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
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.
Business
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.