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BB vows to resuscitate Phikwe

Ever since government announced provisional liquidation for BCL mine, the economic nucleus of Selebi Phikwe, parastatals, government investment arms as well as senior government officials have descended the copper nickel mine, all in attempt to put forth convincing resuscitation proposals.

However not all of the visitors from the big city were given the warm welcome- Investment, Trade and Industry Ministry’s permanent secretary, Peggy Serame’s task team was last week Monday told to go back to their “CBD lucrative offices” in Gaborone.

The team which comprised amongst others, BDC and BITC top brass and other senior government officials was rendered as a waste of time by the aggrieved Phikwe business persons. Vice President Masisi‘s stakeholder address was also a chaotic gathering as business owners demanded the truth about sudden closure of their biggest trading partner. Contrary to the latter, Business Botswana as the voice of private sector businesses in Botswana gathered Selebi Phikwe Business Community on Monday (October 17th) at Cresta Bosele Hotel to get their views on the way forward regarding the future of Phikwe. Lekwalo Mosienyane’s delegation, which was well received, had something worthy to take back to Gaborone at the end of their visit.

It was agreed that a regional task team which was  to compromise of Phikwe business people from different sectors was to be set up to work with the national BCL shutdown response task team formed by Business Botswana. The Phikwe regional task team will liaise through Business Botswana Vice President (North), Palalani Moithobogi who is also a business magnet based in Selebi Phikwe. When addressing the business community, Business Botswana President, Mosienyane said there was light at the end of the tunnel for Selebi Phikwe, “from a business perspective, situations like this can uncover billions in hidden business ventures and value chain opportunities,” he said. He noted that Business Botswana as the mouth piece of the private sector in the country is in a position to offer any urgent assistance necessary to help address the situation which  currently threatens to turn Phikwe into a ghost town.

For his part, Business Botswana Chief Executive Officer, Dr Racious Moatshe told WeekendPost that already there is a national task team that compromises of all stakeholders mandated to respond to the Phikwe situation in terms of cultivating other business ventures and economic alternatives to keep Selebi Phikwe alive. The purpose of the meeting, he revealed, was to get the mining town’s business community on board.

 “We are here basically to prevent these business people from disinvesting from this town, we agreed that they form a task team which will work hand in hand with the national one into developing a position paper from the private sector point of view and present it to government enclave,” said Moatshe.

He added that the task team will comprise of representatives from various   areas of business including retail and hotels. “Liaising with our Vice President ( North) the regional task force intends to develop short term, medium term and long term intervention strategies to rectify the situation here and prevent the worst regional economic crush in our history from hitting Selebi Phikwe.’’

Botswana Chamber of Mines Chief Executive Officer Charles Siwawa expressed hope for BCL itself. “The mine can still be operational under a restructured business model, BCL lifespan is not over yet,’’ said the soft spoken Mining expert.

Siwawa told WeekendPost that BCL Group as a whole sits under high grade ore deposits on some of its shaft as well as the Tati belt, in contradiction to Minister Sadique Kebonang’s sentiments that the ore value is very low.

”From the figures we have and last prospects reviews about BCL deposits, it’s not over yet for Bamangwato Concessions Limited, the mine needs capital injections to observe its sustainability until commodity prices realize growth and business feasibility, and we are talking about billions of pula. BCL is currently making losses because of high operation costs, which need to be stripped down, should the mining resume,’’ Siwawa asserted.

Furthermore, Siwawa believes that the mine can be sold to  different investors in order to raise enough capital to keep the operations running for a period of two years or so, with the hope of commodity price improvement. “No one will probably inject 8 billion into a fragile business like this alone, thus we need to sell profitable shafts to different investors on share basis to gather the huge money needed to assume operation here.”

Mosienyane also chirped in, advising the Phikwe Business community to form a consortium in order to gather up finances they might have to ready themselves for possible purchase of some of the mine operations.

“The consortium can also be used to collectively venture into different business alternatives hence keeping Phikwe economy alive,’’ said Mosienyane.

Chaos over SPEDU erupted during meeting

Earlier on, during the same meeting, chaos erupted at the mention of Selebi Phikwe Economic Diversification Unit (SPEDU). Although media was ordered to leave the meeting when the chaos started, WeekendPost can reveal that the business people in that town want nothing to do with the diversification unit. SPEDU is accused of funds embezzlement and the business society squarely blames it for failed economic diversification over the past 8 years in the mining town. Further, the business community called on government to cease pumping money into SPEDU.   

Meanwhile, Mosienyane said that as a former SPEDU board member, he has yet to get accountability from SPEDU about certain dealings, such as the multimillion Basil project. He added that the SPEDU board as the governing body of the parastatals needs to be reviewed.

“I want to put this on record that SPEDU cannot revive Phikwe without representation of Phikwe business community in its board, we want to seat in the SPEDU board as the private sector,’’ explained Mosianyane .

According to the soft spoken  private sector mouth piece who is also  a  renowned architecture and business man ,SPEDU  needs to affiliate with Business Botswana now that it’s a semi autonomous company that can invest and make money.

“SPEDU should have less of government representation in the board but more of regional business people. All it should do is return to government positive cash flow, investment returns, jobs and consequently total independence from government cash flow, not the current reckless spending we hear about.’’

The meeting generally concluded that a position paper will be presented to the decision makers in a month’s time, recommending possible diversion of ESP funds to Selibe Phikwe, and putting halt to some SPEDU projects like Platjan Bridge.

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Business

Pula smiles at COVID-19 vaccine

25th November 2020
COVID-19 vaccine

A squeaky and glittering metaphoric smile was the look reflected from the Pula against the greenback this week and money market researchers lean this on optimism following Monday’s announcement of another Covid-19 vaccine which is said to have boosted emerging market economies.

With other emerging market currencies, the Pula too reacted to optimism and fanfare on the new Covid-19 vaccine against the weakening US dollar which has been losing its shine since the uncertainty laden US elections.

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Business

Choppies high on JSE rollercoaster volatility

25th November 2020
CHOPPIES

After bouncing back into the Johannesburg Stock Exchange (JSE) last week Friday, following a year of being in the freezer, the Choppies stock started this week with much fluidity.

Choppies was suspended in both the Botswana Stock Exchange and its secondary listing at the JSE for failure to publish financial results. Choppies suspension on Botswana Stock Exchange was lifted on 27 July 2020. On Friday last week, when suspension was being lifted, Choppies explained that this came into fruition “following extensive engagement with the JSE.”

Choppies stock, prior to suspension, hit a mammoth decline in value of more than 60 percent, especially in September 2018. Waking from a 24 month freezer, last week the Choppies share price was at R0.64 and the stock did not make any movement.

However, Monday was the day when Choppies stock moved vibrantly, albeit volatile. Choppies’ value was on a high volatile mood on Monday, reaching highs of 200 percent. At noon, the same Monday, the Choppies share had reached R1.05. Before taking an uphill movement, Choppies stock slightly slipped by 2 cents. But the Choppies share rode up high and by lunch time the stock had reached the day’s summit of R2.00 and that was at 13:30 when investors were buying the stock for lunch.

The same eventful Monday saw gloom on the faces of Choppies rivals, when Choppies gained by 220.31 percent around lunch time its rivals in the JSE Food & Drug Retailers sector were licking wounds. Spar lost 2.94 percent, Pick Pay fell by 2.43 percent, Shoprite 7.52 percent and Dis-Chem 1.98 percent. The only gainer was Clicks by a paltry 0.51 percent.

In an interview with BusinessPost, Choppies sponsors at the JSE PSG Capital Managing Director Johan Holtzhausen explained that the retailer’s stock was in high demand after a long suspension. He said when a company list or a suspension is lifted the market needs to find itself on the pricing of the share.

“Initially when the suspension was lifted there were more buyers than sellers. As far as we could see this created a shortage of shares so to speak and resulted in the price at which the shares traded going to R1.20 and eventually R2.05 before finding its level around R0.80 sent from a JSE perspective.

This is marked dynamics and reflect that there are investors that are positive about the stock in the long run. This is a snapshot over a short period and one requires a longer period to draw further conclusions,” said Holtzhausen in an interview talking about the Choppies stock.

On Monday this week where the Choppies value grew by 200 percent, the stock took a turn looking down, closing the day at R0.87 from a high of R2.00. According to local stockbroker Motswedi Securities on Monday while there was no movement by Choppies in the local stock exchange as the retailer appeared on the board as 141,000 shares traded at P0.60 each.

However in Choppies’ secondary listing the stock price rallied to over 200 percent during intraday trading on Monday before losing steam and declining to around R0.87 share.

Before press yesterday Choppies opened the market with the stock starting the day at R0.80 then went flat for few hours before taking a slide downward, dropping 5 cents in 30 minutes. Choppies then went flat at R0.75 for 50 minutes yesterday before going up at 10:20 am where it nearly recovered the open day price of 80 cents, but was shy of 1 cent. From 79 cents the price went flat until noon.

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Foschini-Jet merger, a class and rivalry conundrum dissection

25th November 2020
Foschini

Competition and Consumer Authority (CCA) has revealed that in its assessment of the Jet take over by Foschini, there were considerations on possible market rivalry and a clash in targeted classes.

According to a merger decision notice seen by this publication this week, high considerations were made to ensure that Foschini’s takeover of Jet is not anyhow an elimination of rivalry or competition or if the two entities; the targeted and the acquiring enterprise serves the same class of customers or offer the same products, to elude the anti-trust issues or a stretch of monopoly.

The two entities are South African retailers whose services stretched to Botswana shores.  Last month local anti-trust body, CCA, received an acquisition proposal from South African clothing retailer, Foschini, stating their intentions to take-over Jet.

South African government’s Business Rescue Practitioners earlier this year after finding out that Jet’s mother company, Edcon, is falling apart, made a decision that Foschini can buy Jet for R480 million. This means that Foschini will add Jet to its portfolio of 30 retail brands that trade in clothing, footwear, jewellery, sportswear, homeware, cell phones, and technology products from value to upper market segments throughout more than 4085 outlets in 32 countries on five continents.

However the main headache for the CCA decision which was released this week, is distinguishing the targeted and the acquiring entity businesses and services.

When doing a ‘Competitive Analysis and Public Interest’ assessment, CCA is said to have discovered that Foschini is classified as a “standard retailer” which targets middle-to-upper income consumers and it competes with stores such as; Truworths and Woolworths. The targeted entity, Jet, is on the lower league when compared to its acquirer, it serves customers of lower classes and is regarded as a discount/value retailer targeting lower income consumers or a mass market. This makes Jet to be in direct competition with Ackermans, Pepkor, Cash Bazaar and Mr Price.

“Therefore, a narrower view of the market is that Foschini through its stores trading in Botswana is not a close competitor to Jet. Additionally, there exist other major rivals who will continue to exercise competitive constraints on the merged enterprise post-merger,” concluded CCA this month.

The anti-trust body continued to explain that in terms of the Acquisition of a Dominant Position, the analysis shows that the acquisition of the target business by Foschini Botswana will result in an insignificant combined market share in the relevant market.

This made CCA reach to a conclusion that there is no case of an acquisition of a dominant position in the market under consideration or any other market on the account of the proposed transaction.

What supports the merger according to CCA is that it is in compliance with regards to ‘Public Interest Considerations’ because the findings of the assessment revealed that the transaction is as a result of the need for a Business Rescue by the target enterprise. This is so because in the event that the proposed transaction fails, it will translate into the loss of the employment positions at the target business.

“On that note the Authority (CCA) found it necessary to ensure that the proposed merger does not result in any retrenchments or redundancies. In light of this, the assessment revealed the critical need to protect the employees of the merged entity from possible merger specific retrenchments/ redundancies,” said CCA.

Before making a determination that the recently proposed transaction is not likely to result in the prevention or substantial lessening of competition or endanger the continuity of the services offered in the relevant market, CCA said it then moved into a concern for public interest which is a protection enshrined in the Competition Act of 2018.

CCA’s concern was mostly loss of livelihood or employment by 126 Batswana workers at Jet stores, stating that possible retrenchments or redundancies may arise as a result of implementation of the proposed merger.

Much to the desire of trade union or labour movements in Botswana and across Southern Africa where the Jet stores are stemmed-who also raised concerns about the retail’s workers job security- CCA subjects Foschini to keep the target entity 126 workers.

“There shall be no merger specific retrenchments or redundancies that may affect the employees of the merged enterprises. For clarity, merger specific retrenchments or redundancies do not include (the list is not exhaustive): i. voluntary retrenchment and/or voluntary separation arrangements; ii. Voluntary early retirement packages; iii. Unreasonable refusals to be redeployed; iv. Resignations or retirements in the ordinary course of business; v. retrenchments lawfully effected for operational requirements unrelated to the Merger; and vi. Terminations in the ordinary course of business, including but not limited to, dismissals as a result of misconduct or poor performance,” said CCA.

CCA also orders that Foschini informs it about all the details of 126 Jet employees within thirty (30) days of the merger approval date. CCA should also know information of when Foschini is implementing the merger, within 30 days of the approval date.

Other conditions include Foschini sharing a copy of the conditions of approval to all employees of the Jet or their respective representatives within ten (10) days of the approval date.

“Should vacancies arise in the target, the merged enterprise shall consider previous employment at one of the non-transferring Jet stores to be a positive factor to be taken into account in the consideration of offering potential employment,” said CCA.

According to CCA, in cases of any job losses, for the Authority to assess whether the retrenchments or redundancies are merger specific, at least three months before (to the extent that this deadline can be practically achieved and in terms of the prevailing and legally required employment practices) any retrenchments or redundancies are to take place, inform the Authority of:  i. The intended retrenchments; ii. The reasons for the retrenchments; iii. The number and categories of employees affected; iv. The expected date of the retrenchments.

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