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Experts lecture Botswana on FDI

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?”

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P300m Phikwe Citrus project first harvest milestone

18th March 2024

The P300 million Selebi Phikwe Citrus project in Botswana has reached its first harvest milestone, with the first export dispatched to the UAE and Saudi Arabia last week. This project, aimed at diversifying the country’s export earnings from diamond mining, is a significant step towards achieving this goal.

The project, which has successfully planted 840,000 seedlings in Phase 1 and completed a 17,000 square meter pack house, is set to employ 1,000 people and create business opportunities across various value chains. These opportunities include manufacturing of juice and packaging materials, transport and logistics, and honey production.

The first export from the Selebi Phikwe Citrus project marks a major achievement for Botswana, as it opens up lucrative export markets in the Middle East and beyond. The project has met market access requirements for countries such as the EU, Canada, China, The Philippines, UAE, and Saudi Arabia, paving the way for future exports to these regions.

The economic impact of the project on the SPEDU region, where it is located, is already being felt. The construction of a 12 km water pipeline and the installation of a power line have driven infrastructure development in the area, benefiting businesses in the vicinity at minimal cost.

The project’s success is the result of collaborative efforts between various government departments and agencies, including the Botswana Investment & Trade Centre (BITC) and SPEDU. Through the BITC’s One Stop Services Centre (BOSSC), the project was able to access red-carpet investor facilitation services and unlock necessary business enablers.

The Ministry of Trade & Industry and the Ministry of Agriculture have played crucial roles in facilitating market access for the project. The Department of Plant Health has opened up protocol and permit markets for citrus exports, ensuring that the project can access international markets with ease.

Botswana has met the European Union (EU), Canada, China, The Philippines, United Arab Emirates and Saudi Arabia market access requirements. “I am happy to report that our desire to export has been actualised as the first consignment was dispatched last week to the United Arab Emirates and Saudi Arabia” Minister Kgafela revealed.

The Selebi Phikwe Citrus project is not only beneficial for the project sponsors but also for other citrus growers in Botswana. With 172 citrus growers in the country, over 90% of whom are small-scale farmers, the project presents opportunities for growth and expansion in the citrus industry.

Massive value chain opportunities are presented by the project, including fertilizer and agrochemical supplies, agro-processing opportunities, and more. The project’s spending on imports presents an opportunity for local production, further boosting the country’s economy.

On 21s March 2024, His Excellency Dr Mokgweetsi EK Masisi will officiate at a ceremony to mark the first harvest of the Selebi Phikwe Citrus project and officially open the pack house. Harvest from this multimillion pula project is expected to reach the United States, Europe and other lucrative export markets.

The project was first launched on the 11th December 2020 with a ground breaking by President Masisi. This multimillion pula private sector funded agricultural enterprise, the likes of which this country has never seen before, is widely touted as a major catalyst to revitalising and catapulting the SPEDU region back to economic glory following the closure of BCL mine in 2016.

The project promoters leased 1500 hectors of land from Mmadinare Multi- Purpose Cooperative Society which will benefit directly through proceeds.

Highlighting the ripple economic impact of the project to the SPEDU region, Assistant Minister of Trade & Industry Honourable Beauty Manake said the Selebi Phikwe Citrus project has been able to drive the development of infrastructure in the area, with the construction of a 12 km water pipeline and ensured the installation of a power line.

She said during a briefing in Gaborone on Thursday that businesses within the vicinity have tapped into these infrastructural developments at minimal cost.

The Selebi Phikwe Citrus project came into being through collective efforts of various government departments and agencies. The Botswana Investment & Trade Centre (BITC) in collaboration with SPEDU courted the investors from South Africa to venture into the project.

Through the Botswana One Stop Services Centre (BOSSC) under the BITC, the project was able to establish and take off by enjoying red-carpet investor facilitation services to unlock required business enablers.

BITC has also through its export promotion arm, facilitated the project by identifying potential export markets in the European Union (EU) and lend crucial support to the Citrus Project to access the identified markets.

About 70 percent of the produce from the Selebi Phikwe Citrus will be exported, while 30% will remain in the country. Assistant Minister Manake revealed that the Ministry of Trade of Industry has been working closely with the project sponsors to explore export markets and facilitate entry into those markets.

The Selebi Phikwe Citrus project’s first harvest and export mark a significant milestone in Botswana’s efforts to diversify its export earnings. With the potential for growth and expansion in the citrus industry, this project is set to have a lasting impact on the country’s economy and agricultural sector.

 

 

 

 

 

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Botswana’s first coal-gas fired power station to start commercial production

18th March 2024

Botswana is set to achieve a significant milestone with the upcoming commencement of commercial production at the country’s first coal-gas fired power station. Tlou Energy Limited, an Independent Power Producer listed on multiple stock exchanges, has been at the forefront of developing this groundbreaking project, which is expected to start generating electricity for both the local and export markets later this year.

Situated in the Central District, just 100 km west of Serowe, the coal-gas fired power station represents a major step towards reducing Botswana’s reliance on expensive power imports. Tlou Energy has confirmed the presence of abundant coal-gas resources in the area, making it suitable for commercial power production. The company has obtained all the necessary approvals, including environmental assessments, production licenses, power generation licenses, and a Power Purchase Agreement, to move forward with the project.

One of the key achievements for Tlou Energy has been the completion of a 100km 66kV transmission line, connecting the power station directly to Botswana’s power grid and the Southern African Power Pool. This connection opens up a vast market for the project, allowing for the sale of electricity both domestically and regionally. The company’s Managing Director, Tony Gilby, expressed optimism about the project’s progress, stating that they are on track to start generating revenue soon.

In terms of the project’s timeline, Tlou Energy is currently focused on completing the construction of the power station, installing generators, and finalizing the gas gathering line. The initial target is to generate around 2MW of power, with plans for rapid expansion to 10MW, generating approximately $10 million in revenue per annum. The company is also in discussions with investors to secure the necessary funds for project completion.

The key remaining items to be completed prior to first power sales, according Tlou Energy, include completing the construction of the power station, installation of generators, completing the short gas gathering line (from the gas wells to the generators) and energizing the power line. “Minor finishing works on the transmission line and the addition of switchgear at Serowe will also be completed prior to first power.  The initial target is ~2MW of power, followed by rapid expansion to 10MW, generating approximately $10m in revenue per annum.” The company has confirmed that it’s in discussions with some investors to secure funds required for project completion.

Tlou’s power is expected to help reduce Botswana’s reliance on expensive power imports. In addition to supplying power in Botswana, the company may sell electricity to the regional market via the Southern African Power Pool, a development which could open up a bigger market for the project.

The successful operation of Botswana’s first coal-gas fired power station will not only contribute to the country’s energy security but also have a positive impact on the regional market. By potentially selling electricity through the Southern African Power Pool, Tlou Energy could tap into a larger market, further solidifying its position as a key player in the energy sector.

Overall, the progress made by Tlou Energy in developing Botswana’s first coal-gas fired power station is a testament to the company’s dedication and vision. With the project nearing completion and commercial production on the horizon, Botswana is poised to enter a new era of energy independence and sustainability.

 

 

 

 

 

 

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Food prices could go up in 2024/2025

18th March 2024

Food prices could potentially go up in 2024/2025 due to the current El Niño conditions in Southern Africa, as reported by the Food and Agriculture Organization (FAO) of the United Nations. The update released by FAO indicates that countries in the region, including Botswana, may experience a decrease in food production, leading to higher food inflation.

The update highlights that Southern Africa has been experiencing below-average rainfall, with key cropping zones in countries such as Malawi, Mozambique, Zambia, Zimbabwe, and Namibia receiving only up to 80 percent of average rainfall quantities between November 2023 and February 2024. This has resulted in significant rainfall deficits, particularly in February, which is a critical period for crop development. The warmer than average temperatures and erratic distribution of rains have further exacerbated the situation, leading to stressed vegetation conditions and potentially lower crop yields in 2024.

In South Africa, the leading cereal producer in the region, a dry spell between late January and February 2024 has negatively impacted crop production prospects. Maize production is expected to fall this year, further contributing to the potential decrease in cereal production in the region.

As a result of the anticipated decline in cereal production in Southern Africa, import needs are projected to increase in the 2024/25 year. This could lead to the importation of cereals from outside of the region, such as the United States of America, Mexico, Brazil, Australia, and Argentina. However, importing food from global markets comes with higher transport costs and import tariffs, which may put upward pressure on food prices in Botswana.

FAO projects that based on the likely scenario of a fall in cereal production in Southern Africa, import needs are set to increase in the 2024/25 year. “Furthermore, if production declines in South Africa and Zambia materialize in 2024, cereal export availabilities in the region would be low and this could necessitate the importation of cereals from outside of Southern Africa.” According to analysts from the organization cereal prices were at higher levels in December 2023 and January 2024 in Southern Africa, reflecting the cumulative impacts of weather shocks on 2023 domestic production, elevated international commodity prices and weak currencies that intensified exchange rate pass-through effects to domestic prices. “Farther ahead, a key risk to the price growth is represented by the impact of El Niño-related rainfall deficits on cereal production in 2024.”

Some local analysts believes that Botswana could import sorghum, maize and wheat from as far as United States of America, Mexico, Brazil, Australia and Argentina as South Africa and Southern African countries which are potential suppliers of cereals, are highly likely to record decline in crop production as a result of the impact of El Niño-related rainfall deficits on cereal production in 2024. The analysts added that food imports from the global markets come with higher transport costs and import tariffs which may have an upward pressure on food prices in Botswana.

Overall, the impact of El Niño-related rainfall deficits on cereal production in 2024 poses a significant risk to food prices in the region. It is important for policymakers and stakeholders to closely monitor the situation and take necessary measures to mitigate the potential increase in food prices in 2024/2025.

 

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