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BPOPF pushes 90 billion pula target

Following the decision by the Botswana Public Officers Pension Fund (BPOPF) to move some of its services in-house and terminate the Alexandra Forbes administrative functions’ contract, Botswana’s richest fund and arguably one of the wealthiest institutions in the land is set to bolster its wealth accumulation and asset expansion business.


Speaking to their 5 year strategy set to commence next year January, the BPOPF Chief Executive Officer (CEO), Boitumelo Molefhe indicated that by the end of the 5 years in 2022, the Fund’s treasury in assets worth, will be sitting at a whopping 90 billion pula.

Speaking at a press briefing recently, Molefhe said BPOPF will to do so simultaneously empowering Batswana to venture into the asset management business.  She said her organization will play its part by awarding new contracts to asset managers that have at least 25% citizen ownership, and 50% locals’ representation in their Boards, and having a minimum of 70 % Batswana in their company executive management.

Molefhe who is a former Finance Chief at Debswana Pension Fund observed that the new guidelines are just the starting point for more citizen empowerment initiatives in the lucrative capital assets and fund management industry. She added that they will review the guidelines from time to time in order to give citizen owned firms more share in the business.

“The 25% is just the starting point, going forward the plan is to continuously review the threshold upwards. The intention is not to leave anyone out but to empower citizens. We have a lot of talented citizens that are doing most of the work for fund managers but are not appropriately remunerated,” she said.

Molefhe explained that they are not just about the talk, emphasizing that there will be a clear compliance framework to ensure robust implementation of these guidelines. “As for the fund managers already mandated with our assets, they will have to comply and meet our new guidelines, if at all they desire to be reengaged because most of their contracts end around February 2018,” she said.

BPOPF is of the view that their assets and capital should be managed by locals as the wealth is generated locally from Batswana public servants. “We cannot have most of the profits from our fund being taken outside the country, if a newly mandated fund manager doesn’t comply in the first year, we will reduce the size of their mandate by 10% and if non-compliance stretches to the second year, then BPOPF will withdraw the mandate totally,” she said.

BPOPF currently does millions worth of business with BIFM, Investec, African Alliance just to mention but a few. The inspiration that Batswana can bite big in the capital asset management business comes from Afena Capital, one of BPOPF mandated fund managers taking care of millions worth of assets and is 100 % owned by Batswana.

In addition, BPOPF revealed that they have half a billion pula ready to finance local asset management startups. “We are willing to inject 500 million pula to finance this bid to see more citizens venture into the capital investment management industry, we will also incubate these businesses to see them through until full establishment as they service back our loans,” Molefhe explained.

She added that they will do so by handholding fledging firms that have less than a billion pula asset management mandate, only those with 100% citizen ownership and at least 50 % locals in senior management. “The incubation is open to all asset classes and we want the businesses to eventually stand on their own and compete in the big league while also transferring skills to locals,” she added.

THE FIVE YEAR STRATEGY

Unpacking the 5 years strategy of which the new guidelines will apply to, Molefhe explained that their asset base has grown from P51 billion in 2015 to P55 billion today. However she noted that although the Fund asset value grew to P55 billion, total returns for its active and deferred members fell to 4.25% from 13.73% in the previous year due to the volatility in both the domestic and global markets. Currently BPOPF has 58% of its portfolio invested offshore.

“We will invest more in private equity and other asset classes such as infrastructure and property to diversify our portfolio amid low growth in the stock and bonds markets,” she said.  According to Molefhe, the BPOPF has also appointed a German company, Monrovia Capital as its new private equity fund manager, effective January 2017.

BPOPF is the largest in Botswana housing over 150 000 members and have over 23 billion pula asset worth in Botswana. One of the Fund’s traditional cash spinning investments includes local mobile network giant, Mascom Wireless. BPOPF is the single largest institutional investor on the Botswana Stock Exchange (BSE) owning a significant stake in 19 of the 22 companies listed on Thapelo Tsheole’s P48 billion domestic stock market.

 

The Fund further owns 16 % of stake in Barclays Botswana, around 25 percent in Botswana Insurance Holdings Limited (BIHL), the diversified financial services firm which has a major stake in other major companies such as the titanic micro-lender, Letshego Holdings Limited and Funeral Services Group (FSG).

Furthermore, Molefhe’s investment drive saw BPOPF recently acquiring shares worth P21 million in tourism company, Wilderness Safaris. The Fund also has a 23 percent stake in Chobe Holdings, another travel and tours operator. The two are the largest and only listed safari services firms. BPOPF owns around 12 percent in the regional fast growing supermarket group, Choppies Enterprises.

 

As if it is not enough, BPOPF also owns a significant stake in listed petroleum services firm Engen Botswana, at 13.7 percent, First National Bank Botswana (FNBB) is the largest company trading on the BSE, BPOPF owns 13.4 percent of Steven Bogatsu’s 8.8 billion pula chunk. BPOPF also owns 10 percent in the security services giant, G4S, and a further 9 %  in industrial property company, Letlole La Rona (LLR).

 

One of the biggest companies on the BSE, Letshego, also a pan-African micro-finance firm is 23 percent owned by BPOPF directly.  
BPOPF investments are endless, for instance in the New African Properties (NAP), a company that owns the classic Riverwalk Mall in Gaborone, BPOPF owns over 167 million shares. It further has a 17 percent stake in another property firm, Prime Time Holdings, as well as RDC Properties at 8.13 percent.

 

In Sechaba Breweries Holdings, the brewers of St Louis Lager, BPOPF owns 22 percent. The fund has a controlling stake in Sefalana, Choppies’ largest competitor, at 33 percent. It has 8.6 percent in Standard Chartered Bank Botswana and around 30 percent in Turnstar, the owners of Game City and Mlimani City malls.

A number of lucrative investment under  property portfolio also  includes the 300 million pula injected in Central Business Department(CBD) to erect the Hilton Garden Inn Hotel and the purchase of two strategic properties at the fast growing  second city, Francistown from Prime Time Properties at tune of P71 million. BPOPF property investment is worth over P1.5 billion including other transactions, of which the mandate is being handled by asset manager, Messidor.

BPOPF Chief Executive Molefhe however expresses worry over their BSE Investment which she observed to be trading southwards since the beginning of the year. Under the new guidelines commenced and encored on Molefhe’s vision 2022, BPOPF will introduce initiatives to encourage skills transfer, local procurement of goods and services such as back office services like performance reports, accounting and compliance, and HR services.

“We have seen instances where the feedback reports we get from our fund managers are complied outside the country including other back office functions such as accounting. We need such services to be done here in Botswana so that skills are transferred to locals,” she said.

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Business

Dark days as Aviation industry collapses

22nd November 2020
Air Botswana

As the Aviation industry takes a COVID-19 pummeling, for Africa the numbers are staggering, Chief Executive Officer of the International Air Transport Association (IATA), Alexandre de Juniac has observed.

Speaking recently at the African Airlines Association (AFRAA) has been hosting an Annual General Assembly, de Juniac said traffic is down 89% and revenue loses are expected to reach $6 billion. And this figure is likely to be revised downwards in the next forecast to be released later this month. “But the impact is much broader. The consequences of the breakdown in connectivity are severe,” he surmised.

According to de Juniac, five million African livelihoods are at risk while aviation-supported GDP could fall by as much as $37 billion. That’s a 58% fall.

“We have a health crisis. And it is evolving into a jobs and economic disaster. Fixing it is beyond the scope of what the industry can do by itself.”

He said they need governments to act, “And act fast to prevent a calamity.”

“We are in the middle of the biggest crisis our industry has ever faced. As leaders of Africa’s aviation industry, you know that firsthand. Airline revenues have collapsed. Fleets are grounded. And you are taking extreme actions just to survive. We all support efforts to contain the COVID-19 pandemic.  It is our duty and we will prevail. But policymakers must know that this has come at a great cost to jobs, individual freedoms and entire economies,” he said.

de Juniac used the AFRA general assembly platform to amplify IATA’s call for governments to address two top priorities: “The first is unblocking committed financial relief. Airlines will go bust without it. Already four African carriers have ceased operations and two are in administration. Without financial relief, many others will follow.”

Over US$31 billion in financial support has been pledged by African governments, international finance bodies and other institutions, including the African Development Bank, the African Union and the International Monetary Fund.

Unfortunately de Juniac pointed out, in his words, “Pledges do not pay the bills. And little of this funding has materialized. And let me emphasize that, while we are calling for relief for aviation, this is an investment in the future of the continent. It will need financially viable airlines to support the economic recovery from COVID-19.”

The second priority, according to IATA is to safely re-open borders using testing and without quarantines.

“People have not lost their desire to travel. Border closures and travel restrictions make it effectively impossible. Forty-four countries in Africa have opened their borders to regional and international air travel. In 20 of these countries, passengers are still subject to a mandatory 14-day quarantine. Who would travel under such conditions?” de Juniac quizzed rhetorically.

He suggested that countries should adopt systematic testing before departure provides a safe alternative to quarantine and a solution to stop the economic and social devastation being caused by COVID-19.

He admitted that it’s a frightening time for everyone, not least the millions of people whose livelihoods depend on a functioning airline industry. Right now, de Juniac said there essentially is no airline industry. He cited the example that China’s largest airlines sound optimistic, but in a vague way. “They gave no hard data about current yields, loads, or forward bookings, discussing only developments in 2019. Boy, does that seem like ages ago.”

Aviation’s darkest days

The IATA CEO said these are the darkest days in aviation’s history. “But as leaders of this great industry I know that you will share with me continued confidence in the future.

Our customers want to fly. They desire the exploration that aviation enables. They need to do international business that aviation facilitates. And they long to reunite with family and loved ones.”

He said the industry will, no doubt, be changed by this crisis, but flying will return. “Airlines will be back in the skies. The resilience of our industry has been proven many times. We will rise again,” he said.

de Juniac said Aviation is a business of freedom. “For Africa that is the freedom to develop and thrive. And that is not something people on this continent will forget or lose their desire for.”

 

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Business

Inflation increased to 2.2% in October 2020

22nd November 2020

Headline inflation increased from 1.8 percent in September to 2.2 percent in October 2020, but remained below the lower bound of the Bank’s medium-term objective range of 3 – 6 percent, and lower than the 2.4 percent in October 2019.

According to Statistics Botswana, the increase in inflation between September and October 2020 mainly reflects the upward adjustment in domestic fuel prices {Transport (from -3.9 to -2.5 percent)}, which is estimated to have increased inflation by approximately 0.29 percentage points.

“There was also a rise in the annual price increase for most categories of goods and services: Alcoholic Beverages and Tobacco (from 6.2 to 6.6 percent); Clothing and Footwear (from 2.5 to 2.7 percent); Communications (from 0.6 to 0.9 percent); Housing, Water, Electricity, Gas and Other Fuels (from 6.4 to 6.6 percent); Recreation and Culture (from 0 to 0.2 percent); Miscellaneous Goods and Services (from 0.7 to 0.9 percent); Food & Non-Alcoholic Beverages (from 4.2 to 4.3 percent); and Furnishing, Household Equipment and Routine Maintenance (from 2 to 2.1 percent). Inflation remained stable for: Education (4.7 percent); Restaurants and Hotels (3 percent); and Health (1.5 percent). Similarly, the 16 percent trimmed mean inflation and inflation excluding administered prices rose from 1.8 percent and 3.1 percent to 2.2 percent and 3.4 percent, respectively, in the same period.”

[Source: Bank of Botswana]

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BDC injects further P64 million into Kromberg & Schubert

22nd November 2020
BDC

Botswana Development Corporation (BDC) has to date pumped a total of P100 million into the expansion of Kromberg and Schubert, a car harnessing manufacturing company, operating from Gaborone Old Naledi.

At the official ground breaking ceremony of the company‘s new warehouse today, BDC Managing Director, Cross Kgosidiile revealed the wholly state owned investment corporation has pumped P64 million into the expansion which entailed building of the new warehouse.

Kgosidiile explained that this follows another expansion project which was successfully launched in 2017, in which BDC invested P36 million, bringing the total investment into Kromberg at P100 million. The MD also acknowledged Botswana Investment and Trade Centre (BITC) as a partner in the project and for having facilitated the acquisition of the land.

 

Giving a keynote address, Minister of Investment, Trade & Industry, Peggy Serame highlighted the importance of infrastructural development in growing the local manufacturing sector and transforming the economy of Botswana.

Serame underscored the value of strategic partnerships between Government and the private sector, noting that when the two work together and pull together in one direction results will be evident and jobs will be created.

“With the prevailing conditions of depressed economy occasioned by COVID-19 pandemic, government is reliant on entities like BDC to bring in revenue and acceleration of private sector development in line with its mandate and strategic plan. This plan is supported by the need to invest in growth sectors and accelerate the implementation of the Economic Diversification Drive,” Serame said.

Minister Serame noted that the partnership between BDC and Kromberg & Schubert begun in 2017 when the P36 million, 4100 square metres factory expansion for the company was launched.

 

She said the launch of the 7320 square meters factory expansion, to be built at the tune of P64 million signals the continuation of the good partnership between the two companies.

 

“I must commend BDC for their continuous efforts to build partnerships with the private sector geared towards contributing to economic development of this country.”

 

Minister Serame also added that BITC through its robust investor aftercare programme continues to provide value added and red carpet to Kromberg and Schubert under their One Stop Service Centre.

 

“In this regard BITC facilitated acquisition of land to enable this expansion. I therefore would like to commend BITC for their timely facilitation to make this expansion possible,” the minister said.

 

Kromberg & Schubert was incorporated in Botswana in 2009; The Company has grown to asset its position as a significant player in the regional automotive industry value chain.

 

The company is also a critical player in the economic development of Botswana, it currently employs 2100 Batswana across its operations. Kromberg exports on average P2.0 billion worth of goods annually, contributing significantly to foreign exchange.

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