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Thuli’s multi-million pula Gamble

The Botswana Gambling Authority (The Authority) has begun the process of selecting an operator for the Botswana National Lottery. The non-refundable one Million Pula applications are now open and the lucky applicant will use the same license for the period of ten years with annual licence fee of the same amount.


Gambling Authority Chief Executive Officer, Thulisizwe Johnson, announced at a media briefing earlier this week that each applicant will be charged the non- refundable fee. He further stated that even though an annual P1 Million licence fee will be charged for the next ten years, the regular tax will apply as well as the gambling levy. The Gambling Authority explained the National Lottery Request For Application (RFA) process, and further offered details on how the lottery can support economic diversification.


The Gambling Authority, a statutory body mandated with licensing and regulating the gambling industry in Botswana, recently started a search for the nation’s first Lottery operator. This comes three months after the Gambling Authority Board approved the issuing of licenses for Casinos, Lottery, Sports Betting and Bingo. The process towards selecting an operator for the Botswana National Lottery started earlier this month following the publication of a guiding document for the bidders.


The draft document has been made available up to mid-month to allow the public an opportunity to comment directly to the Gambling Authority before the final RFA is published. The RFA is the guide document which shall be used to provide information on the process and the information required from applicants to be assessed for the award to the successful operator.


The draft document sets out details of the National Lottery opportunity together with the process and requirements connected with submitting the application. The applicants will be required to provide a complete solution for the lottery, including: setting up and running the lottery; designing, building, financing and operating the requisite infrastructure and systems; designing, distributing and marketing lottery games and ensuring a smooth transition from award of licence to operations.


At the press briefing, Johnson, Gambling Authority’s CEO, said the search for the operator for the national lottery has begun and the licence will be for a period of ten years. He also said the main criteria to awarding the licence hinge on the investment required for operating the lottery and the knowledge and the systems. Mr. Johnson says the lottery will provide some form of entertainment for people while also adding to government revenues.


“Through the National Lottery Distribution Fund, money will be disbursed for good causes, mainly for sports, charities, the arts, and other good causes. Even winning the jackpot can change a person’s life although statistically it’s a rare occurrence,” the CEO said.


It was revealed that the assessment process for choosing the operator will involve due diligence, in-camera interviews, scheduled public hearings, site visits and presentations. The preferred operator will then be announced in September. The Authority says once the licence has been issued and the lottery is up and running, it is expected that it will result in increased revenues for the government and also support economic diversification. Furthermore, there is expectation of job creation and support for other businesses that will be outsourced.


Mr. Johnson emphasised that in preparation for Botswana’s first national lottery, they intend to make the process as transparent as possible, citing the anti-corruption policy and whistle blowing as some measures put in place to mitigate against corrupt practices. Moreover, auditors will be appointed to oversee the process and provide assurance of the process. The Gambling Authority CEO said that they are looking for experienced lottery operators with prior experience in penetrating and managing a new market. This move is done to ensure responsible gambling at all time, which includes crackdown on illegal gambling and protection of the weak and vulnerable that might fall prey to gambling addiction.


The chosen lottery operator is expected to impart skills to citizens through training and development, setting the stage for possible succession by a local operator in later years. Apart from acquiring new industry skills, newly started businesses owned by young people will be given priority during local procurement tenders. The Authority says a well run lottery system can help the country reduce its dependence on diamonds revenue and charter a new path to economic diversification.


While it will be Botswana’s first national lottery, the practice has been growing with popularity in Africa. According to World Game, a site that provides lottery fans with a global overview of how that game has taken root worldwide, Lottery games aren’t quite as numerous in Africa as they are elsewhere, but there are certainly enough of them to give players the chance to win huge sums of money for the cost of a single ticket. Part of the reason why the number of games is lower in Africa than it is in Europe or Asia relates to geography and population. Simply put, there are vast regions in Africa that are populated by a relatively small number of people, and it is therefore not as necessary for every region to have its own range of lottery games.


In Africa there are several countries with a national lottery; Algeria, Ghana, Kenya, Mauritius, Morocco, South Africa and South Sudan. South Africa has two of the most popular – the Lotto and the Powerball. Lotteries in Africa are most often viewed as games that are to be played primarily for entertainment purposes, with the excitement of having a chance of winning a jackpot being its own reward.

 

This seems to be the predominant view to lottery games the world over, although of course some players take their participation much more seriously than others. It is widely predicted that lottery games in Africa will continue to grow in popularity, not only among African players themselves but also with lottery players around the world now that it is possible for them to buy African lottery tickets online.

ECONOMIC IMPACT

Despite its growing popularity, there is little consensus amongst experts on the true economic benefits of the game on a large scale. Many experts, particularly economists, argue that the economy would get more boost if consumers bought goods and services instead of lottery tickets. They further argue that spending money on businesses helps spur much more economic activity than gambling on the lottery.


Lotteries run for or by governments are used to support public programs such as infrastructure development, public safety, public health and education. The principal argument used to support lotteries has focused on their value as a source of "painless" revenue, contributed by players voluntarily spending their money.


Lottery tickets have become a significant source of funds for governments, and the winners obviously benefit greatly. But lotteries for the most part have a regressive impact. Studies have found that the burden falls disproportionately on people with lower incomes, who typically spend a greater portion of their income on lotteries than those with higher incomes. It is a burden because the odds are worse than other forms of gambling.

 

The usual presumption is that people know what’s good for them, and that they’re better off if you allow them to spend their money on whatever they personally value the most. For many people, gambling may be just another form of entertainment. But for others it is a very destructive compulsion.


THE RFA EXPLAINED
 

The draft RFA has already been published in the Authority’s website for public comments. The RFA is the guide document which shall be used to provide information on the process and the information required from applicants to be assessed for the award. The purpose of the publication is to give the public an opportunity to comment directly to the Authority before the final RFA is published. In that regard, the Authority has invited the public to provide comments on the DRAFT National Lottery RFA document which has been made available for download on their website. March 28, 2017, will mark the opening period for enquiries.


Once the one million pula application fee has been paid, the applicant will receive a detailed RFA. Bidders will be invited for a conference to take place on the 18th April and the final date for receiving applications is June 30th 2017. Completion of proposal evaluation, site visits and presentations to the Authority will be on 25th August and announcement of the award is scheduled to take place on November 17th, 2017. Johnson said there will be an open tender for a credible and reputable auditor who shall be the overseer of the project.   
As many people view this as an exclusive opportunity for the rich, the Authority CEO; Johnson sees it differently, “Contrary to popular belief, it is very cheap!”


According to Johnson, the investment required for operating the lottery and the knowledge and system are important criteria for award. He advised interested parties to form business consortiums and or seek technical partners or look for experienced operators to bid with.
“We want the lottery to be run by Batswana and we will train them,” said Johnson.


He added that lotteries are done for good causes because they provide government with tax revenue and energies people as they seek to guess the numbers that will come out of the draw. Through the national lottery distribution fund, money for good causes, mainly sports, charities and the arts are disbursed. “Lotteries can change one’s life. Winning the jackpot can change one’s life even though statistically this is a rare occasion,” Johnson pointed out.

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Business

Slight growth in GDP as economy battles return

28th July 2021
Peggy-Serame

Botswana’s economy showed slight growth signs in the first quarter of 2021, following a devastating year in 2020.

During 2020, the entire second quarter was on zero economic activity as the country went on total lockdown in an effort to curb the spread of the virus.

Diamond trade plummeted to record low levels as global travel restrictions halted movement of both goods and people and muted trade.

The end result was a significant decline for the local economy, at an estimated 7 percent contraction, just marginally below the 2008/09 global financial crises.

According to figures released by Statics Botswana this week, the country’s nominal Gross Domestic Product for the first quarter of 2021 was P47.739 billion compared to a revised P45.630 billion registered during the previous quarter.

This represents a quarterly increase of 4.6 percent in nominal terms between the two periods.

During the quarter, Public Administration and Defence became the major contributor to GDP by 18.4 percent, followed by Wholesale & Retail by 11.4 percent. The contribution of other sectors was below 6.0 percent, with Water and Electricity Supply being the lowest at 1.6 percent.

Real GDP for the first quarter of 2021 increased by 0.7 percent compared to a contraction of 4.6 percent registered in the previous quarter.

The improvement in the first quarter 2021 GDP reflected continued efforts to reopen businesses and resume activities that were postponed or restricted due to the COVID-19 pandemic.

The real GDP increased by 0.7 percent during the period under review, compared to an increase of 1.2 percent in the same quarter of 2020.

The recovery in the domestic economy was observed across majority of industries except Accommodation & Food Services, Mining & Quarrying, Manufacturing, Construction, Other Services and Agriculture, Forestry & Fishing.

The overall slow performance of the economy was mainly due to the impact of measures that were put in place to combat the spread of the COVID-19 pandemic.

The Non-mining GDP increased by 4.1 percent in the first quarter of 2021 compared to 4.0 percent increase registered in the same quarter of the previous year.

Agriculture, Forestry and Fishing industry decreased by 2.0 percent in real value added during the first quarter of 2021, relative to a contraction of 5.2 percent registered during the same quarter of 2020.

The main driver of the unfavorable performance stems from a decrease in real value added of Livestock farming by 3.0 percent.

Mining and Quarrying registered a decrease 11.4 percent in the real value added, this was mainly influenced by the drop in the Gold and Diamond real value added by 17.5 and 12.5 percent respectively.

Diamond production in carats went down by 12.1 percent while the tonnage of Gold produced went down by 17.5 percent.

The poor performance of the diamond sub-industry is attributed to the reduction in production due to a lower grade feed to the plant at Orapa in response to heavy rainfall and operational issues, including continued power supply disruptions.

With regard to Gold is due to diminishing resource base which affect production.

The Manufacturing industry recorded a decline of 7.4 percent in real value added during the first quarter of 2021, compared to a decrease of 2.3 percent registered in the corresponding quarter of 2020.

The deep low performance in the industry is observed in the two major sub-industries of Beverages & tobacco and Diamond cutting, polishing and setting by 57.0 and 38.5 percent respectively.

The reduction in Beverages is attributed to alcohol sale ban imposed during the quarter under review in order to reduce the spread of the COVID-19 virus. On the other hand, exports of polished diamonds went down by 24.9 percent compared to a decrease of 11.5 percent registered in the same quarter of the previous year.

The construction industry recorded a decline of 4.8 percent compared to an increase of 4.3 percent realized in the corresponding quarter in 2020.

This industry comprises of buildings construction, civil engineering and specialized construction activities. The industry is still showing signs of the consequences of COVID-19 pandemic. The industry recorded a negative growth of 7.4 percent in the previous quarter.

Water and Electricity Water and Electricity value added at constant 2016 prices for the first quarter of 2021 was P506.2 million compared to P378.2 million registered in the same quarter of 2020, recording a growth of 33.8 percent.

In the first quarter of 2021, Electricity recorded a significant growth of 62.4 percent compared to a decrease of 67.6 percent recorded in the corresponding quarter of 2020.

The local electricity production increased by 22.4 percent while Electricity imports decreased by 33.3 percent during quarter under review. The water industry recorded a value added of P231.3 million compared to P209.0 million registered in the same quarter of the previous year, registering an increase of 10.7 percent.

Wholesale and Retail Trade real value added increased by 11.4 percent in the first quarter of 2021 compared to an increase of 5.5 percent registered in the same quarter of the previous year. The industry deals with sales of fast moving consumer goods.

Diamond Traders recorded a significant growth of 112.7 percent as opposed to a decline of 22.7 percent recorded in the corresponding quarter last year. The positive growth is due to improved demand of diamonds from the global market.

The Transport and Storage value added increased by 0.6 percent in the first quarter of 2021, compared to a 2.4 percent increase recorded in the same quarter of the previous year.

The slight improved performance of the industry was mainly attributed to the increase in real value added of Road Transport and Post & Courier Services by 4.3 and 2.1 percent respectively.

The slow growth was influenced by a significant reduction in Air Transport services of 69.7 percent due to reduced number of passengers carried. Rail goods traffic in tonnes went down by 6.4 percent and passenger rail transport was not operating during the quarter under review.

Accommodation and Food Services Accommodation and Food Services real value added declined by 31.7 percent in the first quarter of 2021 compared to a decrease of 4.4 percent registered in the same quarter of the previous year. The reduction is largely attributed to a decrease of 42.1 percent in real value added of the Accommodation activities subindustry.

The suspension of air travel occasioned by Covid-19 containment measures impacted on the number of tourists entering the borders of the country and hence affecting the output of Hotels and Restaurants industry. COVID-19 restriction measures resulted in reduced demand for leisure and conferencing activities, as conferences are largely held through virtual platforms.

Finance, Insurance and Pension Funding industry registered a positive growth of 8.3 percent due to the favorable performance from monetary intermediation and Central Banking Services by 16.4 and 5.4 percent respectively during quarter under review.

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Business

Chobe Holdings secures P16 million for dark days

28th July 2021
Chobe Holdings

It is still tough in the tourism industry — big players in this sleeping giant are not having it easy, but options are being explored to keep the once vibrant multibillion Pula sector alive until the world gets back to normalcy.

One of the primary measures against the spread of Covid-19 is to stay home; this widely pronounced precaution against the global contagion that has claimed over 4 million lives across the world is however a thorn in the flesh of one of the major industries in the global economy — the tourism sector .

This sector is underpinned by travel – an act which is the virus‘ number one mode of spread, especially across borders.

Chobe Holdings Limited, one of Botswana’s leading high end eco-tourism giants said its survival strategies are underpinned by well-crafted stakeholder engagements in the mist of these unprecedented times of muted trading activity.

“Throughout the COVID-19 pandemic, Chobe continued to invest in and strengthen its relationships with key stakeholders in both its traditional markets and the SADC region,” the company directors updated shareholders this week.

To keep the business afloat, the company which owns and operates some of the exquisite tourism destinations along the banks of the mighty Chobe said it has triggered its existing available debt financing avenues.

Chobe revealed that its current overdraft of BWP 25 million has been extended on favourable terms.

The company shared that it has negotiated a further USD 1.5 million (over P16 million) standby loan with a flexible settlement terms and preferable cost implications to the bottom line.

“We are confident that the Group has sufficient cash inflows, cash reserves and un-utilized prearranged borrowing in place to settle any liabilities falling due and support the smooth recovery of operations in the short and medium term,” the company directors said, noting that they will retain the flexibility to vary operations should market conditions change.

Early this year, Chobe announced that the ongoing crisis in the tourism industry forced the company to draw from its prearranged overdraft facility of P25 million to the extent of P11.6 million.

Last year Chobe’s occupancy levels around its lodges and hotels went down 89 percent. This resulted in unprecedented revenue decline of 93% to P27.78 million from the P373.94 million in the previous year ended February 2020.

Operating profits went down 159% with profit after tax down 170%, mirroring a loss of over P67 million.

Chobe management said during the last half of the financial year they have done all they could to contain costs across the company’s operations.

During the last half of the year Chobe’s marketing and reservations teams continued to pursue the “don’t cancel but defer policy”.

“We thus continue to hold advance travel receipts, to the value of about P34 million at the financial year end,” the company revealed early this year.

Chobe said it continues to engage Government, through HATAB and BTO to prioritize the vaccination of workers in the tourism sector.

“Throughout the pandemic we have ensured that employees are trained in and comply with COVID-19 infection mitigation protocols as well as ensuring that all visitors to our remote camps and lodges as well as our staff and contractors are tested for COVID-19 before reaching the camp or lodges,” the company said.

However, the company said vaccinating the tourism staff will provide the best way to ensure that both employees and guests are protected from the virus.

“We continue to manage our cashflow through stringent cost control measures, balanced against the protection of the Group’s physical assets and the wellbeing and retention of its people,” the company said.

Chobe has successfully retained its top management through the pandemic.  To this end the company directors continue to closely monitor the Group’s recovery from COVID-19 and adjust salary reductions to support operations and aid retention.

Domestic and regional travel resumed during the second quarter of the 2020/21 financial year with the Group opening a strategic mix of camps and lodges.

A comprehensive domestic, regional and international marketing plan was put in place to support these openings.

International travel resumed in the first quarter of the 2021/22 financial year with occupancies forecast to steadily increase, albeit from a low base, through the second quarter.

The company is optimistic that forward bookings are strong for the 2022/23 financial year.

“There is pent-up demand from our traditional source markets to travel now, but this is tempered by uncertainty and access constraints,” the company stated.

“Both the domestic and international markets are sensitive to such uncertainty, and it is critical that both the private and public sector work together to develop and publish clear, authoritative and consistent travel information in order to build confidence”

Chobe entered the pandemic with the Shinde camp rebuild in progress — one of its high end camps and this was completed in the first half of the 2020/21 financial year accounting for the majority of the Group’s capital expenditure for that period.

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Business

De Beers Q2 production jumps in response to strong rough diamond demand

28th July 2021
De-Beers -jwaneng-mine

De Beers Group, the world’s leading rough diamonds producer by value and Botswana’s partner in the diamond business, ramped up its production in the second quarter of 2021, in response to stronger demand for rough diamonds in the global markets.

The London headquartered diamond mining giant revealed in its production report this week that rough diamonds output  increased by 134% to 8.2 million carats in the three(3) months  of quarter 2 2021, “reflecting planned higher production to meet stronger demand for rough diamonds”.

This was against the backdrop of curtailed demand in the same quarter last year, mirroring the impact of Covid-19 lockdowns across southern Africa during that period.

In Botswana, where De Beers sources majority of its rough diamonds through partly government owned Debswana, production increased by 214% to 5.7 million carats. The percentage jump mirrored planned low production in the second quarter of 2020 where output was adjusted to market demands and implemented Covid-19 protocols.

Debswana operates four (4) Mines: Jwaneng Mine- being its flagship producer and largest revenue contributor. Jwaneng Mine which is the wealthiest diamond mine in the world by value is envisaged for multi-billion expansion to an underground operation in future to stretch its existence by few more decades.

The underground project which is anticipated to cost a whooping P65 billion will be the world‘s largest underground diamond mine.

The company which accounts for over 65 % of De Beers’s global production also operates Orapa Mine- one of the world’s largest by area, Letlhakane Mine currently a tailings treatment operation and Damtshaa Mine which is under care and maintenance following market shrink in 2020.

Namibia production decreased by 6% to 0.3 million carats, primarily due to planned maintenance of the Mafuta vessel which was completed in the quarter and another vessel remaining demobilized.  In Namibia De Beers sources diamonds both in land and marine through Namdeb and Debmarine respectfully.

In South Africa-the spiritual home ground of De Beers Group, production increased by 130% to 1.3 million carats, due to planned treatment of higher grade ore from the final cut of the Venetia open pit, as well as the impact of the Covid-19 lockdown in Q2 2020.

Production in Canada increased by 14% to 0.9 million carats, primarily reflecting the impact of the Covid-19 measures implemented in Q2 2020.

De Beers said consumer demand for polished diamonds continued to recover, leading to strong demand for rough diamonds from midstream cutting and polishing centers, despite the impact on capacity from the severe Covid-19 wave in India during April and May.

Rough diamond sales totaled 7.3 million carats (6.5 million carats on a consolidated basis), from two Sights, reflecting the impact of the reduced Indian midstream capacity on Sight 4, compared with 0.3 million carats (0.2 million carats on a consolidated basis) from two Sights in Q2 2020, and 13.5 million carats (12.7 million carats on a consolidated basis) from three Sights in Q1 2021.

The H1 2021 consolidated average realized price increased by 13% to $135/ct (H1 2020: $119/ct), driven by an increased proportion of higher value rough diamonds sold.

While the average price index remained broadly flat, the closing index increased by 14% compared to the start of 2021, reflecting tightness in inventories across the diamond value chain as well as positive consumer demand for polished diamonds.

Full Year Guidance Production guidance is tightened to 32–33 million carats (previously 32-34 million carats (100% bases)), subject to trading conditions and the extent of any further Covid-19 related disruptions.

When commenting to 2021 quarter 2 production figures, Mark Cutifani, Chief Executive of Anglo American- De Beers parent, said the entire Anglo American Group delivered a solid operational performance supported by comprehensive Covid-19 measures to help safeguard the lives and livelihoods of its workforce and host communities.

“We have generally maintained operating levels at approximately 95% of normal capacity and, as a consequence, production increased by 20% compared to Q2 of last year, with planned higher rough diamond production at De Beers” he said.

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