Barclays Bank of Botswana has delivered strong performance in their half year results for the period ended June 2016 as the bank continues with its journey to be the leading bank in the country. The latest strong results were achieved amidst a challenging trading environment marked by slow economic growth and declining commodity prices.
“Every business faces challenges especially in the current turbulent economic environment. However I’m excited to inform you that despite the challenges we face daily, we remain optimistic and excited about the future. We are committed to maximising shareholder value through our strategy. We are about to see that indeed our strategy is working and resilient despite the challenging environment,” said Reinette van der Merwe, Managing Director of Barclays Bank Botswana.
Ms. van der Merwe says their numbers will show they have achieved and exceeded their objectives and they are now moving into becoming the leading bank in Botswana. She highlighted that they were able to deliver a strong set of results despite the challenging environment. Moreover, she said the bank continues to make progress in growing their key segments in the various sectors of the economy.
For the period under review, Mumba Kalefungwa, Barclays Botswana finance director, said the half year results demonstrate their commitment to delivering on their strategy and also on contributing to the various sectors of the economy through credit extension and provision of various payment solutions.
“The performance that we are reporting today has mainly been driven by sustained revenue growth in our retail banking business and significant growth in excess of 50% in our Corporate and Investment Banking business and indeed our Business Banking business which has contributed to register excellent growth. Some of the factors that drove business in the year were efficient balance sheet utilization, improved margins, increased foreign exchange transaction volumes, generally transactional volumes and growth in our customer base,” he said.
The bank’s profit before tax was up by 144% to P270.6 million on the back of strong growth in revenue despite operating in a challenging and competitive environment. The bank realised revenues in the excess of P740.6 million, representing an increase of 27% following solid balance sheet increase and non-interest revenue growth in all the bank’s segments. Retail business registered growth of 10% mainly driven by transactional volumes while the bank also realised significant growth in Corporate and Investment banking as well as business banking segment which grew by 58% and 22% respectively.
The Net Interest Income increased by 8% to P499.6 million after corporate and investment banking and business and banking registered strong growth in terms of balance sheet momentum propelled by various chosen markets that the bank have elected to ply their trade in. The retail business remains the bank’s biggest cash cow in terms of revenue generation, contributing the largest share to revenues. The growth in Net Interest Income was helped in part by a fall in interest expense which went down by 27% to P92.2 million. The reduction was the result of a combination of optimised alternative funding sources and improved liquidity in the market following a reduction in the statutory reserve ratio which improved overall funding in the banking sector.
The Non-Interest Income increased by 18% while the Net Fee and Commission Income was up by 20% to P150 million. This was driven by improved customer transaction volumes in all chosen business segments. The bank says as part of their channel strategy, they have been migrating customers from the costly traditional bank branch to convenient and affordable digital channels. The operating expenses increased slightly by 4% to end at P374.3 million, which Barclays Bank Botswana says it’s in line with inflation growth rate. The bank has also impressed by cutting down on what was perhaps their biggest headache after they suppressed impairments down by 16% to P96 million. This comes after the bank reported lower profits in previous full year results after experiencing a spike in impairments. Barclays Bank Botswana was able to reduce impairments through improvements on retail losses which they attribute to revised collection models.
The second largest listed bank in Botswana in terms of market capitalization managed to grow its balance sheet to P14.5 billion, up by 12% riding on the growth of loans and advances to customers which spiked by 18% to almost P10 billion. The growth has largely driven by Corporate and Investment banking and Business Banking segments that grew 79% and 116% from a balance sheet perspective as the bank continues to offer debts and transactional solution products. On the liabilities side, deposits due to customers went up by 10% to settle at P10.5 billion largely driven by corporate deposits rising by 16% to P5.7 billion.
“This growth was driven by positive flows from our various corporate relationships where we continue to focus on all identified opportunities. We continue to strive to improve our customer service and product offering to existing and potential customers with a view to providing access to finance and providing various payment solutions. This has continued to contribute to the momentum that we have built over the last few years.”
Barclays bank Botswana half year results show that the bank is strongly capitalised at P1.9 billion in terms of regulatory capital, representing a ratio of 19.2% against the regulatory limit of 15%. Furthermore the bank remains highly liquid at 19.7% and operating well above the regulatory limit. As a way of returning positive returns to shareholders, the bank has declared an interim dividend of 14.67 thebe, representing P125 million in dividend payout, up from P100 million paid out in the corresponding period.
Homegrown LED light manufacturing company, The Bulb World, has kick started operations in South Africa, setting in motion the company’s ambitious continental expansion plans.
The Bulb World, which was partly funded by Citizen Entrepreneurial Development Agency (CEDA) at the tune of P4 million, to manufacture LED lighting bulbs for both commercial and residential use in 2017, announced last year that it will enter the South African market in the Special Economic Zone (SEZ) of North West province under the auspices of North West Development Corporation (NWDC).
The company has already secured a deal with South Africa authorities which entails production factory shells and tax incentives arrangements.
The company founder and Chief Executive Officer, Ketshephaone Jacob has also previously stated that the company is looking for just under P50 million to finance its expansion strategy and is reaching out to institutional investors such as Botswana Public Officers Pensioners Fund (BPOPF) and government investment arm, Botswana Development Corporation (BDC).
However, Jacob told WeekendPost that instead of sitting and waiting for expansion funding the company has started hitting the ground running.
“We have decided to get in the streets of SA, start selling lights from door to door, ” said Jacob who is in currently in Rusternburg to oversee the introduction of The Bulb World products in the market.
Jacob explained more brand activations will be undertaken in South Africa. “The plan is to do it the whole of North West and Limpopo province, through hawkers, we give the hawkers the lights to sell at a factory price and they put a mark up and make a living,” he said.
The Bulb World operates from Selibe Phikwe, it currently employees 65 young people, 80 % of which are Phikwe youth. The company plans to add 100 jobs this year alone as it forges ahead with its regional and continental expansion plans.
In July this year Bulb World products will hit South African Shelves: Pick n Pay, Checkers and Africa’s largest retailer Shoprite.
The Bulb World has been registered as a company in South Africa; the company will start producing lights from Mogwasa after striking a special economic zones deal with North West Development Corporation in North West Province South Africa.
“Over the next 10 years we are looking to create over 5,000 jobs in Africa. Through our expansion into all of Africa we will be able to create employment for various individuals in different sectors namely; manufacturing, distribution electronics and retail,” Jacob told this publication earlier this year.
Jacob said if all goes well, the plan is to have taken over Africa or rather penetrated, and have prevalent presence in the African market.
“We are gunning to have at least 30 percent market share by then. According to a 2016 Market Survey, the total valuation of sales for LED Lighting was 57BN, a portion of which we plan to have taken over by then,” he said.
While the company has set its eyes on Africa, Jacob said, the company has not fully exploited its local growth, indicating that there could be strategic factories built to supply neighbouring countries of Angola and Zimbabwe.
“There is potential for further local expansion as well to other areas of Botswana if things run smoothly as anticipated. Hopefully in the long-term if our fellow Africans and all these markets receive us well we are planning to build another factory,” he said.
“We are looking to build another factory in the Chobe/Ngamiland Area that will give priority to markets in Zimbabwe and Angola,” he said
The Maun based Okavango Research Institute (ORI) has downplayed the impacts of oil and gas exploration in part of Okavango delta arguing that given the distance proposed the likelihoods of negative impacts drilling these exploration wells on the surface water systems is likely to be negligible.
The Institution released a position paper titled ‘Proposed Petroleum (Oil and Gas) Exploration Operations in the Petroleum Exploration License (PEL) No. 73,’ with findings stating that, in the event of discovery of economically viable hydrocarbon deposits, much more careful consideration of the impacts and economic benefits of development of the resource will be needed.
For example, the fracking process for gas and oil extraction is known to require large volumes of underground water.
It further argues that increased extraction of the underground water is likely to affect the water table level and further affect the overall water availability in the river-basin.
“The effect on water availability and use may become worse if surface water is reticulated or sourced by any means from the Kavango River. Should the exploration and fracking for oil and gas expand to Block 1720, 1721 and 1821, the impact on water availability and quality will be significant, especially if the wastewater is not well managed,” said the paper.
The research unit recommends close communication between the relevant Basin State Ministries (Mineral Resources, Environment) and the Permanent Commission on the Okavango River Basin, OKACOM, and other stakeholders must be facilitated.
This will facilitate sharing of the correct information on the desired intentions of the basin states and compromises sought for the sustainability of the ecosystems in the downstream of the Cubango-Okavango river Basin, states the position paper.
ORI as a key stakeholder with scientific information says it is positioned to provide scientific advice and guidance to decision-makers on the potential impacts of both exploration and development and operation activities.
It also recommends that while the impacts might be minimal at the exploration stage, environmental impacts during the development and extraction process are significant.
Findings also state that the SADC Protocol places a mandatory duty to make a notification of planned measures undertaken in any riparian state in cases where such measures hold the potential to cause ‘significant adverse effects.’
It further states that where the planned development is trivial and not expected to cause any significant harm, the development state is not under duty to notify other riparian states.
Given that the drilling in the Kavango Region in Nambia is merely for exploratory purpose and the possibility of harm is minor, it is therefore not surprising that the Namibian government did not inform Botswana.
However, should it be found that the oil can be profitably or economically exploited, the Namibian government would be under a duty to notify both Angola and Botswana.
The institution further states that to ensure sustainable development in the Okavango Delta the following in the context of exploration for and potential development of hydrocarbon deposits within the Cubango-Okavango River Basin, it must be considered that the Okavango Delta is a World Heritage Site listed in 2014 by UNESCO and one of the binding requirements of the listing is the non-permissible commercial mining of any mineral, gas or oil within the World Heritage Site.
It states that the Okavango Delta is also a RAMSAR site in which mining is not allowed.
Should the exploration for minerals, oil and gas be allowed, there is a high chance that a mineral, oil or gas may be found given that the Delta is sitting on karoo sediments and shale rocks which in other parts of the world have been found to be sources of oil and gas deposits. Should oil or gas be discovered, there will be a strong socio-economic pressure to mine oil or gas and create jobs for the masses.
Manufactured in Turkey, Pakmaya Instant Dry Yeast can be used in the production of various fermented products, as it is suited for both traditional and industrial baking processes. All kinds of breads, buns and fermented pastry products are typical examples of applications.
Pakmaya Africa Sales Manager Cem Perdar says Pakmaya has 4 plants in across the world, further indicating that all of the plants have the highest standards of quality certificates and approvals. Regarding raw material, molasses is the main ingredient for yeast. Concerning production activities, yeast manufacturing requires high know-how and capability. Pakmaya has all those capabilities and aspects more than 45 years.
According to Perdar, Pakmaya has been existent in African markets since 30 years. From South to North, Central to East and West, a consumer can find Pakmaya in nearly every part of Africa continent.
“With its high quality, rich product selection and good service, our brand has become the favorite yeast of many Africans. On the other hand, our distributors in African countries are working very hardly and loyally in order to promote our products in their markets. After some time, we are becoming like families with our exclusive distributors in Africa and this enables both parts to work harder and keeps our product sustainable in market,” he said in an interview this week.
The yeast manufacturing giant made its way to Botswana market. The company has been smoothly working with Kamoso Distribution, a local distribution company. Perdar told BusinessPostthat two entities have been working hard to earn is market locally.
“At the moment we have a good market share with them in Botswana market. I’m sure during 2021 long, we will be increasing our sales and market position. Soon we are going to start a marketing campaign in Botswana, so that means Batswana will see and recognize Pakmaya more and more. Pakmaya wants to be the best friend of bakers in bakeries and ladies at homes in Botswana.”
As per global COVID-19 regulations to curb the spread of the COVID-19, Botswana just like other country closed borders. Providentially, the restrictions did not affect the company destructively.
Perdar says “Kamoso Africa is a very important and strong partner in Botswana territory. With Kamoso’s hard work and strict measurements, we have done a very good job. So as Pakmaya, we have not suffered any distribution problem. Our partner is doing the needful at the reaching our products to end users.”
He further said “We are doing well in Botswana market and hoping to make much more. Our aim is to enter every single corner in Botswana territory. With our new marketing campaigns, we are planning to be the most preferred yeast in Botswana market.”