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Pomp as CA Sales lists

Fast Moving Consumer Goods (FMCG) distributor, CA Sales officially listed on the Botswana Stock Exchange (BSE) this Thursday, at exactly 0950 BSE Chief Executive Officer Thapelo Tsheole and CA Sales CEO Mr. Frans Britz, rang the bell to mark a watershed moment in the company’s history – listing on the Domestic Main Board of BSE, one of the stable and significantly growing stock markets in Africa.

According to the CA board, 376 IPO applications totaling to 146 191 572 shares were received from invited investors and the public by 1st November 2017 for the available 136 112 994 ordinary shares of P3.45 each on offer. “The successful public applicants will be allotted ordinary shares equal to their applications, thus they will receive the number of ordinary shares applied for in full. The invited investors will receive a pro-rata allocation of their application”

BSE CEO, Tsheole says the Stock Exchange outperformed its target of attracting two companies this year after listing Australian Minergy, Get Bucks amongst other companies, and now CA Sales. “We have to thank the CA Sales board, they could have easily went for instance to the Johannesburg Stock Exchange (JSE), but they chose the BSE because they have confidence in our stable economy and its prospects for growth.”

Tsheole revealed that the BSE will in a few months list several other multinational corporations of global repute. The chairman of CA Sales, Mr. Johan Holtzhausen commended the BSE for high level of professionalism and competence. “When we began this process of listing the BSE team proficiency and level of seriousness and world standard ethics & etiquette was so heartwarming,” he said.

Holtzhausen added that CA Sales was a Southern African company with total employees of around 8000, with 1500 of them being in Botswana. “We have a turnover of P2 billion and we thank our suppliers, retailers and all stakeholders as we embark on continued journey of expansion  and  ensuring  growth in our  share value to give our investors return of investment,”  he said.

The current shareholding of CA Sales now stands at PSG Africa Holdings (Proprietary) Limited: 214 057 200 shares which is 51%; Export Marketing Investments (Proprietary) Limited holds 42 200 690 shares which translates to 10.1%; while renowned and one of the founders of CA Sales, Jagdish Natwarlal Shah now owns 10 739 190 shares , which is 2.6%. It is reported that Shah pocketed over P30 million from the listing.  Bielkor Beleggings (Proprietary) Limited, 8 587 600 shares 2% and Repassen 21 (Proprietary) Limited controls 4 097 940 shares or 1% and the same applies to Rose Bridge 15 (Proprietary) Limited. The Public as defined in the BSE Listing requirements owns 136 112 994 shares which is 32.3%.

The company has appointed to its board of non-executive directors the Chief Executive Officer of Bona Life and shrewd industry leader, Reginah Sikalesele-Vaka as well as former Debswana Managing Director, Blackie Marole.
Vaka is former Chairperson of the BSE Main Committee.
When officiating at the listing celebration at the CA Sales offices the Vice President Mokgweetsi Masisi said it was worth noting that Botswana’s economy was challenged but thanked the CA Sales board for having confidence in the stability of Botswana business environment.
“We have abundant capital from our pension funds thus more companies should follow CA Sales, Get Bucks and others by listing on our domestic bourse main,” he said.
Masisi commended the BSE leadership for continuing to carry out their mandate with evident delivery.
CA Sales distributes products from companies such as Tiger Brands, Unilever SA, Nestle, Kellogg’s, Nampak, Aspen, Colgate Palmolive, Pioneer Foods and South African Breweries across Southern Africa.
The company started operating almost three decades ago in Botswana as CA Enterprises and went on to acquire then competitors, Dafin Sales and Kalahari sales to birth CA Sales & Distribution. In 2011 it was incorporated as a private company under South African laws. Last year CA Sales registered profits of over R170 million.

Botswana Stock Exchange changes name as it demutualizes

Meanwhile the Botswana Stock Exchange (BSE) has begun a process to demutualize and transform into a public company. In a statement dated 7th November BSE is in the final consultation on the brainstormed names the new stock exchange will bear. The statement reads that substantial progress has been made in the much anticipated demutualization of the BSE which will see the conversion of the BSE from being a statutory body to a public company. BSE says the valuation of the Exchange has been completed and due process of awarding shareholding by the Minister of Finance and Economic Development will commence. “This milestone will officially separate ownership rights and trading rights of the Exchange and will be in line with global trends.”

Given this background, post demutualization, the Exchange will assume a new name. The BSE Transition Act of 2015 states that ‘the company may use Botswana Stock Exchange Limited as its company name and be legally designated as such for all purposes’. However Exchange House says the Act is not prescriptive on the name as it allows the BSE to assume a name that suits the requirements of the Exchange, particularly its vision to become world class. Internally the BSE leadership and management came up with few nomenclatures  in suggestion of naming the new entity, Botswana Stock Exchange Limited (BSE Ltd) ,Botswana Securities Exchange (BSX), Botswana Securities Exchange Group (BSE) and  Botswana Securities Exchange Holdings (BSE).

The statement from the BSE also notes that the proposed names are informed by research, brand identity, the need to be world class as the vision of the BSE prescribes, and the trends in the local securities market thus they call on stakeholders to share their views and brainstorm further names that can best suit the shape of the new demutualized public company.

“The naming of a national stock exchange is a matter of public interest; we would like to hear your views on the proposed names as a valued stakeholder,” reads the statement. The Botswana Stock Exchange Main committee will in finality and having taken stakeholders views into account make the final decision and appropriate recommendation to the Minister.

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Business

New study reveals why youth entrepreneurs are failing

21st July 2022
Youth

The recent study on youth entrepreneurship in Botswana has identified difficult access to funding, land, machinery, lack of entrepreneurial mindset and proper training as serious challenges that continue to hamper youth entrepreneurship development in this country.

The study conducted by Alliance for African Partnership (AAP) in collaboration with University of Botswana has confirmed that despite the government and private sector multi-billion pula entrepreneurship development initiatives, many young people in Botswana continue to fail to grow their businesses into sustainable and successful companies that can help reduce unemployment.

University of Botswana researchers Gaofetege Ganamotse and Rudolph Boy who compiled findings in the 2022 study report for Botswana stated that as part of the study interviews were conducted with successful youth entrepreneurs to understand their critical success factors.

According to the researchers other participants were community leaders, business mentors, Ministry of Trade and Industry, Ministry of Youth, Gender, Sport and Culture, financial institutions, higher education institutions, non-governmental institutions, policymakers, private organizations, and support structures such as legal and technical experts and accountants who were interviewed to understand how they facilitate successful youth entrepreneurship.

The researchers said they found that although Botswana government is perceived as the most supportive to businesses when compared to other governments in sub-Saharan Africa, youth entrepreneurs still face challenges when accessing government funding. “Several finance-related challenges were identified by youth entrepreneurs. Some respondents lamented the lack of access to start-up finance, whereas others mentioned lack of access to infrastructure.”

The researchers stated that in Botswana entrepreneurship is not yet perceived as a field or career of choice by many youth “Participants in the study emphasized that the many youth are more of necessity entrepreneurs, seeing business venturing as a “fall back. Other facilitators mentioned that some youth do not display creativity, mind-blowing innovative solutions, and business management skills. Some youth entrepreneurs like to take shortcuts like selling sweets or muffins.”

According to the researchers, some of the youth do not display perseverance when they are faced with adversity in business. “Young people lack of an entrepreneurial mindset is a common challenge among youth in business. Some have a mindset focused on free services, handouts, and rapid gains. They want overnight success. As such, they give up easily when faced with challenges. On the other hand, some participants argue that they may opt for quick wins because they do not have access to any land, machinery, offices, and vehicles.”

The researchers stated that most youth involved in business ventures do not have the necessary training or skills to maintain a business. “Poor financial management has also been cited as one of the challenges for youth entrepreneurs, such as using profit for personal reasons rather than investing in the business. Also some are not being able to separate their livelihood from their businesses.

Lastly, youth entrepreneurs reported a lack of experience as one of the challenges. For example, the experience of running a business with projections, sticking to the projections, having an accounting system, maintaining a clean and clear billing system, and sound administration system.”

According to the researchers, the participants in the study emphasized that there is fragmentation within the entrepreneurial ecosystem, whereby there is replication of business activities without any differentiation. “There is no integration of the ecosystem players. As such, they end up with duplicate programs targeting the same objectives. The financial sector recommended that there is a need for an intermediary body that will bring all the ecosystem actors together and serve as a “one-stop shop” for entrepreneurs and build mentorship programs that accommodate the business lifecycle from inception to growth.”

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Business

BHC yearend financial results impressive

18th July 2022
BHC

Botswana Housing Corporation (BHC) is said to have recorded an operating surplus of P61 Million, an improvement compared to the previous year. The housing, office and other building needs giant met with stakeholders recently to share how the business has been.

The P61 million is a significant increase against the P6 million operating loss realized in the prior year. Profit before income tax also increased significantly from P2 million in the prior year to P72 million which resulted in an overall increase in surplus after tax from P1 million prior year to P64 million for the year under review.

Chief of Finance Officer, Diratsagae Kgamanyane disclosed; “This growth in surplus was driven mainly by rental revenue that increased by 15% from P209 million to P240 million and reduction in expenditure from P272 million to P214 million on the back of cost containment.”
He further stated that sales of high margin investment properties also contributed significantly to the growth in surplus as well as impairment reversals on receivables amounting to P25 million.

It is said that the Corporation recorded a total revenue of P702 million, an 8% decrease when compared to the P760 million recorded in the prior year. “Sales revenue which is one of the major revenue streams returned impressive margins, contributing to the overall growth in the gross margin,” added Kgamanyane.

He further stated professional fees revenue line declined significantly by 64% to P5 million from P14 million in the prior year which attributed to suspension of planned projects by their clients due to Covid-19 pandemic. “Facilities Management revenue decreased by P 24 million from P69 million recorded in prior year to P45 million due to reduction in projects,” Kgamanyane said.

The Corporation’s strength is on its investment properties portfolio that stood at P1.4 billion at the end of the reporting period. “The Corporation continues its strategy to diversify revenue streams despite both facilities management income and professional fees being challenged by the prevailing economic conditions that have seen its major clients curtailing spending,” added the CEO.

On the one hand, the Corporation’s Strategic Performance which intended to build 12 300 houses by 2023 has so far managed to build 4 830 houses under their SHHA funding scheme, 1 240 houses for commercial or external use which includes use by government and 1 970 houses to rent to individuals.

BHC Acting CEO Pascaline Sefawe noted that; BHC’s planned projects are said to include building 336 flat units in Gaborone Block 7 at approximately P224 million, 100 units in Maun at approximately P78 million, 13 units in Phakalane at approximately P26 million, 212 units in Kazungula at approximately P160 million, 96 units at approximately P42 million in Francistown and 84 units at approximately P61 million in Letlhakane. Emphasing; “People tend to accuse us of only building houses in Gaborone, so here we are, including other areas in our planned projects.”

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Business

Commercial banks to cash big on high interest rates on loans

18th July 2022
Commercial-banks

Researchers from some government owned regulatory institutions in the financial sector have projected that the banking sector’s profitability could increase, following Bank of Botswana Monetary Policy Committee recent decision to increase monetary policy rate.

In its bid to manage inflation, Bank of Botswana Monetary Policy Committee last month increased monetary policy rate by 0.50 percent from 1.65 percent to 2.15 percent, a development which resulted with commercial banking sector increasing interest rate in lending to household and companies. As a result of BoB adjustment of Monetary Policy Rate, from 1.65 percent to 2.15 percent commercial banks increased prime lending rate from 5.76 percent to 6.26 percent.

Researchers from Bank of Botswana, the Non-Bank Financial Institutions Regulatory Authority, the Financial Intelligence Agency and the Botswana Stock Exchange indicated that due to prospects of high inflation during the second half of 2022, there is a possibility that the Monetary Policy Committee could further increase monetary policy rate in the next meeting in August 25 2022.

Inflation rose from 9.6 percent in April 2022 to 11.9 percent in May 2022, remaining above the Bank of Botswana medium-term objective range of 3 – 6 percent. According to the researchers inflation could increase further and remain high due to factors that include: the potential increase in international commodity prices beyond current forecasts, logistical constraints due to lags in production, the economic and price effects of the ongoing Russia- Ukraine conflict, uncertain COVID-19 profile, domestic risk factors relating to possible regular annual administered price adjustments, short-term unintended consequences of import restrictions resulting with shortages in supplies leading to price increases, as well as second-round effects of the recent increases in administered prices “Furthermore, the likelihood of further increases in domestic fuel prices in response to persistent high international oil prices could add upward pressure to inflation,” said the researchers.

The researchers indicated that Bank of Botswana could be forced to further increase monetary policy rate from the current 2.15 percent if inflation rises persistently. “Should inflation rise persistently this could necessitate an upward adjustment in the policy rate. It is against this background that the interest rate scenario assumes a 1.5 percentage points (moderate scenario) and 2.25 percentage points (severe scenario) upward adjustment in the policy rate,” said the researchers.

The researchers indicated that while any upward adjustment on BoB monetary policy rate and commercial banks prime lending rate result with increase in the cost of borrowing for household and compnies, it increase profitability for the banking sector. “Increases in the policy rate are associated with an overall increase in bank profitability, with resultant increases in the capital adequacy ratio of 0.1 percentage points and 0.2 percentage points for the moderate and severe scenarios, respectively,” said the researchers who added that upward adjustment in monetary policy rate would raise extra capital for the banking sector.

“The increase in profit generally reflects the banking industry’s positive interest rate gap, where interest earning assets exceed interest earning liabilities maturing in the next twelve months. Therefore, an increase of 1.5 percentage points in the policy rate would result in industry gains of P71.7 million (4.1 percent increase), while a 2.25 percentage points increase would lead to a gain of P173.9 million (6.1 percent increase), dominated by large banks,” said the researchers.

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