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Economy grew by 1.2% during Q3 2017

The domestic economy increased by 1.2 percent in the third quarter of 2017 compared to an increase of 6.9 percent recorded in the same quarter of 2016. The increase was attributed to real value added of Water & Electricity, Finance & Business Services, Transport & Communications and Mining industries which increased by 15.7, 4.8, 4.5 and 4.4 percent respectively.

The estimated GDP at current prices for the third quarter of 2017 was P43, 067.9 million compared to P43, 146.6 million registered in the second quarter of 2017. The estimated GDP at constant 2006 prices for the third quarter of 2017 was P22, 689.2 million compared to P22, 884.4 million recorded in the second quarter of 2017.

All other industries recorded positive growths of more than 2.0 percent with the exception of Trade, Hotels and Restaurants which decreased by 9.3 percent (See table 4). Water and Electricity value added at constant 2006 prices for the third quarter of 2017 was P98.3 million compared to P84.9 million registered in the same quarter of 2016, recording an increase of 15.7 percent. In the third quarter of 2017, Electricity recorded a negative value added of P103.2 million compared to a negative value added of P117.8 million registered in the same quarter of 2016 recording an increase of 12.4 percent.

The improvement in the Electricity real value added is attributed to an increase in local electricity production by 10.7 percent and a decrease of 62.1 percent in electricity imports. Water sector recorded a positive value added of P202.9 million compared to P209.0 million registered in the same quarter of the previous year amounting to a decrease of 2.9 percent. Water consumption in kilolitres went down by 10.9 percent during the quarter under review.

The increase of 4.8 percent in the real value added of the Finance and Business Services industry was mainly due to the rise in the value added of Banks, Real Estate and Business Services by 6.4, 5.9 and 5.4 percent respectively. Transport and Communications growth of 4.5 percent was attributed to the increase in real value added of Air transport, Road transport and Post & Communications by 7.2, 5.1 and 5.0 percent respectively.

The increase in the real mining value added of 4.4 percent was mainly driven by Diamond and Other Mining value added which increased significantly by 32.9 and 37.4 percent respectively. Other Mining comprises of Gold Mine and quarrying activities. Diamonds production in carats increased by 33.0 percent in the third quarter of 2017 compared to an increase of 9.3 percent recorded in the same quarter of 2016. Gold production in kilograms increased by 52.6 percent.

In the quarter under review, Orapa diamond mine production increased by 60 percent mainly driven by the upgrading of Plant 1, which was previously on partial care and maintenance in response to trading conditions in late 2015. Jwaneng diamond production increased by 23.0 percent as a result of planned increases in feed to plant. Mining sector growth without Copper/Nickel stood at 29.7 percent. The year on year growth compares the third quarter of 2016 value added which has copper contribution and the current period without copper value added.

Copper/nickel production was zero due to the provisional liquidation of the BCL mine in October 2016. Trade, Hotels and Restaurants real value added decreased by 9.3 percent in the third quarter of 2017 compared to an increase of 16.3 percent registered in the same quarter of the previous year. The negative growth is attributed to the decrease in real value added of wholesale sub sector by 79.3 percent. Wholesale value added decreased because downstream diamond industries contributed negatively to the industry during the quarter under review.

Non-mining GDP increased by 0.9 percent in the third quarter of 2017 compared to 5.6 percent registered in the same quarter of the previous year. On quarterly basis, Trade, Hotels and Restaurants remained the major contributor to GDP by 17.0 percent followed by Mining at 15.9 percent while General Government came third at 15.3 percent. Trade, Hotels and Restaurants contribution increased because of inclusion of diamond aggregation processes under wholesale sub sector.

Components of GDP by Type of Expenditure

Total final consumption expenditure recorded an increase of 5.2 percent in the third quarter of 2017, whereas in the same quarter of the previous year it rose by 2.6 percent. Household final consumption increased by 6.1 percent, Government final consumption increased by 3.2 percent and Fixed capital formation decreased by 8.0 percent in the quarter under review. Imports of machinery & equipment and transport & equipment also decreased by 16.2 and 35.4 percent respectively.

In the case of foreign trade, real exports of goods and services decreased by 14.1 percent in the third quarter of 2017 compared to an increase of 50.6 percent realized in the same quarter of 2016. Diamond is the major export commodity. Exports of diamonds in Pula decreased by 5.6 percent in the third quarter of 2017 compared to a decrease of 18.7 percent registered in the same quarter of 2016. Imports of goods and services recorded a decrease of 16.3 percent during the quarter under review, compared to 9.0 percent decline realized in the same quarter of the previous year.

GDP at current prices stood at P170, 588.9 million in 2016 compared to a revised level of P146, 065.8 million in 2015, recording an increase of 16.4 percent. Real GDP increased by 4.3 percent in 2016 compared to 1.7 percent decrease in 2015. The increase in real GDP was mainly attributed to Water & Electricity, Trade, Hotels & Restaurants and Transport & communications industries which recorded an increase in value added of 95.2, 13.5, and 6.6 percent respectively.

Water and Electricity value added at constant 2006 prices for the year 2016 was P623.5 million compared to P319.4 million registered in the previous year, recording an increase of 95.2 percent. The sector recorded the highest growth but it is the lowest in terms of contributions to Gross Domestic Product. In 2016, Electricity recorded a negative value added of P183.1 million compared to a negative value added of P195.5 million registered in the previous year, recording an increase of 6.3 percent.

The improvement in the Electricity real value added is attributed to an increase in local electricity production by 8.4 percent and a decrease of 0.7 percent in electricity imports in 2016. In 2016, the water sector registered a highest growth of 57.4 percent because water consumption in kilolitres January 2016, Water Utilities Corporation introduced dual billing system. Consumers were charged for both portable water and waste water.Trade, Hotels & Restaurants increase in real value added of 13.5 percent is attributed to the increase realized in the downstream diamond industries.

In 2016, their value added increased by 74.1 percent compared to 48.7 percent decline registered in 2015. During 2016, diamond prices remained relatively stable and therefore the diamond industry had not been significantly impacted by the commodity pricedownturn. A decrease of 3.5 percent in the real value added of the Mining sector was mainly due to Copper and Coal value added which declined by 21.2 and 9.4 percent respectively.

Copper/Nickel production decreased by 22.4 percent in 2016. BCL copper mine was placed under provisional liquidation in October 2016. Coal production went down by 9.4 percent in the year under review. Diamond production increased slightly by 0.3 percent in 2016. Contribution to GDP by industry is shown in table 2. In 2016, Mining and Trade, Hotels & Restaurants remained major contributors to GDP, their contributions stood at 20.5 percent and 18.2 percent respectively.

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CA SALES revenues rose to R9.5 billion

27th March 2023

The Botswana and Johannesburg Stock Exchange listed distributor of fast-moving consumer goods

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Grit divests from Letlole La Rona

22nd March 2023

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.

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Stargems Group establishes Training Center in BW

20th March 2023

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.

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