswana, particularly in the Serowe Gas Project and Solar Opportunities.
The listing of Botala Energy on the BSE was welcomed by Mr Tsamatse Mamola, the Head of Listings & Tradings at the exchange. He recognized the company as a pioneering force in the field of gas exploration and development. Mamola also highlighted the company’s commitment to clean energy production, which aligns with the global movement towards sustainable practices. By harnessing the potential of coal bed methane in the Serowe Project and integrating it with solar power generation, Botala Energy is not only innovating in the energy sector but also contributing to a greener and more sustainable future.
Mamola emphasized the significance of Botala Energy’s decision to list all of its issued shares on the BSE. This move demonstrates the company’s confidence in the exchange as a strategic partner in its corporate journey. The listing provides Botala Energy with access to diverse sources of capital, which will be instrumental in advancing its exploration and development projects, fostering technological innovation, and achieving its clean energy production goals. The BSE, as a facilitator of capital raising, plays a crucial role in supporting ambitious initiatives and fostering growth.
The listing of Botala Energy also brings benefits to the broader Botswana economy. It increases investor interest, contributing to the liquidity and vibrancy of the market. Botswana, traditionally reliant on diamonds, recognizes the importance of diversifying its economic base. The inclusion of a dynamic and forward-looking company like Botala Energy on the exchange reflects the evolving economic landscape of the nation.
In the pursuit of economic diversification, the Botswana Stock Exchange serves as a bridge connecting visionary companies with investors who share their commitment to progress. By providing a marketplace for a diverse range of industries, from traditional sectors to emerging technologies, the exchange becomes a catalyst for economic resilience and sustainability.
Peter Grant, the Non-Executive Director of Botala Energy, shared some insights into the company’s operations. Since commencing exploration in Botswana, Botala has made significant progress, drilling exploration wells and pilot production wells. The company expects to become a modest producer of commercial gas within 12 months and increase production rapidly. Botala Energy has independently certified gas reserves and prospective resources within its project area, which have the potential to supply significant amounts of gas for power generation.
Grant also mentioned Botala Energy’s focus on delivering Liquefied Natural Gas (LNG) to off-grid communities, providing them with reliable and affordable electricity and gas. The company is exploring the commercial option of establishing an Energy Hub and Industrial Park near Palapye, where it aims to produce energy for Botswana and export it to neighboring South Africa. Additionally, Botala Energy plans to establish a solar/gas hybrid plant in Serowe to feed into the local grid, in collaboration with the Ngwato Development Trust.
Market analysts say the listing of Botala Energy on the Botswana Stock Exchange marks an important milestone for the company and the energy sector in Botswana. It provides the company with access to capital, fosters economic growth and diversification, and contributes to the global movement towards sustainable energy practices. Botala Energy’s innovative approach to gas exploration and development, combined with its commitment to clean energy production, positions it as a key player in shaping a greener and more sustainable future for Botswana.
Business
Beverages dominate Botswana’s food imports
Beverages dominate Botswana’s food imports for August 2023, according to the latest figures released by Statistics Botswana. The country imported beverages, spirits, and vinegar worth approximately P332 million during this month. This is a significant increase from the previous month, where the food import bill slightly rose from P1,063,990,477.2 in July 2023 to P1,233,702,300.4 in August 2023.
The total imports for Botswana in August 2023 were valued at P6,995,115,623.2, compared to P6,897,364,155.2 recorded in July 2023. Food imports accounted for 15.9 percent of this amount, contributing P1,233,702,300.4. Among the food items imported, beverages, spirits, and vinegar accounted for the majority at 26.9 percent. Cereals and sugars followed with 13.4 percent and 8.8 percent, respectively.
Within the category of beverages, spirits, and vinegar, the most imported commodities were mineral waters and aerated waters containing sugar or other sweetening matter or flavored, contributing 47.0 percent. Beer made from malt accounted for 16.7 percent, while fermented beverages and non-alcoholic beverages accounted for 15.9 percent. The import bill for beverages, spirits, and vinegar shows that the country imported mineral waters and aerated waters containing added sugar or other sweetening matter or flavored worth approximately P156 million. Beer made from malt accounted for around P55 million, while fermented beverages and non-alcoholic beverages were valued at around P79.1 million. Wine and liqueurs and cordials were also imported, with values of P12.6 million and P6.4 million, respectively.
In terms of cereals, dried maize excluding seed and other wheat and muslin accounted for 42.3 percent and 27.4 percent, respectively. Rice imports contributed 21.2 percent. The country spent approximately P165 million on cereal imports, with dried maize accounting for around P70 million, wheat around P45 million, and rice around P44.7 million.
Other food imports included preparations of cereals, flour, starch, or milk; pastry cooks’ products, which amounted to around P89 million. Preparations of vegetables, fruit, nuts, or other parts of plants accounted for around P88 million, while sugars and sugar confectionery were valued at around P108 million. Miscellaneous edible preparations, animal or vegetable fats and oils, dairy produce, prepared animal fodder, coffee, tea, and spices, fruits and nuts, meat, vegetables and certain roots and tubers, and products of the milling industry such as malt, starches, and wheat gluten were also imported, with values ranging from P13 million to P74.6 million.
In conclusion, beverages, particularly mineral waters and aerated waters containing sugar or other sweetening matter or flavored, dominate Botswana’s food imports for August 2023. The country also imports a significant amount of cereals, sugars, and other food products. These figures highlight the country’s reliance on imported food items and the need for strategies to promote domestic production and reduce dependence on imports.