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Matambo signs 1.5 billion loan

Minister of Finance and Economic Development, Kenneth Matambo this week inked the dotted line with the International Bank for Reconstruction and Development (IBRD) securing a loan deal that will see Botswana extracting a P1.5 billion credit to be used for water security.


IBRD is a World Bank Subsidiary and gives development aid and poverty reduction loans to middle-income developing countries. The loan is intended to be used to address water and sanitation concerns in the country. The deal will see Botswana borrowing US$145.5million for part financing the project which is estimated to cost US$160 million. Meanwhile the government will contribute US$15.5 million from its domestic resources to augment the IBRD injection.


Matambo stated that “government aims to ensure sustainable and optimal use of natural resources, including water resources to transform the economy and uplift the lives of the population.” He further stated that the project is intended at improving access to water for around 460,000 people, mostly in drought affected areas and about 177,000 people will benefit from improved wastewater treatment and sludge management systems.


He also furthered that through its support to policy and regulatory reforms in the water sector, the project is expected to contribute to the strengthening of the country’s resilience to drought conditions and the achievement of water security in the medium to long term.
“To this end, the project will contribute to reducing vulnerability of drought affected communities, improve economic opportunity, and contribute to sustainable livelihoods and a better quality of life of Botswana’s population.”Matambo said.


The project is also said to be aligned to new of the three key strategic areas of engagement for World Bank support under the country Partnership Framework (CPF) FY2016-2020The framework was approved by the Bank Board in November 2015,and  one of its objectives is to improve efficiency and sustainability of water supply and sanitation services.


Matambo further said that the drought experienced by the country was tone of the worst in the past 34 years. “The period was declared a drought in July 2015 and this declaration was extended for a second year. Persistent drought periods therefore aggravate the water balance. Our current National Development Plan therefore aims to invest considerable resources towards ensuring water security.” he noted.


Even though, the loan financing was approved in April by parliament Matambo described it “as a culmination of many months of work.” It was also not without opposition on the floor of parliament. In the parliamentary debate, the Umbrella for Democratic Change (UDC) leader, Duma Boko revealed that if his coalition rises to power in the 2019 general election, it retains the option to wash its hands of debt incurred by Botswana Democratic Party (BDP) administration against international lenders as the World Bank and International Monetary Fund.


Then, it was said that the debt will take a period of 19.5 years to service. At the time, Boko also warned international lenders that when the opposition regime rises to power, under international law as a new government it has the leeway to refuse to acknowledge debts incurred by ‘a corrupt pre-existing regime’.: “I want you to appreciate this thing for the following legal reasons now.

 

I want whoever you are dealing with to be listening to me now, whether it is the World Bank, International Monetary Fund (IMF), whoever that is going to be giving you these loans and whoever you are buying these military equipment from, I am making this statement for them here. Under Public International Law, there is something called tabula rasa; clean slate.”


He further elaborated: “When we take over in 2019, we have a choice whether we can uphold these agreements or we claim that we are a new dispensation, we are starting on a clean slate and we reject them. We can do that.” Boko warned. Boko who is also the president of the Botswana National Front (BNF) further warned the BDP leadership of prosecution and jail time if they assume power. “I am speaking to you now as a lawyer, as a jurist. I say under Public International Law, there is something we call “clausula rebus sic stantibus”.

 

Write it down so that when I try you someday in the courts, and I tell you about clausula rebus sic stantibus, you will know what I am talking about.” He further highlighted: “What it means is that conditions in 2019 would have changed so drastically because it would be a new regime; corruption free, transparent and open that will say, we reject all the agreements entered into by that corrupt pre-existing regime that we took over from; clausula rebus sic stantibus. I want you to know this. It is a principle of law. It is not politics. This is what is going to get you behind bars someday.”


Francistown West Member of Parliament, Ignatius Moswaane had also stated that in 2019, the new government has to be prepared to accept such debt adding that ‘it is normal practice.’ Francistown South MP Wynter Mmolotsi also stated that when the new government steps in will be hamstrung by massive debt incurred by BDP administration characterizing government’s priorities as misplaced.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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Global CEOs Back Plan to Unlock $3.4 Trillion Potential of Africa Free Trade Area

23rd January 2023

African heads of state and global CEOs at the World Economic Forum Annual Meeting backed the launch of the first of its kind report on how public-private partnerships can support the implementation of the African Continental Free Trade Area (AfCFTA).

AfCFTA: A New Era for Global Business and Investment in Africa outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the AfCFTA, and illustrative examples from successful businesses in Africa to guide businesses in entering and expanding in this area.

The report aims to provide a pathway for global businesses and investors to understand the biggest trends, opportunities and strategies to successfully invest and achieve high returns in Africa, developing local, sub-regional and continental value chains and accelerating industrialization, all of which go hand in hand with the success of the AfCFTA.

The AfCFTA is the largest free trade area in the world, by area and number of participating countries. Once fully implemented, it will be the fifth-largest economy in the world, with the potential to have a combined GDP of more than $3.4 trillion. Conceived in 2018, it now has 54 national economies in Africa, could attract billions in foreign investment, and boost overseas exports by a third, double intra-continental trade, raise incomes by 8% and lift 50 million people out of poverty.

To ease the pain of transition to its new single market, Africa has learned from trade liberalization in North America and Europe. “Our wide range of partners and experience can help anticipate and mitigate potential disruptions in business and production dynamics,” said Børge Brende, President, and World Economic Forum. “The Forum’s initiatives will help to ease physical, capital and digital flows in Africa through stakeholder collaboration, private-public collaboration and information-sharing.”

Given the continent’s historically low foreign direct investment relative to other regions, the report highlights the sense of excitement as the AfCFTA lowers or removes barriers to trade and competitiveness. “The promising gains from an integrated African market should be a signal to investors around the world that the continent is ripe for business creation, integration and expansion,” said Chido Munyati, Head of Regional Agenda, Africa, World Economic Forum.

The report focuses on four key sectors that have a combined worth of $130 billion and represent high-potential opportunities for companies looking to invest in Africa: automotive; agriculture and agroprocessing; pharmaceuticals; and transport and logistics.

“Macro trends in the four key sectors and across Africa’s growth potential reveal tremendous opportunities for business expansion as population, income and connectivity are on the rise,” said Wamkele Mene, Secretary-General, AfCFTA Secretariat.

“These projections reveal an unprecedented opportunity for local and global businesses to invest in African countries and play a vital role in the development of crucial local and regional value chains on the continent,” said Landry Signé, Executive Director and Professor, Thunderbird School of Global Management and Co-Chair, World Economic Forum Regional Action Group for Africa.

The Forum is actively working towards implementing trade and investment tools through initiatives, such as Friends of the Africa Continental Free Trade Area, to align with the negotiation process of the AfCFTA. It identifies areas where public-private collaboration can help reduce barriers and facilitate investment from international firms.

About the World Economic Forum Annual Meeting 2023

The World Economic Forum Annual Meeting 2023 convenes the world’s foremost leaders under the theme, Cooperation in a Fragmented World. It calls on world leaders to address immediate economic, energy and food crises while laying the groundwork for a more sustainable, resilient world. For further information,

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Electricity generation down 15.8%

9th January 2023

Electricity generation in Botswana during the third quarter of 2022 declined by 15.8%, following operational challenges at Botswana Power Corporation’ Morupule B power plant, according to Statistics Botswana Index of Electricity Generation (IEG) released last week.

The index shows that local electricity generation decreased by 148,243 MWH from 937,597 MWH during the second quarter of 2022 to 789,354 MWH during the third of quarter of 2022.

This decrease, according to the index, was mainly attributed to a decline in power supply realized at Morupule B power station. The index shows that as a result of low power supply from the plant, imported electricity during the third quarter of 2022 increased by 76.3 percent (123,831 MWH), from 162,340 MWH during the second quarter of 2022 to 286,171 MWH during the current quarter and Statistics Botswana added that the increase was necessitated by the need to augment the shortfall in generated electricity.

In the index Statistics Botswana stated that Eskom was the main source of imported electricity at 42.0 percent of total electricity imports. “The Southern African Power Pool (SAPP) accounted for 38.4 percent, while the remaining 10.1, 9.1 and 0.5 percent were sourced from Electricidade de Mozambique (EDM), Cross-border electricity markets and the Zambia Electricity Supply Corporation Limited (ZESCO), respectively. Cross-border electricity markets are arrangements whereby towns and villages along the border are supplied with electricity from neighbouring countries such as Namibia and Zambia.”

The government owned statistics entity stated that distributed electricity decreased by 2.2 percent (24,412 MWH), from 1,099,937 MWH during the second quarter of 2022 to 1,075,525 MWH during the third quarter of 2022. The entity noted that electricity generated locally contributed 73.4 percent to electricity distributed during the third quarter of 2022, compared to a contribution of 85.2 percent during the third quarter in 2022 and added that this gives a decline of 11.8 percentage points. “The quarter-on-quarter comparison shows that the contribution of electricity generated to electricity distributed decreased by 11.8 percentage points compared to the 85.2 percent contribution during the second quarter of 2022.”

Statistics Botswana meanwhile stated that the year-on-year analysis shows some improvement in local electricity generation. Recent figures from entity show that the physical volume of electricity generated increased by 36.3 percent (210,319 MWH), from 579, 036 MWH during the third quarter of 2021 to 789,354 MWH during the current quarter. According to Statistics Botswana electricity generated locally contributed 73.4 percent to electricity distributed during the third quarter of 2022, compared to a contribution of 57.7 percent during the same quarter in 2021. This gives an increase of 15.7 percentage points.

 

The entity noted that trends also show an increase in physical volume of electricity distributed from 2013 to the third quarter of 2022, thereby indicating that there are ongoing efforts to meet the domestic demand for power. “There has been a gradual increase of distributed electricity from the first quarter of 2013 to the third quarter of 2022, even though there are fluctuations. The year-on-year perspective shows that the amount of distributed electricity increased by 7.2 percent (71,787 MHW), from 1,003,738 MWH during the third quarter of 2021 to 1,075,525 MWH during the current quarter.”

The statistics entity noted that year-on-year analysis show that during the third quarter of 2022, the physical volume of imported electricity decreased by 32.6 percent (138,532 MWH), from 424,703 MWH during the third quarter of 2021 to 286,171 MWH during the third quarter of 2022. “There is a downward trend in the physical volume of imported electricity from the first quarter of 2013 to the third quarter of 2022. The downward trend indicates the country’s continued effort to generate adequate electricity to meet domestic demand, hence the decreased reliance on electricity imports.”

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