National mindset change has been touted as an important factor in Botswana’s journey to realizing its dream of being an investor friendly destination of choice.
This came to light at the 5th Botswana Investment & Trade Conference held in the sidelines of the 2017 Global Expo in Gaborone on Tuesday where international experts, academics and experienced business people in the area of trade, finance, economic and investment shared their thoughts and expertise on Botswana’s current Foreign Direct Investment (FDI) attraction agenda and action plan, challenges and mitigation thereof.
Leading the plenary session titled “What paradigm shift is needed in order to position Botswana as a destination of Choice for FDI?” renowned international investment specialist & Managing Director of Quantum Global Research Lab, Switzerland Professor Mthuli Ncube said Botswana’s ranking in the African Investment Index is attractive to investors until they come to Botswana and get pushed away by a number of issues in the local business environment.
He said Botswana needed to package itself as a Southern African Investment Hub arguing that a country cannot remain a middle income state for decades whereas it has one of the best coal deposits in the world, has livestock population more than that of human population, stable political conditions and low interest rates as well as low exchange rate risks. Ncube said these factors and many others that distinguish Botswana from other African continents were more than enough to position Botswana as the best FDI destination globally.
Botswana has over 200 billion tonnes of coal deposits reserves. The former Investec Botswana Chief Executive Officer said Botswana must invest in its Public Private Partnerships (PPPs) capacity to have a readymade and easily interpreted framework on the concept of PPPs. He asserted that progressing middle income countries like Chile, Taiwan have explored the PPPs as an investment mechanism and it bore fruits.
Ncube further grilled Botswana on lack of skilled personnel for industrial investment undertakings like manufacturing, packaging and agro processing. “If an investor comes here and finds no job ready labour, looks next door in Namibia and finds the former they will take their money to the latter,” he said underscoring that Botswana needed to invest in rigorous skills development if it is to attract foreign investors.
“Government needs to take deliberate actions in resourcing and equipping the vocational & technical institutions, you cannot continue investing money in academic institutions that produce graduates that are unskilled and not job ready,” he said. He highlighted that progressive economies have invested billions in human capital and are training their young citizens to acquire trades and vocational technical knowhow not degrees and theoretical certificates.
He further wondered why Botswana, a country with over 3 million cattle and over 30 years multibillion pula beef industry continues to be behind countries like Ethiopia, Brazil and Namibia in the area of diversified livestock and beef industry value chains. “Why is Botswana lacking behind in exploring the leather business even up to date after so many years?” Why is Botswana not using this natural advantage?’’ he asked. According to the shrewd and learned investment expert Botswana has various initiatives at its disposal, such as the AGOA and USAID of which other African countries were already by far making use of.
He commented on the ease of doing business in Botswana saying there was still a lot more that needed to be done. “Together with neighbouring countries Botswana needs to look further into the issues of inter-border trade and advocate for one stop border as it actually reduces time and makes business easy.”
Botswana was also advised not to abandon the services sector, as a peaceful and political stable country the expert asserted that apart from wildlife and environmental events tourism, Botswana could look into the area of education and Health tourism to attract investors. He cited advanced economies like Dubai, noting that getting into private public partnerships to develop world-class health facilities and academic institutions can actually lead to an economic revolution.
Consulting Director, Public Sector & Government Consulting, at Frost & Sullivan (Singapore), Abhinnet Kaul observed that generally a mindset paradigm shift was pivotal. He shared the experience of Asian tigers observing that the major change in the quest to attract foreign investors was change of mindset by natives and the citizenry “everyone has to be at the party and actually understand what is at stake and actually move with the national course,’’ said Kaul.
He highlighted issues such as lifestyle and safety saying investors can be so fragile that they can look elsewhere when they find the way of life of people in one country so different to their own lifestyle urging that Batswana‘s lifestyle needed to be accommodative. “The issue of mindset paradigm shift speaks to changes such as the local citizenry knowing how to relate with investors in a business cultivating manner, some investors I consult would tell me how they can’t put their money in a certain country because the people are lazy thinkers and are not entrepreneurial and business spirited, so we need to make sure this culture of foreign investors attraction is also cultivated amongst the general population,” Kaul explained.
Mr Xavier Furtado, Country Representative of the World Bank Group warned about the wealth and income equality that continues to rise. He observed that as per what happens in other countries especially in Africa when the gap between the rich and the poor widens poses risks of waking up to political instabilities and civil unrests. Furtado asserted that around 30 % of Botswana population had no access to business, wealth cultivation and income generating opportunities, saying that for a population of 2 million people -that was a worrying figure. He said Botswana needed to look with utmost caution the area of education because their research indicated that Botswana was not getting return of investment from billion of pulas pumped into the education sector.
Another renowned pan African investment expert Gift Simwaka, former regional manager for Southern Africa at the African Export Import Bank, now Regional Manager Client Relations with Afrexim Bank in Egypt said that Botswana was a case study for African economic revolution. He noted that despite the demographic variable of being a small population, Botswana was well positioned in the SACU free trade region, housing SADC headquarters and being stable like other speakers asserted, needed to use these advantages to look beyond its borders for market. He underscored that Botswana needed to identify sectors that it had competitive advantage on and run with those for rigorous economic transformation.
Meanwhile, Botswana’s very own shrewd business revolutionary, and one of the most celebrated young executives Bashi Gaetsaloe, Managing Director of Botswana Development Corporation (BDC) highlighted that Botswana needed to use its attributes for investment attraction. He said the fact that Botswana was a small country can be viewed from an angle of saying Botswana was small enough to do everything effectively and easily. “We need to package ourselves as manageable to attract investors and actually walk the talk’’.
The government investment and industrialization arm boss also shared that Botswana can transform Gaborone into Africa‘s first green city. “We need to take deliberate actions in order to actually distinguish us from other attractive investment destination like Kenya, Rwanda and Namibia, why can’t we have free broadband internet for everyone, why can’t we have free visa for every genuine investor at airport entrance?”
In the coming months prices will go up and inflation will shoot sharply above the target of 3 percent to 6 percent towards the third quarter of 2021, the Bank of Botswana on the other hand will continue to withhold its knife on the Bank Rate. This is according to a forecast made by Kgori Capital in its recent Market Watch Segment.
Statistics from Statistics Botswana show that the recent 1.8 percent increase in the September inflation, from 1 percent in August, was a reflection of the upward adjustment in public transport fares (Transport (from -6.9 to -3.9 percent) in September 2020, which is estimated to have increased inflation by approximately 0.64 percentage points.
Local anti-trust body, Competition and Consumer Authority (CCA), this month received back to back acquisition proposals from South African clothing retailers to wipe out their former rivals, Edcon, from Botswana malls.
Last week BusinessPost was in possession of Merger Notice No 23 of 2020 whereby a South African clothing retailer owner, Retailability Proprietary Limited, through Oclin Proprietary Limited, proposed to acquire parts of the Edgars business conducted by Edcon in Botswana (through Edcon Botswana), as a going concern, consisting of certain assets and identified liabilities.
South African government’s Business Rescue Practitioners earlier this year announced that Retailability will buy Edgars, after the latter filed for a business rescue plan in April after it failed to pay suppliers. This move will see Retailability add Edgars to its portfolio consisting of brands such as; Legit, Beaver Canoe and Style.
Retailability landed on Botswana shores 18 years ago with its flamboyant urban fashion Style which had 17 stores. Style, having almost the same target market as Edgars as it offers men’s and ladies’ contemporary and formal fashion, gave the 91 year old legendary clothing retailer a run for its money, and has won the battle as its parent company has taken over Edgars.
Retailability brands are synonymous with Botswana shopping centres and there are currently five (5) Beaver Canoe stores, 10 Style stores and seven (7) Legit stores across this country. The Beaver Canoe stores sell clothing apparel for men and boys only. The Legit stores have a fashion store format which focuses on the retailing of clothing, footwear, accessories, colour cosmetics and cellular products.
Retailability operates in over 460 stores across South Africa, Namibia, Botswana, Lesotho, and Eswatini. Many observers suggest that because of the deal with Retailability to swallow Edcon, most Edgars stores in Botswana will change their name and be branded Style. A sad tale for religious consumers of the Edgars trademark who got used to love their favourite brand for years.
According to CCA’s Merger Notice No 23 of 2020, Retailability is controlled by Clifford Raymond Lines (through a company which functions solely as a holding company of his interests in Retailability) and Metier Investment and Advisory Services Proprietary Limited (“Metier”). Metier is a private equity enterprise with investments in a number of industries spanning from healthcare, hospitality, FMCGs and telecommunications.
Retailability directors are mostly South Africans; Clifford Raymond Lines, Mark Richard Friday and Norman Victor Drieselmann. Only Nasreen Essack, who was appointed February this year, is a Motswana. He comes after Brian Thuto Tsima left on the same date. Retailability 100 percent owns Oclin Proprietary Limited, the company it is acquiring Edgars with, by a capacity of 3000 shares.
The target business, Edgars, offer textiles, cosmetics and cellular products. Edcon has a Motswana director, Charles Mzwandile Vikisi, a South African, Shane Van Niekerk and Zimbabwean Jethro Kamutsi.
“The Target Business comprises of two (2) Edgars franchise brands and private label stores across Botswana. These stores target middle to upper income customers and are home to a range of private label brands such as Free2BU, Charter Club and Stone Harbour, and a wide range of market label brands (such as Levi’s and Guess) for clothing, footwear and cosmetics.
In addition, the Target Business operates iconic Edgars Home and Edgars Beauty stores as store-in-store formats rounding out the department store offering in Botswana,” said CCA. Foshini also lines up to take Jet Botswana from Edcon.
The Foschini Group (TFG) released a statement confirming its latest intentions to acquire Edcon assets or Jet for a cash purchase consideration of R480 million. This was after the business rescue practitioners offered TFG to buy Jet by that amount.
CCA is currently mulling on a proposed merger by TFG to take over Jet operations in Botswana. Merger Notice No 21 of 2020 from TFG came a few days before the Retailability proposal. In this merger TFG, acting through Foschini Botswana, want to take over “parts” of the Jet business conducted by Edcon through Jet Supermarkets Botswana.
TFG will be willing to add Jet to its portfolio of 30 retail brands that trade in clothing, footwear, jewellery, sportswear, homeware, cell phones, and technology products from value to upper market segments throughout more than 4085 outlets in 32 countries on five continents. TFG will also get Jet’s distribution centre located in Durban and certain stores in Botswana, Lesotho, Namibia and Eswatini. Also part of this fat deal is that the company is looking to also acquire JET Club and all existing JET stock of no less than R800 million.
Johannesburg listed TGF owns Foschini Retail Group which owns the local operations called Foschini Botswana, the acquiring enterprise according to CCA merger notice. “TFG is not controlled by any enterprise/s and for completeness, the three largest shareholders of TFG holding shares greater than 5% as at 27th March 2020 are: Government Employees Pension Fund (16.2%) Public Investment Corporation (13.2%); Old Mutual Limited (6.7%); and Investec Asset Management (6.3%). The remaining issued share capital in TFG is widely held,” said the merger notice.
Only Abdool Rahim Khan is a Motswana in the Foschini Botswana directorship, the rest; Ganeswari Shani Naidoo, Anthony Edward Thunström and Gustav Jansen (alternate director) are South Africans.
According to the CCA merger, the Jet Business is Edcon’s discount department store division, selling clothing, footwear, homeware and some cosmetics as well as cellular products and targets lower-to-middle income consumers throughout Botswana. The Jet Business does not directly or indirectly control any enterprises, says the notice. CCA seeks any stakeholder views for or against the proposed merger, which may be sent within 10 days from date of this publication to the following address.
Botswana Communications Regulatory Authority BOCRA signed a memorandum of Agreement (MoA) with the Ministries of Transport and Communications (MTC), Basic Education (MoBE) as well as Local Government and Rural Development (MLGRD).
The MoA seeks to continue the collaboration that dates back to 2016 when the three parties first agreed to work together in a project aimed at computerizing and providing broadband Internet to primary schools in remote and underserved areas of Botswana.
The project benefitted 68 primary schools and 9 secondary schools through the construction of Local Area Network (LAN) in each primary school, provision of 5 Mbps dedicated broadband Internet to each Primary School and provision of Wi-Fi enabled tablets, laptops and related peripherals such as printers and copiers.
Further, the project will see the augmentation of computers in 9 Junior Secondary Schools with 30 laptops per identified school and employment of Information Technology (IT) officers at each primary school.
When speaking at the signing ceremony in Gaborone, Chief Executive of BOCRA and Chairperson of Universal Access and Service Fund (UASF) Board of Trustees Martin Mokgware said the project’s ultimate goal is to facilitate pupils in schools and host villages to be able to play a meaningful role in the digital economy.
Mokgware indicated that this necessitates upgrading of existing Telecommunications infrastructure to high capacity broadband that will support delivery of education, accessibility to the quality Internet and usage of ICTs.
The Fund began its inaugural programme by sponsoring the provision of WiFi hotspots in public areas around the country as its first project. Following the successful implementation of public WiFi hotspots, the Fund identified Kgalagadi, Ghanzi and Mabutsane areas for mobile network upgrades, schools computerization and internet provision.
Conscious that the project would not be possible without buy-in and support from MoBE, MTC and MLGRD, the Fund facilitated the signing of the first MoU between the three parties in 2016 for implementation of the project.
BOCRA Chief Executive said the signing of this agreement is aimed at benefitting the Kweneng District, adding that they have already assessed the area and have determined that they will be covering 62 underserved villages and 119 schools, 91 of which are primary schools.
“This is a project for which the partner Ministries need to re-commit for its success. Lessons from the previous schools’ computerization and internet connectivity project require that we increase our involvement and resources dedicated to the project for it to be successful. It is my belief as the project coordinator, that we will not do things the way we did them during the first project, for if we do, then we will not have learnt anything,” he said at the signing ceremony.
The purpose of learning is so that there can be continuous improvement to minimize the length of time and amount of resources utilized, he said expressing confidence that their partners will step up to the plate and ensure they play their part in the implementation of the project and that it will progress smoothly having already tread along a similar path.
UASF’s role lies mainly in funding and project management. According to Mokgware, once the project is completed, the work to integrate ICTs into the classroom begins in earnest. Therefore, he said, the project will not succeed without full cooperation and oversight of partners.
“MoBE will put in place the necessary content and ensure that the curriculum is available to all. MLGRD will provide, among others, the enabling environment by ensuring readiness of the school’s infrastructure and necessary security.”