There is a flicker of hope for the 6000 ex-miners who were recently axed from BCL following government’s decision to put the mine on provisional liquidation – finally the process of payments of their benefits has begun.
Appointed Liquidator Nigel Dixon Warren has confirmed and started the processing of paying the benefits from his jurisdiction which includes mainly terminal benefits, leave pays and bonuses. The miners’ minds have been settled, amid all the struggle of accepting the reality of job loss and the fear of pocketing next to nothing in the pension payout as BCL Staff Pension Fund (BCLSPF) and its asset manager AON announced the relatively good news.
Speaking this week Monday (December 19) in Selibe Phikwe Town Hall, Mr John Gaborutwe, Chairman of the BCL SPF told thousands of gathered former BCL employees that their asset manager, AON Botswana has began processes to roll out payment for their pension benefits, adding that however because of the large volume of payments to roll and issue out, the undertaking will take time.
According to Gaborutwe the Fund which was established 5 years ago has over 4300 members who worked at the Phikwe mine.”This is the money from our members who contributed five percent of their monthly salaries to preserve with us, together with the ten percent of their salaries contributed by the employer which was BCL Limited,” explained Gaborutwe.
When quizzed about whether the cash strapped and liquidated BCL has paid all of the ten percent as per employer- employee contracts, the Fund Chairman confirmed the company has indeed transacted their contribution to the Staff fund. Confirming that BCL held their end of the deal, AON Botswana Pension Consultancy Deputy Director, Peter Hikhwa told the Fund members that BCL has been paying the 10 percent every month, adding that in the cases of delay the oversight body NBFIRA was roped in to make sure the law and agreement was observed.
“According to NBFIRA regulations the employer pays out their contribution to the Pension Fund at least not beyond the 21st of the following month, and BCL has been meeting that deadline,” he said .Hikhwa explained that the recent payment was paid by the liquidator following the October 2016 final payments which came just before workers’ contracts were terminated on the 31st of the same month.
According to Hikhwa, pension payments will be made in two phases, the first encompassing members over 50 years and those that have reached the 60 years retirement age. He explained that the group will receive a third of their pension tax free and will have the option of a complete 100 percent payout. Hikhwa further said that the threshold houses one percent of 60 year olds, nine percent of 50-55 years old and 11 percent in the 55-59 age group making it to account for 21 percent of the total membership.
Hikhwa further unpacked that the other threshold comprises members under the age of 50 years who will receive one third of their pension, 33.3 percent of that taxed, adding that according to the contract and pension agreements two thirds of the under 50s will only be paid once they reach retirement age being from 50-60 of which he noted would have generated interest. “In a case of the unfortunate event of death, your next of kin as you provided to us, as well as your family will be paid the benefits in your absence,” he confirmed to the young pensioners.
The representative from the Fund Manager also highlighted that cumbersome processes for the liquidation process which includes providing information about retained BCL employees before the Pension Fund roll out processes can begin are still being carried out. “Once the liquidator clears with us which employees he retained, we will now engage Botswana Unified Revenue Services (BURS) to clear with them.” He added that the process is expected to run until February.
According to Hikhwa new accounts will be created specifically for the pension payment. “We are in talks with a bank so that we create fresh accounts which will be active for 3 years, the account will operate like any other current account and will incur bank charges and tariffs like any other bank account,” he explained. The AON Pension Consultant revealed that the fresh account creation is necessary to fast track payment under a uniform integrated system, adding that once the money is paid beneficiaries can transfer the money to any other account they have and juggle with their hard earned cash as they deem fit like money in any other account. Furthermore Hikhwa told the gatherers that members can also transfer their remaining pension to other funds in an event they get new employment elsewhere or where ever they deem fit and qualify so.
Hikhwa concluded by observing that members will be notified once the processes with the liquidator, BURS and the contracted Bank are concluded. When Weekend Post quizzed him about the Bank which they will engage, the AON officer noted that the information can not be disclosed as the talks are not complete yet. “Once we seal the talks with the bank, the pension recipients will receive information of their pension standing, the one third and remaining two thirds thus the total pension they have gathered and how it was calculated as per the agreement,’’ he said.
He said that the ex miners should expect the money to be credited into their new accounts at least by March next year. Hikhwa revealed that they will be using a payment policy similar to that of retrenchment. BCL SPF Chairman, Gaborutwe told Weekend Post that the Fund was established in June 2011 and has over 4 300 members, adding that according to the audited report released in March 31st 2016 the fund was seating at P227 million. “We are a new fund, only 5 years old and we couldn’t have gathered much, but we were still developing ways to expand our portfolio and generate more interest for our members unfortunately the mine met its demise before we could achieve all that.”
Gaborutwe further noted that however, from March to date they expect the fund to have expanded to over P250 million from interest, “But the approximation figures we are receiving from our Fund Manager AON Botswana, which has been our pension management firm from the beginning, indicate we will pay out over P150 million, meaning about 100 million will remain for more interest generation and expansion,’’ he concluded.
Mowana Copper Mine in Dukwi will finally pay its former employees a total amount of P23, 789, 984.00 end of this month. For over three years Mowana Copper Mine has been under judicial management. Updating members, Botswana Mine Workers Union (BMWU) Executive Secretary Kitso Phiri this week said the High Court issued an order for the implementation of the compromise scheme of December 9, 2021 and this was to be done within 30 days after court order.
“Therefore payment of benefits under the scheme including those owed to Messina Copper Botswana employees should be effected sometime in January latest end of January 2022,” Kitso said. Kitso also explained that cash settlement will be 30 percent of the total Messina Copper Botswana estate and negotiated estate is $3,233,000 (about P35, 563,000).
Messina Copper was placed under liquidation and was thereafter acquired by Leboam Holdings to operate Mowana Mine. Leboam Holdings struck a deal with the Messina Copper’s liquidator who became a shareholder of Leboam Holdings. Leboam Holdings could not service its debts and its creditors placed it under provisional judicial management on December 18, 2018 and in judicial management on February 28, 2019.
A new company Max Power expressed interest to acquire the mining operations. It offered to take over the Mowana Mine from Leboam Holdings, however, the company had to pay the debts of Leboam including monies owed to Messina Copper, being employees benefits and other debts owed to other creditors.
The monies, were agreed to be paid through a scheme of compromise proposed by Max Power, being a negotiated payment schedule, which was subject to the financial ability of the new owners. “On December 9, 2021, Messina Copper liquidator, called a meeting of creditors, which the BMWU on behalf of its members (former Messina Copper employees) attended, to seek mandate from creditors to proceed with a proposed settlement for Messina Copper on the scheme of compromise. It is important to note that employee benefits are regarded as preferential credit, meaning once a scheme is approved they are paid first.”
A savingram the Ministry of Local Government and Rural Development sent to Town Clerks and Council Secretaries explaining why councilors across the country should not have access to their terminal benefits before end of their term has been revealed.
The contents of the savingram came out in the wake of a war of words between counselors and the Ministry of Local Government and Rural Development. The councilors through the Botswana Association of Local Authorities (BALA) accuse the Ministry of refusing to allow them to have access to their terminal benefits before end of their term.
This has since been denied by the Ministry. In the savingram to town councils and council secretaries across the country, Permanent Secretary in the Ministry of Local Government and Rural Development Molefi Keaja states that, “Kindly be advised that the terminal benefits budget is made during the final year of term of office for Honorable Councilors.” Keaja reminded town clerks and council secretaries that, “The nominal budget Councils make each and every financial year is to cater for events where a Councilor’s term of office ends before the statutory time due to death, resignation or any other reason.”
The savingram also goes into detail about why the government had in the past allowed councilors to have access to their terminal benefits before the end of their term. “Regarding the special dispensation made in the 2014-2019, it should be noted that the advance was granted because at that time there was an approved budget for terminal benefits during the financial year,” explained Keaja. He added that, “Town Clerks/Council Secretaries made discretions depending on the liquidity position of Councils which attracted a lot of audit queries.”
Keaja also revealed that councils across the country were struggling financially and therefore if they were to grant councilors access to their terminal benefits, this could leave their in a dire financial situation. Given the fact that Local Authorities currently have cash flow problems and budgetary constraints, it is not advisable to grant terminal benefits advance as it would only serve to compound the liquidity problems of councils.
It is understood that the Ministry was inundated with calls from some Councils as they sought clarification regarding access to their terminal benefits. The Ministry fears that should councils pay out the terminal benefits this would affect their coffers as the government spends a lot on councilors salaries.
Reports show that apart from elected councilors, the government spends at least P6, 577, 746, 00 on nominated councilors across the country as their monthly salaries. Former Assistant Minister of Local Government and Rural Development, Botlogile Tshireletso once told Parliament that in total there are 113 nominated councilors and their salaries per a year add up to P78, 933,16.00. She added that their projected gratuity is P9, 866,646.00.
A surge in consumer spending is expected to be a key driver of Botswana’s economic recovery, according to recent projections by Fitch Solutions. Fitch Solutions said it forecasts household spending in Botswana to grow by a real rate of 5.9% in 2022.
The bullish Fitch Solutions noted that “This is a considerable deceleration from 9.4% growth estimated in 2021, it comes mainly from the base effects of the contraction of 2.5% recorded in 2020,” adding that, “We project total household spending (in real terms) to reach BWP59.9bn (USD8.8bn) in 2022, increasing from BWP56.5bn (USD8.3bn) in 2021.” According to Fitch Solutions, this is higher than the pre-Covid-19 total household spending (in real terms) of P53.0 billion (USD7.8bn) in 2019 and it indicates a full recovery in consumer spending.
“We forecast real household spending to grow by 5.9% in 2022, decelerating from the estimated growth of 9.4% in 2021. We note that the Covid-19 pandemic and the related restrictions on economic activity resulted in real household spending contracting by 2.5% in 2020, creating a lower base for spending to grow from in 2021 and 2022,” Fitch Solutions says.
Total household spending (in real terms), the agency says, will increase in 2022 when compared to 2021. In 2021 and 2022, total household spending (in real terms) will be above the pre-Covid-19 levels in 2019, indicating a full recovery in consumer spending, says Fitch Solutions. It says as of December 6 2021 (latest data available), 38.4% of people in Botswana have received at least one vaccine dose, while this is relatively low it is higher than Africa average of 11.3%.
“The emergence of new Covid-19 variants such as Omicron, which was first detected in the country in November 2021, poses a downside risk to our outlook for consumer spending, particularly as a large proportion of the country’s population is unvaccinated and this could result in stricter measures being implemented once again,” says Fitch Solutions.
Growth will ease in 2022, Fitch Solution says. “Our forecast for an improvement in consumer spending in Botswana in 2022 is in line with our Country Risk team’s forecast that the economy will grow by a real rate of 5.3% over 2022, from an estimated 12.5% growth in 2021 as the low base effects from 2020 dissipate,” it says.
Fitch Solutions notes that “Our Country Risk team expects private consumption to be the main driver of Botswana’s economic growth in 2022, as disposable incomes and the labour market continue to recover from the impacts of the Covid-19 pandemic.” It says Botswana’s tourism sector has been negatively impacted by the Covid-19 pandemic and the related travel restrictions.
According to Fitch Solutions, “The emergence of the Omicron variant, which was first detected in November 2021, has resulted in travel bans being implemented on Southern African countries such as South Africa, Botswana, Lesotho, Namibia, Zimbabwe and Eswatini. This will further delay the recovery of Botswana’s tourism sector in 2021 and early 2022.” Fitch Solutions, therefore, forecasts Botswana’s tourist arrivals to grow by 81.2% in 2022, from an estimated contraction of 40.3% in 2021.
It notes that the 72.4% contraction in 2020 has created a low base for tourist arrivals to grow from. “The rollout of vaccines in South Africa and its key source markets will aid the recovery of the tourism sector over the coming months and this bodes well for the employment and incomes of people employed in the hospitality industry, particularly restaurants and hotels as well as recreation and culture businesses,” the report says.
Fitch Solutions further notes that with economies reopening, consumers are demanding products that they had little access to over the previous year. However, manufacturers are facing several problems. It says supply chain issues and bottlenecks are resulting in consumer goods shortages, feeding through into supply-side inflation. Fitch Solutions believes the global semiconductor shortage will continue into 2022, putting the pressure on the supply of several consumer goods.
It says the spread of the Delta variant is upending factory production in Asia, disrupting shipping and posing more shocks to the world economy. Similarly, manufacturers are facing shortages of key components and higher raw materials costs, the report says adding that while this is somewhat restricted to consumer goods, there is a high risk that this feeds through into more consumer services over the 2022 year.
“Our global view for a notable recovery in consumer spending relies on the ability of authorities to vaccinate a large enough proportion of their populations and thereby experience a notable drop in Covid-19 infections and a decline in hospitalisation rates,” says Fitch Solutions. Both these factors, it says, will lead to governments gradually lifting restrictions, which will boost consumer confidence and retail sales.
“As of December 6 2021, 38.4% of people in Botswana have received at least one vaccine dose. While this is low, it is higher than the Africa average of 11.3%. The vaccines being administered in Botswana include Pfizer-BioNTech, Sinovac and Johnson & Johnson. We believe that a successful vaccine rollout will aid the country’s consumer spending recovery,” says Fitch Solutions. Therefore, the agency says, “Our forecasts account for risks that are highly likely to play out in 2022, including the easing of government support. However, if other risks start to play out, this may lead to forecast revisions.”