The Bank of Botswana (BOB) has no contingency planning and crisis preparedness system in place, and this presents a dangerous status quo – Specially Elected Member of Parliament (SEMP), Bogolo Kenewendo has observed.
Kenewendo who has been screening the national treasury and its operations lately wanted Finance Minister, Kenneth Matambo to share with lawmakers whether the bank has a contingency planning and crisis preparedness system, and if so what its highlights are.
Kenewendo who is a shrewd Economist also requested the Minister of Finance & Economic Development to brief Members of Parliament on the Bank of Botswana’s Financial Stability Unit functionality and also state its current assessment of the financial system.
When responding to Kenewendo, Matambo indicated that the Bank of Botswana Financial Stability Unit was functional. According to the Minister it was established in 2010 with technical assistance from the International Monetary Fund (IMF). “The bank has since 2012 incorporated the macro-prudential assessments in its Monetary Policy technical analysis,” he said.
Matambo added that the BoB continues to refine the scope, institutional design, policies and macro-prudential tools for an effective financial stability assessment. Further lecturing legislators on operations and financial position of the county’s central bank Matambo who is also a SEMP highlighted that based on the banking sector performance indicators, which include levels of capital, liquidity, profitability and default ratios, financial system was assessed to be sound and stable. “In particular, the aggregate ratio of non-performing loans to total loans has been consistently low by international standards and stood at only 5.5 per cent in March 2017,” he revealed.
However on a low note, Minister Matambo told legislators that the BoB does not have a contingency planning and crisis preparedness system. Contingency plans are very critical for financial service providers especially those of magnitude and national importance as a central bank, they are devised for an outcome other than in the usual. A contingency plan is often used for risk management when an exceptional risk that, though unlikely, would have catastrophic consequences. Each financial sector participant has an independent responsibility for reducing the risk in its own operations.
This responsibility includes developing stable operating solutions, proper backup and preparedness procedures and systems and a robust financial infrastructure. Most banks’ system preparedness work is closely tied to its responsibility for promoting an efficient payment system and ensuring financial stability. This applies internally to, for instance, the central bank’s own systems, including settlement system as well as externally to financial sector infrastructure, including the power to authorize and oversee interbank systems.
Matambo told lawmakers that plans were underway to put a BoB contingency planning and crisis preparedness system in place based on the International Monetary Fund Technical Assistance Mission which was engaged to align the banking safety nets, bank resolution mechanisms and crisis management framework in Botswana with the best international practices. Matambo revealed that the International Monetary Fund Mission identified lack of legal power as an impediment to a well-functioning crisis resolution mechanism and has recommended amendments of the Bank of Botswana Act and the Banking Act. “I am happy to indicate that both of these Acts are currently being reviewed in order to address the identified deficiencies.”
Kenewendo said that the BoB needed to move with speed to put in place such system in order to be ready for any unforeseen circumstances, risks and crush within the financial banking spaces especially due to possible global economic shocks. Kenewendo said BOB can learn and use assistance also from World Bank Group to complement International Monetary Fund (IMF) support .The World Bank offers support to financial sector authorities to help deal with emerging problems in financial institutions and financial markets, and to mitigate the risk of systemic crisis. The Bank provides technical assistance to strengthen authorities’ contingency plans for dealing with distress, and to test the authorities’ preparedness through the use of simulation exercises.
Mitigating lack of data and information at local level
On other issues, Bogolo Kenewendo also asked the Matambo to state his ministry’s efforts towards mitigating the challenge of lack of data and information that has been collected in a consistent and systematic way especially at local level which she says has been cited as one of the key challenges of monitoring and evaluation and also what new surveys should be expected from these efforts.
In response, Minister Matambo said efforts continue to be made to avail relevant and timely information in the required format and disaggregation for planning purposes at all levels. He said to this end, a key effort towards enhancing the availability of data and information at the local level was on the roll out by Statistics Botswana under the Botswana Strategy for the Development of Statistics. “The strategy seeks to promote data collection and production of statistical reports, following internationally approved methods and standards,” he said. Matambo also revealed that new surveys which will provide some of the data and information at the local level which were almost at roll out stage included the Botswana Demographic Survey, the Multi-Topic Survey, which survey includes labour, poverty, literacy, health and nutrition statistics and the Botswana Aids Impact Survey.
With just four weeks to go, the Gambling Authority of Botswana has revealed that it is expecting a record attendance at the much anticipated International Association of Gambling Regulators (IAGR) Conference, which will be held in Botswana from 16 â€“ 19 October 2023.
According to a communique from the IAGR, the Gambling Authority will most probably break the record in the number of accredited countries that will attend the conference in Botswana.
â€śWe are on track to match and potentially exceed the incredible delegate turnout we saw in Melbourne last year,â€ť read a statement from IAGRâ€™s.
In its global reach alert, IAGR revealed a glimpse of jurisdictions that will be represented at the conference, among them Australia, Canada, Denmark, Japan, Jersey, Mauritius, United Kingdom, United States and Netherlands. African countries that have so far confirmed attendance include Zimbabwe, South Africa, Nigeria, Tanzania, Kenya and Burundi.
Commenting on the expected bumper attendance, IAGR said the amazing diversity elevates the conference to a whole new level, which will enrich discussions with a tapestry of regulatory perspectives and insights.
Botswana won the bid to host this yearâ€™s conference last year in Melbourne, Australia. The IAGR consists of representatives from gaming and gambling regulatory organizations from around the world; with a common mission to advance the effectiveness and efficiency of gaming regulation.
According to Gambling Authority Chief Executive Officer (CEO) Peter Kesitilwe, the Authority is a member of the IAGR by dictates of the Gambling Act; which compels it to align with international organizations whose objectives are to regulate gambling, and build collaboration among regulators.
â€śThe IAGR conference is held annually and hosted by different member jurisdictions. It provides opportunities for gambling and gaming regulators from around the world to engage, learn and network with industry peers through events, workshops, research, information sharing, and the development of best practices,â€ť explained Kesitilwe.
Funding requirements for the conference are shared between IAGR, the host country and conference participants. The government of Botswana has reaffirmed its commitment to supporting the Gambling Authority to host IAGR; as it is in line with its objectives of promoting the country as a Meetings, Incentives, Conferences, and Exhibitions (MICE) tourism destination.
According to Kesitilwe, the conference is coordinated by a Technical Committee of IAGR; together with a Local Organizing Committee (LOC) that comprises of representatives from the Ministries of Trade, Tourism, Foreign Affairs, Botswana Police Service and other stakeholders.
â€śWe promise to deliver this hugely important event and showcase the best that Botswana has to offer. In addition to the exchange of ideas and culture capital, the Organizing Committee will also ensure maximum benefits for the tourism, hotel and hospitality industry, entertainment, transport, telecommunications, vendors, hawkers of cultural artifacts,â€ť said Kesitilwe.
As part of preparations to host IAGR2023, the Gambling Authority recently went on a benchmarking mission to Great Britain.
â€śWhat we learnt there can assist the Gambling Authority as we enter a new era of growth and expansion. The meeting also provided a timely opportunity to catch up on preparations for IAGR2023. We are ready to host the conference and we look forward to meeting other regulators from across the world to share best practice, discuss common challenges and tackle illegal gambling,â€ť concluded Kesitilwe.
In recent years, diversity and inclusion have emerged as crucial aspects of the corporate sector. Recognising the importance of inclusivity, the Botswana Development Corporation (BDC) has taken significant steps to signal its commitment to the inclusion of all regardless of age, gender, background. By implementing a comprehensive Diversity and Inclusion policy, BDC aims to create an environment that fosters equality, attracts top talent, and promotes creativity and innovation.
BDC has demonstrated its commitment to inclusion by crafting and implementing a bespoke Diversity and Inclusion policy. This policy recognises and values the differences within its workforce, striving to create a culture of equality. By fostering an environment where all employees feel respected and supported, BDC aims to attract and retain top talent, which in turn contributes to the organisation’s overall success.
The Corporation has implemented policies and strategies that promote diversity and inclusivity in the workplace. The Diversity and Inclusion policy emphasises the value and respect for employees from diverse backgrounds, creating an inclusive environment where everyone can thrive. By having this policy in place, BDC ensures that all employees are treated fairly and have equal opportunities for growth and development within the organisation.
In the realm of inclusivity, leading firms and companies have emerged as trailblazers, championing diversity and equity by implementing progressive policies and initiatives. These organisations have made significant strides in demonstrating their commitment to inclusivity through actions that support individuals with disabilities and foster work-life balance for all employees.
Microsoft actively recruits individuals with disabilities and fosters an inclusive workplace through accommodations and a dedicated resource group. Netflix offers generous paternity leave, Unilever supports surrogate parenthood and gender-neutral caregiver benefits, while IBM provides comprehensive adoption support. Companies like Google, Apple, and Facebook establish employee resource groups to amplify underrepresented voices. Adobe prioritises inclusive workplace design, and Accenture and Deloitte focus on diverse leadership representation. These companies set a powerful example, demonstrating the value of diversity and fostering a more inclusive corporate landscape.
Rising to the challenge, BDC has also taken several measures to respond to the different needs of its work force. These measures include fostering open and respectful communication, encouraging the formation of employee resource groups or affinity networks, and promoting diverse perspectives and contributions. The Corporation has also shown its commitment to inclusivity by recruiting persons with disabilities, providing paternity leave benefits, and recognising and supporting surrogate parenthood, primary caregiver benefits regardless of gender, as well as the adoption of children. These efforts demonstrate BDC’s progressive approach to embracing diversity and supporting employees in all aspects of their lives.
By so doing, The Corporation exemplifies the essence of progressiveness, embracing inclusivity as a core value. By championing diverse talent, providing supportive benefits, and fostering inclusive cultures, BDC is part of a movement that is shaping a future where every individual is valued and empowered.
Inclusion and diversity are not only moral imperatives but also strategic investments for success. BDC’s commitment to fostering diversity and inclusion, sets an example for other organisations in Botswana and beyond. By implementing policies and strategies that create an inclusive environment, celebrating diversity, and supporting employees from all walks of life, BDC paves the way for a more equitable and inclusive corporate sector in Botswana. Embracing diversity is not only the right thing to do; it also drives innovation, boosts employee morale, and contributes to the overall success of organisations.
Choppies Enterprises Limited, a supermarket chain led by Botswana businessman Ramachandran Ottapathu, reported an increase in profit after tax which is up 3.4%, hence improving from P145 million realized in 2022, to P150 million in 2023.
The results demonstrate sustained increases in consumer demand, improved operational flexibility, efficiency, cost-effectiveness and despite stiff competition, the Group managed reduce its debt levels by paying off P263 million debt from the previous fiscal year.
The chain supermarket realized growth in Group retail sales which went up 6.5% to BWP6 433 million compared to P6 042 recorded in 2022. The growth is attributed to a broad presence across Botswana and a growing footprint in three other African countries, being South Africa, Zambia and Zimbabwe, according to a recently financial results statement.
In Pula terms, gross profit grew by 4.0% to BWP 1 359 million (2022: BWP 1 307 million) despite the challenging economic environment. Botswana and Namibia marginally grew gross profit rates while rates in Zambia and Zimbabwe declined.
During the period under review, the groupâ€™s Group net cash generated fromÂ operating activities rose by 4.5% to P484 million, this is a significant improvement when compared to P463 million recorded in 2022. This segment was boosted by strong showing from Botswana and Namibia, which performed exceptionally despite the challenging trading conditions. Furthermore, it was driven by sixteen new stores coupled with price growth of 6.8%.
As a result of the robust financial performance, the groupâ€™s total assets increased from P1 886 million to P2 177 million, while retained losses decreased from P811 million to P664 million.
Meanwhile, the Group faced a demanding economic environment characterised by stubbornly high inflation, higher interest rates and unemployment, all of which continue to constrain consumer spending and the consumerâ€™s ability to digest higher prices. Sales volumes were lower in many categories, exacerbated by competitor discounting, with cost pressures only partly recovered through price increases.
According to the audited results, the gross profit margin accordingly reduced to 21.1% from last yearâ€™s 21.6% due to higher supply chain costs, including fuel and managing prices in response to higher cost inflation and competitor discounting.
Furthermore, while expenses increased 5.1% excluding the depreciation restatement, expenses grew 9.8% partly due to new stores and inflation. Foreign exchange losses on lease liabilities of P31 million (against a gain of P28 million last year) were partly offset by foreign exchange gains on Zimbabwean legacy debt receipts of P18 million (2022: BWP15 million).
Operating profit (EBIT) reduced by 1.8% from BWP 279 million to BWP 274 million whilst Adjusted EBIT, which excludes foreign exchange gains and losses on lease liabilities, movements in credit loss allowances, Zimbabwean legacy debt receipts and the reassessment of depreciation, reduced by 7.5% as costs grew faster than gross profit.
According to the Choppies Enterprises financial statement commentary, the Group continues to manage its cash resourcesÂ and liquidity prudently with a reduction of P132 million in debt with P87 million paidÂ out of internally generated funds and the balance of P45 million paid out of the proceeds of the rights issue.
In addition, capital expenditure increased toÂ P185 million when compared to 2022 fiscal year which had recorded P122 million. This was a result of theÂ Group strategy to invest in new stores and maintaining theÂ distribution fleet.
Choppies Enterprises raised BWP50 million fromÂ leases to fund the fleet, an improvement because in 2022 only P36Â million was raised.
Despite the growth in sales, inflation and new stores, Choppies Enterprises inventory reduced by P20 million helped by more stable global supply and the benefits of implementing an inventory optimisation system.
Finally, commentary from the Choppies Enterprises Group observes that as the economies in which the Group operates recover and the new stores reach full potential, an improvement in margins is expected. â€śWith a value proposition that resonates with customers and with the cost of everyday items still stubbornly high in too many categories, more customers are choosing Choppies for the value and assortment we are known for. While we have strong and resilient brands, affordability is a growing constraint for consumers, limiting their ability to digest higher prices,â€ť reads a commentary on the Groupâ€™s Financial statement.
Choppies Enterprises Limited (â€śthe Companyâ€ť) isÂ aÂ Botswana-based investment holding company operating in the retail sector in Southern Africa. Dual-listed on the Botswana Stock Exchange (â€śBSEâ€ť) and Johannesburg Stock Exchange (â€śJSEâ€ť), its are food and general merchandise retailing as well as financial service transactions supported by centralised distribution channels through distribution and logistical support centres. Each week, approximately 2.0 million customers visit 177 stores under five formats in four countries. With annual revenue of more than BWP6 billion, Choppies employs 10 000 people and is the largest grocery retailer in Southern Africa, outside of SouthÂ Africa.
EVENTS AFTER REPORTING DATE
On 19 July 2023, Choppies acquired 76% (seventy-six percent) of the Kamoso Group for BWP2.00 (two Pula) and took cession of shareholdersâ€™ loans to the value of BWP22 million. The Botswana Development Corporation (BDC) will retain its 24% stake.
This acquisition will take Choppies to become a P8 billion business in revenue with 11 000 employees and 274 retail stores.
SNEAK VIEW: COUNTRY PERFORMANCESÂ
According to the financial results, Botswana experienced sales growth to BWP4Â 459Â million an improvement from P4 209 million recorded in 2022. This was supported by volume growth from new stores and double-digit price inflation. Sales from Botswana increased by 5.9% and like-for-like sales growth wasÂ 2.2%, as the business continued to show strongÂ resilience in an increasingly challenging economic environment. The Botswana economy continues to experience elevated inflation, high unemployment, and low economic growth.
EBITDA grew 5.8% and adjusted EBITDA was flat onÂ last year. The performance for the second half was much stronger than in the first half as our strategies, leadership and inventory optimisation system have started toÂ come to fruition.
As for the Rest of Africa being Namibia, Zambia andÂ Zimbabwe sales increased by 7.7% to PÂ 1Â 974 million, yet another improvement from 2022, which had realized P1Â 833 million sales. The increase was driven by the addition of nine new stores, inflationary increases in Zimbabwe and Zambia and volume growth in Namibia and Zambia. â€śHowever, this was offset by a very weak Zimbabwean Dollar resulting in Zimbabweâ€™s Pula sales declining by 48.3%.â€ť
Meanwhile Namibia has successfully turned around with sales growth of 60.0% and like-for-like sales growth of 14.4%. Five new stores were opened during the year. EBITDA grew 140% with EBIT loss reducing from BWP9 million to BWP2 million. Adjusted EBIT, excluding the depreciation reassessment, reduced from BWP9 million to BWP6 million.
Connectedly, Zambia continues to grow with sales up 44.7% and like-for-like sales growth of 33.3%. ThreeÂ new stores were opened during the year. While EBITDA declined by 26.4% due to the foreignÂ exchange loss on the lease liability, adjustedÂ EBITDA grew 27.1%. Adjusted EBIT declined marginally at 2.6%. Choppies Enterprises Directors are confident thatÂ Zambia will generate taxable profits inÂ theÂ foreseeable future.
Lastly in Zimbabwe, the Zimbabwean DollarÂ (ZWL) has significantly weakened especially in the last two months of the financial year. As a result of the above mentioned factors, Pula sales declined by 48.3%. EBIT and EBITDA declined by 151.6% and 125.5% respectively as cost inflation reduced margins. Adjusted EBIT and adjusted EBITDA declined 133.3% and 108.1% respectively.