Statistics headache…
Statistics Botswana has fallen short of the World Bank Statistics Index, adding to the downward trajectory since 2004. Dr Burton Mguni, Deputy General Statistician, revealed at the Statistics Botswana seminar that Botswana scored 45.5 points out of 100, putting it below the Sub Saharan African average.
The decline in the ratings of Statistics Botswana is not so much to do with data collection but rather the dissemination of it. This comes after the country failed to report part of statistics to UNESCO. Of the required data, health survey and poverty survey also ranked the country low.
Statistics Botswana is the principal data collecting, processing and disseminating agency responsible for coordinating, monitoring and supervising the National Statistical System. The organisation is currently undertaking the health survey and the poverty survey with results expected to be released before end of 2018. Dr Mguni said the release of the results will place Botswana above the Southern African Development Committee (SADC) average.
Statistics Botswana has caught flak for lack of comprehensive data which some believe is outdated and out of touch with the reality on the ground. As part of efforts to improve the frequency and quality of the country’s statistics, the organisation has partnered with Ministry of Finance and Development Planning as well as the country’s central bank, Bank of Botswana, to form Statistics Producer Committee which will provide a framework for addressing challenges facing the country.
The organisation recently released the Consumer Price Index (CPI) which showed that inflation rate for July was at 2.7%, the same rate it was the previous month. While most of the group indexes that constitute the CPI remain unchanged, this was partly offset by price increases in the Food and Non-Alcoholic Beverages group index after recording a 0.3% increase following notable price increases in bread and cereals, fruits, coffee, tea and cocoa.
The Food and Non-Alcoholic Beverages group is the main constituent of the CPI at 21.84%. In the last 6 months the group’s overall price increased by 1.8%. The core inflation, which excludes items that are prone to volatile price movements such as food, petrol and electricity, remained unchanged at 3.8%. Core inflation is thought to be an indicator of underlying long-term inflation.
According to Dr Mguni, the country used to do well in the consumer price index but that changed last year when it used 2004 as the base year instead of the required 10 year base. Furthermore, it was revealed that the manual used by the government was not up to date. He said the CPI would be rebased this year which would add more points for Botswana and improve its ranking. The rebasing of the CPI will ensure that the index gives an updated reflection of inflation.
Botswana has the second lowest inflation rate in Southern Africa after Mauritius. Zimbabwe is the only exception with its negative inflation rate. Southern African countries were hit the most by the El Nino phenomenon which affected agricultural production from late 2015 and extending into 2016. The drought brought upon by El Nino affected the production of Southern Africa’s staple crops such as maize, pushing up prices. These forced Southern African governments to engage in tight monetary policies to rein in inflation.
Meanwhile in Botswana, the Bank of Botswana has been bucking the trend of increasing bank rates, and instead opted for loose monetary policy to spur economic growth. The lowest inflation rate in more than 3 years has given the country’s central back room to manoeuvre unlike its regional peers.
The bank rate was recently cut by 50 basis points to 5.5% following a Monetary Policy Committee meeting. The recent cut means that Botswana now has the second lowest bank rate in Southern Africa, coming second to Mauritius again.
“The current state of the economy and both the domestic and external economic outlook as well as the inflation forecast provide scope for easing monetary policy to support economic activity without undermining maintenance of inflation within the Bank’s medium-term objective range of 3 –6 percent.
Accordingly, the Monetary Policy Committee decided to reduce the Bank Rate by half a percentage point to 5.5 percent.2Monetary policy is also aligned with the need to safeguard financial stability. In this respect, credit growth is considered to be at a sustainable level and poses no threat to financial stability,” read part of the Monetary Policy Committee statement.
In Southern Africa, Zambia’s economy is struggling as the copper producing country is devastated by low commodity prices, putting the country’s inflation rate as the fourth highest in the region at 20%. The country’s bank rate is currently at 15.5%.
Malawi, which declared a state of national disaster earlier this year over the worsening food crisis, has the second highest inflation rate at 22.6% and the bank rate is the highest at 27%. Mozambique’s inflation is the third highest at 20.68% due to higher food prices, while the interest rate is the second highest in the region at 17.25%.
The biggest oil producer, Angola, is still reeling from the fall of oil prices with the country’s inflation rate at 35.30% and interest rate at 16%. The region’s economic powerhouse and the largest economy in Africa, South Africa, is also trying to contain its inflation which at 6.30% is above the South Africa Reserve Bank’s target range of 3-6%. In efforts to control the spiralling inflation, the reserve bank has since raised the bank rate by 200 basis points since 2014, leaving the current rate at 7%.
Business
LLR transforms from Company to Group reporting
Botswana Stock Exchange listed diversified real estate company, Letlole La Rona Limited (“LLR” or “the Company” or “the Group”), posted its first set of group financial statements which comprise the Company and Group consolidated accounts, which show strong financial performance for the six months ended 31 December 2023, with improvements across all key metrics.
The Company commenced the financial year with the appointment of a Deputy Chairperson, Mr Mooketsi Maphane, in order to bolster its governance and enhance leadership continuity through the development of a Board and Executive Management Succession Plan.
At operational level, LLR increased its shareholding in Railpark Mall from 32.79% to 57.79% and proudly took over the management of this prime asset.
The CEO of LLR, Ms Kamogelo Mowaneng commented “During the period under review, our portfolio continued to perform strongly, with improvements across all key metrics as a result of our ongoing focus on portfolio growth and optimisation.
“We are pleased to report a successful first half of the 2024 financial year, where we managed to not only grow the portfolio through strategic acquisitions and value accretive refurbishments but also recycled capital through the disposal of Moedi House as well as the ongoing sale of section titles at Red Square Apartments. The acquisition of an additional 25% stake in JTTM Properties significantly uplifted the value of our investment portfolio to P2.0 billion at a Group level. Our investment portfolio was further differentiated by the quality of our tenant base, as demonstrated by above market occupancy levels of 99.15% and strong collections of above 100% for the period”.
The growth in contractual revenue of 9% from the prior year’s P48.0 million to the current year P52.2 million, increased income from Railpark Mall, coupled with high collection rates, has enabled the company to declare a distribution of 9.11 thebe per linked unit, which is in line with the prior year.
In line with its strategic pillars of ‘Streamlined and Expanded Botswana Portfolio’ as well as ‘Quality African Assets’, the Group continuously monitors the performance of its investments to ensure that they meet the targeted returns.
“The Group continues to explore yield accretive opportunities for balance sheet growth and funding options that can be deployed to finance that growth” further commented the CEO of LLR Ms Kamogelo Mowaneng.
Ms Mowaneng further thanked the Group’s stakeholders for their continued support and stated that they look forward to unlocking further value in the Group.
Business
Botswana’s Electricity Generation Dips 26.4%
The Botswana Power Corporation (BPC) has reported a significant decrease in electricity generation for the fourth quarter of 2023, with output plummeting by 26.4%. This decline is primarily attributed to operational difficulties at the Morupule B power plant, as per the latest Botswana Index of Electricity Generation (IEG) released recently.
Local electricity production saw a drastic reduction, falling from 889,535 MWH in the third quarter of 2023 to 654,312 MWH in the period under review. This substantial decrease is largely due to the operational challenges at the Morupule B power plant. Consequently, the need for imported electricity surged by 35.6% (136,243 MWH) from 382,426 MWH in the third quarter to 518,669 MWH in the fourth quarter. This increase was necessitated by the need to compensate for the shortfall in locally generated electricity.
Zambia Electricity Supply Corporation Limited (ZESCO) was the principal supplier of imported electricity, accounting for 43.1% of total electricity imports during the fourth quarter of 2023. Eskom followed with 21.8%, while the remaining 12.1, 10.3, 8.6, and 4.2% were sourced from Electricidade de Mozambique (EDM), Southern African Power Pool (SAPP), Nampower, and Cross-border electricity markets, respectively. Cross-border electricity markets involve the supply of electricity to towns and villages along the border from neighboring countries such as Namibia and Zambia.
Distributed electricity exhibited a decrease of 7.8% (98,980 MWH), dropping from 1,271,961 MWH in the third quarter of 2023 to 1,172,981 MWH in the review quarter.
Electricity generated locally contributed 55.8% to the electricity distributed during the fourth quarter of 2023, a decrease from the 74.5% contribution in the same quarter of the previous year. This signifies a decrease of 18.7 percentage points. The quarter-on-quarter comparison shows that the contribution of locally generated electricity to the distributed electricity fell by 14.2 percentage points, from 69.9% in the third quarter of 2023 to 55.8% in the fourth quarter. The Morupule A and B power stations accounted for 90.4% of the electricity generated during the fourth quarter of 2023, while Matshelagabedi and Orapa emergency power plants contributed the remaining 5.9 and 3.7% respectively.
The year-on-year analysis reveals some improvement in local electricity generation. The year-on-year perspective shows that the amount of distributed electricity increased by 8.2% (88,781 MWH), from 1,084,200 MWH in the fourth quarter of 2022 to 1,172,981 MWH in the current quarter. The trend of the Index of Electricity Generation from the first quarter of 2013 to the fourth quarter of 2023 indicates an improvement in local electricity generation, despite fluctuations.
The year-on-year analysis also reveals a downward trend in the physical volume of imported electricity. The trend in the physical volume of imported electricity from the first quarter of 2013 to the fourth quarter of 2023 shows a downward trend, indicating the country’s continued effort to generate adequate electricity to meet domestic demand, has led to the decreased reliance on electricity imports.
In response to the need to increase local generation and reduce power imports, the government has initiated a new National Energy Policy. This policy is aimed at guiding the management and development of Botswana’s energy sector and encouraging investment in new and renewable energy. In the policy document, Minister of Mineral Resources, Green Technology and Energy Security Lefoko Moagi stated that the policy aims to transform Botswana from being a net energy importer to a self-sufficient nation with surplus energy for export into the region. Moagi expressed confidence that Botswana has the potential to achieve self-sufficiency in electric power supply, given the country’s readily available energy resources such as coal and renewable sources.
Business
MMG acquires Khoemacau in a transaction valued at P23Bn
MMG Limited, the Hong Kong-based mining company specializing in base metals, has successfully concluded the acquisition of Khoemacau Copper Mine, a state-of-the-art, world-class copper asset nestled in the northwest of Botswana.
On Monday, MMG announced that the acquisition of Khoemacau Mine in Botswana was finalized on 22nd March 2024. “This acquisition enriches the company’s portfolio with a top-tier, transformative growth project and signifies a monumental milestone in the Company’s journey,” MMG communicated in an official statement published on the Hong Kong Stock Exchange.
Upon completion of the acquisition, MMG remitted to the Sellers an Aggregate Consideration of approximately US$1,734,657,000 (over P23 billion), a sum subject to potential adjustments post-Completion.
In addition to the Aggregate Consideration, MMG, in accordance with the Agreement, advanced an aggregate amount of approximately US$348,580,000 (over P4.5 billion) as the Aggregate Debt Settlement Amount, to settle certain debt balances of the Target Group (Cuprous Capital/Khoemacau).
On November 21, 2023, Khoemacau announced that the shareholders of its parent company [Cuprous Capital] had agreed to sell 100% of their interests to MMG Limited.
MMG is a global resources company that mines, explores, and develops copper and other base metals projects on four continents. The company is headquartered in Melbourne, Australia, and has a significant shareholder, China Minmetals Corporation, which is China’s largest metals and minerals group owned by the Government of the People’s Republic of China.
On December 22, 2023, Khoemacau Copper Mining (Pty) Ltd received the approval from the Minister of Minerals and Energy of Botswana regarding the transfer of a controlling interest in the Project Licenses and Prospecting Licenses associated with the Khoemacau Copper Mine, a result of the Acquisition.
The Botswana Competition & Consumer Authority (CCA) on January 29, 2024, notified the market that it had given its approval for the takeover of Khoemacau Copper Mining by MMG Limited.
On January 29, 2024, the CCA issued a merger decision to the market, stating that after conducting all necessary assessments, it was ready to proceed.
The Competition Authority affirmed that the structure of the relevant market would not significantly change upon implementation of the proposed merger as the proposed transaction is not likely to result in a substantial lessening of competition, nor endanger the continuity of service in the market of mining of copper and silver ores and the production, and sale or supply of copper concentrate in Botswana.
Furthermore, the CCA stated that the proposed merger would not have any negative impact on public interest matters in Botswana as per the provisions of section 52(2) of the Competition Act 2018.
Earlier this month, Minister of Minerals & Energy, Lefoko Maxwell Moagi, informed parliament that his Ministry was endorsing the Khoemacau acquisition by MMG Limited. He noted that not only was the company acquiring the existing operation but also committing to an expansion program that would cost over $700 million to double production, create more jobs for Batswana, and increase taxes and royalties paid to the Government.