Efforts to develop entrepreneurship and facilitate the ease of doing business in Botswana are evidently bearing fruits as different stakeholder, Gov’t s continue to come on board to complement government programs.
This past week Anglo American, Debswana, De Beers Global Sightholder Sales and Ministry of Investment Trade and Industry (MITI), partners of Botswana Government in the lucrative diamond mining industry went an extra mile in giving back to the economy of Botswana beyond mineral sector profit making partnership. The companies signed a Memorandum of Agreement (MoU) to underpin the continued expansion of Tokafala Enterprise Development programme.
On the other hand Botswana’s company registration body, Companies and Intellectual Property Authority (CIPA) and tender awarding institution, the Public Procurement and Asset Disposal Board (PPADB) joined hands to enhance and promote the ease of doing Business in Botswana. All these undertakings are viewed as watershed milestone achievements that will fast track economic development in Botswana and deliver much needed diversification and job creation through Foreign Direct Investment and Domestic entrepreneurship development.
The P40 million Tokafala initiative
Small Micro, Medium Enterprises (SMMES) are regarded as new economic language for developing countries. Encompassing small scale business, community cooperatives, hawkers, roadside traders and medium scale businesses SMMEs give over 30% of Botswana’s workforce the breadwinner status. Currently contributing over 20% to Botswana‘s economy the SMME sector is viewed as an integral role player in Botswana‘s economic path. However this sectors faces challenges that hinders it to flourish, from financial limitations, lack of technical ability amongst others.
In response to these challenges the Government of Botswana and the De Beers Group of Companies established a partnership to implement a 3-year Enterprise Development Programme, called Tokafala. Designed as a collaborative effort, Tokafala aims at promoting economic diversification and job creation in Botswana by catalyzing the growth of micro, small and medium companies (SMMEs) through personalized business mentoring, advisory support tailored to specific needs of enterprise and facilitating access to finance and markets for clients.
The program builds on Anglo American’s extensive experience and successes in enterprise development, tailored to the specific Botswana context. It is aligned with the Ministry of Trade and Industry’s EDD strategy of economic diversification in Botswana and the poverty eradication undertakings in the office of the president. Established as a pilot project in 2014 the initiative is said to have already output tangible results of revenue growth amongst assisted enterprises. The program targeted 600 micro enterprises, 445 small enterprises and 9 to 15 medium enterprises, with the ultimate objective of sustaining up to 6 000 jobs and creating 400 new jobs.
So far the program has recorded impressive growth in terms of increased revenues and jobs, as per the rate of success recorded by the enterprises that had been enrolled in the mentorship and advisory services. This included strong revenue growth, with enrolled enterprise growing revenues by an average of 39 % . Micro-sized businesses were the biggest beneficiaries, growing by an average of 260 % during this period. In addition, the program has supported more than 1,500 jobs, including the direct creation of more than 280 jobs. Participants have also received significantly improved access to finance, with more than BWP11 million being accessed from commercial sources.
Giving a keynote address at the signing of the MoU, Permanent Secretary in the Ministry of Investment trade & Investment (MITI), Ms Peggy Serame said the signing of the new MoU establishes principles of cooperation under which partners will work together to continue expanding the programme to support the growth of (SMMEs) in Botswana. She said that it will also extend to capacity building of select government enterprise development institutions. Serame said this would reinforce cooperation among participating partners and lead to further possibilities to achieve common goals of creating globally competitive enterprises for economic diversification.
The collaboration between Government and the Group of Companies started in November 2012. The basis for this engagement according to Serame was “the Economic Diversification Drive Strategy, whose main objective is to develop globally competitive and sustainable enterprises”. She shared that the programme for the past 3 years since its inception was implemented under the financial support of partners, revealing that it has now been accommodated for in the country‘s National Development Plan (NDP) 11. “Financial provision has been made in NDP 11 to continue with the implementation of the programme.”
Along with continued contribution from the partners the program will now run at a budget of over P40 million. It was also explained that the program assists various types of businesses across all sectors including enterprises from retail and hospitality, information and communication, services and consultancies and industrial goods and services sub-sectors. “More than 70 per cent are small enterprises, 20 per cent are micro, while 10 per cent are medium enterprises,” said Serame.
According to De Beers Botswana chairman and De Beers’s global sightholder sales Residence Director, Mr Neo Moroka, the Tokafala programme has delivered significant success for a number of emerging businesses in Botswana since its commencement. Moroka observed that the memorandum of understanding was also aligned to the country’s Vision 2036 for sustainable economic growth.
Chief Executive Officer of Anglo American, Mark Cutifani noted that a strong and vibrant business community benefits the whole of Botswana. “Through the Tokafala programme, and our strong partnership with government, we are providing a pathway to enable motivated small and medium-sized businesses realize their growth potential and contribute to a strong and diversified economic future for Botswana,” he said. Bruce Cleaver, CEO of De Beers Group added that as longstanding partners, Botswana’s interests were also De Beers’s interests. Cleaver noted that through this MoU, the partnership will be able to support even more Botswana enterprises to achieve commercial success through improved market access, supply chains and access to finance.
The Managing Director of Debswana Balisi Bonyongo said that his company was pleased with the success of the Tokafala programme to date. “We are looking forward to the next phase of the program, part of which will focus on Debswana mining sites. We believe this is critical as it adds enterprise and business development to the legacy that we would like to leave in the areas around our mines and across Botswana in general,” said Bonyongo. The Permanent Secretary in the Ministry of Investment, Trade & Industry also added that the signing of the Memorandum of Understanding was a testimony of the importance of Public Private Partnership in the economic development of any country.
PPADB and CIPA join hands
The Public Procurement and Asset Disposal Authority (PPADB) and Companies & Intellectual Property Authority (CIPA) have also signed a memorandum of understanding to facilitate and enhance the ease of doing Business in Botswana. CIPA and PPADB are both integral role players in the entrepreneurship and business space. CIPA registers companies and businesses allowing them to operate in Botswana while PPADB facilitates and conducts and awards all purchasing tenders and procurements of government and parastatals.
Speaking at the MoU signing, the PPADB Executive Chairman, Bridget John said the cooperation between PPADB and CIPA was crucial to ensure dialogue and exchange of views geared at serving businesses better. She said in order to do business with government companies must be registered and compliant with CIPA thus cooperation was imperative and mandatory. John explained that in order to ensure that provisions of the MoU are put to practice a joint committee of PPADB and CIPA executives would be set up to enhance ease of agreement implementation.
Conductor Masena, who is the CIPA Registrar General observed that the signing of the MoU was a milestone of achievement for the cooperation of the two entities. Masena said there were certain business areas and opportunities that were deliberately reserved for Batswana to empower their entrepreneurial endeavours and improve their socio-economic wellbeing. “Our cooperation with PPADB will ensure that we adequately implement and monitor this initiative and also make sure that Batswana fully benefit from this dispensation.
Elijah Motshepi PPADB Executive Director said there was an uphill task to ensure that the provisions of the MoU are put to practice, he urged members of the two organizations to work together towards achieving one goal of a more diversified Botswana with improved economy led by Private sector.
Botswana’s economy showed slight growth signs in the first quarter of 2021, following a devastating year in 2020.
During 2020, the entire second quarter was on zero economic activity as the country went on total lockdown in an effort to curb the spread of the virus.
Diamond trade plummeted to record low levels as global travel restrictions halted movement of both goods and people and muted trade.
The end result was a significant decline for the local economy, at an estimated 7 percent contraction, just marginally below the 2008/09 global financial crises.
According to figures released by Statics Botswana this week, the country’s nominal Gross Domestic Product for the first quarter of 2021 was P47.739 billion compared to a revised P45.630 billion registered during the previous quarter.
This represents a quarterly increase of 4.6 percent in nominal terms between the two periods.
During the quarter, Public Administration and Defence became the major contributor to GDP by 18.4 percent, followed by Wholesale & Retail by 11.4 percent. The contribution of other sectors was below 6.0 percent, with Water and Electricity Supply being the lowest at 1.6 percent.
Real GDP for the first quarter of 2021 increased by 0.7 percent compared to a contraction of 4.6 percent registered in the previous quarter.
The improvement in the first quarter 2021 GDP reflected continued efforts to reopen businesses and resume activities that were postponed or restricted due to the COVID-19 pandemic.
The real GDP increased by 0.7 percent during the period under review, compared to an increase of 1.2 percent in the same quarter of 2020.
The recovery in the domestic economy was observed across majority of industries except Accommodation & Food Services, Mining & Quarrying, Manufacturing, Construction, Other Services and Agriculture, Forestry & Fishing.
The overall slow performance of the economy was mainly due to the impact of measures that were put in place to combat the spread of the COVID-19 pandemic.
The Non-mining GDP increased by 4.1 percent in the first quarter of 2021 compared to 4.0 percent increase registered in the same quarter of the previous year.
Agriculture, Forestry and Fishing industry decreased by 2.0 percent in real value added during the first quarter of 2021, relative to a contraction of 5.2 percent registered during the same quarter of 2020.
The main driver of the unfavorable performance stems from a decrease in real value added of Livestock farming by 3.0 percent.
Mining and Quarrying registered a decrease 11.4 percent in the real value added, this was mainly influenced by the drop in the Gold and Diamond real value added by 17.5 and 12.5 percent respectively.
Diamond production in carats went down by 12.1 percent while the tonnage of Gold produced went down by 17.5 percent.
The poor performance of the diamond sub-industry is attributed to the reduction in production due to a lower grade feed to the plant at Orapa in response to heavy rainfall and operational issues, including continued power supply disruptions.
With regard to Gold is due to diminishing resource base which affect production.
The Manufacturing industry recorded a decline of 7.4 percent in real value added during the first quarter of 2021, compared to a decrease of 2.3 percent registered in the corresponding quarter of 2020.
The deep low performance in the industry is observed in the two major sub-industries of Beverages & tobacco and Diamond cutting, polishing and setting by 57.0 and 38.5 percent respectively.
The reduction in Beverages is attributed to alcohol sale ban imposed during the quarter under review in order to reduce the spread of the COVID-19 virus. On the other hand, exports of polished diamonds went down by 24.9 percent compared to a decrease of 11.5 percent registered in the same quarter of the previous year.
The construction industry recorded a decline of 4.8 percent compared to an increase of 4.3 percent realized in the corresponding quarter in 2020.
This industry comprises of buildings construction, civil engineering and specialized construction activities. The industry is still showing signs of the consequences of COVID-19 pandemic. The industry recorded a negative growth of 7.4 percent in the previous quarter.
Water and Electricity Water and Electricity value added at constant 2016 prices for the first quarter of 2021 was P506.2 million compared to P378.2 million registered in the same quarter of 2020, recording a growth of 33.8 percent.
In the first quarter of 2021, Electricity recorded a significant growth of 62.4 percent compared to a decrease of 67.6 percent recorded in the corresponding quarter of 2020.
The local electricity production increased by 22.4 percent while Electricity imports decreased by 33.3 percent during quarter under review. The water industry recorded a value added of P231.3 million compared to P209.0 million registered in the same quarter of the previous year, registering an increase of 10.7 percent.
Wholesale and Retail Trade real value added increased by 11.4 percent in the first quarter of 2021 compared to an increase of 5.5 percent registered in the same quarter of the previous year. The industry deals with sales of fast moving consumer goods.
Diamond Traders recorded a significant growth of 112.7 percent as opposed to a decline of 22.7 percent recorded in the corresponding quarter last year. The positive growth is due to improved demand of diamonds from the global market.
The Transport and Storage value added increased by 0.6 percent in the first quarter of 2021, compared to a 2.4 percent increase recorded in the same quarter of the previous year.
The slight improved performance of the industry was mainly attributed to the increase in real value added of Road Transport and Post & Courier Services by 4.3 and 2.1 percent respectively.
The slow growth was influenced by a significant reduction in Air Transport services of 69.7 percent due to reduced number of passengers carried. Rail goods traffic in tonnes went down by 6.4 percent and passenger rail transport was not operating during the quarter under review.
Accommodation and Food Services Accommodation and Food Services real value added declined by 31.7 percent in the first quarter of 2021 compared to a decrease of 4.4 percent registered in the same quarter of the previous year. The reduction is largely attributed to a decrease of 42.1 percent in real value added of the Accommodation activities subindustry.
The suspension of air travel occasioned by Covid-19 containment measures impacted on the number of tourists entering the borders of the country and hence affecting the output of Hotels and Restaurants industry. COVID-19 restriction measures resulted in reduced demand for leisure and conferencing activities, as conferences are largely held through virtual platforms.
Finance, Insurance and Pension Funding industry registered a positive growth of 8.3 percent due to the favorable performance from monetary intermediation and Central Banking Services by 16.4 and 5.4 percent respectively during quarter under review.
It is still tough in the tourism industry — big players in this sleeping giant are not having it easy, but options are being explored to keep the once vibrant multibillion Pula sector alive until the world gets back to normalcy.
One of the primary measures against the spread of Covid-19 is to stay home; this widely pronounced precaution against the global contagion that has claimed over 4 million lives across the world is however a thorn in the flesh of one of the major industries in the global economy — the tourism sector .
This sector is underpinned by travel – an act which is the virus‘ number one mode of spread, especially across borders.
Chobe Holdings Limited, one of Botswana’s leading high end eco-tourism giants said its survival strategies are underpinned by well-crafted stakeholder engagements in the mist of these unprecedented times of muted trading activity.
“Throughout the COVID-19 pandemic, Chobe continued to invest in and strengthen its relationships with key stakeholders in both its traditional markets and the SADC region,” the company directors updated shareholders this week.
To keep the business afloat, the company which owns and operates some of the exquisite tourism destinations along the banks of the mighty Chobe said it has triggered its existing available debt financing avenues.
Chobe revealed that its current overdraft of BWP 25 million has been extended on favourable terms.
The company shared that it has negotiated a further USD 1.5 million (over P16 million) standby loan with a flexible settlement terms and preferable cost implications to the bottom line.
“We are confident that the Group has sufficient cash inflows, cash reserves and un-utilized prearranged borrowing in place to settle any liabilities falling due and support the smooth recovery of operations in the short and medium term,” the company directors said, noting that they will retain the flexibility to vary operations should market conditions change.
Early this year, Chobe announced that the ongoing crisis in the tourism industry forced the company to draw from its prearranged overdraft facility of P25 million to the extent of P11.6 million.
Last year Chobe’s occupancy levels around its lodges and hotels went down 89 percent. This resulted in unprecedented revenue decline of 93% to P27.78 million from the P373.94 million in the previous year ended February 2020.
Operating profits went down 159% with profit after tax down 170%, mirroring a loss of over P67 million.
Chobe management said during the last half of the financial year they have done all they could to contain costs across the company’s operations.
During the last half of the year Chobe’s marketing and reservations teams continued to pursue the “don’t cancel but defer policy”.
“We thus continue to hold advance travel receipts, to the value of about P34 million at the financial year end,” the company revealed early this year.
Chobe said it continues to engage Government, through HATAB and BTO to prioritize the vaccination of workers in the tourism sector.
“Throughout the pandemic we have ensured that employees are trained in and comply with COVID-19 infection mitigation protocols as well as ensuring that all visitors to our remote camps and lodges as well as our staff and contractors are tested for COVID-19 before reaching the camp or lodges,” the company said.
However, the company said vaccinating the tourism staff will provide the best way to ensure that both employees and guests are protected from the virus.
“We continue to manage our cashflow through stringent cost control measures, balanced against the protection of the Group’s physical assets and the wellbeing and retention of its people,” the company said.
Chobe has successfully retained its top management through the pandemic. To this end the company directors continue to closely monitor the Group’s recovery from COVID-19 and adjust salary reductions to support operations and aid retention.
Domestic and regional travel resumed during the second quarter of the 2020/21 financial year with the Group opening a strategic mix of camps and lodges.
A comprehensive domestic, regional and international marketing plan was put in place to support these openings.
International travel resumed in the first quarter of the 2021/22 financial year with occupancies forecast to steadily increase, albeit from a low base, through the second quarter.
The company is optimistic that forward bookings are strong for the 2022/23 financial year.
“There is pent-up demand from our traditional source markets to travel now, but this is tempered by uncertainty and access constraints,” the company stated.
“Both the domestic and international markets are sensitive to such uncertainty, and it is critical that both the private and public sector work together to develop and publish clear, authoritative and consistent travel information in order to build confidence”
Chobe entered the pandemic with the Shinde camp rebuild in progress — one of its high end camps and this was completed in the first half of the 2020/21 financial year accounting for the majority of the Group’s capital expenditure for that period.
De Beers Group, the world’s leading rough diamonds producer by value and Botswana’s partner in the diamond business, ramped up its production in the second quarter of 2021, in response to stronger demand for rough diamonds in the global markets.
The London headquartered diamond mining giant revealed in its production report this week that rough diamonds output increased by 134% to 8.2 million carats in the three(3) months of quarter 2 2021, “reflecting planned higher production to meet stronger demand for rough diamonds”.
This was against the backdrop of curtailed demand in the same quarter last year, mirroring the impact of Covid-19 lockdowns across southern Africa during that period.
In Botswana, where De Beers sources majority of its rough diamonds through partly government owned Debswana, production increased by 214% to 5.7 million carats. The percentage jump mirrored planned low production in the second quarter of 2020 where output was adjusted to market demands and implemented Covid-19 protocols.
Debswana operates four (4) Mines: Jwaneng Mine- being its flagship producer and largest revenue contributor. Jwaneng Mine which is the wealthiest diamond mine in the world by value is envisaged for multi-billion expansion to an underground operation in future to stretch its existence by few more decades.
The underground project which is anticipated to cost a whooping P65 billion will be the world‘s largest underground diamond mine.
The company which accounts for over 65 % of De Beers’s global production also operates Orapa Mine- one of the world’s largest by area, Letlhakane Mine currently a tailings treatment operation and Damtshaa Mine which is under care and maintenance following market shrink in 2020.
Namibia production decreased by 6% to 0.3 million carats, primarily due to planned maintenance of the Mafuta vessel which was completed in the quarter and another vessel remaining demobilized. In Namibia De Beers sources diamonds both in land and marine through Namdeb and Debmarine respectfully.
In South Africa-the spiritual home ground of De Beers Group, production increased by 130% to 1.3 million carats, due to planned treatment of higher grade ore from the final cut of the Venetia open pit, as well as the impact of the Covid-19 lockdown in Q2 2020.
Production in Canada increased by 14% to 0.9 million carats, primarily reflecting the impact of the Covid-19 measures implemented in Q2 2020.
De Beers said consumer demand for polished diamonds continued to recover, leading to strong demand for rough diamonds from midstream cutting and polishing centers, despite the impact on capacity from the severe Covid-19 wave in India during April and May.
Rough diamond sales totaled 7.3 million carats (6.5 million carats on a consolidated basis), from two Sights, reflecting the impact of the reduced Indian midstream capacity on Sight 4, compared with 0.3 million carats (0.2 million carats on a consolidated basis) from two Sights in Q2 2020, and 13.5 million carats (12.7 million carats on a consolidated basis) from three Sights in Q1 2021.
The H1 2021 consolidated average realized price increased by 13% to $135/ct (H1 2020: $119/ct), driven by an increased proportion of higher value rough diamonds sold.
While the average price index remained broadly flat, the closing index increased by 14% compared to the start of 2021, reflecting tightness in inventories across the diamond value chain as well as positive consumer demand for polished diamonds.
Full Year Guidance Production guidance is tightened to 32–33 million carats (previously 32-34 million carats (100% bases)), subject to trading conditions and the extent of any further Covid-19 related disruptions.
When commenting to 2021 quarter 2 production figures, Mark Cutifani, Chief Executive of Anglo American- De Beers parent, said the entire Anglo American Group delivered a solid operational performance supported by comprehensive Covid-19 measures to help safeguard the lives and livelihoods of its workforce and host communities.
“We have generally maintained operating levels at approximately 95% of normal capacity and, as a consequence, production increased by 20% compared to Q2 of last year, with planned higher rough diamond production at De Beers” he said.