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.”
A squeaky and glittering metaphoric smile was the look reflected from the Pula against the greenback this week and money market researchers lean this on optimism following Monday’s announcement of another Covid-19 vaccine which is said to have boosted emerging market economies.
With other emerging market currencies, the Pula too reacted to optimism and fanfare on the new Covid-19 vaccine against the weakening US dollar which has been losing its shine since the uncertainty laden US elections.
After bouncing back into the Johannesburg Stock Exchange (JSE) last week Friday, following a year of being in the freezer, the Choppies stock started this week with much fluidity.
Choppies was suspended in both the Botswana Stock Exchange and its secondary listing at the JSE for failure to publish financial results. Choppies suspension on Botswana Stock Exchange was lifted on 27 July 2020. On Friday last week, when suspension was being lifted, Choppies explained that this came into fruition “following extensive engagement with the JSE.”
Choppies stock, prior to suspension, hit a mammoth decline in value of more than 60 percent, especially in September 2018. Waking from a 24 month freezer, last week the Choppies share price was at R0.64 and the stock did not make any movement.
However, Monday was the day when Choppies stock moved vibrantly, albeit volatile. Choppies’ value was on a high volatile mood on Monday, reaching highs of 200 percent. At noon, the same Monday, the Choppies share had reached R1.05. Before taking an uphill movement, Choppies stock slightly slipped by 2 cents. But the Choppies share rode up high and by lunch time the stock had reached the day’s summit of R2.00 and that was at 13:30 when investors were buying the stock for lunch.
The same eventful Monday saw gloom on the faces of Choppies rivals, when Choppies gained by 220.31 percent around lunch time its rivals in the JSE Food & Drug Retailers sector were licking wounds. Spar lost 2.94 percent, Pick Pay fell by 2.43 percent, Shoprite 7.52 percent and Dis-Chem 1.98 percent. The only gainer was Clicks by a paltry 0.51 percent.
In an interview with BusinessPost, Choppies sponsors at the JSE PSG Capital Managing Director Johan Holtzhausen explained that the retailer’s stock was in high demand after a long suspension. He said when a company list or a suspension is lifted the market needs to find itself on the pricing of the share.
“Initially when the suspension was lifted there were more buyers than sellers. As far as we could see this created a shortage of shares so to speak and resulted in the price at which the shares traded going to R1.20 and eventually R2.05 before finding its level around R0.80 sent from a JSE perspective.
This is marked dynamics and reflect that there are investors that are positive about the stock in the long run. This is a snapshot over a short period and one requires a longer period to draw further conclusions,” said Holtzhausen in an interview talking about the Choppies stock.
On Monday this week where the Choppies value grew by 200 percent, the stock took a turn looking down, closing the day at R0.87 from a high of R2.00. According to local stockbroker Motswedi Securities on Monday while there was no movement by Choppies in the local stock exchange as the retailer appeared on the board as 141,000 shares traded at P0.60 each.
However in Choppies’ secondary listing the stock price rallied to over 200 percent during intraday trading on Monday before losing steam and declining to around R0.87 share.
Before press yesterday Choppies opened the market with the stock starting the day at R0.80 then went flat for few hours before taking a slide downward, dropping 5 cents in 30 minutes. Choppies then went flat at R0.75 for 50 minutes yesterday before going up at 10:20 am where it nearly recovered the open day price of 80 cents, but was shy of 1 cent. From 79 cents the price went flat until noon.
Competition and Consumer Authority (CCA) has revealed that in its assessment of the Jet take over by Foschini, there were considerations on possible market rivalry and a clash in targeted classes.
According to a merger decision notice seen by this publication this week, high considerations were made to ensure that Foschini’s takeover of Jet is not anyhow an elimination of rivalry or competition or if the two entities; the targeted and the acquiring enterprise serves the same class of customers or offer the same products, to elude the anti-trust issues or a stretch of monopoly.
The two entities are South African retailers whose services stretched to Botswana shores. Last month local anti-trust body, CCA, received an acquisition proposal from South African clothing retailer, Foschini, stating their intentions to take-over Jet.
South African government’s Business Rescue Practitioners earlier this year after finding out that Jet’s mother company, Edcon, is falling apart, made a decision that Foschini can buy Jet for R480 million. This means that Foschini will add Jet to its portfolio of 30 retail brands that trade in clothing, footwear, jewellery, sportswear, homeware, cell phones, and technology products from value to upper market segments throughout more than 4085 outlets in 32 countries on five continents.
However the main headache for the CCA decision which was released this week, is distinguishing the targeted and the acquiring entity businesses and services.
When doing a ‘Competitive Analysis and Public Interest’ assessment, CCA is said to have discovered that Foschini is classified as a “standard retailer” which targets middle-to-upper income consumers and it competes with stores such as; Truworths and Woolworths. The targeted entity, Jet, is on the lower league when compared to its acquirer, it serves customers of lower classes and is regarded as a discount/value retailer targeting lower income consumers or a mass market. This makes Jet to be in direct competition with Ackermans, Pepkor, Cash Bazaar and Mr Price.
“Therefore, a narrower view of the market is that Foschini through its stores trading in Botswana is not a close competitor to Jet. Additionally, there exist other major rivals who will continue to exercise competitive constraints on the merged enterprise post-merger,” concluded CCA this month.
The anti-trust body continued to explain that in terms of the Acquisition of a Dominant Position, the analysis shows that the acquisition of the target business by Foschini Botswana will result in an insignificant combined market share in the relevant market.
This made CCA reach to a conclusion that there is no case of an acquisition of a dominant position in the market under consideration or any other market on the account of the proposed transaction.
What supports the merger according to CCA is that it is in compliance with regards to ‘Public Interest Considerations’ because the findings of the assessment revealed that the transaction is as a result of the need for a Business Rescue by the target enterprise. This is so because in the event that the proposed transaction fails, it will translate into the loss of the employment positions at the target business.
“On that note the Authority (CCA) found it necessary to ensure that the proposed merger does not result in any retrenchments or redundancies. In light of this, the assessment revealed the critical need to protect the employees of the merged entity from possible merger specific retrenchments/ redundancies,” said CCA.
Before making a determination that the recently proposed transaction is not likely to result in the prevention or substantial lessening of competition or endanger the continuity of the services offered in the relevant market, CCA said it then moved into a concern for public interest which is a protection enshrined in the Competition Act of 2018.
CCA’s concern was mostly loss of livelihood or employment by 126 Batswana workers at Jet stores, stating that possible retrenchments or redundancies may arise as a result of implementation of the proposed merger.
Much to the desire of trade union or labour movements in Botswana and across Southern Africa where the Jet stores are stemmed-who also raised concerns about the retail’s workers job security- CCA subjects Foschini to keep the target entity 126 workers.
“There shall be no merger specific retrenchments or redundancies that may affect the employees of the merged enterprises. For clarity, merger specific retrenchments or redundancies do not include (the list is not exhaustive): i. voluntary retrenchment and/or voluntary separation arrangements; ii. Voluntary early retirement packages; iii. Unreasonable refusals to be redeployed; iv. Resignations or retirements in the ordinary course of business; v. retrenchments lawfully effected for operational requirements unrelated to the Merger; and vi. Terminations in the ordinary course of business, including but not limited to, dismissals as a result of misconduct or poor performance,” said CCA.
CCA also orders that Foschini informs it about all the details of 126 Jet employees within thirty (30) days of the merger approval date. CCA should also know information of when Foschini is implementing the merger, within 30 days of the approval date.
Other conditions include Foschini sharing a copy of the conditions of approval to all employees of the Jet or their respective representatives within ten (10) days of the approval date.
“Should vacancies arise in the target, the merged enterprise shall consider previous employment at one of the non-transferring Jet stores to be a positive factor to be taken into account in the consideration of offering potential employment,” said CCA.
According to CCA, in cases of any job losses, for the Authority to assess whether the retrenchments or redundancies are merger specific, at least three months before (to the extent that this deadline can be practically achieved and in terms of the prevailing and legally required employment practices) any retrenchments or redundancies are to take place, inform the Authority of: i. The intended retrenchments; ii. The reasons for the retrenchments; iii. The number and categories of employees affected; iv. The expected date of the retrenchments.