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Diamond groups, Gov’t push entrepreneurship

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.

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MD, Board in BBS battle for supremacy

12th April 2021

Botswana Stock Exchange (BSE) moved swiftly this week to suspend BBS Limited from trading its securities following a brawl between Board of Directors and Managing Director, Pius Molefe, which led to corporate governance crisis at the organisation.

In an interesting series of events that unfolded this week, incumbent board Chairperson, Pelani Siwawa-Ndai moved to expel Molefe together with board Secretary, Sipho Showa, who also doubles up as Head of Marketing and Communications.  It is reported that Siwawa-Ndai in her capacity as the board Chairperson wrote letters of dismissals to Molefe and Showa.

Following receipt of letters, the duo sought and was furnished with legal opinion from Armstrong Attorneys advising them that their dismissals were unlawful hence they were told to continue to report to work and carry out their duties.

Documents seen by BusinessPost articulate that in the meeting which was held on the 1st of April, the five outgoing board members, unlawfully took resolutions to extend their contracts by a further 90 days after April 30 2021 as they face tough competition from five other candidates who had expressed interest to run for the elections.

Moreover, at the said meeting, management explained that neither management nor the board have the authority to decline nominations submitted by shareholders or the interested parties which is in line with Companies Act and also BBS Limited constitution.

Molefe also revealed that as management they cautioned the board that it was conflicted and it would be improper for it to influence the election process as it seems they intended to do so.
“Nonetheless, in a totally unprecedented move in the history of BBSL, the board then collectively passed the unlawful resolutions below. Leading to the illegitimate decisions, the board had brazenly directed that its discussions on the Board elections should not be recorded totally violating sound corporate governance,” reads the statement released by management this week.

When giving their legal advice, Armstrong Attorneys noted that notice for the AGM should state individuals proposed to be elected to the board and directors have no legal authority to prevent the process.

Armstrong Attorneys also noted that, “due process” cited by board members are simply to ensure that the five retiring Directors avoid competition from interested candidates to be appointed to the BBS Limited board.  The law firm further opined that the resolution of the 90 day extension of term of the five directors pending re-election or election was unlawful.

Molefe expressed with regret that BBS has been suspended from trading by BSE until the current matter has been resolved. “I am concerned by this development and other potentially harmful actions on the business. As management, we are engaging with stakeholders to mitigate any negative impact on BBS Limited,” expressed a distressed Molefe.

He assured shareholders and the rest of Management that they are working very hard to ensure that the issues are being dealt with in a mature manner.  BBS which hopes to become the first indigenous commercial bank has seen its shares halted barely four months after BSE lifted the trading suspension of shares for BBS following submission of their published 2019 audited financial statements.

According to Chief Executive Officer (CEO) of the local bourse, Thapelo Tsheole said the halting of shares of BBSL is to maintain fair, efficient and orderly securities trading environment. “The securities have been suspended to allow BBS to provide clarity to the market concerning the recent allegations which have been brought to the attention of the BSE relating to the company’s Board of Directors and senior management,” said Tsheole.

Meanwhile in their audited financial statements for the year ended 31 December 2020, BBS recorded a loss of P14.6 million as at 31 December 2020 compared to the loss of P35.7 million for the comparative year ended 31 December 2019. According to Molefe the year under review was the most challenging for the bank, its shareholders and customers endured the difficult economic environment and the negative impact of the coronavirus.

He revealed that as the bank, they were forced to put in place several measures to ensure that the business withstands the impact of coronavirus and also to cushion mortgage customers from the effects of the pandemic. “Since April 2020 up to the end of December 2020, BBS assisted 555 mortgage customers with a payment holiday,’’ he said.

This is the bank whose total balance sheet declined by 12 percent from P4, 626 billion for the year ended. 31 December 2019 to P4, 088 billion as at 31 December 2020. As if things were not bad enough, total savings and deposits at the bank declined by 14 percent from a balance of P2, 885 billion as at 31 December 2019 to P2, 494 billion as at 31 December 2020.

On a much brighter side, BBSL mortgage loans and advances improved from P3, 401 billion to P3.408 billion with impairment allowance significantly improving to P78, 648 million from P102, 532 million for the year under review, representing a positive variance of 23 percent. BBS maintained a strong capital base with capital adequacy ratios of 26.32% for the year ended 31 December 2020.

Molefe was optimistic and anticipated a positive outcome during the implementation of the new BBS corporate strategy, whose main drive is commercialization of operations, which is in full force.
“It will be spurred on by the positive results we have achieved for the year ended 31 December 2020, and our planned submission of our banking license application to Bank of Botswana which we anticipate to operate as a commercial bank in the third quarter of 2021,” he alluded.

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Mphathi promises people centred, environmentally sensitive new BCL

12th April 2021
CEO of Premium Nickel Resources Botswana: Montwedi Mphathi

Chief Executive Officer (CEO) of Premium Nickel Resources Botswana (PNRB), Montwedi Mphathi, has said his company will resuscitate the formerly owned BCL assets and deliver a new, sustainable and cutting edge mining operation.

The new mine which will leverage on modern and next generation technology, will be environmentally sensitive and cognisant of the needs of its people and that of the communities around the area of influence.

In a statement last week, Premium Nickel Resources Botswana and its parent company, the Canadian headquartered Premium Nickel Resources announced that they have now completed the Exclusivity Memorandum of Understanding (MOU) with the Liquidator.

The MOU will govern a six-month exclusivity period to complete its due diligence and related purchase agreements on the Botswana nickel-copper-cobalt (Ni-Cu-Co) assets formerly operated by BCL Limited (BCL), that are currently in liquidation.

On February 10, 2021, Lefoko Moagi, the Minister of Mineral Resources, Green Technology and Energy Security of Botswana, affirmed in Parliament a press release by the Liquidator for the BCL Group of Companies, stating that PNR was selected as the preferred bidder to acquire assets formerly owned by BCL.

“This is encouraging for the company and for Botswana. Our ambition in this new project dubbed “Tsholofelo” is to redevelop the former BCL assets into a modern, environmentally sensitive, efficient NI-Cu-Co-water producer where sustainability and the people are at the forefront of the decisions we make,” said Mphathi in a statement last Thursday.

“We also understand that no matter how successful we are at building the “New BCL” , our success will only be measured at our ability to create local wealth , skills and support the continued transition of local economy to a longer term sustainable base.”

The next step during the exclusivity period will be the completion of the definitive agreement. Simultaneous to this the PNRB will be conducting additional investigative work on site to further its understanding of the potential of these assets.

Specifically the company will complete an environmental assessment, a metallurgical study, a review of legal and social responsibilities, a review of the mine closure and rehabilitation plans and an on-site inspection of the legacy mining infrastructure and equipment that has been under care and maintenance.

Mphathi said they continue to monitor the global Covid-19 developments noting that they are committed to working with health and safety authorities as a priority and in full respect of all government and local Covid-19 protocol requirements. PNRB has developed Covid-19 travel, living and working protocols in anticipation of moving forward to on site due diligence.

“We will integrate these protocols with the currently applicable protocols of Ministry of Health & Wellness as well as District Health Management Team ( DHMT) and surrounding communities,” reads a statement released by the Gaborone based Premium Nickel Resources team.

PNRB is looking to become a catalyst in participating and building a strong economy for Botswana, with a purpose where respect and trust are core to every single step that will be taken. “Our success will mean following international best-in-class practices for the protection of Botswana’s environment and the focus on its people, building partnerships and earning respect, through cooperation and collaboration,” explains PNRB on its website.

“We are committed to Governance through transparent accountability and open communication within our team and with all our stakeholders.” Mphathi, a former BCL Executive, is widely celebrated for achieving unprecedented profitability at the mine during his tenure as General Manager.

The Serowe-born mining guru obtained a Diploma in Mining Technology from Haileybury School of Mines in Canada. He later obtained a B.Eng. Mining degree from the Technical University of Nova Scotia. Mphathi went on to City University in London, UK and obtained a M.Sc. in Industrial and Administrative Sciences.

Before ascending to the top country managerial role of Premium Nickel Resources. Mphathi was General Manager of Botswana Ash (Botash), Southern Africa’s leading salt and soda ash producer.
He was at some point linked to Debswana top post, which is still to date not substantively filled following the death of Managing Director, Albert Milton, in August 2019.

With Mphathi out of the race and now leading the rebuilding of his former employer, the top post at De Beers- Botswana joint venture is likely to be filled by current acting Managing Director Lynette Armstrong, a seasoned finance executive with unparalleled experience in the extractive industry.

“We are happy to hear that former General Manager of BCL, Mr Montwedi Mphathi, has a relationship with the new Company that intends to resuscitate the mine, he is an experienced Mining Executive who knows BCL better, we want the mine to be brought back to life so that our people can be employed ” said Dithapelo Keorapetse Member of Parliament for Selibe Phikwe West recently in Parliament.

BCL was liquidated in October 2016 following a series of losses and government bailout occasioned by low Copper prices and allegedly poor Investment decisions and maladministration. Recently PNR CEO, Keith Morrison said his team of seasoned experts both from Canada and Botswana are committed to resuscitate the BCL assets and deliver a high performance mining operation.

“The World, Botswana and the mining industry have changed dramatically since mining first started at the former BCL assets in the early 1970s. The nickel-copper-cobalt resources remaining at these mines are now critical metals, required for the continued development of a decarbonized and electrified global economy,” he said.

Morrison added: “As we move forward, it is our goal to demonstrate the potential economics of re-developing a combination of the former BCL assets to produce Ni-Cu-Co and water in a manner that is inclusive of modern environmental, social and corporate governance responsibilities.”

He explained that to attain this, extensive upgrades to infrastructure will be required with an emphasis on safety, sustainability and the application of new technologies to minimize the environmental impact and total carbon footprint for the new operations.

“Our team remains committed to working with the local communities and all of the stakeholders throughout this period and we encourage anyone with questions or feedback to reach out to us directly,” he noted.

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Lucara extends sales deal with Belgian diamond cutter

12th April 2021
Lucara extends HB Antwerp’s contract Signum technologies

Lucara Diamond Corporation, the Canadian 100% owners of iconic Karowe mine, this week announced the extension of its supply deal with Belgian diamond midstream giant HB Antwerp.

The definitive supply agreement is in respect of all diamonds produced in excess. of 10.8 carats in size from its rare gem producing Karowe diamond mine located in the Boteti district of Botswana.
Large, high value diamonds in excess of 10.8 carats in size account for approximately 70% of Lucara’s annual revenue.

Though the Karowe mine has remained fully operational throughout the COVID-19 pandemic, Lucara made a deliberate decision not to tender any of its +10.8 carat inventory after early March 2020 amidst the uncertainty caused by the global crisis.

Under the terms of this novel supply agreement with HB, extended to December 2022, the purchase price paid for each +10.8 carat rough diamond is based on the estimated polished outcome, determined through state of the art scanning and planning technology, with a true up paid on actual achieved polished sales thereafter, less a fee and the cost of manufacturing.

“Lucara is beginning to see the benefits of this strategy in accessing a broader marketplace and delivering regular cash flow based on final polished sales,” said Lucara CEO, Eira Thomas on Wednesday.

“We believe these early results warrant an extension of the arrangement for at least 24 months to determine if superior pricing and market stability for our large, high-value diamonds can be sustained longer term.”

The Canadian junior miner initiated a supply agreement with HB for large stones from its Botswana Karowe mine in July 2020, after pausing its tenders shortly after the Covid-19 pandemic began.
The deal enables Lucara to sell the rough diamonds to HB at a price based on an estimate of the polished outcome, which the companies determine using diamond scanning and planning technology.
Once HB sells the goods, it adjusts the price that Lucara receives based on the actual selling price of the polished, minus a fee and manufacturing costs.

The extended supply deal will follow the same payment terms as the initial agreement, and will be in effect through to December 2022. Lucara said in a statement this week that the agreement also provides increased tax revenue and beneficiation opportunities for the government of Botswana, and creates a streamlined supply chain for Karowe’s rough.

“More than a supply agreement, this collaboration structurally embeds a new transparent and sustainable way of working in the diamond-value chain,” said HB CEO, Oded Mansori.
“For the first time, different partners of the value chain are fully aligned, sharing data and information throughout the process from mine to consumer.”

Mansori added: “We are truly proud with this innovative and straightforward collaboration that has proven itself through the volatile and uncertain reality of 2020. We are confident to achieve even better results during the term of this new contract and demonstrate the power of a true partnership.”

Lucara, which early this year secured extension of Karowe mining license to 2040, announced over P2.4 billion funding for Karowe underground mining expansion project a fortnight ago. The Vancouver headquartered top large diamond producer says this supply agreement deal extension with HB will bring about regular cash flow for Lucara using polished pricing mechanism. Furthermore, the company says the deal has potential revenue upside, particularly suited for Lucara’s large, exceptional diamonds.

In the main, Botswana will benefit increased tax revenue and additional beneficiation opportunities for the Government and communities around Karowe mine. A streamlined supply chain that achieves alignment between Lucara and HB to maximize the value of each +10.8 carat diamond produced at Karowe.

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