The Botswana Stock Exchange’s benchmark index is at its lowest levels last seen two years ago as investors favourites crumble while small cap stocks punch above their weight. The BSE’s domestic company index is down by 11.63%, a stark contrast to 2015 when then stock tracking index appreciated by 11.65%. We take a look at the top gainers and losers.
The DCI which comprises of 21 listed local companies on the main domestic counter and 2 on the venture capital board is a market weighted index. That means it is sensitive to the performance of companies with large market capital value. In 2015, the share prices of 16 companies appreciated compared to 12 companies this year. It has turned out to be the most frustrating year for investors: the local interest rates are at their lowest in over 23 years, inflation rates for most of the year has been bubbling under the central bank’s 3-6% medium term range, while the economy has been sluggish with increasing job losses across the sectors.
When the economy is under duress, analysts say the markets will be the first to reflect those cracks. The decline of the DCI hence comes as little surprise given the prevailing economic circumstances. Listed companies annual reports have been characterised by leading terms such as “tough trading conditions”, “stagnated wages”, “weak economic growth”, and “increasing regulatory controls”.
The DCI’s decline this year serves as an example why investors are taught why it is never a good idea to put your eggs in one basket. Some sectors have been hit the hardest, resulting in negative and low returns for investors. However not all was lost as some sectors proved their resilience in the face of headwinds.
TOP GAINERS Cresta-Up by 19.62% The company has recently been in the news for the wrong reasons as the company found itself in a financial scandal that led to the dismissal of the Chief Financial Officer and the resignation of the Managing Director. Nonetheless the tourism and leisure company has outperformed domestic listed companies. The profits look good and the company is optimistic about future demand as it expands to top tourist destinations like Maun.
The company must be chuffed by the spotlight the country is receiving following the release of the United Kingdom film which depicts an actual love and political story of the founding president. It’s expected that the movie will arouse the curiosity of frequent travellers to come see the country where the film was shot.
Botswana Insurance Holdings Limited- 15.46% Under the leadership of Catherine Lesetedi-Letegele, the financial services behemoth with three subsidiaries that spans the insurance and investment management sector has been a consistent performer throughout the year. The company has held its own in a sector that faces enormous challenges from intense competition, stagnated wages, falling premiums and increased claims from retrenchments. While analysts are closely monitoring the company’s stock, investors are cheering them on, buoyed by the company’s expansion plan.
The group took bold steps in increasing its product mix; from acquisitions to brokering deals with banks, tapping into bancassurance as well as looking at regional expansions. BIHL is a financial services titan originally established in 1975.BIHL has been listed on the Botswana Stock Exchange since 1991 and is the holding company for three subsidiaries (Botswana Insurance Fund Management, Botswana Life Insurance Ltd and Legal Guard) and holds a stake in two associate companies; Letshego Holdings and Funeral Service Group as well as a 21.5% stake in Nico holdings in Malawi.
Engen-Up by 15.15% A surprise performance from the stock with a market valuation of P1.5 billion that really gets mentioned with the BSE’s blue chip stocks. What impresses the most about this stock is that it began the year down at -10%, dragged down by concern over oil prices which were also at their lowest from 2015 to early 2016. However the stock remained solid and pulled spectacular move when its share price started rising in line with improved market sentiments as oil prices begun to rise.
Chobe Holdings- Up by 13.23% This tourism listed outfit is the second best performing stock in the tourism sector. The company ended the year with impressive financials: revenue was up by 33% and profits before tax increased by 45%. With its luxury lodges, the group will benefit from increased tourism activities. Through its wholly owned subsidiaries, Chobe Holdings Limited owns and operates ten eco-tourism lodges and camps on leased land in Northern Botswana and the Caprivi Strip in Namibia with a combined capacity of 290 beds under the brands Desert & Delta Safaris and Ker & Downey Botswana. Safari Air, a wholly owned air charter operator, provides air transport services to the group's camps and lodges.
Desert and Delta Safaris (SA) (Pty) Ltd, another wholly owned subsidiary operating in South Africa, provides reservation services to the group. This year, the group, through its wholly owned subsidiary North West Air (Pty) Ltd, acquired Air Charter Botswana (Pty) Ltd’s aircraft maintenance operation at Maun International Airport.
G4s- Up by 12.70% Here is another company that began the year on a back foot following a dismal stock performance in 2015. Michael Kampani, G4s Managing Director, is leaving a happy man after he steered the group to profitability since he joined it in 2013. Under his leadership, G4s has focused on its core services as well as expanding its product mix. The stock market has taken note of his stellar performance as evidenced by the company’s share price appreciation.
Barclays Bank Botswana- Up by 12.22% The bank this year was in its element, churning out new products and services and delivering impressive financial results. It is not a surprise that investors have been rallying behind the company which often touts its 5 year transformation strategy as something to reckon with. Indeed, the results show that the strategy is having some positive results.
The bank which seeks to be the leading bank in Botswana and your bank of choice doubled its profit in its interim results for the year. The second largest listed bank becomes the only one in the banking sector that has delivered capital gains to shareholders so far this year. With most financial institutions under pressure from the prevailing tough conditions, Barclays seems to be an exception to the rule as investors rally behind it.
NEW AFRICAN PROPERTIES- Up by 10.94% This property listed stock deserves a special mention that extends beyond its exploits in the property market. Not only did it outperform property listed stocks, it also broke records on the BSE after the single biggest day trade in the history of the BSE after the company traded 26% of its issued capital worth P457.3 million. This year’s performance extends the gains the company enjoyed last year as it delivered 22%.
NAP was listed on the BSE in 2011, with a total of 604 397 124 issued units. The largest unit holder is Cash Bazaar Holdings (Pty) Ltd with 79.3 percent stake. NAP owns properties such as Riverwalk Mall, Riverwalk Plaza and Kagiso Mall in Gaborone, Mafenyatlala Mall in Molepolole, Kasane Mall and Mokoro Centre in Maun. The portfolio comprises primarily of prime retail sites with a strong tenant base, including Pick ‘n Pay, Spar, Choppies, Mr Price, Woolworths, Pep, Cashbuild, Furnmat, CB Stores, Ackermans, Cape Union Mart, Exclusive Books, FNB, Hi-Fi Corporation, Home Corp, Incredible Connection, Jet, KFC, Nando's, New Capitol Cinema, Mugg & Bean, JB Sports, Truworths and many others.
TOP LOSERS Choppies-Down by 49.77% The retail giant’s stock has been pummelled in the stock market, causing the biggest upset of the year as far as stocks are concerned. Choppies is a leading retailer in the fast moving consumable goods industry, targeting low-income to middle class buyers and the company has been doing well for the past 20 years, growing in leaps and bounds. The dual listed company, both in the BSE and Johannesburg Stock Exchange, has been pursuing regional expansions in the last two years. The company’s profit after tax nearly halved due to costs associated with the expansion.
What has been particularly worrying investors is that the expansion plans are yet to bring results. The South African and Zimbabwean Stores are still not making profits profits. Choppies faces other myriad challenges as its core customers’ disposable income diminishes through retrenchments while in Zimbabwe the recently rolled out bond notes will have an impact on the retailers operations.However, Ram Ottapathu led Choppies surprised many when it launched its own clothing line with its hyper stores. This move was seen in a positive light as it added a new revenue stream.
Furnmart- Down by 35.77% This player also belongs to the retail and wholesaling sector that has been dragged down by economic factors. The Group continues to trade steadily in an ever more challenging environment. Drought conditions, currency weakness, high unemployment, an increase in retrenchments and the over-indebtedness of customers, continue to plague the region.
Low commodity prices on world markets and the slowdown in the Chinese economy have hampered growth in the countries in which Furnmart trades. The group says continued trading losses, a weakening economy, US Dollar-based rentals and a volatile currency have culminated in management’s decision to cease trading in Zambia
Furthermore, regulators continue to introduce burdensome restrictions and administrative processes on consumer credit providers, in an attempt to protect consumers from risky or unfair exposure.
Standard Chartered Bank Botswana- Down by 30.80% The bank popularly known as Stanchart has extended its losses to 2016. The bank ended 2015 with a share price depreciation of about 11% and took the biggest fall this year. The financial sector, particularly banking, lists low interest rates, stagnated wages, unemployment and retrenchments as factors that have greatly impacted their operations. The bank’s 2015 end of year profit went down by 87% while the latest interim results reflect a decline in profits.
Stanchart was the first bank to publicly admit to its large exposure to the BCL Group which is under provisional liquidation. While the stock is being battered, the Moatlhodi Lekakau led bank is busy at work trying to turn around its fortunes. It has increased its bancassurance offerings and recently opened a digital bank branch at the country’s biggest airport.
FIRST NATIONAL BANK BOTSWANA- Down by 22.51% FNBB is the largest bank in the country both by market value, industry profits and assets. This giant has been weakening since 2015 on the pressure of enhanced competition, the recently lifted moratorium on bank charges, low interest rates and limited spending power in the economy. Steven Bogatsu finds himself in charge of a bank that recently reported its lowest profit in two years, continuing the trend of declining profits in the banking sector. In efforts to lure customers and get them to spend, the bank has introduced a number of initiatives such as smart devices scheme and ebucks rewards program. The bank has also bolstered its newly created insurance division, striking deals with BIHL, the country’s leading insurer.
Letshego- Down by 20% This financial giant has made its fortunes from micro-lending, with its strong customer base made up of government workers and state owned enterprises. In the stock market, the company tops the charts of domestic companies in terms of volume and value of trades. Simply put, Letshego stock is the most liquid, exchanging hands quickly and easily. This could account for the stock’s decline this year.
The company which breached the P1 billion mark in revenue for the year ended 2015, released interim results for 2016 which showed declining profit. However the group says results show satisfactory growth in an environment of depreciating exchange rates, higher inflation and interest rates and lower economic activity in most of the markets in which Letshego operates.
In its 2015 annual report, Letshego says it will continue to drive its inclusive financial services strategy and to strengthen its operations through investment in people, technology and strategic partnerships. Moreover, the group’s Board of Directors is confident that the Pan African financial services titan is well positioned to benefit from the growing markets in which it is active and views inorganic expansion via strategic acquisitions as important to the acceleration of Letshego’s strategy.
Here is how one Permanent Secretary encapsulates the clear tension between democracy and bureaucracy in Botswana: “President Mokgweetsi Masisi’s Government is behaving like a state surrounded with armed forces in order to capture it or force its surrender. The situation has turned so volatile, for tomorrow is not guaranteed for us top civil servants.
These are the painful results of a personalized civil service in our view as permanent secretaries”. Although his deduction of the situation may be summed as sour grapes because he is one of the ‘victims’ of the reshuffle, he is convinced this is a perfect description of the rationale behind frequent changes and transfers characterising the current civil service.
The result of it all, he said, is that “there is too much instability at managerial and strategic levels of the civil service leading to a noticeable directionless civil service.” He continued: “Changes and transfers are inevitable in the civil service, but to a permissible scale and frequency. Think of soccer team coach who changes and transfers his entire squad every month; you know the consequences?”
The Tsunami has hit hard at critical departments and Ministries leaving a strong wave of uncertainty, many demoralised and some jobless. In traditional approaches to public administration, democracy gives the goals; and bureaucracy delivers the technical efficiency required for implementation. But the recent moves in the civil service are indicative of conflicting imperatives – the notion of separation between politicians and administrators is becoming blurred by the day.
“Look at what happened to Prisons and BDF where second in command were overlooked for outsiders, and these are the people who had sacrificially served for donkey’s years hoping for a seat at the ladder’s end. The frequency of the changes, at times affecting the same Ministry or individual also demonstrates some level of ineptitude, clumsiness and lack of foresight from those in charge,” remarked the PS who added that their view is that the transfers are not related to anything but “settling scores, creating corruption opportunities and pushing out perceived dissident and former president, Ian Khama’s alleged loyalists and most of these transfers are said to be products of intelligence detection.”
Partly blaming Khama for the mess and his unwillingness to let go, the PS dismissed Masisi for falling to the trap and failing to outgrow the destructive tiff. “Khama is here to stay and the sooner Masisi comes to terms with the fact that he (Masisi) is the state President, the better. For a President to still be making these changes and transfers signals signs of a confused man who has not yet started rolling his roadmap, if at all it was ever there. I am saying this because any roadmap comes with key players and policies,” he concluded.
The Ministry of Health and Wellness seems to be the most hard-hit by the transfers, having experienced three Permanent Secretaries changes within a year and a half. Insiders say the changes have everything to do with the Ministry being the centre of COVID-19 tenders and economic opportunities. “The buck stops with the PS and no right-thinking PS can just allow glaring corruption under his watch as an accounting officer. Technocrats are generally law abiding, the pressure comes with politically appointed leaders racing against political terms to loot,” revealed a director in the Ministry preferring anonymity.
The latest transfer of Kabelo Ebineng she says was also motivated by his firm attitude against the President’s blue-eyed Task Team boys. “The Task Team wants to own the COVID-19 pandemic and government interventions and always cry foul when the Ministry reasserts itself as mandated by law,” said the director who added that Masisi who was always caught between the crossfire decided on sacrificing Ebineng to the joy of his team as they (Task Team) were in the habit of threatening to resign citing Ebineng as the problem.
Ebineng joins the Office of the President as a deputy Coordinator (government implementation and coordination office).The incoming PS is the soft-spoken Grace Muzila, known and described by her close associates as a conformist albeit knowledgeable.
One of the losers in the grand scheme is Thato Raphaka who many had seen as the next PSP because of his experience and calm demeanour following a declaration of interest in the Southern African Development Community (SADC) Secretary post by the current PSP, Elias Magosi.
But hardly ten months into his post, Raphaka has been transferred out to the National Strategy Office in what many see as a demotion of some sort. Other notable changes coming into OP are Pearl Ramokoka formerly with the Employment, Labour and Productivity Ministry coming in as a Permanent Secretary and Kgomotso Abi as director of Public Service Reforms.
One of the ousted senior officers in the Office of the President warned that there are no signs that the changes and transfers will stop anytime soon: “If you are observant you would have long noticed that the changes don’t only affect senior officers but government decisions as well. A decision is made today and the government backtracks on it within a week. Not only that, the President says this today, and his deputy denies it the following day in Parliament,” he warned.
Some observers have blamed the turmoil in the civil service partly to lack of accountable presidential advisers or kitchen cabinet properly schooled on matters of statecraft. They point out that politicians or those peripheral to them should refrain from hampering the technical and organizational activities of public managers – or else the party (reshuffling) won’t stop.
In the view expressed by some Permanent Secretaries, Elias Magosi, has not really been himself since joining the civil service; and has cut a picture of indifference in most critical engagements; the most notable been a permanent secretaries platform which he chairs. As things stand there is need to reconcile the imperatives of democracy and democracy in Botswana. Peace will rein only when public value should stand astride the fault that runs between politicians and public managers.
Former Permanent Secretary to the President, Carter Morupisi, is fighting for survival in a matter in which the State has charged him and his wife, Pinnie Morupisi, with corruption and money laundering.
Morupisi has joined a list of prominent figures that served in the previous administration and who have been accused of corruption during their tenure in office. While others have been emerging victorious, Morupisi is yet to find that luck. The High Court recently dismissed his no case to answer application.
United States President, Joe Biden, is faced with a decision to make relating to the Covid-19 vaccine intellectual property after 175 former world leaders and Nobel laurates joined the campaign urging the US to take “urgent action” to suspend intellectual property rights for Covid-19 vaccines to help boost global inoculation rates.
According to the world leaders, doing so would allow developing countries to make their own copies of the vaccines that have been developed by pharmaceutical companies without fear of being sued for intellectual property infringements.
“A WTO waiver is a vital and necessary step to bringing an end to this pandemic. It must be combined with ensuring vaccine know-how and technology is shared openly,” the signatories, comprising more than 100 Nobel prize-winners and over 70 former world leaders, wrote in a letter to US President Joe Biden, according to Financial Times.
A measure to allow countries to temporarily override patent rights for Covid related medical products was proposed at the World Trade Organization by India and South Africa in October, and has since been backed by nearly 60 countries.
Former leaders who signed the letter included Gordon Brown, former UK Prime Minister; François Hollande, former French President; Mikhail Gorbachev, former President of the USSR; and Yves Leterme, former Belgian Prime Minister.
In their official communication, South Africa and India said: “As new diagnostics, therapeutics and vaccines for Covid-19 are developed, there are significant concerns [about] how these will be made available promptly, in sufficient quantities and at affordable prices to meet global demand.”
While developed countries have been able to secure enough vaccine to inoculate their citizens, developing countries such as Botswana are struggling to source enough to swiftly vaccine their citizens, something which world leaders believe it would work against global recovery therefore proving counter-productive.
Since the availability of vaccines, Botswana has been able to secure only 60 000 doses of vaccines, 30 000 as donation as from the Indian government, while the other 30 000 was sourced through COVAX facility. Canada, has pre-ordered vaccines in surplus and it will be able to vaccinate each of its citizens six times over. In the UK and US, it is four vaccines per person; and two each in the EU and Australia.
For vaccines produced in Europe, developing countries are forced to pay double what European countries are paying, making it more expensive for already financially struggling economies. European countries however justify the price of vaccines and that they deserve to buy them cheap since they contributed in their development.
It is evident that vaccines cannot be made available immediately to all countries worldwide with wealthy economies being the only success story in that regard, something that has been referred to as a “catastrophic moral failure”, head of the World Health Organisation (WHO), Tedros Adhanom Ghebreyesus.
The challenge facing developing countries is not only the price, but also the capacity of vaccine manufactures to be able to do so to meet global demand within a short time. The proposal for a patent waiver by India and South Africa has been rejected by developed countries, known for hosting the world leading pharmaceutical companies such US, European Union, the United Kingdom, and Switzerland.
According to the Financial Times, US business groups including pharmaceutical industry representatives, have urged Biden to resist supporting a waiver to IP rules at the WTO, arguing that the proposal led by India and South Africa was too “vague” and “broad”.
The individuals who signed the letter, including Nobel laureates in economics as well as from across the arts and sciences, warned that inequitable vaccine access would impact the global economy and prevent it from recovering.
“The world saw unprecedented development of safe and effective vaccines, in major part thanks to US public investment,” the group wrote. “We all welcome that vaccination rollout in the US and many wealthier countries is bringing hope to their citizens.”
“Yet for the majority of the world that same hope is yet to be seen. New waves of suffering are now rising across the globe. Our global economy cannot rebuild if it remains vulnerable to this virus.” The group warned that fully enforcing IP was “self-defeating for the US” as it hindered global vaccination efforts. “Given artificial global supply shortages, the US economy already risks losing $1.3tn in gross domestic product this year.”