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Selibe Phikwe: Failed diversification vs resuscitation plans

The ongoing provisional liquidation of BCL has left many in great suspense in the once smoking town of Selebi-Phikwe, as well as arguably a significant crush in the national economic operations.


WeekendPost takes a brief recap of both government and private sector efforts put in place to diversify the Selibe Phikwe economy over the past years, as well as an in-depth look on the current proposed resuscitation plans. The story of Selebi Phikwe can be traced back to the early 1970s, when the mining town was established to house and service the employees of the then BCL, a copper and nickel mine which began operations in 1973.

 

Originally there were two settlements, Selebi and Phikwe with livestock keeping and mixed farming activities. The settlements enclosed the then rich, unexploited deposits of nickel and copper in the area. When the minerals were discovered, the mine and township were built on the land between the two villages, and their names were combined to Selebi-Phikwe, the name we know today.


Upon realization of the possible economic crush of the town post copper and nickel depletion, the government introduced the Financial Assistance Policy (FAP) in the late 90s under which foreign investors were granted capital to setup manufacturing businesses, mainly in the textile industries through government investment arm, Botswana Development Corporation (BDC).


Member of Parliament for Selebi-Phikwe West, Hon Dithapelo Keorapetse, reminded the government of this failed efforts last week in his response to the National Development Plan 11, which was presented by Finance Minister Kenneth Matambo a fortnight ago. Keorapetse labelled the disaster in Phikwe today, a result of neglect, carelessness and lack of proper planning by the government of the day.


“There were many textile industries under Botswana Development Corporation partly owned by foreign investors who after enjoying tax holidays took profits and returned to their countries.” Keorapetse noted that this was because of government overly focusing on foreign investment and totally neglecting fostering domestic investment. He labelled such investors as pseudo fly by night business people who tricked the lazy thinkers in government.


In 2008 a number of textile factories were shut down and consequently over 2000 jobs were lost, leaving the Phikwe economy more dependent on BCL for employment. BDC also had to liquidate Talana farm, a mainly horticultural farm which employed hundreds of furfural settlers, as one of its failed projects in the region, although the farm operated for a number of years before new BDC management decided to let it go.


Another missed opportunity that is consistently noted as lack of planning by the government was the building of Botswana University of Science and Technology (BUIST) in Palapye instead of Selebi-Phikwe. Dithapelo Keorapetse explains that Selebi-Phikwe should have been turned into the Graham‘s town and Stellenbosch of Botswana where the economy is knowledge based and sustained by a world class university (University of Stellenbosch and Rhodes University).


“When expects advised that the second university be built in Phikwe, it was instead taken to Palapye, an already commercial town,’’ noted Keorapetse who added that,  “there were  discussions that Selebi-Phikwe technical college be expanded , but rather funds were diverted to Gaborone Technical College , and on top of that propositions that the college of applied arts be built in Phikwe were rubbished and it was taken to a more sustainable and economically congested south side of the country in Oodi!’’


Keorapetse observed that for over 40 years, government failed to add more value to the copper and nickel extracted in Phikwe. He noted that to add to mining, concentrating, and smelting which were BCL’s main operations, other metallurgical undertakings should have been explored to plan for post ore depletion .


Notably in the records of Selebi-Phikwe economic diversification is a massive undertaking by BCL; the beyond 2020 Polaris II initiative which the authorities believed was to be a huge turnaround in the economy of the town. To date the Polaris II financial figures alone account for more than 7 billion BCL debts and arguably the reason why the town has more than 5000 unemployed inhabitants today.


Again quoted during the BCL liquidation shocking news weeks ago, Keorapetse explained the Polaris II was a corrupt undertaking which cash striped BCL mine. Under the Polaris II, there were a string of un-procedural procurement transactions and multimillion pula questionable contracts. The Polaris II saw the purchase of all Norilsk Operations in Africa by BCL limited which include Nkomati mine in South Africa and Tati Nickel

Mine in Francistown, at a tune of P3 billion, more than 100 million Pula injection into Pula Steel Manufacturing, over 700 million Pula refurbishment of BCL smelter, all done in good will of keeping the BCL alive and a significant employer post ore deposits depletion.
Also, there is Selebi Phikwe Economic Diversification Unit (SPEDU) a government placed organ that could have possibly, if implemented correctly, turned Phikwe into Botswana’s investment and economic hub.

However, today, SPEDU is accused of misplacing 1.4 million pula in its rebranding exercise, further the parastatals established in 2008 is accused of chewing more than 200 million pula taxpayers’ money on administration only, since its inception 8 years ago. However the tangible diversification the parastatal has undertook is yet to be witnessed.


Meanwhile, this past week, a press release from SPEDU written by SPEDU‘s Community Economic facilitation Director, James Mathokgwane titled “The truth behind SPEDU’s rebranding” explains that SPEDU became a full fleshed company just 18 month ago.

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Business

Pan-African risk advisor Minet Group and Botswana’s Africa Lighthouse Capital acquire Aon Botswana

21st May 2021
Pan-African-risk-advisor-Minet-Group-

Strategic partnership offers inherent benefits of global knowledge, African insights, and local expertise and commitment

Minet Group and Africa Lighthouse Capital today announced that they have received regulatory approval and fulfilled all requirements to acquire Aon’s shareholding in Aon Botswana, and consequently will begin the process to rebrand to Minet Botswana.

Minet Group is a well-known and trusted pan-African risk advisory firm and Aon’s largest Global Network Correspondent and has been rapidly expanding its African footprint since 2017 through the acquisition of operations from global professional services firm Aon in Kenya, Lesotho, Malawi, Mozambique, Namibia, Tanzania, Uganda, and Zambia.   Minet has been delivering world class products and services across Africa for over 70 years.

Africa Lighthouse Capital (ALC) is a leading Botswana citizen-owned private equity firm focused on investing in Botswana companies and propelling them into regional champions, with over BWP 500 million in funds under management.

The new entity will be rebranded to Minet and will inherit deeply rooted respect by its clients for their innovative and locally relevant solutions, responsiveness, and efficient processes. Furthermore, it shall have the benefit of consistency in leadership and staffing, with Barnabas Mavuma, previously Managing Director of Aon Botswana, continuing to lead the business as the MD supported by the local management team.

 “The addition of Minet Botswana to our growing African network affirms our belief in the great opportunities for growth that Africa offers, driven by rising consumer demand, huge investment in infrastructure and quick adoption of new technology,” says Joe Onsando, CEO at Minet Group.

“This transaction significantly adds to the diversity and skills base of our team and will have a positive impact on the range of products and services we provide. Our Correspondent agreement with Aon gives us access to global expertise and data driven insights and uniquely positions us to deliver risk advisory solutions that reduce volatility, thus driving improved performance for our clients. This is a very exciting time to be Minet in Africa.”

“The significantly increased Botswana citizen shareholding effected by this transaction gives rise to an exciting era of local market focus and growth for Minet Botswana,” says Bame Pule, Founder and CEO of Africa Lighthouse Capital.  “We intend to work with Minet Botswana’s local management team to further localise the business in terms of product development, while at the same time investing in local skills development and business development.  We look forward to this exciting journey, which will result in a significantly enhanced service offering for Minet Botswana’s clients.”

Consequently, and similar to the other members of the Minet Group, Minet Botswana becomes an Aon Global Network Correspondent, retaining its access to Aon’s resources, technology, and best practises, combined with the benefit of independent, local agility. This transaction furthermore significantly increases local shareholding, enabling operations to become even nimbler and better positioned to unlock new and existing growth opportunities.

Clients of Minet Botswana will experience continuity of product and service delivery standards in the short term. In the near future, they can expect an enhanced offering that combines agility with technology and product innovation, tailormade for their specific needs.

Together, Minet and ALC bring a sound understanding of local market conditions, strong governance, and an established track record in the region. These qualities, combined with Aon’s global capabilities and expertise, will bring clear benefits for clients.

This transaction vastly increases citizen ownership with shareholders who are going to be active in the business. The transfer of equity interests in Botswana to investors with local and regional expertise, presence and commitment will allow the businesses to move quickly in line with market movements, and to introduce products that are tailored to the local market.

“Minet’s commitment and drive to incessantly adapt to changing market conditions, and to innovate to meet the unique insurance demands of the African continent, while maintaining the high standards customers have come to expect – Onsando concludes – will continue to grow and give Minet a powerful competitive edge within the African market”.

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Africa scores $285 Billion IMF deal

21st May 2021
IMF-Managing-Director-Kristalina-Georgieva

French President Emmanuel Macron received 21 Heads of state and government officials from Africa during the recent summit on the Financing of African Economies that focused on Africa to take full advantage of the tectonic shifts in the global economy and the call for a joint effort for financial and vaccination support for the continent.

President Emmanuel Macron stressed that “Most regions of the world are now launching massive post-pandemic recovery plans, using their huge monetary and fiscal instruments. But most African economies suffer the lack of adequate capacities and such instruments to do the same. We cannot afford leaving the African economies behind.

We, the Leaders participating to the Summit, in the presence of international organizations, share the responsibility to act together and fight the great divergence that is happening between countries and within countries.

This requires collective action to build a very substantial financial package, to provide a much-needed economic stimulus as well as the means to invest for a better future. Our ambition is to address immediate financing needs, to strengthen the capacity of African governments to support a strong and sustainable economic recovery and to reinforce the vibrant African private sector, as a long-term growth driver for Africa.”

For her part, International Monetary Fund (IMF) Managing Director Kristalina Georgieva highlighted that “there is urgency to focus on financing Africa. Last year, the pandemic-caused recession shrank the GDP of the Continent by 1.9 percent – the worst performance on record. This year, we project global growth at 6 percent, but only half that 3.2 percent for Africa.” Adding that Africa needs to grow faster than the world at 7 to 10 percent to meet the aspirations of its youthful populations, and become more prosperous and more secure.

Georgieva revealed that the price tag on the shot is estimated to be “$285 billion through 2025. Of this $135 billion is for low-income countries. This is the bare minimum. To do more – to get African nations back on their previous path of catching up with wealthy countries – will cost roughly twice as much. These are large numbers. They may seem out of reach. But to quote Nelson Mandela: impossible until it is done.”

The main areas of interest to achieve this include; first, end the pandemic everywhere, 40 percent of the population of all countries is targeted to get vaccinated by the end of 2021, and at least 60 percent by mid-2022.

Second, bilateral and multilateral development financing grants and concessional loans ought to go up. Over the last year, the IMF have swiftly ramped their financing for the Continent, including providing 13 times their average annual lending to sub-Saharan Africa. And are working to do much more. The IMF has also received support to increase access limits so they can scale up their zero-interest lending capacity through the Poverty Reduction and Growth Trust.

The IMF has also devised exceptional measures. Their membership backs an unprecedented new allocation of Special Drawing Rights (SDR) of $650 billion, by far the largest in their history. Once approved, which is intended to be achieved by the end of August, it will directly and immediately make about $33 billion available to African members. It will boost their reserves and liquidity, without adding to their debt burden.

Over the course of the last year, the IMF has built experience in facilitating the on lending of SDRs – thus managing to triple their concessional lending capacity as a result.

The Third being, actions at home. According to Georgieva “a crisis is an opportunity for transformational domestic reforms that increase domestic revenue, improve public services, and strengthen governance. For instance, digitalization can improve tax administration and revenue collection, and the quality of public spending. And with radical transparency, Africa can tap into new sources of finance – such as carbon offsets.

There is ample scope for countries to encourage private investment, including in social and physical infrastructure. New IMF research, published today, highlights that domestic and international investors could provide at least 3 percent of GDP per year of additional financing by the end of this decade.”

Reforms of international taxation can also support Africa’s growth. For a long time, the IMF has been in favor of minimum corporate tax rates to reduce the race to the bottom and tax avoidance. And they strongly support an international agreement on digital tax, something France has been a leading voice for. It is important to secure fair distribution of tax revenues, so they can contribute to closing Africa’s financial gap.

Georgieva called on to each and every one to step up. Reminding the attendees that from history they are all familiar with what a shock of this magnitude can do if not countered forcefully and effectively.

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Indian COVID-19 variant hits Botswana diamond sales

20th May 2021
Indian-Covid--19-variant-hit-rough-diamonds-sales---De-Beers-

De Beers’ Group, the world’s number one diamond producer by value, this week attributed the downfall of its sales for the fourth cycle week to the second wave of the Covid-19 variant (B.1.617.2) which was first discovered in India.

Diamond trading conditions have been hit by the Covid-19 crisis in India which is a major cutting and polishing centre for the world’s diamond trade.

The outbreak of the new variant has led to a humanitarian crisis with 280, 284 fatalities of the disease reported.

The London headquartered company said the sales in its fourth cycle fell to $380m (about P4.1 billion) down from $450m (about P4.8 billion) in the third cycle though it was higher than the fifth cycles of last year when the group shifted only $56m (P600 million).

De Beers emphasized that they continued to implement a more flexible approach to rough diamond sales during the fourth sales cycle of 2021, with the Sight event extended beyond its normal week-long duration.

The De Beers group Chief Executive Officer (CEO), Bruce Cleaver said the company continues to see robust demand for diamond jewellery in the key US and China consumer markets.

“However, the scale of the second wave of Covid-19 in India, where the majority of the world’s diamonds are cut and polished, has led to reduced midstream capacity and subsequently lower rough diamond demand, during what is already a seasonally slower time of year for midstream purchases,” said Cleaver.

Meanwhile Botswana health officials have confirmed the new Covid-19 variant in Botswana. The Ministry of Health and Wellness -through a press statement- informed members of the public that the variant (B.1.617), was confirmed in Botswana on 13th May 2021.

According to Christopher Nyanga, spokesperson at the Ministry, this followed a case investigation within Greater Gaborone, involving people of Indian origin who arrived in the country on the 24th April 2021.

Moreover the World Health Organization (WHO) recently announced that the Indian Covid-19 variant was a global concern, with some data suggesting that the variant has “increased transmissibility” compared with other strains.

The India variant (B.1.617.2) – is one of four mutated versions of the coronavirus which has been designated as being “of concern” by transitional public health bodies, with others first being identified in Kent, South Africa and Brazil.

Nevertheless when speaking at Bank of America Global Metals and Mining conference, Anglo American Chief Executive Officer, Mark Cutifani said the company portfolio is increasingly tilted towards future enabling products and those that need to decarbonise energy and transport in order to meet consumers’ needs – from home appliances, electronics and infrastructure, to food and luxury goods.

“We see material opportunity for Anglo American to continue to set itself apart in terms of the performance of our diversified business, further enhanced through sector-leading 25% volume growth over the next four years, led by copper and the platinum group metals,” said Cutifani.

“Most importantly, as the supplier of such critical materials, it is the duty of our industry to ensure that in everything we do, we act responsibly and deliver enduring value for our full breadth of stakeholders, including our planet.”

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