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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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Matsheka seeks raise bond program ceiling to P30 billion

14th September 2020
Dr Matsheka

This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.

“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.

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Lucara sits clutching onto its gigantic stones with bear claws in a dark pit

14th September 2020
Lesedi La Rona

Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.

A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.

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Botswana Diamonds issues 50 000 000 shares to raise capital

14th September 2020
Diamonds

Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.

A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.

Each Placing Share, according to Botswana Diamond Executives has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from, 7th September 2020, being the date of the Placing Warrants issue.

In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.

The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.

In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.

Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.

The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”

In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.

Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.

The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.

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