The Southern African Development Community (SADC) 37th Ordinary SADC Summit held last week in Pretoria South Africa has placed industrialization at the top of the regional block action plan in order to realize growth amongst economies of member states.
When accepting the SADC chairmanship from Swaziland, President of South Africa, Jacob Zuma assured SADC head of governments that his country would push the region’s industrialization agenda. Zuma said that the International Monetary Fund (IMF) in its regional economic outlook for Sub-Saharan Africa has forecasted a modest rebound in aggregate growth of 2.6 percent in 2017 saying SADC countries would need to work together to realize integrated economic rebound.
“The economies of the countries in the region continue to be under severe economic difficulty owing to the 2008 global financial crisis and the accompanied decline in global demand for commodities,” he observed. The new SADC Chair also noted that the rising public debt brought about mainly by the budget deficit makes it difficult for SADC economies to finance regional industrial projects like the much needed infrastructure.
Zuma also borrowed from the global economic outlook and projections that uncertainties persist as major players in the world economy were inward looking with evidence of some taking a policy stance which could be characterized as push backs on globalization. “It is therefore imperative that the region focuses inwardly,” he said. President Zuma also reiterated that African economies were small by global standards thus it was imperative for a collective response through regional integration in order to realize structural transformation of SADC economies. “The region cannot continue to be suppliers of primary products in global value chains while remaining with low levels of domestic production with economies that are very vulnerable to global shocks.”
Zuma further highlighted the summit theme “Partnering with the Private Sector in Developing Industry and Regional Value Chains’ saying it intended to promote momentum and continuity in the region’s collective aspiration towards regional sustainable economic development and industrialization. Deliberating on the SADC Industrialization Strategy which was adopted under the chairmanship of Zimbabwe in 2015 Zuma said the implementation of the strategy would ensure successful transformation of regional economies from the commodity dependent growth path to production induced growths. “This will not only raise the living standards of our people but also facilitate the rapid catch-up of the SADC countries with industrialized and developed countries.”
He added that the key activities during South Africa’s Chair-ship will be the development of a high impact Annual Operation Plan with targeted interventions and public policy tools to foster the development of regional value-chains in agro-processing, pharmaceuticals and mineral beneficiation. “We will promote a Member State driven process through the Industrial Development Forum to facilitate the identification of cross-border projects that will strengthen regional value-chains and contribute to the development of the region.”
Zuma also told SADC head of states that as a contribution towards capacity building, South Africa will introduce a new programme to develop capacity in industrial policy making and implementation for senior officials in the SADC region. He also noted Infrastructure as the key driver of industrialization. Zuma lamented the lack of funding for development of bankable projects. “Infrastructure investment is a catalyst to economic transformation and industrial development we therefore, need to leverage infrastructure spent to fast track the process of structural transformation in our economy,” he said.
SADC INDUSTRILIZATION STRATEGY
Inter boarder trade within the SADC region is still very low and its sitting at just above 17 %, this results in very low returns SADC member state solicits from doing business within the region. This is because of among other reasons the fact that most of SADC countries still depend on mineral revenue to sustain their economies, minerals which are sold overseas. As for other sectors like agriculture South Africa’s economy is dominant over other SADC economies. It is under this back drop SADC member states through their head of governments adopted a rigorous industrialization plan in 2014 and approved the proposed undertaking at the Extra-Ordinary Summit in Harare, Zimbabwe in April 2015.
The SADC Industrialization Strategy was birthed after a realization that despite persistent efforts to boost Trade within the region through the SADC Free Trade Area, the value of intra-SADC Trade still remained low making Industrialization a priority at global, regional and national levels. The Industrialization Strategy was developed as an inclusive long-term modernization and economic transformation scheme that enables substantive and sustained rising of living standards; intensifying structural change and engendering a rapid catch up of the SADC countries with industrializing and developed countries. It is anchored on three interdependent and mutually supportive strategic pillars – industrialization as champion of economic transformation; enhancing competitiveness; and deeper regional integration.
PROGRESS OF THE STRATEGY IMPLEMENTATION
SADC member states are currently engaging their trade stakeholders, the private sector and businesses in an effort to collect views and exchange ideas towards the implementation of the strategy. Recently Botswana which houses the SADC headquarters hosted the SADC Coasted Action Plan Workshop as a build-up undertaking to the SADC head of states meetings. When officially opening the workshop Permanent Secretary in the Ministry of Investment, Trade and Industry, Ms. Peggy O. Serame, said the workshop was aimed at sensitizing stakeholders on the SADC Industrialization Action Plan which intends to guide the Implementation of the SADC Industrialization Strategy and Road Map of 2015 – 2030 and to determine the Indicative National Public Coordination costs of the Industrialization Process.
Serame said the strategy was developed taking into consideration what was already happening at Africa level, she highlighted that SADC countries have different abilities in the manufacturing sector depending on resources available at the respective countries. The strategy also appreciates technology and digital migration as a key factor to realizing the industrialized SADC region. Currently SADC countries are moving towards a techno-based manufacturing sector and industries. To meet the competitive global world in the manufacturing and commodities trade space SADC intends to fast track their transformation of members states to knowledge based, export led and consequently diversified economies. Again at the workshop the importance of private sector investment and full participation was highlighted.
Dr Monnana Monnana from the SADC secretariat had told gatherers that the objective of the Industrialization strategy was to use technology in catching up with developed economies; Dr Monnana said it was high time SADC countries moved away from depending on other countries from different regions for commodities and day to day goods. “We have to devise collective ways in which we SADC can become sustainable as an intraregional trade space, knowledge will increasingly become very important as we transform our region and develop our economies,” he said.
All SADC member states penned authorization to the Industrialization strategy and thus it is expected that all countries will implement and observe all the guidelines outlined in the road map in order to realize more diversified, industrialized SADC economies with significant intraregional trade revenue. It is envisioned that by 2063, the SADC region will be fully transformed and will be an important player in the continental and global landscape, premised on the three growth phases. Trade and Finance Ministers also met at last week’s summit to deliberate and further come up with action plans to ensure the implementation of the strategy.
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.”