Head of South African Development Community (SADC) Public Private Partnership(PPP) Network, Kogan Pillay has warned that Botswana and Africa will go into recession in the next 10 years if the country does not adequately invest in its infrastructural needs.
Pillay, who has vast experience in the implementation of PPPs and has previously worked for the South African government, is of the view that Africa’s big investors will shun the continent because of lack of infrastructure necessary for doing business. “World Bank has warned about this happening,” he said at a workshop organised by Ministry of Finance and Economic Management this week.
“Africa would not attract FDI (Foreign Direct Investment) because nobody would want to do business in a country which does not have infrastructure. It makes doing business difficult,” Pillay stated. According to Pillay, Africa needs US$ 90 billion to fund its infrastructural needs but it only has US$45 million availed for such.
Furthermore, Pillay revealed that Botswana is not ready for PPPs until it develops a legal frame work which will guide investment and implementation of PPPs. “What Botswana has now is a policy, but you need to put it into law like other countries including South Africa,” he said. Pillay said PPPs are long term concessions to the private sector and should be done in a prudent manner to avoid forcing the country into bad commitments.
“You should do it in a proper manner and do not screw it or else it will be like being in a bad marriage,” he said. Pillay said for government to ensure that it has good PPPs implementations it should first have good, experienced and qualified transactional advisors and should also appoint qualified project officers.
The dangers facing governments in Africa according to Pillay is that they are not willing to pay for the best talents and as a result end up losing them to private sectors. He said if government is to negotiate PPPs with private companies, it should have the best negotiators to get the best deal.
“If you do not have the right capacity, the private sector will rob you. I have seen governments being robbed by the private sector in PPPs so hire the right people,” he warned. He said African countries should know their needs and only go into partnership with the private sector for projects they truly need. He dissmissed suggestions that PPPs are too complex to be implement easily in Botswana and other African countries. “Government officials are lazy and want to pursue easy options which end up being costly. Africa is in its situation becuase of that kind of thinking,” he said.
Pillay also indicated that PPPs are less likely to be prone to corruption hence lack of good will on its implementation. He also expressed concern that there is a misconception that PPPs cost government more, while the reality is the opposite. “97 percent of PPPs projects are completed on time and on budget. The governments actually incurred no losses at all because the risk has been transfered to the private entity,” he said.
Deputy Permanent Secretary in the Ministry of Finance and Economic Management, Boniface Mphetlhe conceded that the implementation of projects thought traditonal or conventional methods has not led to desired outputs in all cases. “As our economy developed over the years, the projects became bigger and more complex. Examples of these are the power and road projects in response to the need to increase our power generating capacity and the increasing traffic volumes on our roads respectively,” he said.
Mphetlhe said there is need to develop ideas on the implementation of projects and get rid of phobia that they may have to pursue alternative financing options for development projects. “It also comes at an opportune moment when we are about to commence implemenatation of the National Development Plan 11 that was approved by parliament at its last sitting.”
This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.
“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.
Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.
A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.
Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.
A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.
Each Placing Share, according to Botswana Diamond Executives has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from, 7th September 2020, being the date of the Placing Warrants issue.
In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.
The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.
In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.
Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.
The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”
In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.
Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.
The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.