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PrimeTime expands in Zambia

Primetime Holdings Limited is in the process of acquiring property in Zambia at a time when local companies operating in Zambia are facing headwinds from the copper exporting country that has slid in economic quagmire following the fall in commodity prices, particularly copper prices.

"The board of Primetime Property Holdings Limited (“Primetime” or “the Company”) through its subsidiary Primetime Property Holdings (Mauritius) Limited, is pleased to advise linked unit holders the Company has provisionally entered into an agreement to acquire 100% of the shares in Luongo, a private company incorporated in Mauritius, whose only asset is shares in Tilson Limited, a private company incorporated in Zambia," the company announced in a trading statement.

Primetime also revealed that Tilson Limited’s only asset is a 35 year lease over a site in Kubulonga, Lusaka, Zambia on which it has constructed a Shopping Mall. The Mall comprises approximately 7,500 sqm of prime retail space. The acquired target is a prime retail development situated on subdivision 6 of Farm No 377 in the central Lusaka suburb of Kabulonga. The property is being purchased from the sellers on the basis of a guaranteed return of 9.25% in the first year of operation which will translate to a purchase price estimated to be US$17.1 million.

The statement from Primetime also reveals that the asset is registered in the name of a Zambian domiciled company, Tilson Limited, a company incorporated in accordance with the laws of Zambia, of which 99% is currently owned by Luongo and the remaining 1% owned by a private individual who is an unrelated party of the Primetime Group who will transfer their share as part of the Agreement. Luongo is a private company incorporated according to the laws of Mauritius which is owned 95% by Pylos Africa Limited and 5% by Qubicon Management Services Limited, both companies are incorporated under the laws of Mauritius.

Primetime says the transaction is part of the execution of Primetime’s strategy to continue growing and diversifying the property portfolio in order to create long-term value for linked unit holders and will enhance the current geographical spread and mix of properties. “The Board believes that while the effect on net asset value and earnings per. share will not be material in the short term, the medium term impact of this transaction on Primetime will be meaningful as the rental revenues and asset value rise in line with contracted escalations, inflation and general economic growth,” the company said.

Primetime’s expansion in Zambia comes at a time when other Botswana companies with operations in the copper rich country are experiencing difficult trading conditions brought about mainly by the falling kwacha, the country’s currency. Just recently, Furnmart announced that they are pulling out of the Zambian market. In Zambia, Primetime currently operates office space rented out to G4S in Lusaka and Kitwe. The plan to expand in Zambia has long been mulled as early as 2015. In its 2015 annual report, the property company said that despite the downturn in the Zambian market, the company’s long term vision remains positive.

“Our expressed intention of expanding our footprint in Zambia, and potentially elsewhere in the region, is gaining traction. At the year-end we had agreed terms to acquire an office park in Lusaka. Despite current negativity surrounding the Zambian economy, with the downward trajectory of the copper price and in mid to late 2015 the subsequent depreciation of the Kwacha, our long-term view remains positive. As an investor driven by long-term wealth creation, the present trepidation in Zambia may give us openings that previously didn’t exist, while at the same time offering an opportunity to cultivate a US$ based income stream for Primetime,” the company said in its chairman and managing director’s report contained in the annual report.


The property companies listed in the Botswana Stock Exchange have since 2014 been trying to diversify their property portfolio to mitigate against risks brought by slowing local and regional demand. This follows a consensus amongst the companies that the property market was rather subdued and unfavorable for almost all property sectors. Letlole La Rona, another property listed company, says several factors have also affected their operations.

Letlole La Rona's 2016 annual report highlighted that factors such as depressed world markets and slowdown in global economic growth have affected business operations in Botswana. Last year, in an attempt to stimulate economic activity, the central bank reduced its lending rate on two occasions. The said rate was reduced by one percentage point from 7.5% to 6.5% in February 2015, and was further reduced by half a percentage point from 6.5% to 6% in August 2015 then finally to 5.5% this year.

The report further states that for 2016, the BMI Research has projected a 4.0% in inflation for Botswana. This means that property investment  firms will continue to face the challenge of lower annual compound escalations as shrewd tenants motivate for lower rates riding upon rental reviews occasioned by lease renewals. In such cases, property investment  firms face the unenviable possibility of failing to achieve targeted growth, especially  firms which were beneficiaries of high compound escalations factored into long leases.

"In the short to medium term, property’s resilience to weakening economic conditions is always challenged. The property market in Botswana has not been spared from the economic climate facing the country. Almost all property sectors are affected. However, the longevity of investment potential of property relative to other investment classes will continue to place property at a reasonably competitive level," said Mr. Paul More, Chief Executive Officer of Letlole La Rona, in the mentioned annual report.
 

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Gambling Authority tender dangles as a jittery lottery quandary

30th November 2020
SEFALANA MD: CHANDRA CHAUHAN

Lucrative and highly anticipated national lottery tender that saw several Batswana businessmen partnering to form a gambling consortium to pit against their South African counterparts, culminates into a big power gamble.

WeekendPost has had a chance to watch lottery showcase even before the anticipated and impending national lottery set-up launches. A lot has been a big gamble from the bidding process which is now set for the courts next year January following a marathon legal brawl involving the interest of the gambling fraternity in Botswana and South Africa.

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The uncertainty of getting the next meal in Botswana

30th November 2020
uncertainty of getting the next meal

Households representing more than half of Botswana’s population-mostly residing in rural areas- do not know where their next meal will come from, but neither do they take into consideration the quality and/or quantity of the food they consume.

This is according to the latest Prevalence of Food Insecurity in Botswana report which was done for the 2018/19 period and represents the state of food insecurity data even to this time.
The Prevalence of Food Insecurity was released by Statistics Botswana and it released results with findings that the results show that at national level 50.8 percent of the population in Botswana was affected by moderate to severe food insecurity in 2018/19, while 22.2 percent of the population was affected by severe food insecurity only.

According to the report, this translates to 27 percent of the population being food secure that is to say having adequate access to food in both quality and quantity. According to Statistician General, Burton Mguni, when explaining how the food data was compiled, Food and Agriculture Organization of the United Nations (FAO), is custodian of the “Prevalence of Undernourishment (PoU)” and “Prevalence of moderate or severe food insecurity in the population based on the Food Insecurity Experience Scale (FIES)” SDG indicators, for leading FIES data analysis and the resultant capacity building.

“The FIES measures the extent of food insecurity at the household or individual level. The indicator provides internationally comparable estimates of the proportion of the population facing moderate to severe difficulties in accessing food. The FIES consists of eight brief questions regarding access to adequate food, and the questions are answered directly with a yes/no response. It (FIES) complements the existing food and nutrition security indicators such as Prevalence of Undernourishment.

According to the FIES, with increasing severity, the quantity of food consumed decreases as portion sizes are reduced and meals are skipped. At its most severe level, people are forced to go without eating for a day or more. The scale further reveals that the household’s experience of food insecurity may be characterized by uncertainty and anxiety regarding food access and compromising the quality of the diet and having a less balanced and more monotonous diet,” says Mguni.

The 50.8 percent of the population in Botswana which was affected by moderate to severe food insecurity are characterized as people experiencing moderate food insecurity and face uncertainties about their ability to obtain food. These people have been forced to compromise on the quality and/or quantity of the food they consume according to the report on food insecurity.

Those who experience severe food insecurity, the 22.2 percent of the population, are people who have typically run out of food and, at worst, gone a day (or days) without eating. According to the statistics, rural area population experienced moderate to severe food insecurity at 65 percent while urban villages were at 46.60 percent and cities/town were at 31.70 percent. Those experiencing the most extreme and severe insecurity were at rural areas making 33.10 percent while urban villages and towns were at 11.90 percent and 17.50 respectively.

According to a paper compiled by Sirak Bahta, Francis Wanyoike, Hikuepi Katjiuongua and Davis Marumo and published in December 2017, titled ‘Characterization of food security and consumption patterns among smallholder livestock farmers in Botswana,’ over 70 percent of Botswana’s population reside in rural areas, and majority (70%) relies on traditional/subsistence agriculture for their livelihoods.

The study set out to characterize the food security situation and food consumption patterns among livestock keepers in Botswana. “Despite the policy change, challenges still remain in ensuring that all persons and households have access to food at all times. For example, during an analysis of the impacts of rising international food prices for Botswana, BIDPA reported that food prices tended to be highest in the rural areas already disadvantaged by relatively low levels of income and high rates of unemployment,” said the study.

According to the paper, about 9 percent of households were found to be food insecure and this category of households included 6 percent of households that ranked poorly and 3 percent that were on the borderline according to the World Food Programme’s (WFP) definition of food security.

Media reports state that the World Bank has warned that disruption to production and supply chains could ‘spark a food security crisis’ in Africa, forecasting a fall in farm production of up to 7 percent, if there are restrictions to trade, and a 25 percent decline in food imports.

Food security in Botswana or food production was also attacked by the locust pandemic which swept out this country’s vegetation and plants. The locust is said to have contributed to 25 percent loss in production.

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Solid demand for diamonds towards the ‘gift’ season

30th November 2020
Diamonds

Global lockdown have been a thorn in diamonds having shiny sales, but a lot of optimism shows with the easing of Covid-19 restrictions, the precious stones will be bought with high volumes towards festive season. The diamond market is however warned of the resurgence of Covid-19 in key markets presents ongoing risks amid the presence and optimist about the new Covid-29 vaccines.

The latest findings published as De Beers Group’s latest Diamond Insight ‘Flash’ Report, which looks at the impact of the pandemic on relationships and engagements, has revealed that in the US that more couples than ever are buying diamond engagement rings. Bridal sales is mostly the primary source of diamond jewellery demand in recent months, De Beers said.

According to De Beers, interviews with independent jewellers around the US revealed that the rate of couples getting engaged has increased compared with the period when Covid-19 first had an impact in the US in the spring.

“In addition, despite challenging economic times, consumers were spending more than ever on diamond engagement rings – often upgrading in colour, cut and clarity, rather than size. Several jewellers speculated that with consumers spending less on elaborate weddings and/or honeymoons in the current environment, they had more to spend on choosing the perfect ring,” said De Beers.

According to De Beers, a national survey of 360 US women in serious relationships, undertaken in late October in collaboration with engagement and wedding website, The Knot. This survey is said to have found that the majority of respondents (54%) were thinking more about their engagement ring than the wedding itself (32%) or the honeymoon (15%), supporting jewellers’ hypothesis that engagement ring sales were benefiting from reduced wedding and travel budgets in light of Covid-19 restrictions.

When it came to researching engagement rings, online was by far the predominant channel for gaining ideas/inspiration at 86% of consumers surveyed, with 85% saying they had saved examples of styles they liked, according to De Beers. According to the survey, only a uarter of respondents said they had looked in-store at a physical location for design inspiration.

“For many couples, the pandemic has brought them even closer together, in some instances speeding up the path to engagement after forming a deeper connection while experiencing lockdown and its associated ups and downs as a partnership. Engagement rings are taking on even greater symbolism in this environment, with retailers reporting couples are prepared to invest more than usual, particularly due to budget reductions in other areas,” De Beers CEO Cleaver said.

According to De Beers Group, its Diamond Insight Flash Report series is focused on understanding the US consumer perspective in light of Covid-19 and monitoring how it evolves as the crisis evolves. Also, the company said, it is augmenting its existing research programme with additional consumer, retailer and supply chain touch-basis to understand the pain points and the opportunities for stakeholders across the diamond pipeline.

Demand for diamonds is as hard and resilient as the precious stone itself. De Beers pocketed US$ 450 million in its recently held ninth rough diamond sales cycle, and the company says it is more flexible approach to rough diamond sales during the ninth sales cycle of 2020, with the Sight event extended beyond its normal week-long duration.

“Steady demand for De Beers Group’s rough diamonds continued in the ninth sales cycle of the year, reflecting stable consumer demand for diamond jewellery at the retail level in the US and China, and expectations for reasonable demand to continue throughout the holiday season. However, the resurgence of Covid-19 infections in several consumer markets presents ongoing risks,” said De Beers CEO Bruce Cleaver recently.

High expectations are on diamonds being a sentimental gift for holiday season or as the most fetished gift. However the ninth cycle was lower than the eighth which registered US$ 467 million. For the last year period which corresponds with the current one, De Beers managed to raise US$ 400.

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