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Friday, 19 April 2024

Poverty declines at decreasing rate

Business

Despite introduction of poverty alleviation initiatives in 2010, Statistics Botswana has this week released statistics indicating that poverty has decreased at decreasing rate compared to previous periods.

From the period of 2002/03 poverty to 2009/10 poverty decreased by nearly 10 percent, compared to just 3 percent in the recent survey. There is a decrease however in the number of people who worry about going to bed on an empty stomach or waking up and worrying about not having enough food.

The percentage fell from 42 percent in 2009/10 to 38.9 percent in 2015/16. However, more than half of the population (50.2 percent) in rural areas still worry about not having enough meal. This is compared to only 25 percent of the people in cities and towns, and 37.5 percent in urban villages. The new statistics also show that, with government aid, the number of people within the poverty bracket stand at 337 410, and the number will rise to 503 196 without government aid (nearly a quarter of the total population).

The survey indicates that poverty stricken families in both rural and urban areas are headed by females. The purpose of the survey was to provide a comprehensive set of household level indicators for poverty and the labour market such as the poverty incidence, employment and unemployment levels. The survey forms part of the Multi-Topic Household Survey 2015/16. Results of the economic activity module covering employment rates were released in August.

The survey carried modules on household consumption and expenditure; Education, Health; Access to amenities, Employment; community activities and other information on schools and health facilities. Botswana was one of the poorest countries in 1966 when it gained independence; however that dramatically changed when the country, owing to discovery and prudent management of diamonds moved surged to the upper-middle-class category.

This measurement however Poverty incidence is determined by computing the Poverty Datum Line (PDL), which is based on the cost of a basket of goods and services deemed to be necessary and adequate to meet basic needs for household members. This is based on the basic requirements for; food, clothing, personal items, household goods &services and shelter.

 The daily/monthly requirements for PDL basket components differ according to sex and age, consequently the household composition. Poverty datum line is the minimum cost of a defined basket of goods and services necessary to meet the basic requirements for food, clothing, personal items and household goods and services.  A poor person/household is, therefore, one whose total consumption (expenditure, aid, wages in-kind, gifts received, school meals) is less than the PDL.

POVERTY PER REGION

Kweneng West is the worst hit by poverty, overtaking Ngamiland which has been most hit in previous surveys. Kweneng is the only region as per survey that has more than 50 percent of its population living under poverty datum line. It is followed by Ngwaketse West, Kgalagadi South, Ghanzi as well as Ngamiland in the worst hit bracket. Meanwhile North East, Gaborone, Jwaneng, Lobatse, Central Boteti as well as Barolong areas are the least affected by poverty.  

POVERTY AND HUMAN DEVELOPMENT

The United Nations Development Programme has developed the Human Development Index (HDI) as a metric to assess the social and economic development levels of countries. Four principal areas of examination are used to rank countries: mean years of schooling, expected years of schooling, life expectancy at birth and gross national income per capita. This index makes it possible to follow changes in development levels over time and to compare the development levels of different countries.

It has been observed that Botswana, like any other country experience a link between poverty, and; education and health. School in urban areas, where there are little incidences of poverty do well when compared to their counterparts in rural areas. This means pupils in urban areas have a better opportunity of progressing to the highest education possibly, while those in rural areas are unlikely to reach the top.

This has been supported by by recent PSLE and BGCSE performances where urban schools outclassed rural school, which scores terribly remarks. This has also translated to health due to poor nutrition in poor families as well as the HIV/AIDS which affects poor families in the society. Botswana has one of the lowest lifespan in the world, with a life span of 55 years on average.

POVERTY ERADICATION PROGRAMMES

The decreasing rate of poverty reduction during a period where government had introduced poverty eradication measures indicate that the initiatives where not fruitful. This proposition is in line with the finding conducted by UNICEF jointly with the Botswana Institute of Development Policy Development Analysis (BIDPA), which champions the Ipelegeng  programme. The following were the the recommendations of the evaluation:

Recommendation 1

Ipelegeng objectives must be revised and be aligned to the national objective of poverty eradication. Such an alignment should portray the programme only as a part of a process that seeks to achieve poverty eradication since on its own it cannot achieve that. Such an objective should therefore place emphasis on coordinating and linking the programme with other government programmes with the view to draw maximum synergies with such programmes.

Recommendation 2

Ipelegeng must be redesigned to be result-based to introduce flexible working schedules where beneficiaries will be assigned work and will work at their own time and pace and be paid on work done instead of time spent at work. Such a change should be done with the view to enable participants to get involved in other productive activities in the spirit of recommendation 12 below. Piece rate and task- based remuneration system as well as flexi-time should be introduced where feasible.

Recommendation 3

Ipelegeng must introduce a well-structured capacity building component that arms participants with production skills as well as survival skills. Such skills will assist the participants to graduate to better paying jobs.

Recommendation 4

A strong and clear Communication, Education and Public Awareness Strategy for Ipelegeng must be designed. Such a strategy should place emphasis on ensuring that xxii the programme objectives are clearly known and understood by all stakeholders. The need for participants to graduate must form a central core for such a strategy.

Recommendation 5

A cost benefit analysis of using a single national Ipelegeng wage rate to achieve self-selection must be undertaken with the view to establish whether different regional factors can be taken into account and hence vary the wage rate regionally.

Recommendation 6

The Ministry of Local Government should investigate the reasons for Remote areas having displayed very different results from the rest of the groups regarding Ipelegeng Issues. Based on the outcome of this investigation the Ministry will determine if a special Ipelegeng Programme targeting Remote area should be designed and implemented.

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Business

LLR transforms from Company to Group reporting

9th April 2024

Botswana Stock Exchange listed diversified real estate company, Letlole La Rona Limited (“LLR” or “the Company” or “the Group”), posted its first set of group financial statements which comprise the Company and Group consolidated accounts, which show strong financial performance for the six months ended 31 December 2023, with improvements across all key metrics.

The Company commenced the financial year with the appointment of a Deputy Chairperson, Mr Mooketsi Maphane, in order to bolster its governance and enhance leadership continuity through the development of a Board and Executive Management Succession Plan.

At operational level, LLR increased its shareholding in Railpark Mall from 32.79% to 57.79% and proudly took over the management of this prime asset.

The CEO of LLR, Ms Kamogelo Mowaneng commented “During the period under review, our portfolio continued to perform strongly, with improvements across all key metrics as a result of our ongoing focus on portfolio growth and optimisation.

“We are pleased to report a successful first half of the 2024 financial year, where we managed to not only grow the portfolio through strategic acquisitions and value accretive refurbishments but also recycled capital through the disposal of Moedi House as well as the ongoing sale of section titles at Red Square Apartments. The acquisition of an additional 25% stake in JTTM Properties significantly uplifted the value of our investment portfolio to P2.0 billion at a Group level. Our investment portfolio was further differentiated by the quality of our tenant base, as demonstrated by above market occupancy levels of 99.15% and strong collections of above 100% for the period”.

The growth in contractual revenue of 9% from the prior year’s P48.0 million to the current year P52.2 million, increased income from Railpark Mall, coupled with high collection rates, has enabled the company to declare a distribution of 9.11 thebe per linked unit, which is in line with the prior year.

 

In line with its strategic pillars of ‘Streamlined and Expanded Botswana Portfolio’ as well as ‘Quality African Assets’, the Group continuously monitors the performance of its investments to ensure that they meet the targeted returns.

“The Group continues to explore yield accretive opportunities for balance sheet growth and funding options that can be deployed to finance that growth” further commented the CEO of LLR Ms Kamogelo Mowaneng.

Ms Mowaneng further thanked the Group’s stakeholders for their continued support and stated that they look forward to unlocking further value in the Group.

 

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Business

Botswana’s Electricity Generation Dips 26.4%

9th April 2024

The Botswana Power Corporation (BPC) has reported a significant decrease in electricity generation for the fourth quarter of 2023, with output plummeting by 26.4%. This decline is primarily attributed to operational difficulties at the Morupule B power plant, as per the latest Botswana Index of Electricity Generation (IEG) released recently.

Local electricity production saw a drastic reduction, falling from 889,535 MWH in the third quarter of 2023 to 654,312 MWH in the period under review. This substantial decrease is largely due to the operational challenges at the Morupule B power plant. Consequently, the need for imported electricity surged by 35.6% (136,243 MWH) from 382,426 MWH in the third quarter to 518,669 MWH in the fourth quarter. This increase was necessitated by the need to compensate for the shortfall in locally generated electricity.

Zambia Electricity Supply Corporation Limited (ZESCO) was the principal supplier of imported electricity, accounting for 43.1% of total electricity imports during the fourth quarter of 2023. Eskom followed with 21.8%, while the remaining 12.1, 10.3, 8.6, and 4.2% were sourced from Electricidade de Mozambique (EDM), Southern African Power Pool (SAPP), Nampower, and Cross-border electricity markets, respectively. Cross-border electricity markets involve the supply of electricity to towns and villages along the border from neighboring countries such as Namibia and Zambia.

Distributed electricity exhibited a decrease of 7.8% (98,980 MWH), dropping from 1,271,961 MWH in the third quarter of 2023 to 1,172,981 MWH in the review quarter.

Electricity generated locally contributed 55.8% to the electricity distributed during the fourth quarter of 2023, a decrease from the 74.5% contribution in the same quarter of the previous year. This signifies a decrease of 18.7 percentage points. The quarter-on-quarter comparison shows that the contribution of locally generated electricity to the distributed electricity fell by 14.2 percentage points, from 69.9% in the third quarter of 2023 to 55.8% in the fourth quarter. The Morupule A and B power stations accounted for 90.4% of the electricity generated during the fourth quarter of 2023, while Matshelagabedi and Orapa emergency power plants contributed the remaining 5.9 and 3.7% respectively.

The year-on-year analysis reveals some improvement in local electricity generation. The year-on-year perspective shows that the amount of distributed electricity increased by 8.2% (88,781 MWH), from 1,084,200 MWH in the fourth quarter of 2022 to 1,172,981 MWH in the current quarter. The trend of the Index of Electricity Generation from the first quarter of 2013 to the fourth quarter of 2023 indicates an improvement in local electricity generation, despite fluctuations.

The year-on-year analysis also reveals a downward trend in the physical volume of imported electricity. The trend in the physical volume of imported electricity from the first quarter of 2013 to the fourth quarter of 2023 shows a downward trend, indicating the country’s continued effort to generate adequate electricity to meet domestic demand, has led to the decreased reliance on electricity imports.

In response to the need to increase local generation and reduce power imports, the government has initiated a new National Energy Policy. This policy is aimed at guiding the management and development of Botswana’s energy sector and encouraging investment in new and renewable energy. In the policy document, Minister of Mineral Resources, Green Technology and Energy Security Lefoko Moagi stated that the policy aims to transform Botswana from being a net energy importer to a self-sufficient nation with surplus energy for export into the region. Moagi expressed confidence that Botswana has the potential to achieve self-sufficiency in electric power supply, given the country’s readily available energy resources such as coal and renewable sources.

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Business

MMG acquires Khoemacau in a transaction valued at P23Bn

9th April 2024

MMG Limited, the Hong Kong-based mining company specializing in base metals, has successfully concluded the acquisition of Khoemacau Copper Mine, a state-of-the-art, world-class copper asset nestled in the northwest of Botswana.

On Monday, MMG announced that the acquisition of Khoemacau Mine in Botswana was finalized on 22nd March 2024. “This acquisition enriches the company’s portfolio with a top-tier, transformative growth project and signifies a monumental milestone in the Company’s journey,” MMG communicated in an official statement published on the Hong Kong Stock Exchange.

Upon completion of the acquisition, MMG remitted to the Sellers an Aggregate Consideration of approximately US$1,734,657,000 (over P23 billion), a sum subject to potential adjustments post-Completion.

In addition to the Aggregate Consideration, MMG, in accordance with the Agreement, advanced an aggregate amount of approximately US$348,580,000 (over P4.5 billion) as the Aggregate Debt Settlement Amount, to settle certain debt balances of the Target Group (Cuprous Capital/Khoemacau).

On November 21, 2023, Khoemacau announced that the shareholders of its parent company [Cuprous Capital] had agreed to sell 100% of their interests to MMG Limited.

MMG is a global resources company that mines, explores, and develops copper and other base metals projects on four continents. The company is headquartered in Melbourne, Australia, and has a significant shareholder, China Minmetals Corporation, which is China’s largest metals and minerals group owned by the Government of the People’s Republic of China.

On December 22, 2023, Khoemacau Copper Mining (Pty) Ltd received the approval from the Minister of Minerals and Energy of Botswana regarding the transfer of a controlling interest in the Project Licenses and Prospecting Licenses associated with the Khoemacau Copper Mine, a result of the Acquisition.

 

The Botswana Competition & Consumer Authority (CCA) on January 29, 2024, notified the market that it had given its approval for the takeover of Khoemacau Copper Mining by MMG Limited.

On January 29, 2024, the CCA issued a merger decision to the market, stating that after conducting all necessary assessments, it was ready to proceed.

The Competition Authority affirmed that the structure of the relevant market would not significantly change upon implementation of the proposed merger as the proposed transaction is not likely to result in a substantial lessening of competition, nor endanger the continuity of service in the market of mining of copper and silver ores and the production, and sale or supply of copper concentrate in Botswana.

Furthermore, the CCA stated that the proposed merger would not have any negative impact on public interest matters in Botswana as per the provisions of section 52(2) of the Competition Act 2018.

Earlier this month, Minister of Minerals & Energy, Lefoko Maxwell Moagi, informed parliament that his Ministry was endorsing the Khoemacau acquisition by MMG Limited. He noted that not only was the company acquiring the existing operation but also committing to an expansion program that would cost over $700 million to double production, create more jobs for Batswana, and increase taxes and royalties paid to the Government.

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