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The unbanked millions of Pula

  • Mobile money offers mobile operators a big bite
  • Orange tops, beMobile prepares to compete  


As beMobile’s market share continues to grow steadily, the mobile company is also flexing its muscles to compete in other income generating segments like the Mobile money.

A report by Stockbrokers Botswana says Mobile money services show immense potential, with the segment among the prime drivers of financial inclusion as they make financial services accessible to the unbanked market. According to the report, as at March 2015, the sector had 412, 126 active mobile money accounts, generating revenues of BWP 206 million for the year.

With this potential, the report suggests that penetrating the Mobile money is the next big fight among mobile telephony companies. Currently Orange has 65% market share for mobile money services, Mascom 34%, and beMobile 1% market share. But beMobile is splashing over P110 million recently to boost its brand.

Following the listing of the parent company, Botswana Telecommunications Corporation Limited (BTCL), it emerged that losses attributable to BWP522 million impairment charges of Property, Plant and Equipment were a result of technological changes on a global scale. beMobile is said to be pushing its technological acquisitions to up its game.

The Stockbrokers report further says the mobile telephony sector has seen substantial growth of subscriptions, from 823 070 in 2006 to 3 405 887 in 2015, representing a 10 year CAGR of 15.3%. Mascom has the largest share in the mobile telephony sector, with an estimated 55%, followed by Orange with an estimated 28%.

“beMobile, with an estimated 17% market share, has been growing steadily since its launch in April 2008, and had a subscriber base of 507 321 as at January 2016. BTCL expects to spend about BWP110 million developing its beMobile arm during the year. This will be done on the backdrop of 1% Universal Access Service levy on all identified mobile operators to raise funds towards the Universal Access and Service Fund,” reads part of the report.

Much of beMobile’s growth, which has seen it capture a meaningful share of Botswana’s mobile market is attributable to its low tariff rates and wider network coverage of the three service providers.

The market share between prepaid and post-paid telephony subscriptions is 98% and 2% respectively. Although prepaid calls are more expensive than post-paid calls, prepaid is a service of choice as it allows customers control over their spending through pre-payment of small denominations airtime units.

The Stockbrokers report indicates that Mobile penetration, measured by teledensity, was estimated at 168% in March 2014 (March 2014: 158%), higher than the Sub Saharan Africa’s average mobile penetration of 82.1%. It is estimated that the mobile telephony networks cover at least 95% of the population with varying network capabilities of 2.5G, 3G and 4G.

“Mobile broadband technologies such as 3G and 4G are mostly available in urban areas while in rural areas subscribers access the internet through other technologies such as 2G and Enhanced Data for Global Evolution (EDGE) that are widely deployed throughout the country. Currently, 3G as a percentage of mobile market is estimated at 12.5%; while the newer technology, 4G, or LTE, has already been rolled out by Mascom and Orange. The 4G technology requires 4G ready handsets, which are quite costly, BTCL rolled out the 4G to its customer base in September 2015.”

However the stockbrokers report shares that the slowing annual growth rates of mobile subscriptions suggest increasing saturation in Botswana’s mobile market, while the relatively high penetration rates are likely to be driven by unique form of competition where consumers possess multiple Sim cards belonging to different service providers.

“The multiple SIM cards phenomenon allows subscribers to take advantage of product and price offerings across networks. This practice also ensures that consumers have access to other networks in areas of the country where some networks are not available.”
Internet services

There is no doubt that the use of mobile technology has surpassed fixed technology due to its convenience, with mobile internet penetration at 59% and fixed internet penetration at 5%. It is expected as captured by the Stockbrokers report that Mascom (78%), Orange (53%) and beMobile (39%) are fighting for this segment.

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13 AUGUST 2022 Publication

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DIS blasted for cruelty – UN report

26th July 2022
DIS BOSS: Magosi

Botswana has made improvements on preventing and ending arbitrary deprivation of liberty, but significant challenges remain in further developing and implementing a legal framework, the UN Working Group on Arbitrary Detention said at the end of a visit recently.

Head of the delegation, Elina Steinerte, appreciated the transparency of Botswana for opening her doors to them. Having had full and unimpeded access and visited 19 places of deprivation of liberty and confidentiality interviewing over 100 persons deprived of their liberty.

She mentioned “We commend Botswana for its openness in inviting the Working Group to conduct this visit which is the first visit of the Working Group to the Southern African region in over a decade. This is a further extension of the commitment to uphold international human rights obligations undertaken by Botswana through its ratification of international human rights treaties.”

Another good act Botswana has been praised for is the remission of sentences. Steinerte echoed that the Prisons Act grants remission of one third of the sentence to anyone who has been imprisoned for more than one month unless the person has been sentenced to life imprisonment or detained at the President’s Pleasure or if the remission would result in the discharge of any prisoner before serving a term of imprisonment of one month.

On the other side; The Group received testimonies about the police using excessive force, including beatings, electrocution, and suffocation of suspects to extract confessions. Of which when the suspects raised the matter with the magistrates, medical examinations would be ordered but often not carried out and the consideration of cases would proceed.

“The Group recall that any such treatment may amount to torture and ill-treatment absolutely prohibited in international law and also lead to arbitrary detention. Judicial authorities must ensure that the Government has met its obligation of demonstrating that confessions were given without coercion, including through any direct or indirect physical or undue psychological pressure. Judges should consider inadmissible any statement obtained through torture or ill-treatment and should order prompt and effective investigations into such allegations,” said Steinerte.

One of the group’s main concern was the DIS held suspects for over 48 hours for interviews. Established under the Intelligence and Security Service Act, the Directorate of Intelligence and Security (DIS) has powers to arrest with or without a warrant.

The group said the “DIS usually requests individuals to come in for an interview and has no powers to detain anyone beyond 48 hours; any overnight detention would take place in regular police stations.”

The Group was able to visit the DIS facilities in Sebele and received numerous testimonies from persons who have been taken there for interviewing, making it evident that individuals can be detained in the facility even if the detention does not last more than few hours.

Moreover, while arrest without a warrant is permissible only when there is a reasonable suspicion of a crime being committed, the evidence received indicates that arrests without a warrant are a rule rather than an exception, in contravention to article 9 of the Covenant.

Even short periods of detention constitute deprivation of liberty when a person is not free to leave at will and in all those instances when safeguards against arbitrary detention are violated, also such short periods may amount to arbitrary deprivation of liberty.

The group also learned of instances when persons were taken to DIS for interviewing without being given the possibility to notify their next of kin and that while individuals are allowed to consult their lawyers prior to being interviewed, lawyers are not allowed to be present during the interviews.

The UN Working Group on Arbitrary Detention mentioned they will continue engaging in the constructive dialogue with the Government of Botswana over the following months while they determine their final conclusions in relation to the country visit.

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Stan Chart halts civil servants property loan facility

26th July 2022
Stan-Chart

Standard Chartered Bank Botswana (SCBB) has informed the government that it will not be accepting new loan applications for the Government Employees Motor Vehicle and Residential Property Advance Scheme (GEMVAS and LAMVAS) facility.

This emerges in a correspondence between Acting Permanent Secretary in the Ministry of Finance Boniface Mphetlhe and some government departments. In a letter he wrote recently to government departments informing them of the decision, Mphetlhe indicated that the Ministry received a request from the Bank to consider reviewing GEMVAS and LAMVAS agreement.

He said: “In summary SCBB requested the following; Government should consider reviewing GEMVAS and LAMVAS interest rate from prime plus 0.5% to prime plus 2%.” The Bank indicated that the review should be both for existing GEMVAS and LAMVAS clients and potential customers going forward.

Mphetlhe said the Bank informed the Ministry that the current GEMVAS and LAMVAS interest rate structure results into them making losses, “as the cost of loa disbursements is higher that their end collections.”

He said it also requested that the loan tenure for the residential property loans to be increased from 20 to 25 years and the loan tenure for new motor vehicles loans to be increased from 60 months to 72 months.

Mphetlhe indicated that the Bank’s request has been duly forwarded to the Directorate of Public Service Management for consideration, since GEMVAS and LAMVAS is a Condition of Service Scheme. He saidthe Bank did also inform the Ministry that if the matter is not resolved by the 6th June, 2022, they would cease receipt of new GEMVAS and LAMVAS loan applications.

“A follow up virtual meeting was held to discuss their resolution and SCB did confirm that they will not be accepting any new loans from GEMVAS and LAMVAS. The decision includes top-up advances,” said Mphetlhe. He advised civil servants to consider applying for loans from other banks.

In a letter addressed to the Ministry, SCBB Chief Executive Officer Mpho Masupe informed theministry that, “Reference is made to your letter dated 18th March 2022 wherein the Ministry had indicated that feedback to our proposal on the above subject is being sought.”

In thesame letter dated 10 May 2022, Masupe stated that the Bank was requesting for an update on the Ministry’s engagements with the relevant stakeholder (Directorate of Public Service Management) and provide an indicative timeline for conclusion.

He said the “SCBB informs the Ministry of its intention to cease issuance of new loans to applicants from 6th June 2022 in absence of any feedback on the matter and closure of the discussions between the two parties.”  Previously, Masupe had also had requested the Ministry to consider a review of clause 3 of the agreement which speaks to the interest rate charged on the facilities.

Masupe indicated in the letter dated 21 December 2021 that although all the Banks in the market had signed a similar agreement, subject to amendments that each may have requested. “We would like to suggest that our review be considered individually as opposed to being an industry position as we are cognisant of the requirements of section 25 of the Competition Act of 2018 which discourages fixing of pricing set for consumers,” he said.

He added that,“In this way,clients would still have the opportunity to shop around for more favourable pricing and the other Banks, may if they wish to, similarly, individually approach your office for a review of their pricing to the extent that they deem suitable for their respective organisations.”

Masupe also stated that: “On the issue of our request for the revision of the Interest Rate, we kindly request for an increase from the current rate of prime plus 0.5% to prime plus 2%, with no other increases during the loan period.” The Bank CEO said the rationale for the request to review pricing is due to the current construct of the GEMVAS scheme which is currently structured in a way that is resulting in the Bank making a loss.

“The greater part of the GEMVAS portfolio is the mortgage boo which constitutes 40% of the Bank’s total mortgage portfolio,” said Masupe. He saidthe losses that the Bank is incurring are as a result of the legacy pricing of prime plus 0% as the 1995 agreement which a slight increase in the August 2018 agreement to prime plus 0.5%.

“With this pricing, the GEMVAS portfolio has not been profitable to the Bank, causing distress and impeding its ability to continue to support government employees to buy houses and cars. The portfolio is currently priced at 5.25%,” he said.  Masupe said the performance of both the GEMVAS home loan and auto loan portfolios in terms of profitability have become unsustainable for the Bank.

Healso said, when the agreement was signed in August 2018, the prime lending rate was 6.75% which made the pricing in effect at the time sufficient from a profitable perspective. “It has since dropped by a total 1.5%. The funds that are loaned to customers are sourced at a high rate, which now leaves the Bank with marginal profits on the portfolio before factoring in other operational expenses associated with administration of the scheme and after sales care of the portfolio,” said the CEO.

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