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Barclays sets the tone

Barclays Bank of Botswana has confirmed that its consolidated results for the half year period ended 30 June 2016 will be significantly higher than those reported for the half year period ended 30 June 2015. The anticipated higher profit is  rare news in the banking sector which is riddled with dwindling profits amid tough trading conditions.

In a market characterised by anaemic economic growth, low interest rates, stagnated wages and tight competition, commercial banks in Botswana have been reporting lower profits as they grapple with a new reality. The announcement by Barclays that they are expecting a higher profit than the previous period has become an exception to the rule. Just recently the biggest bank in Botswana by value, First National Bank Botswana, declared its lowest profit in two years. Standard Chartered Bank Botswana, the oldest bank in the country, also added to the woes plaguing the banking sector when it reported half year results which were lower than the previous corresponding period. Barclays Bank Botswana has not been spared the rout in the market trend as its profit declined by 22 percent in 2015.

However, there seems to be a silver lining for Barclays as the bank continues to push against the norm. The anticipated half year results which are expected to be higher are likely to buoy the bank and set the mood for the second half in which the bank tends to deliver spectacular results.  In 2015 the bank had a strong second half performance where they doubled their first half financial performance, achieving profit before tax of P222 million in comparison to P110 million in the first half of 2015. While the improved first half results and cessation of the moratorium on banking charges and fees might point to improved profits, the central bank has recently cut the bank rate by 50 basis points to 5.5%.When Bank of Botswana of slashed the bank rate by a cumulative 150 basis points in 2015, Barclays Bank lost more than P100 million.  It will be interesting to see if Barclays’ second half results will go against the grain and deliver yet another spectacular results considering that the bank’s revenue in the second half of 2015 were spurred by a 2% increase in net interest income.

The bank led by Reinette van der Merwe who joined it in 2013 after Barclays Africa Group Limited purchased the majority of  Barclays PLC operations in Africa. Barclays Bank of Botswana was one of those operations. In 2014 the banking group formulated a 5-year strategy to build a leading bank in Africa. Chiefly amongst those strategies was to be in the top 3 by revenue in any market they operated in, and in Botswana, the bank is number two in terms of revenue. Barclays Bank of Botswana has been chartering its own territory in the local landscape and escaping the shadows of the domineering FNBB as an innovative bank. Barclays Botswana has of recent engaged in a series of products and services intended to make baking seamless hence convenient for the end consumer. The bank introduced the first of its kind cash withdrawal that allows its client to withdraw a maximum of P1500 at cash tills in participating retail stores, then it followed up with an expedited account opening that takes 20 minutes, calling it the ignition account and even promised to waiver three months of banking fees for three months if they fail to open the account in less than 20 minutes. The ignition account is for students. The bank then took it a notch up when they improved on the ATM cash deposits by allowing non-Barclays clients to deposit money using their ATMs. The bank has recently introduced the first of its kind in the local markets when they launched a mobile payment system dubbed mPOS (Mobile point of sale) which provides convenience through its portability hence allowing payment solutions during transactions anywhere as long as there is a cellular network range. The improved digital channels fit in with the overall strategy of the bank to make banking easier and convenient.

“Our Customers and Clients are at the centre of everything we do. We committed a significant amount of our costs to technological and digital investments, making it easy for our customers to do business with us,” Reinette van der Merwe said in the bank’s 2015 annual report.

Other than launching its own products, the bank has also been involved in a raft of multi-million deals. When Sefalana, a leading retailer through their brand stores Sefcash and Shoppers, launched an online shopping platform, they turned to Barclays Bank to ensure safety during online transactions. Recently when
the Citizen Entrepreneurial Development Agency (CEDA) launched a P20 million loan product targeted at small enterprises and aimed at a group with a minimum of five people and maximum of fifteen people, they announced that the facility will warrant a savings avenue which should be 10% of the total loan and shall be in custody of the bank agreed by upon by CEDA and the group. So far CEDA has entered into an agreement with Barclays Bank of Botswana and Botswana Savings Bank to facilitate such agreement.   The bank was also party to a multi-billion deal when the Overseas Private Investment Corporation (OPIC), the U.S. Government’s development finance institution, signed the $125 million loan guaranty with Barclays Bank of Botswana, together with Lazare Kaplan International (LKI) acting through its subsidiary Botswana Finance LLC in a deal which will help Botswana develop its diamond industry in a sustainable manner that will promote local job creation and diversified economic growth. Barclays Bank of Botswana is the first lender under the broader $250 million loan guaranty program, and additional lenders may join the program in the future.

Barclays Bank of Botswana has also defied the odds in the stock market as it managed to deliver positive year to date returns on its share price. The bank’s efforts have not gone unnoticed in the Botswana Stock Exchange (BSE) as the share price has appreciated by 6.9% in the past 8 months to trade at P4.80. The share performance of Barclays Botswana is a stark contrast to other listed banks that have seen their share prices plummet in value, with FNBB losing 20% and Standard Chartered Bank in its steepest loss in years at 30%.

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Dark days as Aviation industry collapses

22nd November 2020
Air Botswana

As the Aviation industry takes a COVID-19 pummeling, for Africa the numbers are staggering, Chief Executive Officer of the International Air Transport Association (IATA), Alexandre de Juniac has observed.

Speaking recently at the African Airlines Association (AFRAA) has been hosting an Annual General Assembly, de Juniac said traffic is down 89% and revenue loses are expected to reach $6 billion. And this figure is likely to be revised downwards in the next forecast to be released later this month. “But the impact is much broader. The consequences of the breakdown in connectivity are severe,” he surmised.

According to de Juniac, five million African livelihoods are at risk while aviation-supported GDP could fall by as much as $37 billion. That’s a 58% fall.

“We have a health crisis. And it is evolving into a jobs and economic disaster. Fixing it is beyond the scope of what the industry can do by itself.”

He said they need governments to act, “And act fast to prevent a calamity.”

“We are in the middle of the biggest crisis our industry has ever faced. As leaders of Africa’s aviation industry, you know that firsthand. Airline revenues have collapsed. Fleets are grounded. And you are taking extreme actions just to survive. We all support efforts to contain the COVID-19 pandemic.  It is our duty and we will prevail. But policymakers must know that this has come at a great cost to jobs, individual freedoms and entire economies,” he said.

de Juniac used the AFRA general assembly platform to amplify IATA’s call for governments to address two top priorities: “The first is unblocking committed financial relief. Airlines will go bust without it. Already four African carriers have ceased operations and two are in administration. Without financial relief, many others will follow.”

Over US$31 billion in financial support has been pledged by African governments, international finance bodies and other institutions, including the African Development Bank, the African Union and the International Monetary Fund.

Unfortunately de Juniac pointed out, in his words, “Pledges do not pay the bills. And little of this funding has materialized. And let me emphasize that, while we are calling for relief for aviation, this is an investment in the future of the continent. It will need financially viable airlines to support the economic recovery from COVID-19.”

The second priority, according to IATA is to safely re-open borders using testing and without quarantines.

“People have not lost their desire to travel. Border closures and travel restrictions make it effectively impossible. Forty-four countries in Africa have opened their borders to regional and international air travel. In 20 of these countries, passengers are still subject to a mandatory 14-day quarantine. Who would travel under such conditions?” de Juniac quizzed rhetorically.

He suggested that countries should adopt systematic testing before departure provides a safe alternative to quarantine and a solution to stop the economic and social devastation being caused by COVID-19.

He admitted that it’s a frightening time for everyone, not least the millions of people whose livelihoods depend on a functioning airline industry. Right now, de Juniac said there essentially is no airline industry. He cited the example that China’s largest airlines sound optimistic, but in a vague way. “They gave no hard data about current yields, loads, or forward bookings, discussing only developments in 2019. Boy, does that seem like ages ago.”

Aviation’s darkest days

The IATA CEO said these are the darkest days in aviation’s history. “But as leaders of this great industry I know that you will share with me continued confidence in the future.

Our customers want to fly. They desire the exploration that aviation enables. They need to do international business that aviation facilitates. And they long to reunite with family and loved ones.”

He said the industry will, no doubt, be changed by this crisis, but flying will return. “Airlines will be back in the skies. The resilience of our industry has been proven many times. We will rise again,” he said.

de Juniac said Aviation is a business of freedom. “For Africa that is the freedom to develop and thrive. And that is not something people on this continent will forget or lose their desire for.”

 

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Inflation increased to 2.2% in October 2020

22nd November 2020

Headline inflation increased from 1.8 percent in September to 2.2 percent in October 2020, but remained below the lower bound of the Bank’s medium-term objective range of 3 – 6 percent, and lower than the 2.4 percent in October 2019.

According to Statistics Botswana, the increase in inflation between September and October 2020 mainly reflects the upward adjustment in domestic fuel prices {Transport (from -3.9 to -2.5 percent)}, which is estimated to have increased inflation by approximately 0.29 percentage points.

“There was also a rise in the annual price increase for most categories of goods and services: Alcoholic Beverages and Tobacco (from 6.2 to 6.6 percent); Clothing and Footwear (from 2.5 to 2.7 percent); Communications (from 0.6 to 0.9 percent); Housing, Water, Electricity, Gas and Other Fuels (from 6.4 to 6.6 percent); Recreation and Culture (from 0 to 0.2 percent); Miscellaneous Goods and Services (from 0.7 to 0.9 percent); Food & Non-Alcoholic Beverages (from 4.2 to 4.3 percent); and Furnishing, Household Equipment and Routine Maintenance (from 2 to 2.1 percent). Inflation remained stable for: Education (4.7 percent); Restaurants and Hotels (3 percent); and Health (1.5 percent). Similarly, the 16 percent trimmed mean inflation and inflation excluding administered prices rose from 1.8 percent and 3.1 percent to 2.2 percent and 3.4 percent, respectively, in the same period.”

[Source: Bank of Botswana]

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BDC injects further P64 million into Kromberg & Schubert

22nd November 2020
BDC

Botswana Development Corporation (BDC) has to date pumped a total of P100 million into the expansion of Kromberg and Schubert, a car harnessing manufacturing company, operating from Gaborone Old Naledi.

At the official ground breaking ceremony of the company‘s new warehouse today, BDC Managing Director, Cross Kgosidiile revealed the wholly state owned investment corporation has pumped P64 million into the expansion which entailed building of the new warehouse.

Kgosidiile explained that this follows another expansion project which was successfully launched in 2017, in which BDC invested P36 million, bringing the total investment into Kromberg at P100 million. The MD also acknowledged Botswana Investment and Trade Centre (BITC) as a partner in the project and for having facilitated the acquisition of the land.

 

Giving a keynote address, Minister of Investment, Trade & Industry, Peggy Serame highlighted the importance of infrastructural development in growing the local manufacturing sector and transforming the economy of Botswana.

Serame underscored the value of strategic partnerships between Government and the private sector, noting that when the two work together and pull together in one direction results will be evident and jobs will be created.

“With the prevailing conditions of depressed economy occasioned by COVID-19 pandemic, government is reliant on entities like BDC to bring in revenue and acceleration of private sector development in line with its mandate and strategic plan. This plan is supported by the need to invest in growth sectors and accelerate the implementation of the Economic Diversification Drive,” Serame said.

Minister Serame noted that the partnership between BDC and Kromberg & Schubert begun in 2017 when the P36 million, 4100 square metres factory expansion for the company was launched.

 

She said the launch of the 7320 square meters factory expansion, to be built at the tune of P64 million signals the continuation of the good partnership between the two companies.

 

“I must commend BDC for their continuous efforts to build partnerships with the private sector geared towards contributing to economic development of this country.”

 

Minister Serame also added that BITC through its robust investor aftercare programme continues to provide value added and red carpet to Kromberg and Schubert under their One Stop Service Centre.

 

“In this regard BITC facilitated acquisition of land to enable this expansion. I therefore would like to commend BITC for their timely facilitation to make this expansion possible,” the minister said.

 

Kromberg & Schubert was incorporated in Botswana in 2009; The Company has grown to asset its position as a significant player in the regional automotive industry value chain.

 

The company is also a critical player in the economic development of Botswana, it currently employs 2100 Batswana across its operations. Kromberg exports on average P2.0 billion worth of goods annually, contributing significantly to foreign exchange.

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