UK, SACU discuss new deal
Business
The United Kingdom (UK) and members of the Southern African Customs Union (SACU) have agreed to continue discussions to explore ways to ensure that the existing trade arrangement between the UK and SACU currently governed by the EU-SADC EPA will not be disrupted by the UK’s departure from the EU.
This effectively means almost all the terms and conditions of SACU’s current trade agreement with the EU – known as the SADC Economic Partnership Agreement (EPA) – would be adopted into a new trade arrangement with the UK.
According to a statement signed by Botswana’s Minister of Trade Industry and Investment, Vincent Seretse and Minister of State at the Department for International Trade, United Kingdom, The Lord Price CVO, talks are likely to focus on steps to agree an arrangement that replicates the effects of the EPA once the UK has left the EU.
“This would be a technical exercise to ensure continuity in the trading relationship, rather than an opportunity to renegotiate existing terms,” reads the statement. Ministers responsible for Trade Policy in the United Kingdom (UK), the Lord Price; Botswana, V T Seretse; Namibia, I Ngatjizeko; South Africa, Dr. R Davies; Swaziland, J C Mabuza; Lesotho Permanent Secretary of Trade and Industry, Mr F Notoane, representing the Minister of Trade; and the High Commissioner of Mozambique to South Africa, Mr P Macaringue met in Johannesburg on Wednesday 19 July 2017, to discuss the trade relationship between the UK and the Southern African Customs Union (SACU) countries, post Brexit.
The Economic Partnership Agreement (EPA) between the SADC EPA countries (Botswana, Lesotho, Namibia, Mozambique, South Africa and Swaziland) and the European Union (EU) was signed on 10 June 2016 in Kasane, Botswana. The EU-SADC Economic Partnership Agreement (EU-SADC EPA) provisionally entered into force between the SACU countries and the EU on 10 October 2016. While the UK remains a member of the EU, the EU-SADC EPA will continue to apply to trade between the SADC EPA countries and the UK.
“The UK is in the process of exiting the EU. The SACU Ministers welcomed the UK’s intention to avoid disruption for its trading partners as it withdraws from the EU. The UK re-affirmed its commitment to the trade arrangement under the current EU-SADC EPA and to maintain current market access to the UK following its withdrawal from the EU, and to ensure continuity of the effects of the EU-SADC EPA,” reads Seretse and the Lord Mark Price.
The Brexit discussions officially began this week, amid scepticism by many Britons and others that the UK will in fact leave the EU. After last year’s referendum in favour of leaving, many Britons are believed to have had second thoughts, largely because of the negative impact the prospect of Brexit has already had on the country’s economy.
UK trade minister Mark Price today dismissed the possibility of a reverse on Brexit, noting that in the recent general election, 85% of Britons had voted for parties which supported a divorce from the EU. He added that many people thought Britain’s decision to leave the EU was a sign of an inward-looking and protectionist attitude. The truth was exactly the opposite, he insisted. “We want to use the opportunity of leaving the EU to become Global Britain,” he said. The UK would trade even more with the world, to help lift people from poverty. Once the UK had dealt with the business of leaving the EU, it would seek to negotiate even better trade deals with all its partners, including SACU and SADC.
Implications of Brexit
Gerhard Erasmus writing on ‘Some Implications of Brexit for Southern African Trade Relations’ in the Tralac Trade Brief notes that exit from the EU means that most aspects of secure international agreements, including the multilateral systems of the World Trade Organization (WTO), will now have to be renegotiated.
“Apart from the huge demands on national technical capacity (which is said to be lacking), most of these negotiations will involve unknown territory and will take a long time to complete. There has never been an exit from the EU before. The uncertainty will linger and cause considerable damage to domestic and international markets and commerce.”
Erasmus further states that an exit from the European Union would also have dire consequences for development assistance. In a recent article, Kevin Watkins, a Brookings nonresident senior fellow and executive director of the Overseas Development Institute (ODI)—an international development think tank based in London— highlights the consequences of the Brexit on development assistance.
He notes that the U.K. is one of the biggest contributors to the European Development Fund, the EU’s development assistance arm, which provides funds to developing countries and regions. The U.K. currently contributes £409 million—$585 million— making up 14.8 percent of contributions to the fund (Figure 1). The fund is one of the world’s largest providers of multilateral concessional aid, with disbursements exceeding ones channeled through the World Bank’s International Development Association (IDA).
Speaking at an investment symposium on the future of Botswana exports to EU markets post Brexit and implications for trade relations earlier this year, the EU head of delegation to Botswana and SADC, Mr Alexander Baum observed that Botswana’s priority area should be to increase investments in Botswana in non-mining production. Baum noted that the economic implications of the Brexit, for the UK, EU and all third countries were difficult to assess as long as details of the exit agreement were unknown.
According to the EU Head of Delegation, the EU without the UK would contain 445 million consumers and a GDP of 16.6 trillion USD, which still made it the second largest economy after the US. Even without the UK, EU imports US$ 6.7 trillion in goods and services, which made it the largest export market for a larger number of countries. Baum had said the trade statistic for Botswana and the EU was by itself not easy to read.
"Notably many products that come to Botswana through South Africa are not recorded as trade between the EU and Botswana. The current trade flows and notably the exports are also not diversified. Botswana imports from Europe mainly semi-manufactured and manufactured goods, transport equipment and machinery including electrical machinery and chemicals including pharmaceuticals.
Botswana exports essentially diamonds, other mining products and beef. Beef represents by itself only 1.7 per cent of Botswana's exports in 2015 according to Bank of Botswana data and is exported to Europe mainly via the UK and Norway," he concluded. The same case applies for the UK, as Botswana exports mainly diamonds and beef.
Business
Botswana’s household spending to reach P62.4Bn
The UK based research entity, Fitch Solutions Group recent forecasts indicate that household spending in Botswana could increase, following the recent decline in inflation.
In the recent statement Bank of Botswana Monetary Policy Committee (MPC) noted that headline inflation decreased significantly from 4.6 percent in June to 1.5 percent in July 2023, breaching the lower bound of the Bank’s medium-term objective range of 3 – 6 percent and added that the fall in inflation was mainly due to the dissipating impact of the earlier increase in domestic fuel prices in the corresponding period in 2022. “Furthermore, inflation fell on account of the downward adjustment in domestic fuel prices effected on June 21, 2023. Inflation is forecast at 1.2 percent for August 2023 and the MPC projects that inflation will remain below the lower bound of the objective range temporarily and revert to within the objective range from the first quarter of 2024 into the medium term.”
In the recent forecasts Fitch Solutions Group noted that easing food and transport costs are expected to support strong demand for goods and services over the second half of 2023 and 2024 and boost consumer spending. “Our outlook for consumer spending in Botswana over 2023 is positive, with downward food and transport price pressures supporting easing inflation over H223 and presenting tailwinds to spending. Over 2024, we believe the Bank of Botswana will begin its rate cutting cycle due to inflation returning to a downward trajectory over Q423 and Q124, driving spending over the year.”
According to the entity household spending is expected to grow by 5.1 percent. “We forecast real total household spending (2010 prices) will grow by 5.1% y-o-y over 2023, an acceleration from 4.8% y-o-y growth in 2022. This will take real total spending up to BWP62.4bn. We project the positive growth trajectory to continue over 2024, with consumer spending growing by 4.4% y-o y.”
Researchers from the entity indicated that inflation in Botswana has begun easing due to declining food and non-alcoholic drinks, as well as transport price pressures. “In June 2023 inflation slowed to 4.6% y-o-y in June 2023, down from 12.7% y-o-y in June 2022. We believe the lagged impact of central bank monetary policy will feed through to downward inflationary pressures over the remainder of H223 and into Q124, presenting tailwinds to spending. Our Country Risk team forecasts inflation to average 6.3% y-o-y over 2023, before ending the period at 4.2% y-o-y. Over 2024, inflation will average 4.1% y-o-y, returning to the central bank’s target rate of 3-6%.”
The researchers stated that 2023/24 national budget shows that around BWP15.0bn (USD1.15bn) will be allocated towards strengthening human capital and skills development in the country, while BWP10.3bn (USD792.3mn) will be allocated for health. “This decreases the need for consumers to pay for these services out of their wages. The effects that increasing level of investment by the government into skills development and improving the health of citizens on the disposable income outlook is threefold. Firstly, the investment decreases the need for consumers to pay for these services out of their wages, and thus boosts the level of disposable income. Secondly, citizens enter the workforce with a higher level of skills and can thus command a higher wage/salary, and thirdly, with improving levels of health and access to health services, workers are able to return to work quicker and overall this improves their wage prospects and the general productivity of the labour force. These factors will provide a boost to the longer-term employment outlook in Botswana.”
Fitch Solutions Group meanwhile noted that unemployment, high interest rates and income inequality is a key risk to the consumer outlook during the second half of 2023 and 2024. “High unemployment, elevated interest rates and persistent income inequality will, however, present downside risks to demand, limiting spending growth.”
The research entity noted that the level of unemployment in Botswana remains high, at 23.8% of the labour force in 2023 and added that this is slightly below the 24.1% average in 2022. “However, despite decreasing from a peak of 24.9% and 24.7% in 2020 and 2021 respectively, unemployment has not returned to the pre-pandemic level of 22.6% in 2019. Weak investments in agriculture and manufacturing will keep employment limited with low economic diversification and high-income inequality exacerbating the risk of social stability.”
Business
Troubled Minergy terminates mining contractor in turnaround strategy
Minergy Limited, the Botswana Stock Exchange listed mining company operating Masama Coal Mine in Medie near Lentsweletau, has decided to part ways with mining contractor Jarcon, the company announced on Tuesday.
In a circular to the market Minergy revealed that it has issued a notice to terminate its mining contract with Jarcon Opencast Mining Botswana (Pty) Ltd. In the notice, Minergy Coal will terminate the mining contract in 30 days.
The company, financial backed by state owned Mineral Development Corporation (MDC) and Botswana Development Corporation (BDC), said termination of the mining contract is “in line with the strategic intent of the Board of Directors and the financiers of Minergy, to stabilise operations and bring the business to sustainable profitability”.
During this transition period, arrangements have been made to ensure business continuity and minimal disruption in coal supply to clients, by inter alia using stock holdings available.
The market was further informed that the process of appointing a new mining contractor is at an advanced stage and a final decision will be communicated in due course.
Minergy operates a privately developed coal mine in Medie near Lentsweletau, the company has been facing financial challenges recently leading to operational slow down early this year due to unsettled debt to mining contactor. MDCB later came to the rescue, bailing out the company to ensure business continuity.
According to letters to employees dated 25 August 2023, seen by this publication, Jarcon, Masama’ s mining contractor has warned its employees of possible job cuts as Minergy financial challenges persists, citing reduction in demand for coal and fall in prices for the product.
Last week Minergy announced that Chief Technical Officer at Mineral Development Company Botswana Mr Matthews Bagopi has been seconded to Minergy Coal as interim lead following the resignation of Minergy Chief Executive Officer Mr. Morné du Plessis.
Minergy said du Plessis tendered his resignation to pursue other interests. Mr. du Plessis will however remain available and dedicated to Minergy during his notice period ending 30 November 2023.
Bagopi is tasked with ensuring augmented management capacity at the mine and ensure business continuity.
An alumnus of Camborne School of Mines, Mr. Bagopi is described as a seasoned mining professional with over 30 years of experience in the industry in various mining commodities, starting his career at graduate level and ascending to executive management.
Mr Bagopi has been instrumental and at the leading edge of developing coal markets for Botswana coal at Morupule Coal Mine in the region as well as internationally.
He brings forth a well-established network of strategic partnerships and collaborations in the industry, ranging from operations, technical, commercial and business development, projects development, having paved the path for the development of MCM corporate strategy, before joining the MDCB as Chief Technical Officer, overseeing technical aspects of MDCB’s mining investment.
Masama has capacity to produce 1.5 million tonnes of coal per year and is the smaller of two coal mines currently in operation in Botswana, the other being the state-owned Morupule Coal Mine, with 4.2 million tonne capacity.
Minergy’s latest annual report shows that as of June 2022, the company owed the mining contractor 79 million pula after a debt restructuring exercise. It also owed BDC 125 million pula and MDCB some 295 million pula.
Strong demand, mostly from Europe due to the fallout from Russia’s invasion of Ukraine, drove Minergy’s exports up 53% in the half-year to Dec.31, boosting its earnings and helping it to reduce debt.
However, weakening coal prices and logistical challenges it faces when hauling coal from landlocked Botswana to export markets have impacted Minergy’s earnings.
Business
How Value-Based Care Can Revitalise HealthCare
Dr. Malebogo Kebabonye, Bomaid Chief Clinical Services Officer
The healthcare system is a crucial and yet fragile one, in any scenario we look at it within. The reality we face is an overburdened healthcare system, taking an even greater toll since the COVID-19 pandemic. The pressure gaps and issues we face are now clearer than ever before to see, and the time to act is now. At the same time, as we look at this healthcare crisis, we recognise it is not for Botswana alone to experience, not to solve – this is a global phenomenon we are seeing in many markets. But how are we solving for it? And is the onus on healthcare providers alone?
The concept of value-based healthcare is fast becoming a go-to, and with good reason. However, it is not new. Indeed, it has been around for some time and has been a primary focus for work delivered by, for example, the World Economic Forum (WEF) and even the World Health Organisation (WHO). Value-based care ties the amount health care providers earn for their services to the results they deliver for their patients and aims at promoting quality of care over the quantity of services. There is less focus on frequency of healthcare interventions or doctor visits, and rather, priority is placed on the quality of care and the progress experienced for the customer or patient. Ultimately, this approach improves overall health and wellbeing of the population and has proven effective in such markets as Kenya, the US, the UK, and in the public sector of Botswana.
According to the World Economic Forum, “The widely accepted definition of value in healthcare is the health outcomes that matter to patients relative to the resources or costs required to deliver those outcomes. Value-based healthcare is an approach that aligns industry stakeholders (payers, providers, pharma/MedTech and policymakers) around a shared objective of improving patient health outcomes, providing autonomy and accountability to providers to pursue the best way to deliver healthcare for the money spent. The transition from volume-based to value-based healthcare will inevitably lead to more healthy societies while optimising resources
As Bomaid, we have adopted the Value Based Care approach locally, it is in line with one of our key strategic pillars of improving holistic wellness which is patient centred and anchored in Primary Health Care. It helps better manage healthcare costs which are ultimately borne by customers through annual subscription increases and other out of pocket expenses, recognising that medical providers alone are not the only agents of change in this space – medical aid providers are crucial to supporting the wider ecosystem growth and betterment.
Patient centered care or personalised care, on the other hand, focuses on the individual’s particular healthcare needs. The goal of patient-centered healthcare is to empower patients to become active participants in management of their care. Core to the principles of patient centred care is personalisation and individual accountability towards one’s own health. Value-based healthcare focuses on maximising patient healthcare outcomes and harnessing resources to better deliver on this while reducing inequity in health outcomes and promoting high impact interventions. This is, ultimately, what Bomaid strives to do in working towards delivering, first things first, health, happiness and holistic wellbeing.
So how do we deliver on a value-based healthcare sustainably and meaningfully?
It begins with mindset, yes. But this is swiftly followed by many tangible factors too: the right systems; the right infrastructure; the right resources; The right regulatory environment. It means putting holistic patient wellbeing and health first, as well as removing inefficiencies that would otherwise result in cost burdens on patients, as well as unimproved health outcomes – always being ill, never seeing real recovery.
The WEF further notes, “This high-cost burden can, in part, be the consequence of inefficiencies in the healthcare system, such as fragmented and uncoordinated care delivery, poor data governance, workforce shortages and underinvestment in preventive care. The OECD estimates that up to 20% of healthcare spending across its member countries is unnecessary or ineffective. Accordingly, spending more doesn’t always lead to improved patient outcomes. So, addressing these inefficiencies would help reduce costs and make healthcare more equitable and accessible.”
As we strive for healthier, happier people across the nation, how do we help leverage value-based care to ensure better healthcare outcomes are the only acceptable result, and that we help ensure quality and relevant, appropriate healthcare is equitable, accessible, and inclusive?
It is not for us to suggest our approach is by any means a silver bullet, but it is one worth exploring, because the global results speak for themselves. Now, how do we collectively mobilise in recognition of the fact that some discomfort for the industry now means progress for our patients and customers? This, after all, remains our priority.
Aligned to the Botswana Government through the Ministry of Health strategic agenda for Primary Health Care Revitalisation, the time is now to refocus the Private Health Care system towards a value based care to create sustainability and resilience in our health sector as a country.
Dr. Kebabonye ( Bomaid Chief Clinical Services Officer) is a public health specialist who joined Bomaid in 2023 as Chief Clinical Services Officer. In this role, she is mandated to develop and implement clinical strategies and policies which support the business in providing healthcare solutions, finding access to affordable leading-edge healthcare and innovations. This works to help enable healthier, happier lives through proactive and preventative products to attract younger healthier clients, whilst still providing reactive rehabilitation healthcare solutions.