Ministry of Youth Empowerment, Sports and Cultural Development (MYESC) last week Tuesday signed a memorandum of agreement (MOU) with the Companies and Intellectual Property Authority (CIPA) for a partnership that will harness ease of doing business amongst Botswana’s youth. The agreement is expected to benefit and promote services delivery for both MYESC and CIPA.
Established in 2011 by an act of parliament, CIPA’s mandate is to register businesses and protect intellectual property rights, promoting and enabling rights of investors and rights holders. Through the partnership, the Authority wants to realise easy access of their services. Under the agreement CIPA will use MYESC offices countrywide to disseminate their much needed services which include mainly registration of business and company formation.
CIPA observes that the MOU will go a long way into complementing their 2020 vision of having Botswana as a business and investment attractive place. According to Paul Conductor Masena, Register General at CIPA, his organization has a mandate to create a conducive business environment by making business registration services more accessible to entrepreneurs.
“It is essential for CIPA to collaborate with key stakeholders such as MYESC to harness their competitive advantage in order to contribute positively to the ease of doing Business in Botswana,” he said. Masena observed that MYESC and CIPA services complement each other as far as unearthing vocational & creative business opportunities are concerned. “MYESC will be economically empowering young people through funding and capacity building and CIPA will be ensuring that intellectual properties & technical business ideas are protected,” he said.
From a MYSEC point of view the partnership will augment the ministry and enhance its mandate to administrate and dispense the 120 million pula Youth Development Fund. The Ministry of Youth which also has the mandate of cultural development sees the agreement as a milestone in protecting intellectual formations, properties, ideas from the cultural, native and creative industries.
According to the Permanent Secretary at the Ministry Kago Ramokate, the youth will easily access business start up and company formation services which are all prerequisites to benefiting from the Youth Development Fund. Ramokate noted that participation of youth in businesses and entrepreneurial undertakings creates employment and grows the economy.”
“The agreement will facilitate dialogue and more engagement on further amendments that can be made to improve service delivery as far as business registration is concerned, it’s a complementation, we need CIPA to register businesses and protect intellectual properties and we fund, develop and capacitate the ideas into live entities that empowers young people and creates employment,” said Ramokate.
Hilda Mocuminyane also from CIPA added that shortage of facilities in government departments and parastatals was a hindrance to effective service delivery thus departments and parastatals who offer complementing services to the same clientele must cooperate to take services to Batswana. “We also at CIPA are not an exception from shortage of resources due to budgetary constraints thus we saw it fit to collaborate with MYSEC to enhance our mandate delivery.
P20 MILLION TO 24 CREATIVE ENTREPRENEURS
The Memorandum of Understanding between CIPA and MYESC comes after CIPA Levy on Technical Device Fund (LTDF) dispensed over 20 million pula two weeks ago to resource the creative industry. A total amount of P20 269 684.14 was awarded to 24 beneficiaries from the creative industry only. Speaking at the unveiling ceremony in Gaborone a fortnight ago CIPA executives noted that the grant was awarded to winning creative proposals which seek to create employment and improve the local arts and creative industry.
Sponsored projects include Book publishing, film production, music, photography and art amongst others in the creative industry that can be protected by copyright. Other projects include capacity building projects and those that aim to diversify and improve the quality of the creative industries in Botswana.
One of the beneficiaries includes Elton G P Seleka who was granted over P800 000 to create Botswana’s first ever animated cartoons. The MOU between CIPA and Ministry of Youth signed this past Tuesday is observed to have come at the right time for both government entities who seek to empower mostly young people who account for the largest portion of Botswana’s population and are also affected highly by unemployment.
In a bid to empower young people even more and harness entrepreneurship amongst the youth, it is anticipated that government will soon introduce the innovation fund which seeks to grant start-up capital to young people who propose to come up with well researched groundbreaking innovative entrepreneurial undertakings that are geared at solving national challenges and also augment economic growth. This came to light at a Youth Pitso in Tlokweng recently when Minister of Tertiary Education, Research, and Science & Technology addressed attendants.
The recent study on youth entrepreneurship in Botswana has identified difficult access to funding, land, machinery, lack of entrepreneurial mindset and proper training as serious challenges that continue to hamper youth entrepreneurship development in this country.
The study conducted by Alliance for African Partnership (AAP) in collaboration with University of Botswana has confirmed that despite the government and private sector multi-billion pula entrepreneurship development initiatives, many young people in Botswana continue to fail to grow their businesses into sustainable and successful companies that can help reduce unemployment.
University of Botswana researchers Gaofetege Ganamotse and Rudolph Boy who compiled findings in the 2022 study report for Botswana stated that as part of the study interviews were conducted with successful youth entrepreneurs to understand their critical success factors.
According to the researchers other participants were community leaders, business mentors, Ministry of Trade and Industry, Ministry of Youth, Gender, Sport and Culture, financial institutions, higher education institutions, non-governmental institutions, policymakers, private organizations, and support structures such as legal and technical experts and accountants who were interviewed to understand how they facilitate successful youth entrepreneurship.
The researchers said they found that although Botswana government is perceived as the most supportive to businesses when compared to other governments in sub-Saharan Africa, youth entrepreneurs still face challenges when accessing government funding. “Several finance-related challenges were identified by youth entrepreneurs. Some respondents lamented the lack of access to start-up finance, whereas others mentioned lack of access to infrastructure.”
The researchers stated that in Botswana entrepreneurship is not yet perceived as a field or career of choice by many youth “Participants in the study emphasized that the many youth are more of necessity entrepreneurs, seeing business venturing as a “fall back. Other facilitators mentioned that some youth do not display creativity, mind-blowing innovative solutions, and business management skills. Some youth entrepreneurs like to take shortcuts like selling sweets or muffins.”
According to the researchers, some of the youth do not display perseverance when they are faced with adversity in business. “Young people lack of an entrepreneurial mindset is a common challenge among youth in business. Some have a mindset focused on free services, handouts, and rapid gains. They want overnight success. As such, they give up easily when faced with challenges. On the other hand, some participants argue that they may opt for quick wins because they do not have access to any land, machinery, offices, and vehicles.”
The researchers stated that most youth involved in business ventures do not have the necessary training or skills to maintain a business. “Poor financial management has also been cited as one of the challenges for youth entrepreneurs, such as using profit for personal reasons rather than investing in the business. Also some are not being able to separate their livelihood from their businesses.
Lastly, youth entrepreneurs reported a lack of experience as one of the challenges. For example, the experience of running a business with projections, sticking to the projections, having an accounting system, maintaining a clean and clear billing system, and sound administration system.”
According to the researchers, the participants in the study emphasized that there is fragmentation within the entrepreneurial ecosystem, whereby there is replication of business activities without any differentiation. “There is no integration of the ecosystem players. As such, they end up with duplicate programs targeting the same objectives. The financial sector recommended that there is a need for an intermediary body that will bring all the ecosystem actors together and serve as a “one-stop shop” for entrepreneurs and build mentorship programs that accommodate the business lifecycle from inception to growth.”
Botswana Housing Corporation (BHC) is said to have recorded an operating surplus of P61 Million, an improvement compared to the previous year. The housing, office and other building needs giant met with stakeholders recently to share how the business has been.
The P61 million is a significant increase against the P6 million operating loss realized in the prior year. Profit before income tax also increased significantly from P2 million in the prior year to P72 million which resulted in an overall increase in surplus after tax from P1 million prior year to P64 million for the year under review.
Chief of Finance Officer, Diratsagae Kgamanyane disclosed; “This growth in surplus was driven mainly by rental revenue that increased by 15% from P209 million to P240 million and reduction in expenditure from P272 million to P214 million on the back of cost containment.” He further stated that sales of high margin investment properties also contributed significantly to the growth in surplus as well as impairment reversals on receivables amounting to P25 million.
It is said that the Corporation recorded a total revenue of P702 million, an 8% decrease when compared to the P760 million recorded in the prior year. “Sales revenue which is one of the major revenue streams returned impressive margins, contributing to the overall growth in the gross margin,” added Kgamanyane.
He further stated professional fees revenue line declined significantly by 64% to P5 million from P14 million in the prior year which attributed to suspension of planned projects by their clients due to Covid-19 pandemic. “Facilities Management revenue decreased by P 24 million from P69 million recorded in prior year to P45 million due to reduction in projects,” Kgamanyane said.
The Corporation’s strength is on its investment properties portfolio that stood at P1.4 billion at the end of the reporting period. “The Corporation continues its strategy to diversify revenue streams despite both facilities management income and professional fees being challenged by the prevailing economic conditions that have seen its major clients curtailing spending,” added the CEO.
On the one hand, the Corporation’s Strategic Performance which intended to build 12 300 houses by 2023 has so far managed to build 4 830 houses under their SHHA funding scheme, 1 240 houses for commercial or external use which includes use by government and 1 970 houses to rent to individuals.
BHC Acting CEO Pascaline Sefawe noted that; BHC’s planned projects are said to include building 336 flat units in Gaborone Block 7 at approximately P224 million, 100 units in Maun at approximately P78 million, 13 units in Phakalane at approximately P26 million, 212 units in Kazungula at approximately P160 million, 96 units at approximately P42 million in Francistown and 84 units at approximately P61 million in Letlhakane. Emphasing; “People tend to accuse us of only building houses in Gaborone, so here we are, including other areas in our planned projects.”
Researchers from some government owned regulatory institutions in the financial sector have projected that the banking sector’s profitability could increase, following Bank of Botswana Monetary Policy Committee recent decision to increase monetary policy rate.
In its bid to manage inflation, Bank of Botswana Monetary Policy Committee last month increased monetary policy rate by 0.50 percent from 1.65 percent to 2.15 percent, a development which resulted with commercial banking sector increasing interest rate in lending to household and companies. As a result of BoB adjustment of Monetary Policy Rate, from 1.65 percent to 2.15 percent commercial banks increased prime lending rate from 5.76 percent to 6.26 percent.
Researchers from Bank of Botswana, the Non-Bank Financial Institutions Regulatory Authority, the Financial Intelligence Agency and the Botswana Stock Exchange indicated that due to prospects of high inflation during the second half of 2022, there is a possibility that the Monetary Policy Committee could further increase monetary policy rate in the next meeting in August 25 2022.
Inflation rose from 9.6 percent in April 2022 to 11.9 percent in May 2022, remaining above the Bank of Botswana medium-term objective range of 3 – 6 percent. According to the researchers inflation could increase further and remain high due to factors that include: the potential increase in international commodity prices beyond current forecasts, logistical constraints due to lags in production, the economic and price effects of the ongoing Russia- Ukraine conflict, uncertain COVID-19 profile, domestic risk factors relating to possible regular annual administered price adjustments, short-term unintended consequences of import restrictions resulting with shortages in supplies leading to price increases, as well as second-round effects of the recent increases in administered prices “Furthermore, the likelihood of further increases in domestic fuel prices in response to persistent high international oil prices could add upward pressure to inflation,” said the researchers.
The researchers indicated that Bank of Botswana could be forced to further increase monetary policy rate from the current 2.15 percent if inflation rises persistently. “Should inflation rise persistently this could necessitate an upward adjustment in the policy rate. It is against this background that the interest rate scenario assumes a 1.5 percentage points (moderate scenario) and 2.25 percentage points (severe scenario) upward adjustment in the policy rate,” said the researchers.
The researchers indicated that while any upward adjustment on BoB monetary policy rate and commercial banks prime lending rate result with increase in the cost of borrowing for household and compnies, it increase profitability for the banking sector. “Increases in the policy rate are associated with an overall increase in bank profitability, with resultant increases in the capital adequacy ratio of 0.1 percentage points and 0.2 percentage points for the moderate and severe scenarios, respectively,” said the researchers who added that upward adjustment in monetary policy rate would raise extra capital for the banking sector.
“The increase in profit generally reflects the banking industry’s positive interest rate gap, where interest earning assets exceed interest earning liabilities maturing in the next twelve months. Therefore, an increase of 1.5 percentage points in the policy rate would result in industry gains of P71.7 million (4.1 percent increase), while a 2.25 percentage points increase would lead to a gain of P173.9 million (6.1 percent increase), dominated by large banks,” said the researchers.