Emirate Investment House, a consortium of United Arab Emirates rich businessmen from Dubai are in the process of investing billions of Pula into the entire Selibe Phikwe and SPEDU region and turn them into an empire of value chain businesses and cash spinning enterprises – highly placed sources revealed to WeekendPost this week.
Sources close to developments have disclosed to this publication that investors who recently arrived in the country and were interested in re-opening the mine now want more than the mine and want to turn the whole area into their own economic hub, in line with what the Revitalisation Strategy seeks to achieve.
Suggestions are that Linah Mohohlo who was tasked with coordinating the efforts of resuscitating the once vibrant copper mining town through the Phikwe Revitalisation Strategy played her cards right and convinced the investors to not only pump money into saving BCL alone but to invest in other activities autonomous from mining in the region.
“This is a delegation encompassing highly connected and loaded business magnates, they run and own multinational corporate entities with multibillion dollar revenues, they are looking into tens of billions pula investments locally,” said a source who preferred anonymity. WeekendPost investigations reveal that SPEDU executives along with Mohohlo are scouting for investors from the Emirate Investment House to resource and realize their mandates.
Mohohlo has used her investment wooing expertise to convince and solicit interest from the Abu Dhabi Arabs, and sources reveal she is succeeding as the investors expressed interest and wish to turn the region into their base for agriculture, transport and logistics, international trade as well as manufacturing, exactly what SPEDU seeks to achieve as well.
Sources close to SPEDU and Mohohlo offices have revealed that a chunk of land would be readily available for the Arabs to branch into high value large scale agriculture as well as manufacturing. “The entire SPEDU tourism master plan, agricultural potential unearthing blueprint would be handed over to these investors as soon as they are done with BCL take over,” he said. Minister Kebonang has confirmed that the Dubai investors were not only eyeing BCL but will venture into other business sectors.
“The Emirates Arabs will invest in agriculture, manufacturing, transport and logistics and government is ready to make the ground fertile for them to undertake such ventures as long as jobs are created for our people,” he told WeekendPost this week however underscoring that it might not necessarily be in Phikwe.Efforts to reach Phikwe economic recovery coordinator, Mohohlo were not successful. SPEDU is of the view that their aim was to woo any serious investor to setup economic transforming business and judging by the progress so far, jobs will be created.
THE CASE FOR SELIBE PHIKWE
Selibe Phikwe became a special case last year when government decided to put BCL mine under provisional liquidation due to loss making operations caused by amongst other reasons low copper and nickel commodity prices.BCL dissolution shocked the entire nation and the aftermath left Selibe Phikwe and the entire eastern block in an economic stand still.
Immediately government introduced measures to try counter anticipated socio-economic impacts. From October last year to date the harsh effects of the dissolution of the region’s economic nucleus have not been that catastrophic as anticipated owing to ex-employees still enjoying terminal benefits, and lately shares from their 5 year BCL Staff pension fund which paid collectively over P150 million to qualifying members in February this year.
With the government BCL closure package slowly reaching its afternoon, the aftermaths of the mine closure are expected to hit hard on Phikwe settlers. Incentives included the government paying school fees for former BCL employees’ children attending private English medium schools aimed which is expected to go on until the end of the last quarter of 2017. Currently over a significant number of former BCL miners are still occupying staff houses.
THE BCL SALE
Things may ease up sooner than previously believed should Minister Kebonang’s helter-skelter investor wooing marathon bear fruits, as matter of fact it seems to be already outputting positive results. The group of rich Dubai tycoons are about to seal a deal with Botswana Government on BCL sale – Kebonang was quoted as saying. Critics have raised concerns over the sudden worth of BCL deposits to be up for grabs whereas the initial sentiments were that the company and assets were valueless, as well as lack of consultations on the matter.
However Minister Kebonang, has stated in various interviews about the BCL mine sale that the government reserves the right to consult the public or to deal with the matter privately considering the sensitivity and high value worth and monetary language of the subject. “I don’t know what consultation people are talking about, we are dealing with a sensitive issue here, moving with speed to try and save thousands of jobs by looking for monetary able individuals,” he was quoted as saying recently.
Last week the Dubai investors visited BCL and undertook a due diligence exercise, a comprehensive appraisal of a business undertaken by a prospective buyer, especially to establish its assets and liabilities and evaluate its commercial potential. Reports indicate that the investors were impressed by what they saw.
“They assessed the company assets and looked into any information they required,” Provisional Liquidator Dixon-Warren had revealed. According to him, the prospective buyers are expected to make an offer and if agreed upon, purchase of shares would be conducted. “The intention is to put liquidation at halt as soon as possible and hand over the assets to the investors,” he said.
Kebonang revealed last week that government as the largest BCL creditor because of shareholding is willing to forgo its stake from BCL sale returns so that other creditors can be fully paid. “We are looking at about 300 million USD these investors are willing to pay as an offer to take over the assets; and looking at that money, almost all of it will go to creditors such as BPC, Altlas Corp, Air lique just to name but a few and the government will only in return be looking at having its people going back to work,” he explained last week in an interview with one of the local private radio stations.
Kebonang also added that the new BCL owners would further pump over 2 billion pula into the mine to prepare it for operation “well over 2 billion will be required to refurbish the mine, remodel and restructure the mining shafts, and re-arrange the smelting operations to re-craft the entire mining setup to a modern profit making operation,” he stipulated.
NAPRO UP FOR SALE
National Agro Processing Plant (NAPRO) is also geared for privatization, WeekendPost has gathered. Established last year as National Food Technology and Research Centre (NAFTRC) commercial arm, NAPRO processes tomatoes, onions and other vegetables to increase their shelf life. The plant initially established and funded by Office of the President with over P100 million is said to be approaching zero balance status in their working capital accounts.
Earlier this year in Talana Farms, Minister of Agriculture and Food Security Partrick Ralotisa made remarks that the Plant would be sold to any interested investors with the aim of turning it into a world-class food processing entity. Information reaching WeekendPost suggests the Dubai investors have been sold the idea of pocketing NAPRO as well to enhance their agricultural and food processing ambitions in Botswana.
An Executive from NAPRO who preferred anonymity told this publication that rumours of the plant being privatized have reached their understanding “Yes, we know that any time we might find ourselves no longer under NAFTRC of Botswana Government,” they said. According to the source NAPRO financial figures are not commercial and business viable for continuity under the current setup.
Some vendors have been misled Vendors thrive on households goods and fresh produce
Despite the previous false allegations that the Tobacco Control Bill will lead to several 20 000 vendors across the country losing their jobs, several local vendors have expressed that they are ready for the bill and because vendors sell mostly household goods
“This is something that we openly accept and receive as street vendors, the problem is some of our counterparts were misled and made to believe that we will not be allowed to sell cigarettes on our stalls.
Some of us got to understand that the bill states that we have to be licensed to sell cigarettes, we are not supposed to sell them to children under the age of 18 years of age and eliminating the selling of single sticks. We understand that this agenda is meant to develop a healthy nation but not take us down,” said Mbimbi Tau a vendor who operates from Mogoditshane.
The Tobacco Control Bill has been passed in several countries and street vendors are operating properly without any challenges faced. Tau further mentioned that there is no way that the Tobacco Control Bill will affect their business operations, all they have to do as vendors are to get the required documentation and do what the bill requires.
Another vendor Busani Selalame who operates from Gaborone Bonnington North was not shy to express his support towards the Tobacco Control Bill, “the problem is that some people within our sector have been misled and now they think that the bill is meant to take our operations down and completely stop selling cigarettes.
I support the fact that we are not supposed to sell cigarettes to children who are under the age of 18 years of age this has always been wrong, as parents we should be cautious of such and ensure that our children are disassociated with cigarettes,” said Selalame.
The Tobacco Control Bill prohibits advertising, promotion and sponsorship by the tobacco industry to prevent messages, cues, and other inducements to begin using tobacco, especially among the youth, to reassure users to continue their use, or that otherwise undermine quitting.
Renowned economist Bakang Ntshingane is of the view that since vendors sell household goods and fresh produce they are likely to keep on making profits despite what the Tobacco Control Bill comes with. He further stated that the Tobacco Control Bill will not be of harm on the local economy since the country does not manufacture or produce any tobacco related products.
BancABC Botswana, the BSE-listed bank today announced its half year results for the six months ended 30 June 2021, against a subdued economic backdrop, exacerbated by the COVID-19 pandemic and related lockdowns.
BancABC has remained resilient in the current operating environment as business activity increased in the first half of 2021, with Real GDP up by 0.7% in the first quarter compared to a contraction of 4.6% in the previous quarter. Commenting on the results, Managing Director Kgotso Bannalotlhe said, “Currently, economic activity is relatively stable.
While COVID-19 placed significant pressure on the economy and our overall business, BancABC Botswana has shown remarkable resilience amid a tough operating environment. While the bank operates in an environment that is seeing a rise in COVID-19 infections, it is encouraging that the business has maintained a healthy capital adequacy ratio as well as being successful in improving total expenses with focus on cost containment across the board.”
The retail segment saw an increase in customer deposits this year, signalling an improvement from the previous period and strengthening the current funding mix. This segment has built great momentum and continues to advance its digital strategy, through various products such as the mobile banking app, SARUMoney, as well as enhanced product offerings such as the introduction of fash cash. The Bank has invested in its digital capabilities to ensure a seamless and hassle-free banking experience for all its customers.
The commercial segment was successful in reducing the cost of funding. In addition, Treasury and Global Markets performed well, doubling from the previous comparative period. The current year performance across the bank’s different segments is testament to the bank’s strong income lines, aiding the Bank’s resilience during this time.
“The Bank experienced slow loan book growth due to a constrained economic environment, however, we remain optimistic that as the economy recovers, credit appetite amongst the Bank’s customer-base will increase. In addition, we reported good non-interest revenue, driven by increased trading income on the back of improved margins and volumes. Our outlook remains positive as we expect momentum across the different segments to improve over time,” said Ratang Icho-Molebatsi, BancABC Botswana Finance Director.
In April 2021, BancABC Botswana’s ultimate holding company, Atlas Mara Limited, as well as ABC Holdings Limited and Access Bank Plc announced an agreement to a proposed acquisition of 78.15% of BancABC Botswana. The transaction presented an opportunity for BancABC Botswana’s strong retail banking operation to merge with Access Bank’s wholesale banking capabilities, augmenting itself as one of Africa’s leading banks.
“The transaction provides significant scope for revenue diversification and growth in the corporate and SME banking segment. Increased access to trade finance, treasury, international payments and loans through the wider distribution network offered by Access Bank’s presence in the key trade corridors that connect Africa to the rest of the world, presents solid opportunities for BancABC Botswana”, commented Icho-Molebatsi “With the transaction, BancABC Botswana’s customers stand to benefit from best-in-class digital platforms and product suites, leveraging Access Bank’s group IT infrastructure as well as other fintech solutions”, said Bannalotlhe.
Further, with Access Bank expanding its footprint into Botswana, it will position the Bank to deliver a more complete set of banking solutions to Batswana across the country”, concluded Bannalothle.
Last Friday, the board of Directors of the African Development Bank Group authorised a $137 million (P1.5 billion) loan to support Botswana’s Post COVID-19 pandemic economic recovery.
The funds, extended under the Bank Group’s Botswana Economic Recovery Support Program, will be used to enact multi-sector reforms that will increase spending efficiency, create jobs and drive inclusive growth.
The project has three components: enhancing domestic resource mobilisation and mitigating fiscal risks to enhance macroeconomic performance and create fiscal space for spending on social safety nets; supporting private sector-led agriculture and industry to bolster productivity and value addition and increase job opportunities, and offering business development services to micro and small enterprises to advance social protection and gender equity. The three components are expected to reinforce one another.
“The African Development Bank is providing support for reforms to enhance private sector-led agriculture and transformation of the industrial sector,” said Leila Mokadem, Director General of the Southern Africa Regional Development and Business Delivery Office. “Agriculture value addition can serve as a springboard for industrialisation and job creation,” she added.
The project aligns with the Bank Group’s Ten-Year Strategy (2013-2022) and its High Five strategic priorities, particularly Industrialise Africa and Improve the quality of life of the people of Africa. The African Development Bank observed that Botswana has a very low risk of debt distress and a positive medium-term growth outlook. However, a lack of economic diversification exposes the country to significant vulnerabilities.
The Bank Group’s active portfolio in Botswana amounts to UA 57.7 million ($81.9 million) and comprises four projects. The financial sector accounts for the largest share of the portfolio by industry (97.1%), followed by agriculture (1.7%) and industry (1.2%). In the past, the African Development Bank partnered with various Botswana government agencies to accelerate economic growth.
On the 21st of February 2020, the bank signed a thematic Line of Credit (LoC) of P900 Million for a 10-year tenor with Botswana Development Corporation (BDC), a wholly state-owned investment agency. This was during that time, the single largest transaction of its nature to ever take place in Botswana.
The LoC was penned to support the BDC’s long-term strategy to scale up its investments in critical sectors, including manufacturing, transport and service sectors, with the overall objective of supporting the transformation and industrialisation of the Botswana economy. BDC eyed a more comprehensive socio-economic benefit with this partnership, including attracting investments into the economy and employment creation.
The African Development Bank is a multilateral development finance institution. It has an overarching objective to spur sustainable economic development and social progress in its regional member countries (RMCs) through mobilising and allocating resources for investment and providing policy advice and technical assistance to support development efforts.
This transaction was poised to support further BDC’s focus on safeguarding its balance sheet to ensure financial sustainability whilst fulfilling its mandate as the Botswana Government’s principal investment arm.
The COVID-19 pandemic has landed massive blows on Botswana; apart from claiming more than 2300 lives thus far, the contagious plague has exacerbated existing growth challenges. The effects of the pandemic have led to an estimated real gross domestic product (GDP) contraction of 7.9% in 2020, according to the World Bank, worse than that of the 2009 global financial crisis.
The contraction reflects the impact that reduced global demand, travel restrictions and social distancing measures have had on output in crucial production and export sectors, including the diamond industry and tourism.
Botswana’s fiscal deficit is set to widen to 11.3% of GDP in FY2020/21, from 5.6% in FY2019/20, reflecting a sharp decline in mineral revenues, a sticky public sector wage bill, and the impact of the COVID-19 spending. Similarly, the current account deficit is estimated to have widened to 8 percent of GDP in 2020 following the sharp decline in diamond exports.
Developments in the global diamond industry will significantly impact the short-term recovery, given Botswana’s dependence on the commodity. While recovery is expected in 2021 due to a favourable outlook for the diamond industry, the economic impact of COVID-19 is likely to be deep and long-lasting. The P1.5 billion African Development Bank loan comes after the World Bank approved a P2.5 billion boost for Botswana early this year.
The Programmatic Economic Resilience and Green Recovery Development Policy Loan (DPL) will support the implementation of Botswana’s Economic Recovery and Transformation Plan and is designed to strengthen COVID-19 pandemic relief while bolstering resilience to future shocks.
In August, Botswana received the International Monetary Fund (IMF) 189 Special Drawing Rights allocation worth P3 billion. The IMF SDR is a non-currency asset that Botswana can convert into hard currency by trading it with other IMF member countries.