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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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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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Global CEOs Back Plan to Unlock $3.4 Trillion Potential of Africa Free Trade Area

23rd January 2023

African heads of state and global CEOs at the World Economic Forum Annual Meeting backed the launch of the first of its kind report on how public-private partnerships can support the implementation of the African Continental Free Trade Area (AfCFTA).

AfCFTA: A New Era for Global Business and Investment in Africa outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the AfCFTA, and illustrative examples from successful businesses in Africa to guide businesses in entering and expanding in this area.

The report aims to provide a pathway for global businesses and investors to understand the biggest trends, opportunities and strategies to successfully invest and achieve high returns in Africa, developing local, sub-regional and continental value chains and accelerating industrialization, all of which go hand in hand with the success of the AfCFTA.

The AfCFTA is the largest free trade area in the world, by area and number of participating countries. Once fully implemented, it will be the fifth-largest economy in the world, with the potential to have a combined GDP of more than $3.4 trillion. Conceived in 2018, it now has 54 national economies in Africa, could attract billions in foreign investment, and boost overseas exports by a third, double intra-continental trade, raise incomes by 8% and lift 50 million people out of poverty.

To ease the pain of transition to its new single market, Africa has learned from trade liberalization in North America and Europe. “Our wide range of partners and experience can help anticipate and mitigate potential disruptions in business and production dynamics,” said Børge Brende, President, and World Economic Forum. “The Forum’s initiatives will help to ease physical, capital and digital flows in Africa through stakeholder collaboration, private-public collaboration and information-sharing.”

Given the continent’s historically low foreign direct investment relative to other regions, the report highlights the sense of excitement as the AfCFTA lowers or removes barriers to trade and competitiveness. “The promising gains from an integrated African market should be a signal to investors around the world that the continent is ripe for business creation, integration and expansion,” said Chido Munyati, Head of Regional Agenda, Africa, World Economic Forum.

The report focuses on four key sectors that have a combined worth of $130 billion and represent high-potential opportunities for companies looking to invest in Africa: automotive; agriculture and agroprocessing; pharmaceuticals; and transport and logistics.

“Macro trends in the four key sectors and across Africa’s growth potential reveal tremendous opportunities for business expansion as population, income and connectivity are on the rise,” said Wamkele Mene, Secretary-General, AfCFTA Secretariat.

“These projections reveal an unprecedented opportunity for local and global businesses to invest in African countries and play a vital role in the development of crucial local and regional value chains on the continent,” said Landry Signé, Executive Director and Professor, Thunderbird School of Global Management and Co-Chair, World Economic Forum Regional Action Group for Africa.

The Forum is actively working towards implementing trade and investment tools through initiatives, such as Friends of the Africa Continental Free Trade Area, to align with the negotiation process of the AfCFTA. It identifies areas where public-private collaboration can help reduce barriers and facilitate investment from international firms.

About the World Economic Forum Annual Meeting 2023

The World Economic Forum Annual Meeting 2023 convenes the world’s foremost leaders under the theme, Cooperation in a Fragmented World. It calls on world leaders to address immediate economic, energy and food crises while laying the groundwork for a more sustainable, resilient world. For further information,

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Electricity generation down 15.8%

9th January 2023

Electricity generation in Botswana during the third quarter of 2022 declined by 15.8%, following operational challenges at Botswana Power Corporation’ Morupule B power plant, according to Statistics Botswana Index of Electricity Generation (IEG) released last week.

The index shows that local electricity generation decreased by 148,243 MWH from 937,597 MWH during the second quarter of 2022 to 789,354 MWH during the third of quarter of 2022.

This decrease, according to the index, was mainly attributed to a decline in power supply realized at Morupule B power station. The index shows that as a result of low power supply from the plant, imported electricity during the third quarter of 2022 increased by 76.3 percent (123,831 MWH), from 162,340 MWH during the second quarter of 2022 to 286,171 MWH during the current quarter and Statistics Botswana added that the increase was necessitated by the need to augment the shortfall in generated electricity.

In the index Statistics Botswana stated that Eskom was the main source of imported electricity at 42.0 percent of total electricity imports. “The Southern African Power Pool (SAPP) accounted for 38.4 percent, while the remaining 10.1, 9.1 and 0.5 percent were sourced from Electricidade de Mozambique (EDM), Cross-border electricity markets and the Zambia Electricity Supply Corporation Limited (ZESCO), respectively. Cross-border electricity markets are arrangements whereby towns and villages along the border are supplied with electricity from neighbouring countries such as Namibia and Zambia.”

The government owned statistics entity stated that distributed electricity decreased by 2.2 percent (24,412 MWH), from 1,099,937 MWH during the second quarter of 2022 to 1,075,525 MWH during the third quarter of 2022. The entity noted that electricity generated locally contributed 73.4 percent to electricity distributed during the third quarter of 2022, compared to a contribution of 85.2 percent during the third quarter in 2022 and added that this gives a decline of 11.8 percentage points. “The quarter-on-quarter comparison shows that the contribution of electricity generated to electricity distributed decreased by 11.8 percentage points compared to the 85.2 percent contribution during the second quarter of 2022.”

Statistics Botswana meanwhile stated that the year-on-year analysis shows some improvement in local electricity generation. Recent figures from entity show that the physical volume of electricity generated increased by 36.3 percent (210,319 MWH), from 579, 036 MWH during the third quarter of 2021 to 789,354 MWH during the current quarter. According to Statistics Botswana electricity generated locally contributed 73.4 percent to electricity distributed during the third quarter of 2022, compared to a contribution of 57.7 percent during the same quarter in 2021. This gives an increase of 15.7 percentage points.

 

The entity noted that trends also show an increase in physical volume of electricity distributed from 2013 to the third quarter of 2022, thereby indicating that there are ongoing efforts to meet the domestic demand for power. “There has been a gradual increase of distributed electricity from the first quarter of 2013 to the third quarter of 2022, even though there are fluctuations. The year-on-year perspective shows that the amount of distributed electricity increased by 7.2 percent (71,787 MHW), from 1,003,738 MWH during the third quarter of 2021 to 1,075,525 MWH during the current quarter.”

The statistics entity noted that year-on-year analysis show that during the third quarter of 2022, the physical volume of imported electricity decreased by 32.6 percent (138,532 MWH), from 424,703 MWH during the third quarter of 2021 to 286,171 MWH during the third quarter of 2022. “There is a downward trend in the physical volume of imported electricity from the first quarter of 2013 to the third quarter of 2022. The downward trend indicates the country’s continued effort to generate adequate electricity to meet domestic demand, hence the decreased reliance on electricity imports.”

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