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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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Pan-African risk advisor Minet Group and Botswana’s Africa Lighthouse Capital acquire Aon Botswana

21st May 2021

Strategic partnership offers inherent benefits of global knowledge, African insights, and local expertise and commitment

Minet Group and Africa Lighthouse Capital today announced that they have received regulatory approval and fulfilled all requirements to acquire Aon’s shareholding in Aon Botswana, and consequently will begin the process to rebrand to Minet Botswana.

Minet Group is a well-known and trusted pan-African risk advisory firm and Aon’s largest Global Network Correspondent and has been rapidly expanding its African footprint since 2017 through the acquisition of operations from global professional services firm Aon in Kenya, Lesotho, Malawi, Mozambique, Namibia, Tanzania, Uganda, and Zambia.   Minet has been delivering world class products and services across Africa for over 70 years.

Africa Lighthouse Capital (ALC) is a leading Botswana citizen-owned private equity firm focused on investing in Botswana companies and propelling them into regional champions, with over BWP 500 million in funds under management.

The new entity will be rebranded to Minet and will inherit deeply rooted respect by its clients for their innovative and locally relevant solutions, responsiveness, and efficient processes. Furthermore, it shall have the benefit of consistency in leadership and staffing, with Barnabas Mavuma, previously Managing Director of Aon Botswana, continuing to lead the business as the MD supported by the local management team.

 “The addition of Minet Botswana to our growing African network affirms our belief in the great opportunities for growth that Africa offers, driven by rising consumer demand, huge investment in infrastructure and quick adoption of new technology,” says Joe Onsando, CEO at Minet Group.

“This transaction significantly adds to the diversity and skills base of our team and will have a positive impact on the range of products and services we provide. Our Correspondent agreement with Aon gives us access to global expertise and data driven insights and uniquely positions us to deliver risk advisory solutions that reduce volatility, thus driving improved performance for our clients. This is a very exciting time to be Minet in Africa.”

“The significantly increased Botswana citizen shareholding effected by this transaction gives rise to an exciting era of local market focus and growth for Minet Botswana,” says Bame Pule, Founder and CEO of Africa Lighthouse Capital.  “We intend to work with Minet Botswana’s local management team to further localise the business in terms of product development, while at the same time investing in local skills development and business development.  We look forward to this exciting journey, which will result in a significantly enhanced service offering for Minet Botswana’s clients.”

Consequently, and similar to the other members of the Minet Group, Minet Botswana becomes an Aon Global Network Correspondent, retaining its access to Aon’s resources, technology, and best practises, combined with the benefit of independent, local agility. This transaction furthermore significantly increases local shareholding, enabling operations to become even nimbler and better positioned to unlock new and existing growth opportunities.

Clients of Minet Botswana will experience continuity of product and service delivery standards in the short term. In the near future, they can expect an enhanced offering that combines agility with technology and product innovation, tailormade for their specific needs.

Together, Minet and ALC bring a sound understanding of local market conditions, strong governance, and an established track record in the region. These qualities, combined with Aon’s global capabilities and expertise, will bring clear benefits for clients.

This transaction vastly increases citizen ownership with shareholders who are going to be active in the business. The transfer of equity interests in Botswana to investors with local and regional expertise, presence and commitment will allow the businesses to move quickly in line with market movements, and to introduce products that are tailored to the local market.

“Minet’s commitment and drive to incessantly adapt to changing market conditions, and to innovate to meet the unique insurance demands of the African continent, while maintaining the high standards customers have come to expect – Onsando concludes – will continue to grow and give Minet a powerful competitive edge within the African market”.

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Africa scores $285 Billion IMF deal

21st May 2021

French President Emmanuel Macron received 21 Heads of state and government officials from Africa during the recent summit on the Financing of African Economies that focused on Africa to take full advantage of the tectonic shifts in the global economy and the call for a joint effort for financial and vaccination support for the continent.

President Emmanuel Macron stressed that “Most regions of the world are now launching massive post-pandemic recovery plans, using their huge monetary and fiscal instruments. But most African economies suffer the lack of adequate capacities and such instruments to do the same. We cannot afford leaving the African economies behind.

We, the Leaders participating to the Summit, in the presence of international organizations, share the responsibility to act together and fight the great divergence that is happening between countries and within countries.

This requires collective action to build a very substantial financial package, to provide a much-needed economic stimulus as well as the means to invest for a better future. Our ambition is to address immediate financing needs, to strengthen the capacity of African governments to support a strong and sustainable economic recovery and to reinforce the vibrant African private sector, as a long-term growth driver for Africa.”

For her part, International Monetary Fund (IMF) Managing Director Kristalina Georgieva highlighted that “there is urgency to focus on financing Africa. Last year, the pandemic-caused recession shrank the GDP of the Continent by 1.9 percent – the worst performance on record. This year, we project global growth at 6 percent, but only half that 3.2 percent for Africa.” Adding that Africa needs to grow faster than the world at 7 to 10 percent to meet the aspirations of its youthful populations, and become more prosperous and more secure.

Georgieva revealed that the price tag on the shot is estimated to be “$285 billion through 2025. Of this $135 billion is for low-income countries. This is the bare minimum. To do more – to get African nations back on their previous path of catching up with wealthy countries – will cost roughly twice as much. These are large numbers. They may seem out of reach. But to quote Nelson Mandela: impossible until it is done.”

The main areas of interest to achieve this include; first, end the pandemic everywhere, 40 percent of the population of all countries is targeted to get vaccinated by the end of 2021, and at least 60 percent by mid-2022.

Second, bilateral and multilateral development financing grants and concessional loans ought to go up. Over the last year, the IMF have swiftly ramped their financing for the Continent, including providing 13 times their average annual lending to sub-Saharan Africa. And are working to do much more. The IMF has also received support to increase access limits so they can scale up their zero-interest lending capacity through the Poverty Reduction and Growth Trust.

The IMF has also devised exceptional measures. Their membership backs an unprecedented new allocation of Special Drawing Rights (SDR) of $650 billion, by far the largest in their history. Once approved, which is intended to be achieved by the end of August, it will directly and immediately make about $33 billion available to African members. It will boost their reserves and liquidity, without adding to their debt burden.

Over the course of the last year, the IMF has built experience in facilitating the on lending of SDRs – thus managing to triple their concessional lending capacity as a result.

The Third being, actions at home. According to Georgieva “a crisis is an opportunity for transformational domestic reforms that increase domestic revenue, improve public services, and strengthen governance. For instance, digitalization can improve tax administration and revenue collection, and the quality of public spending. And with radical transparency, Africa can tap into new sources of finance – such as carbon offsets.

There is ample scope for countries to encourage private investment, including in social and physical infrastructure. New IMF research, published today, highlights that domestic and international investors could provide at least 3 percent of GDP per year of additional financing by the end of this decade.”

Reforms of international taxation can also support Africa’s growth. For a long time, the IMF has been in favor of minimum corporate tax rates to reduce the race to the bottom and tax avoidance. And they strongly support an international agreement on digital tax, something France has been a leading voice for. It is important to secure fair distribution of tax revenues, so they can contribute to closing Africa’s financial gap.

Georgieva called on to each and every one to step up. Reminding the attendees that from history they are all familiar with what a shock of this magnitude can do if not countered forcefully and effectively.

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Indian COVID-19 variant hits Botswana diamond sales

20th May 2021

De Beers’ Group, the world’s number one diamond producer by value, this week attributed the downfall of its sales for the fourth cycle week to the second wave of the Covid-19 variant (B.1.617.2) which was first discovered in India.

Diamond trading conditions have been hit by the Covid-19 crisis in India which is a major cutting and polishing centre for the world’s diamond trade.

The outbreak of the new variant has led to a humanitarian crisis with 280, 284 fatalities of the disease reported.

The London headquartered company said the sales in its fourth cycle fell to $380m (about P4.1 billion) down from $450m (about P4.8 billion) in the third cycle though it was higher than the fifth cycles of last year when the group shifted only $56m (P600 million).

De Beers emphasized that they continued to implement a more flexible approach to rough diamond sales during the fourth sales cycle of 2021, with the Sight event extended beyond its normal week-long duration.

The De Beers group Chief Executive Officer (CEO), Bruce Cleaver said the company continues to see robust demand for diamond jewellery in the key US and China consumer markets.

“However, the scale of the second wave of Covid-19 in India, where the majority of the world’s diamonds are cut and polished, has led to reduced midstream capacity and subsequently lower rough diamond demand, during what is already a seasonally slower time of year for midstream purchases,” said Cleaver.

Meanwhile Botswana health officials have confirmed the new Covid-19 variant in Botswana. The Ministry of Health and Wellness -through a press statement- informed members of the public that the variant (B.1.617), was confirmed in Botswana on 13th May 2021.

According to Christopher Nyanga, spokesperson at the Ministry, this followed a case investigation within Greater Gaborone, involving people of Indian origin who arrived in the country on the 24th April 2021.

Moreover the World Health Organization (WHO) recently announced that the Indian Covid-19 variant was a global concern, with some data suggesting that the variant has “increased transmissibility” compared with other strains.

The India variant (B.1.617.2) – is one of four mutated versions of the coronavirus which has been designated as being “of concern” by transitional public health bodies, with others first being identified in Kent, South Africa and Brazil.

Nevertheless when speaking at Bank of America Global Metals and Mining conference, Anglo American Chief Executive Officer, Mark Cutifani said the company portfolio is increasingly tilted towards future enabling products and those that need to decarbonise energy and transport in order to meet consumers’ needs – from home appliances, electronics and infrastructure, to food and luxury goods.

“We see material opportunity for Anglo American to continue to set itself apart in terms of the performance of our diversified business, further enhanced through sector-leading 25% volume growth over the next four years, led by copper and the platinum group metals,” said Cutifani.

“Most importantly, as the supplier of such critical materials, it is the duty of our industry to ensure that in everything we do, we act responsibly and deliver enduring value for our full breadth of stakeholders, including our planet.”

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