Since the collapse of BCL acquisition talks between government and Emirate Investment House, disheartened Selebi Phikwe residents who had their hoped for the possible reopening of the mine now pin their hopes on the revitalization strategy. Residents want their town to be saved from becoming Botswana’s Detroit, they are demanding the promised jobs.
The Selebi Phikwe Revitalization Strategy, launched last year November was supposed to have created over 2000 jobs by the 1st quarter of 2017 according to authorities heard at a number of occasions post the mine’s sudden closure. However, we are already in the third quarter and thousands of Phikwe residents especially youth still roam the streets unemployed. As things stand the Botswana Development Corporation factory shells in Selibe Phikwe industrial sites are still as empty as they were following the 2008 pseudo investors’ relocation to Lesotho after enjoying tax holidays.
Earlier this year Minister of Infrastructure and Housing, Nonofo Molefhi who is also Member of Parliament for Selibe Phikwe East told residents in his Kgotla meetings that Phikwe locals especially the youth should prepare their C.Vs for over 2000 jobs geared up for the first payout in end of March 2017. Molefhi had announced then that an Indian tractor, machinery and equipments company was already allocated land to setup a significant employment creation firm, as well a complete plans to resurrect the textile industry.
As a shock absorbing measure and incentive for the over 5 000 miners who were axed from the mine, they were to remain in the mine houses rent free and their children’s school fees were to be paid for a year by government. In less than two months, the one year period lapses. According to the Ward Development Committees, residents have since turned to government’s Ipelegeng scheme, resulting in over flocking of the program. Since the mine’s closure, WeekendPost has discovered that Ipelegeng employees have quadrupled since the mine closure last year. This reporter has witnessed people queuing overnight in the hope of being enrolled the following morning.
The Selibe Phikwe Town Council also revealed to this publication that ever since the mine shut down requests for trading licenses per month have tripled and this also resulted in high numbers of bidders for low value tenders especially in the supplies and procurement section. According to the Business Botswana BCL Closure Impact intensive assessment Report released 2 months back this and other trends with the socio-economic space are a result of diminishing source of income within Phikwe. The taxi rank is also over crowded with influx of former BCL employees who from the observation have adopted the famous Honda Fit car for rescue and quick money from transporting people around town. “As you can see there is no business, we spend hours without a single load, we had hoped the mine will open and things back to normal,” narrated Philip Malema a taxi operator in Selibe Phikwe.
SPEDU is on top of things
After officially commissioning electrification of Motloutse river basin farms, the construction of over 100 million Platjan Bridge which is expected to open a corridor of trade, travel and tourism as well as resurrecting the Selebi Phikwe trade and exhibition show, SPEDU believes it’s on the right track.
SPEDU has been criticized for spending taxpayers’ money over the last eight years without tangible economic diversification output. However SPEDU argues that it has just been transformed into a limited and autonomous company, independent to take strategic and investment decisions. SPEDU launched their new logo last year and transformed into a more corporate entity. They have since invested in sports tourism by sponsoring a Golf tournament and the soft ball extravaganza this year. Last week SPEDU together with Selebi Phikwe Town Council delivered a trade and exhibition show which was last hosted in 2003. This was a seen a major mile stone in the transformation and revitalization quest of the Phikwe economy.
SPEDU Chief Executive Officer, Dr Mokubung Ndala Mokubung noted that revitalization was a long process that would take time to bare fruits. He said it requires collective, support and patience from residents. Mokubung reiterated that SPEDU was on top of things to get the town back to its glory years.
This past week SPEDU and Selibe Phikwe Town Council (SPTC ) signed a memorandum of understanding to launch a service delivery based 5 year agreement that will facilitate documented and monitored partnership between the two critical stakeholders. SPTC as the administration body of the town is tasked with day to day running of the town affairs from services, utilities, sanitation and so forth. SPTC Council Secretary Godimo Garemore is of the view that it was a noble resolution by the council administration to delegate investment land allocation to SPEDU because they have the acumen to do so.
“SPEDU is strategically and technically equipped to undertake this, we want all prospective investors to go through SPEDU so as they (SPEDU) assess and screen the credibility and seriousness of those investors,” he said. Deputy Council Secretary Shadrack Selelo added that it was integral for SPEDU and SPTC as complementing partners to define and officially outline the parameters of their areas of cooperation. “We have a number of projects that we will be implementing and undertaking together thus this is a blue print defining our collective journey that is just beginning, because we have a long way to go,” he said.
Mokubung observed that an uphill task lay ahead, he said the town and region needs sound investors that can setup enterprises and hire people. “This penning down of our partnership is the beginning of a long journey of economic transformation, revitalization is not an overnight event is a process and we are in the right track,” he said.
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.”
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.”
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.