Air Botswana is set to retrench close to 200 employees as it embarks on a restructuring exercise. The process will be in two phases, first being the voluntary separation followed by retrenchment, employees were told through an employee brief signed by the Airliner’s Acting General Manager, Agnes Khunwane.
“This serves to update staff on the Organisational restructuring process. The Revised Organisational Structure will be shared with employees during this brief. The whole process will be implemented in two phases. The first phase entails voluntary separation and the second phase will be retrenchment where there would be redundancies occasioned by the new structure and competency assessments,” reads Khunwane’s brief to employees.
According to Khunwane, the organisational structure review and alignment has been concluded albeit subject to business process re-engineering and new business plan. “The revised organisational structure requires 350 employees as opposed to the current headcount of 522. The revised structure identifies all positions that are mission critical and also highlights areas that are likely to be affected. It is against this background that the Corporation invites applications for voluntary separations,” the brief further states.
However contract employees; employees in key roles which are mission critical or high impact positions and are under the age of 45 and have served less than 20 years, and those that were appointed from April 2015 are not eligible for voluntary separation.
Ms Khunwane further informed staff that Section 25 letters will be issued to all staff members excluding employees in mission critical positions, “notwithstanding that all employees aged 45 and above and have served the corporation for 20 years or more are eligible to apply for voluntary separation.”
According to inside sources the new structure highlights vulnerable positions that may be affected or become redundant and employees in these positions have been encouraged to apply for voluntary separation. The separation package for voluntary separation will be calculated at 26 days for each year worked plus normal terminal benefits approved by the Board subject to funding availability, said Ms Khunwane.
Meanwhile, employees have been told that management reserves the right to approve or not to approve any application for voluntary separation. A panel has been set to adjudicate on the applications and it has been given a criterion to follow when assessing applications.
As a word of caution, Khunwane has warned that some employees in the mission critical positions will also be affected, and in the event such as employee is affected they will be paid in accordance with the voluntary separation package.
Khunwane further shared that separation package for retrenchment separation will be calculated at 22 days for each year worked plus normal terminal benefits.
A further communication has indicated that it is expected that the minimum pay-out will be P50 000 under both voluntary and retrenchment processes. Upon separation a number of benefits that were accorded staff will cease immediately including Group Life and Accident cover, Training Bod. Employees have been informed that those with ordinary loans should settle them with banks.
These changes come at a time when Air Botswana is going through a number of changes, especially the possibility of the Airliner being transferred to the Ministry of Environment and Natural Resources, Conservation and Tourism.
Air Botswana is also in the process of recruiting General Manager, and names are expected to be submitted to the Board in the near future. A contest between the Acting General Manager, Khunwane and former MVA Chief Executive Officer, Cross Kgosidiile is expected, although the former was said to have withdrawn her name from the shortlist prepared for Cabinet.
Air Botswana is also working towards acquiring new fleet although the tendering process has been delayed after the Board was told to reverse an ongoing procurement process.
When engaging the Parliamentary Committee on Statutory Bodies and Public Enterprises, Ms Khunwane had stated that they need about P2.3 billion for a fleet of seven aircrafts, saying currently the airline was leasing a jet aircraft which operates the Gaborone-Cape Town route at a cost of P3 million a month. The same route made losses of about P13 million.
Ms Khunwane also highlighted that they had not requested for funding, but that the minister was aware of their needs. A formal request has been submitted after a consultant that has been hired submitted a report on October 4.
A STRUGGLING AIRLINER
Meanwhile, Khunwane had confirmed that the airline has been operating at huge losses for years due to a number of challenges. Appearing before the Parliamentary Committee on Statutory Bodies and State Enterprises on last month, Ms Khunwane said the airline had experienced a P165 millions loss as of March 2015.
She said their main challenge had been equipment failure and attributed P90 million of the total loss to maintenance costs. A number of aircrafts in the airline's fleet are old and are going through heavy airframe maintenance checks, and that most were grounded for good.
She nevertheless said there had been an improvement in regard to departure times which stands at 80 per cent. Ms Khunwane had said the board had come up with a five-year turnaround strategy which came into effect in March this year.
She said the organisation was working on a strategy that was expected to look at the airline's operations, including the rationalisation of route network and schedule, review of internal processes and procedures, use of technology to enhance delivery, fleet upgrade and equipment renewal
She, however, said she believed that the turnaround plan would be the one to bring back the airline into profitability.
Mowana Copper Mine in Dukwi will finally pay its former employees a total amount of P23, 789, 984.00 end of this month. For over three years Mowana Copper Mine has been under judicial management. Updating members, Botswana Mine Workers Union (BMWU) Executive Secretary Kitso Phiri this week said the High Court issued an order for the implementation of the compromise scheme of December 9, 2021 and this was to be done within 30 days after court order.
“Therefore payment of benefits under the scheme including those owed to Messina Copper Botswana employees should be effected sometime in January latest end of January 2022,” Kitso said. Kitso also explained that cash settlement will be 30 percent of the total Messina Copper Botswana estate and negotiated estate is $3,233,000 (about P35, 563,000).
Messina Copper was placed under liquidation and was thereafter acquired by Leboam Holdings to operate Mowana Mine. Leboam Holdings struck a deal with the Messina Copper’s liquidator who became a shareholder of Leboam Holdings. Leboam Holdings could not service its debts and its creditors placed it under provisional judicial management on December 18, 2018 and in judicial management on February 28, 2019.
A new company Max Power expressed interest to acquire the mining operations. It offered to take over the Mowana Mine from Leboam Holdings, however, the company had to pay the debts of Leboam including monies owed to Messina Copper, being employees benefits and other debts owed to other creditors.
The monies, were agreed to be paid through a scheme of compromise proposed by Max Power, being a negotiated payment schedule, which was subject to the financial ability of the new owners. “On December 9, 2021, Messina Copper liquidator, called a meeting of creditors, which the BMWU on behalf of its members (former Messina Copper employees) attended, to seek mandate from creditors to proceed with a proposed settlement for Messina Copper on the scheme of compromise. It is important to note that employee benefits are regarded as preferential credit, meaning once a scheme is approved they are paid first.”
A savingram the Ministry of Local Government and Rural Development sent to Town Clerks and Council Secretaries explaining why councilors across the country should not have access to their terminal benefits before end of their term has been revealed.
The contents of the savingram came out in the wake of a war of words between counselors and the Ministry of Local Government and Rural Development. The councilors through the Botswana Association of Local Authorities (BALA) accuse the Ministry of refusing to allow them to have access to their terminal benefits before end of their term.
This has since been denied by the Ministry. In the savingram to town councils and council secretaries across the country, Permanent Secretary in the Ministry of Local Government and Rural Development Molefi Keaja states that, “Kindly be advised that the terminal benefits budget is made during the final year of term of office for Honorable Councilors.” Keaja reminded town clerks and council secretaries that, “The nominal budget Councils make each and every financial year is to cater for events where a Councilor’s term of office ends before the statutory time due to death, resignation or any other reason.”
The savingram also goes into detail about why the government had in the past allowed councilors to have access to their terminal benefits before the end of their term. “Regarding the special dispensation made in the 2014-2019, it should be noted that the advance was granted because at that time there was an approved budget for terminal benefits during the financial year,” explained Keaja. He added that, “Town Clerks/Council Secretaries made discretions depending on the liquidity position of Councils which attracted a lot of audit queries.”
Keaja also revealed that councils across the country were struggling financially and therefore if they were to grant councilors access to their terminal benefits, this could leave their in a dire financial situation. Given the fact that Local Authorities currently have cash flow problems and budgetary constraints, it is not advisable to grant terminal benefits advance as it would only serve to compound the liquidity problems of councils.
It is understood that the Ministry was inundated with calls from some Councils as they sought clarification regarding access to their terminal benefits. The Ministry fears that should councils pay out the terminal benefits this would affect their coffers as the government spends a lot on councilors salaries.
Reports show that apart from elected councilors, the government spends at least P6, 577, 746, 00 on nominated councilors across the country as their monthly salaries. Former Assistant Minister of Local Government and Rural Development, Botlogile Tshireletso once told Parliament that in total there are 113 nominated councilors and their salaries per a year add up to P78, 933,16.00. She added that their projected gratuity is P9, 866,646.00.
A surge in consumer spending is expected to be a key driver of Botswana’s economic recovery, according to recent projections by Fitch Solutions. Fitch Solutions said it forecasts household spending in Botswana to grow by a real rate of 5.9% in 2022.
The bullish Fitch Solutions noted that “This is a considerable deceleration from 9.4% growth estimated in 2021, it comes mainly from the base effects of the contraction of 2.5% recorded in 2020,” adding that, “We project total household spending (in real terms) to reach BWP59.9bn (USD8.8bn) in 2022, increasing from BWP56.5bn (USD8.3bn) in 2021.” According to Fitch Solutions, this is higher than the pre-Covid-19 total household spending (in real terms) of P53.0 billion (USD7.8bn) in 2019 and it indicates a full recovery in consumer spending.
“We forecast real household spending to grow by 5.9% in 2022, decelerating from the estimated growth of 9.4% in 2021. We note that the Covid-19 pandemic and the related restrictions on economic activity resulted in real household spending contracting by 2.5% in 2020, creating a lower base for spending to grow from in 2021 and 2022,” Fitch Solutions says.
Total household spending (in real terms), the agency says, will increase in 2022 when compared to 2021. In 2021 and 2022, total household spending (in real terms) will be above the pre-Covid-19 levels in 2019, indicating a full recovery in consumer spending, says Fitch Solutions. It says as of December 6 2021 (latest data available), 38.4% of people in Botswana have received at least one vaccine dose, while this is relatively low it is higher than Africa average of 11.3%.
“The emergence of new Covid-19 variants such as Omicron, which was first detected in the country in November 2021, poses a downside risk to our outlook for consumer spending, particularly as a large proportion of the country’s population is unvaccinated and this could result in stricter measures being implemented once again,” says Fitch Solutions.
Growth will ease in 2022, Fitch Solution says. “Our forecast for an improvement in consumer spending in Botswana in 2022 is in line with our Country Risk team’s forecast that the economy will grow by a real rate of 5.3% over 2022, from an estimated 12.5% growth in 2021 as the low base effects from 2020 dissipate,” it says.
Fitch Solutions notes that “Our Country Risk team expects private consumption to be the main driver of Botswana’s economic growth in 2022, as disposable incomes and the labour market continue to recover from the impacts of the Covid-19 pandemic.” It says Botswana’s tourism sector has been negatively impacted by the Covid-19 pandemic and the related travel restrictions.
According to Fitch Solutions, “The emergence of the Omicron variant, which was first detected in November 2021, has resulted in travel bans being implemented on Southern African countries such as South Africa, Botswana, Lesotho, Namibia, Zimbabwe and Eswatini. This will further delay the recovery of Botswana’s tourism sector in 2021 and early 2022.” Fitch Solutions, therefore, forecasts Botswana’s tourist arrivals to grow by 81.2% in 2022, from an estimated contraction of 40.3% in 2021.
It notes that the 72.4% contraction in 2020 has created a low base for tourist arrivals to grow from. “The rollout of vaccines in South Africa and its key source markets will aid the recovery of the tourism sector over the coming months and this bodes well for the employment and incomes of people employed in the hospitality industry, particularly restaurants and hotels as well as recreation and culture businesses,” the report says.
Fitch Solutions further notes that with economies reopening, consumers are demanding products that they had little access to over the previous year. However, manufacturers are facing several problems. It says supply chain issues and bottlenecks are resulting in consumer goods shortages, feeding through into supply-side inflation. Fitch Solutions believes the global semiconductor shortage will continue into 2022, putting the pressure on the supply of several consumer goods.
It says the spread of the Delta variant is upending factory production in Asia, disrupting shipping and posing more shocks to the world economy. Similarly, manufacturers are facing shortages of key components and higher raw materials costs, the report says adding that while this is somewhat restricted to consumer goods, there is a high risk that this feeds through into more consumer services over the 2022 year.
“Our global view for a notable recovery in consumer spending relies on the ability of authorities to vaccinate a large enough proportion of their populations and thereby experience a notable drop in Covid-19 infections and a decline in hospitalisation rates,” says Fitch Solutions. Both these factors, it says, will lead to governments gradually lifting restrictions, which will boost consumer confidence and retail sales.
“As of December 6 2021, 38.4% of people in Botswana have received at least one vaccine dose. While this is low, it is higher than the Africa average of 11.3%. The vaccines being administered in Botswana include Pfizer-BioNTech, Sinovac and Johnson & Johnson. We believe that a successful vaccine rollout will aid the country’s consumer spending recovery,” says Fitch Solutions. Therefore, the agency says, “Our forecasts account for risks that are highly likely to play out in 2022, including the easing of government support. However, if other risks start to play out, this may lead to forecast revisions.”