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Economic report card

The Bank of Botswana Annual Report for the year ended December 2016, which was released and shared with cabinet early this week on Tuesday has highlighted that the bank was successful in the implementation of its work programmes and, in general, achieved its policy objectives during 2016.


The Report provides a summary of the operational activities and audited financial statements of the Bank for the period ended December 31, 2016. According  to an overview available on Bank of Botswana website, the report outlines the accountability framework for the Bank’s performance which include  functions and responsibilities from conducting  of monetary policy, maintaining financial stability, implementation of the exchange rate policy, the design and issuance of currency, management of foreign exchange reserves to  regulation and supervision of banks, oversight of the payments systems and provision of banking and settlement services to Government, commercial banks and other  financial institutions as well as economic research and policy advice.


According to Governor, Moses Pelaelo in his foreword, 2016 was of special significance to the Bank in several ways. “The banking industry remained sound, prudently managed, solvent, liquid and profitable. All licensed banks met the minimum prudential requirements as set out in the Banking Act and Banking Regulations. The industry’s profitability was due to the increase in both net interest income and non-interest income.”


Further, the report contains a theme topic titled Botswana’s Trade Pattern, International Investment and Regional Economic Integration: Opportunities for Industrial Development and Inclusive Growth. “The topic reviews Botswana’s external sector, in particular, trade and investment performance, related institutional and policy support, and suggests opportunities that should be exploited through trade and industrial policies to stimulate sustainable economic diversification, inclusive growth and job creation,” reads the statement signed by the recently appointed Pelaelo.


However, according to the statement, as in the previous year, the domestic and external environment was less favourable and uncertain. Global economic activity was weak in 2016 relative to 2015, with varying performance across countries and regions. In   August 2016 the Bank rate was reduced by 0.5 % point to 5.5 percent due to a positive medium-term outlook for inflation and a stable financial environment which provided scope for monetary policy easing to support economic activity.

 

The monetary policy easing was undertaken moreover, to encourage productive commercial bank lending and market efficiency, as well as alleviate the cost of liquidity absorption. The 2016 report also states that due to  projected low inflation in Botswana compared to trading partner countries, the nominal effective exchange rate (NEER) of the Pula crawled upwards by 0.38 percent during 2016, while the Pula basket weights were 50 percent each for the South African rand and the Special Drawing Rights (SDR). ”However, the real effective exchange rate (REER) depreciated by 0.8 percent in 2016, as the upward rate of crawl was smaller than the inflation differential between Botswana and its trading partner countries.”


The banking sector was adequately capitalized, profitable and liquid as at December 31, 2016. The industry’s compliance with the regulatory and prudential requirements was satisfactory. Most banks reported higher levels of profit compared to the previous year, with the exception of Standard Chartered Bank, First National Bank, Bank of India and Bank SBI.


According to the governor,  the banking sector’s balance sheet increased by 5.2 %  from P76.7 billion in December 2015 to P80.7 billion in December 2016. The 4.1 percent and 8.7 percent growth in total deposits and capital, respectively, supported the increase in government bonds, treasury bills and gross loans and advances. “Even so, annual credit growth slowed from 7.1 percent at the end of 2015 to 6.2 percent at the end of 2016 because of the slower rate of increase in lending to both households and businesses,” Pelaelo observed.


Notably the bank ‘s financial performance fell tremendously as the Bank’s total assets fell by P7.8 billion to P77.6 billion in December 2016, of which P76.8 billion (P84.9 billion in 2015) was foreign exchange reserves. “The reserves were equivalent to 17 months of imports of goods and services.

 

The decrease in foreign exchange reserves, in Pula terms, reacts a drawdown in the Government Investment Account, market and currency valuation losses, the latter being due to the appreciation of the Pula against currencies in which the reserves are held.” The Bank’s net income for the year 2016 also fell to P1.4 billion, compared to P9.1 billion in 2015, however 2016 saw the Bank register currency gains of P2.2 billion from the Currency Revaluation Reserve, the net distributable income was P3.6 billion, which was higher than the P2.3 billion given to Government in 2015.


The Bank of Botswana Governor states in the report that the focus on skills development, through appropriate short and long-term training programmes, and staff welfare improvement was maintained with a view to sustaining the Bank’s operational and leadership capability and productivity.


According to the statement, Botswana Certificates (BoBCs) decreased from P8.2 billion at the end of 2015 to P7.9 billion in December 2016. Repurchase Agreements (repos) and reverse repos were used during the year to manage liquidity in between BoBCs auctions, resulting in outstanding reverse repos of P1.3 billion at the end of 2016 compared to P1.7 billion in December 2015.


As in 2015, there were no outstanding repos at the end of 2016 The 14-day BoBC weighted average yield decreased from 0.97 percent in December 2015 to 0.84 percent in December 2016, while the yield on the 91-day BoBC decreased from 1.17 percent to 1.01 percent in the same period. The prime lending rate of the commercial banks decreased from 7.5 percent in 2015 to 7 percent in 2016 in line with the Bank’s decision to reduce the Bank Rate by 0.5 percentage points during the year. Meanwhile, the nominal 3-month (88-day) deposit interest rate decreased from 2.5 percent in December 2015 to 2.03 percent at the end of 2016.

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Business

The Bulb World starts operations in South Africa

8th April 2021

Homegrown LED light manufacturing company, The Bulb World, has kick started operations in South Africa, setting in motion the company’s ambitious continental expansion plans.

The Bulb World, which was partly funded by Citizen Entrepreneurial Development Agency (CEDA) at the tune of P4 million, to manufacture LED lighting bulbs for both commercial and residential use in 2017, announced last year that it will enter the South African market in the Special Economic Zone (SEZ) of North West province under the auspices of North West Development Corporation (NWDC).

The company has already secured a deal with South Africa authorities which entails production factory shells and tax incentives arrangements.

The company founder and Chief Executive Officer, Ketshephaone Jacob has also previously stated that the company is looking for just under P50 million to finance its expansion strategy and is reaching out to institutional investors such as Botswana Public Officers Pensioners Fund (BPOPF) and government investment arm, Botswana Development Corporation (BDC).

However, Jacob told WeekendPost that instead of sitting and waiting for expansion funding the company has started hitting the ground running.

“We have decided to get in the streets of SA, start selling lights from door to door, ” said Jacob who is in currently in Rusternburg to oversee the introduction of The Bulb World products in the market.

Jacob explained more brand activations will be undertaken in South Africa. “The plan is to do it the whole of North West and Limpopo province, through hawkers, we give the hawkers the lights to sell at a factory price and they put a mark up and make a living,” he said.

The Bulb World operates from Selibe Phikwe, it currently employees 65 young people, 80 % of which are Phikwe youth. The company plans to add 100 jobs this year alone as it forges ahead with its regional and continental expansion plans.

In July this year Bulb World products will hit South African Shelves:  Pick n Pay, Checkers and Africa’s largest retailer Shoprite.

The Bulb World has been registered as a company in South Africa; the company will start producing lights from Mogwasa after striking a special economic zones deal with North West Development Corporation in North West Province South Africa.

“Over the next 10 years we are looking to create over 5,000 jobs in Africa. Through our expansion into all of Africa we will be able to create employment for various individuals in different sectors namely; manufacturing, distribution electronics and retail,” Jacob told this publication earlier this year.

Jacob said if all goes well, the plan is to have taken over Africa or rather penetrated, and have prevalent presence in the African market.

“We are gunning to have at least 30 percent market share by then. According to a 2016 Market Survey, the total valuation of sales for LED Lighting was 57BN, a portion of which we plan to have taken over by then,” he said.

 

While the company has set its eyes on Africa, Jacob said, the company has not fully exploited its local growth, indicating that there could be strategic factories built to supply neighbouring countries of Angola and Zimbabwe.

“There is potential for further local expansion as well to other areas of Botswana if things run smoothly as anticipated. Hopefully in the long-term if our fellow Africans and all these markets receive us well we are planning to build another factory,” he said.

“We are looking to build another factory in the Chobe/Ngamiland Area that will give priority to markets in Zimbabwe and Angola,” he said

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Business

‘Oil exploration will have minimal impact’

30th March 2021
Okavango-River-Basin

The Maun based Okavango Research Institute (ORI) has downplayed the impacts of oil and gas exploration in part of Okavango delta arguing that given the distance proposed the likelihoods of negative impacts drilling these exploration wells on the surface water systems is likely to be negligible.

The Institution released a position paper titled ‘Proposed Petroleum (Oil and Gas) Exploration Operations in the Petroleum Exploration License (PEL) No. 73,’ with findings stating that, in the event of discovery of economically viable hydrocarbon deposits, much more careful consideration of the impacts and economic benefits of development of the resource will be needed.

For example, the fracking process for gas and oil extraction is known to require large volumes of underground water.

It further argues that increased extraction of the underground water is likely to affect the water table level and further affect the overall water availability in the river-basin.

“The effect on water availability and use may become worse if surface water is reticulated or sourced by any means from the Kavango River. Should the exploration and fracking for oil and gas expand to Block 1720, 1721 and 1821, the impact on water availability and quality will be significant, especially if the wastewater is not well managed,” said the paper.

The research unit recommends close communication between the relevant Basin State Ministries (Mineral Resources, Environment) and the Permanent Commission on the Okavango River Basin, OKACOM, and other stakeholders must be facilitated.

This will facilitate sharing of the correct information on the desired intentions of the basin states and compromises sought for the sustainability of the ecosystems in the downstream of the Cubango-Okavango river Basin, states the position paper.

ORI as a key stakeholder with scientific information says it is positioned to provide scientific advice and guidance to decision-makers on the potential impacts of both exploration and development and operation activities.

It also recommends that while the impacts might be minimal at the exploration stage, environmental impacts during the development and extraction process are significant.

Findings also state that the SADC Protocol places a mandatory duty to make a notification of planned measures undertaken in any riparian state in cases where such measures hold the potential to cause ‘significant adverse effects.’

It further states that where the planned development is trivial and not expected to cause any significant harm, the development state is not under duty to notify other riparian states.

Given that the drilling in the Kavango Region in Nambia is merely for exploratory purpose and the possibility of harm is minor, it is therefore not surprising that the Namibian government did not inform Botswana.

However, should it be found that the oil can be profitably or economically exploited, the Namibian government would be under a duty to notify both Angola and Botswana.

The institution further states that to ensure sustainable development in the Okavango Delta the following in the context of exploration for and potential development of hydrocarbon deposits within the Cubango-Okavango River Basin, it must be considered that the Okavango Delta is a World Heritage Site listed in 2014 by UNESCO and one of the binding requirements of the listing is the non-permissible commercial mining of any mineral, gas or oil within the World Heritage Site.

It states that the Okavango Delta is also a RAMSAR site in which mining is not allowed.

Should the exploration for minerals, oil and gas be allowed, there is a high chance that a mineral, oil or gas may be found given that the Delta is sitting on karoo sediments and shale rocks which in other parts of the world have been found to be sources of oil and gas deposits. Should oil or gas be discovered, there will be a strong socio-economic pressure to mine oil or gas and create jobs for the masses.

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Business

Pakmaya yeast penetrates local market

30th March 2021
Pakmaya Africa Sales Manager: Cem Perdar

Manufactured in Turkey, Pakmaya Instant Dry Yeast can be used in the production of various fermented products, as it is suited for both traditional and industrial baking processes. All kinds of breads, buns and fermented pastry products are typical examples of applications.

Pakmaya Africa Sales Manager Cem Perdar says Pakmaya has 4 plants in across the world, further indicating that all of the plants have the highest standards of quality certificates and approvals. Regarding raw material, molasses is the main ingredient for yeast. Concerning production activities, yeast manufacturing requires high know-how and capability. Pakmaya has all those capabilities and aspects more than 45 years.

According to Perdar, Pakmaya has been existent in African markets since 30 years. From South to North, Central to East and West, a consumer can find Pakmaya in nearly every part of Africa continent.

“With its high quality, rich product selection and good service, our brand has become the favorite yeast of many Africans. On the other hand, our distributors in African countries are working very hardly and loyally in order to promote our products in their markets. After some time, we are becoming like families with our exclusive distributors in Africa and this enables both parts to work harder and keeps our product sustainable in market,” he said in an interview this week.

The yeast manufacturing giant made its way to Botswana market. The company has been smoothly working with Kamoso Distribution, a local distribution company. Perdar told BusinessPost that two entities have been working hard to earn is market locally.

“At the moment we have a good market share with them in Botswana market. I’m sure during 2021 long, we will be increasing our sales and market position. Soon we are going to start a marketing campaign in Botswana, so that means Batswana will see and recognize Pakmaya more and more. Pakmaya wants to be the best friend of bakers in bakeries and ladies at homes in Botswana.”

As per global COVID-19 regulations to curb the spread of the COVID-19, Botswana just like other country closed borders. Providentially, the restrictions did not affect the company destructively.

Perdar says “Kamoso Africa is a very important and strong partner in Botswana territory. With Kamoso’s hard work and strict measurements, we have done a very good job. So as Pakmaya, we have not suffered any distribution problem. Our partner is doing the needful at the reaching our products to end users.”

He further said “We are doing well in Botswana market and hoping to make much more. Our aim is to enter every single corner in Botswana territory. With our new marketing campaigns, we are planning to be the most preferred yeast in Botswana market.”

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