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‘MITI created over 6000 new jobs in 2016’

Contrary to the belief that 2016 was the worst year in Botswana’s history as far as employment creation is concerned, considering that the economy bled thousands of jobs – with some notable cases of mining closures and parastatal retrenchments – figures from the Ministry of Investment Trade & Industry (MITI) show positive spin between April 2016 and December 2016. A total of over 6000 jobs were created, according to Minister Vincent Seretse.


Early last year Botswana Meat Commission (BMC)  which owns one of the largest beef abattoirs in Africa t retrenched hundreds at the Francistown branch, followed by liquidation of Khemakhau, Toteng mines and notably the crush of Copper-nickel giant, BCL  in October  2016 just to name but a few.


Liquidations and retrenchments saw over 10 000 celebrate Botswana’s Golden Jubilee year jobless. These causalities, MITI suggests, were countered by 6 275 job opportunities. “From April 2016 to December 2016, cumulative employment created by my Ministry stands at a total of 6 275 jobs, compared to 4 375 around the same time in the last financial year,” said Minister Seretse when delivering his Ministry’s 2017/18 budget last week.


 Minister Seretse also told parliament that government business facilitation and investment arms have carried out their mandate significantly well in the past financial year soliciting over a billion pula worth of business for Botswana economy. “Total investment realized through business facilitation provided by Citizen Entrepreneurial Development Agency (CEDA), Botswana Development Corporation (BDC) and Botswana Investment and Trade Centre (BITC), across different business sectors accounted for P1.529billion,” said Seretse.


Botswana Development Corporation (BDC)’s half year, mid 5 year strategy report indicates doubled profits before tax for the investment entity. Government lender CEDA has also significantly invested on new agriculture, hotel and hospitality property businesses which are currently doing well.

 

Botswana Investment & Trade Center (BITI) which parted ways with its Chief Executive Officer, Letsebe Sejoe last week registered P377 million of investment expansions resulting from their investor aftercare program, which encourages companies to reinvest locally. FDI attracted through BITC in 2015 amounted to P1.493 billion compared to P1.489 billion the previous year, while domestic investment amounted to P1.253 billion compared to P238.4 million the previous year. In 2015, BITC further facilitated exports valued at P2.2 billion.


According to Seretse, Botswana property and manufacturing industries also realized growth in the past financial year. “The country is generally doing well in the Property and Manufacturing Sector, which pertains to production of goods as well as development of infrastructure targeted towards promoting manufacturing,” the minister said.


Seretse cited the state of the art infrastructural developments at the new Central Business Department (CBD) Gaborone which houses some of the best properties in the continent, form elite hotels, business offices and world class bourgeois residence. Furthermore, Seretse observed that Botswana’s ease of doing business has improved and significantly the country’s international rankings have also gone up.

 

“I wish to highlight that we are doing relatively well towards achieving our set targets in areas such as value of investment attraction and performing well in areas such as value of Exports and Business Start-ups. We also continue work on improving the ease of doing business environment and global competitiveness, “The Global Competitiveness Report that was released on the 28th September 2016 ranked Botswana 64 out of 138 countries and in the 2017 Ease of Doing Business Report, Botswana improved one place, from position 72 in 2016 to 71 in the 2017 Report. In the Global Enabling Trade Report that was released on 1st December 2016, Botswana made significant strides on the efficiency front as indicated by the country leading the region at Position one (1) followed by Rwanda and South Africa, respectively,” he added.


To promote and enhance ease of doing business in Botswana, Minister Seretse further told parliament that the Government of Botswana has partnered with the government of New Zealand and the World Bank to implement online registration of companies and business in a bid to fast track start up enterprises locally. He also told parliament that the World Bank will technically support the entire doing business reforms roadmap to place Botswana as a business & investment preferred place.


“The implementation of the Companies and Business Names Online Registration System Project funded by the New Zealand Government is ongoing. To facilitate the implementation of the project, the partnership arrangement between the New Zealand Ministry of Foreign Affairs and Trade (MFAT) and the Ministry of Investment, Trade and Industry (MITI) was signed on 16th July, 2016,” he said.


 He also highlighted that CIPA was currently undertaking the Modernization of the Intellectual Property Office project, which aims to establish an efficient and effective operational and technical framework for the business processes related to the intellectual property applications and registration processes.


“The project which is funded by World Intellectual Property   will allow the Companies and Intellectual Property Authority to offer online registration of intellectual property rights to improve service delivery. Currently the World Bank is providing technical assistance  towards implementation of the “Doing Business Reforms” road map  which include the tax reforms, trade facilitation, Information and Communication Technology (ICT), among others,” said Seretse.


To further create jobs the minister responsible for wooing investors into Botswana revealed that through initiatives such as the Economic Diversification Drive (EDD), Cooperative Society support programs, LEA entrepreneurship awareness initiative s the government intends to promote more citizen participation in businesses and job creation undertakings. Vincent Seretse also announced the Milk Afric Project in Lobatse was finally taking shape. The Project is expected to create jobs and reduce Botswana’s import bill in milk and milk by products commodities.


However experts and business analysts still cry foul of Botswana’s commitment to promoting ease of doing business and creating jobs for locals. Last year during the deliberations of the Parliamentary Committee on Public Enterprises & Statutory Bodies, former Botswana Investment & Trade Center Chief Executive Officer, Letsebe Sejoe told the committee led by Samson Guma Moyo that Botswana’s immigration laws were currently a nightmare to investors.


BITC, which is mandated with wooing investors to Botswana and promoting local exports  grieved to lawmakers that investors were getting discouraged and moving to other countries because Botswana work permits , visa and business trade licenses procedures were cumbersome.


Specially Elected legislator Bogolo Kenewendo who is also a Specialist in Investment, Trade and Financial Economic issues noted in her response to 2017/16 Budget speech that as government moves to diversify the economy, facilitating and enhancing ease of doing business was key to achieving an industrial economy that created employment for its people and the youth.


Upcoming Shrewd economist, Moatlhodi Sebabole who is head of Economic Research at First National Bank Botswana also pleaded with the government to relax trade and immigration regulations. In his words, the youthful analyst said: Botswana’s Foreign Direct Investment was still untapped.


Speaking at the FNBB Budget Speech Review recently, Sebabole compared Botswana to countries such as Mozambique and the Democratic Republic of Congo which were doing well in attracting foreign investors to set up business and create employment for their natives.
“If you look at our FDI figures, they are very low compared to countries I have mentioned, that raises a concern that there might be something we are not doing right,” he said.


He further explained that compared to those countries Botswana has better political stability with no civil unrest. “It suggests that possible there was somewhere we failing as far as attracting investors to Botswana noting that cumbersome and delayed processes and requirements with work permits and immigration go how was not an exception.”

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Business

New study reveals why youth entrepreneurs are failing

21st July 2022
Youth

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.”

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Business

BHC yearend financial results impressive

18th July 2022
BHC

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.”

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Business

Commercial banks to cash big on high interest rates on loans

18th July 2022
Commercial-banks

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.

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