Technology to boost BotswanaPost profits
Business
BotswanaPost looks set to Leverage on technology to deliver service excellence. According to the Chief Executive Officer Cornelius Ramatlhakwane one of the biggest challenges they face is to increase the uptake and usage on all their mobile channels.
He says this is a customer acquisition issue. “How do we encourage people to change their transaction patterns and explore better ways of sending money, buying electricity, paying their water bills, and renewing their vehicle licences? How do we make sure that the BotswanaPost App is downloaded onto every smartphone in Botswana? This puts the spotlight on our Marketing and Communications team,” he says.
The BotswanaPost CEO is confident that he has built the systems, now they need higher levels of activity on those systems. He is of the view that their growth plans go beyond Botswana. “We are in the process of generating revenue streams from within the region by successfully completing money transfers between us and our fellow Postal Operators. We are already transacting with Zimbabwe, South Africa, Lesotho and Swaziland. We believe we can connect the entire region and will be in Malawi soon. Our intention is to do that, and more: ultimately reaching out beyond the diaspora.”
The CEO promised that there are further innovations on the horizon: “We will resuscitate our PosoCloud offering. We will create more solutions for the financially excluded. We will make it quicker and cheaper for Batswana to communicate, do business, stay in touch with family and complete daily tasks without setting foot in a Post Office.”
RESPONSE TO DECLINING MAIL SERVICES
“Being the nation’s designated Postal Operator comes with significant responsibilities. Chief among these is the Universal Service Obligation (USO), which declares that all Batswana — no matter where they may live in the country — are entitled to the benefit of our services, regardless of how financially viable (or not viable) it may be to provide those services.”
Ramatlhakwane says despite the diverse revenue streams which they have created in recent times through the use of technology, their Mail business should still, at all times, account for half of BotswanaPost revenue. “This means that as we take steps towards increasing our revenues, Mail should account for half of those revenues, and we believe we can make this happen, even in the face of the general decline in mail volumes worldwide. We have to find more proactive ways to grow the Mail business.”
The CEO says they have opened four new kiosks in Sefalana retail outlets to increase reach. He says this has proved to be very successful, so they will definitely continue to expand this partnership. “We have created a Mail Business Value Centre with its own dedicated General Manager. And, most notably, we are using our Commercial Postal Operator’s licence to make our presence felt in the commercial postal business landscape.”
ICON OF EXCELLENCE
The Icon of Excellence Strategy was born in 2011. This was the point at which BotswanaPost started to reposition itself from being a traditionalist postal operator to a service provider. The philosophy was (and still is) to leverage technology to diversify revenue streams and enhance existing products through smart partnerships.
“Of course, the driving force behind this very important change was technology in general, and mobile technology in particular. A traditionalist postal business model cannot survive in the face of advanced communication systems, advanced payment systems and multichannel access — however, under the Icon of Excellence, these ‘threats’ became golden opportunities for our business,” observes Ramatlhakwane.
According to the CEO, the Icon of Excellence Strategy has enabled the Company to deliver a wide range of new products and services and to capitalise on the changing technological environment. This include the new BotswanaPost App (available for download on both Android and iOS devices) ePost, eCommerce, eGovernance, or a wide range of affordable and easy to use financial services — these innovations have redefined what can be accomplished in Botswana through dialogue with key stakeholders.”
Ramatlhakwane says he is particularly proud of the technological solutions they have delivered in partnership with organisations ranging from Government departments and parastatals to the private sector.
THE DILEMMA
BotswanaPost finds itself in an interesting position: revenues are growing steadily, it is clear that customers appreciate (and are using) the new and existing range of products and services, but the parastatal is still recording losses — even though these are rapidly reducing.
To this end, Ramatlhakwane and his team have adopted organisation-wide measures such as Customer Service Excellence, System For Managing (SFM), process reengineering and product profitability under a new organizational model called the Value Centre Model. The goal is to aggressively control costs, boost efficiency, improve profitability and increase our revenue generating activities per employee (revenue per labour cost).
FINANCIAL PERFORMANCE
During the financial year 2016/2017 there was significant improvement in many areas of the business. Ramatlhakwane shares that BotswanaPost recorded a year-on-year revenue growth of 6.8% and revenues climbed strongly to BWP 457.7 million— the highest in the history of this organisation. “This sends a clear message to our stakeholders: we are continuing to grow. And we are doing so even in the face of a slightly depressed economic environment —domestically, regionally and globally,” he said.
Furthermore, BotswanaPost has managed to expand its revenue despite the fact that the Mail business has taken a large hit during this period. Mail revenue has declined by 9.1%, as many of the organisation’s large institutional clients such as the commercial banks and Government agencies have recently migrated to electronic platforms.
However, BotswanaPost says this setback is temporary. “We now have access to leading edge innovations such as Reverse Hybrid Mail which will enable us to pivot and revive these relationships with the important clients we served for many years — while still giving them the cost savings they desire. Through technology, we are confident in our ability to recover these income streams — and even grow them.”
This year, controllable costs are down by 7.9% and this is the second consecutive year of real improvement in this area. BotswanaPost is currently halfway through its two year Turnaround Strategy (Operational Effeciency Execution Plan) which began in the 2015-2016 financial year.
“In the first financial year since this plan was implemented, our operating losses reduced by 24.7%. In the current year, our losses have reduced by a further 51.9% to P12.9 million. As we dig ourselves out of this loss-making position, this has a healthy impact on our balance sheet. Today, BotswanaPost finds itself in a far superior financial situation than any other time in our recent history. Our total assets have increased by 9.9% this year, mostly in respect of our properties, which has the impact of improving retained earnings and solvency, valuing BotswanaPost at P538.6 million at the end of March 2017,” reports Ramatlhakwane.
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.
Business
Food import bill slightly declines
The latest figures released by Statistics Botswana this week shows that food import bill for Botswana slightly declined from around P1.1 billion in November 2022 to around P981 million in December during the same year.
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