Botswana Oil Limited (BOL) was established to support the Government of Botswana with achieving three broad, national economic objectives, namely ensuring the security and efficiency of fuel supply to Botswana, managing Botswana Government’s petroleum strategic reserves, and promoting active citizen involvement in the petroleum industry.
Botswana Oil is wholly owned by the Government of Botswana, represented by the Ministry of Mineral Resources, Green Technology and Energy Security, and incorporated under the Companies Act of Botswana. According to Galeboe Mmelesi, ICT Manager at BOL, the company recognised that it had to improve its operating model – including processes, data and information management – if it was to drive its performance to new levels. "Our company is set for tremendous growth over the coming years.
However, we had to be ready to scale quickly and efficiently, and for this we needed to establish best-practice processes specific to the oil and gas industry. Our SAP solution now allows us to not only scale our business, but expand into other mid to downstream oil and gas activities, helping us realise our vision of becoming a leader in the integrated oil and gas sector in Africa."
For Mmelesi, it was critical that an optimum time-to-value for the project was achieved. "We made value management part of our project management meetings from the outset, helping us continuously align our activities to the broader business objectives. A key part of improving the time-to-value was the use of SAP's Oil-in-one template solution, which allowed us to adapt an existing best-practice solution to our specific business needs. However, we needed experienced partners to help us leverage the power of this solution."
As a relatively new company, BOL made a concerted effort to contract business process specialists that were experienced not only with the oil and gas industry, but in SAP solutions as well. "Having this kind of experience on board reduced the overall pressure on the team during the implementation period. We also chose an implementation partner that could bring deep experience and expertise in the mid to downstream oil and gas industry.
Francois van Heerden, Executive Technology Advisor at Adapt IT, the SAP partner that implemented the project, said the six-month project unlocked immediate benefits for BOL. "Following the successful implementation of the new SAP solution, the client was able to improve accuracy of data and pricing, gain immediate visibility of critical business data, and automate key controls and processes. We were also able to fast-track the implementation timeline by relying on standard best practice, and brought in senior experienced SAP resources in all areas of the implementation, which minimised development time and overall project costs."
A change management strategy was implemented to on-board users and prepare them for the new system and associated processes. "By the time the project went live, users were ready and eager to use the new system, which made the switchover from the legacy system that much easier. Key to this was the effective stakeholder engagement strategy that ensured all stakeholders were informed of changes and clear in terms of expectations from the executive team. In this, effective training and adequate support mechanisms ensured a seamless switchover to the new system," said van Heerden.
Lawrence Kandaswami, Managing Director: South Africa at SAP Africa, said: “By implementing a best-practice suite of technology solutions and leveraging SAP’s global expertise in the oil and gas sector, BOL is now in the enviable position of being able to scale quickly and efficiently as the company continues its remarkable growth trajectory. This is a great example of how digital transformation can create a solid platform for the growth and success of economically-critical industries across the African continent.”
This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.
The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.
Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.
He was speaking in Parliament on Tuesday delivering Parliament’s Finance Committee report after assessing a motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.
Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.
The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.
The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.
The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.
This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.
Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.
Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.
However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.
Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.
When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.
This as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.
Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.
The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.
Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.
In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.
Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.
Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.
Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.
Acknowledging the need to draw down from GIA no more, current Minister of Finance Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”
He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”