Botswana’s antitrust body has approved the proposed disposal of all the manufacturing assets of Can Manufacturers to Nampak Products Ltd and a yet to be formed Special Purpose Vehicle (“Newco”), which will be jointly controlled by Botswana Development Corporation and Nampak Limited.
The Botswana Competition Authority determined to conditionally authorise the proposed transaction in the market under consideration that there are no competition concerns that will arise as a result of the implementation of the proposed transaction and that it is not likely to result in a substantial lessening of competition, nor endanger the continuity of service in the market under consideration.
The approval comes almost two months after the acquiring entity made a bid for the struggling Can Manufacturers. Nampak Products is Africa’s leading package company from South Africa, and is wholly owned by the Johannesburg Stock Exchange listed Nampak Limited (incorporated in South Africa).
Nampak Products exports rectangular cans and lids, and large round cans from South Africa into Botswana. Some of the top shareholders of Nampak Limited are Allan Gray Investment Council; The Government Employee’s Pension Fund; Lazard Asset Management LLPC Group; Somerset Capital Management; and Visio Capital Management.
Can Manufacturers is a wholly owned subsidiary of BDC opened in 2008 at an investment of P128 million. The company’s operations are based in Lobatse. Can Manufacturers produces and supplies a range of cans for packaging of food items. The company produces cans in different sizes and specifications for the intended contents including dairy, meat, fish, fruit, vegetables and other food variants. Specifically, Can Manufacturers produces and supplies tinplate food cans and Endomat tinplate cans. The company is located in Lobatse and supplies cans throughout Botswana and South Africa.
BDC, wholly owned by the Government of Botswana, is a development finance institution founded to promote and facilitate the development of industrial, commercial, and agricultural enterprises within the framework of the Government of Botswana's plan for economic development. Under the leadership of Mr. Bashi Gaetsaloe, BDC turned around its fortunes after it implemented the Transformation programme which begun in 2014, shortly after Mr. Gaetsaloe was appointed the managing director.
Under the Transformation Programme, BDC returned to profitability after previous historic loss making position. Part of the Transformation Programme initiatives included revision of all major processes to reflect industry best practise; revision of risk management and governance policies; revision of legal agreements; deployment of a new organisational structure and right-sized the organisation; and, recruitment of new skills and capabilities, including the key roles of Chief Risk, Chief Operations and Chief Audit.
The Transformation Programme also focused on addressing key issues of restructuring BDC Group’s portfolio and balance sheet. In its 2015 annual report, the group says it has successfully completed Wave 1a of their divestment strategy and has commenced Wave 1b and Wave 2 of this strategy. BDC said that the strategy has not only raised cash for the Corporation, but has also empowered Batswana as most of these businesses ended up in the hands of local citizens.
The approval of the deal by Competition Authority carried conditions that fit in with BDC’s divestment strategy that entails citizen empowerment. One of the conditions is that Nampak Southern African Holdings Ltd (“NSAH”) shall sell shares in Newco of not less than 10% but not more than 20% to a citizen of Botswana controlled entity or citizen of Botswana within 12 months upon implementation of this transaction
While there had been fears that the merger will result in job losses especially at a time when the country is grappling with retrenchments and unemployment, the antitrust body placed a strong condition that will guard against such occurrences.
“The end line business will not relocate out of Botswana and shall remain a manufacturing business and not change into a sole distribution business. In the event that market circumstances change to the point where NSAH resolve to exit the market in Botswana, NSAH shall notify the Authority of their intention to sell the company as a going concern to interested parties,” the authority said.
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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.”
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.”