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Tough immigration regulations cost BCL P270 million

Tightening of immigration regulations in recent years has cost BCL, and Botswana government, an estimated P270 million in 2015. Government is the sole shareholder in BCL.

According to the economic think tank, E-Consult in its quarterly economic review publication, BCL has made large financial losses in 2015. This, the Keith Jeffries led outfit attributes to among others BCL’s high costs of production hence its failure to turn a profit at the current low nickel prices.

BCL’s diversification into steelmaking and exploration for iron ore and diamonds is also cited as a factor and was said to have diverted management attention, instead of focusing on BCL’s core business of mining and smelting nickel and ensuring that it is a competitive, efficient and low-cost producer.

More telling of the factors that led to BCL bleeding funds is the closure of the smelter for refurbishment last year. The closure lasted far longer than anticipated, and according to E-Consult, was due, in part, to BCL’s inability to secure short-term work permits for the specialised workers needed for the refurbishment. “This delay is reported as costing BCL, and hence the government, P270 million. Hopefully, this painful experience will help to convince the government that it’s tightening of immigration regulations in recent years imposes huge costs on business, and on itself,” writes E-Consult.

The 2015 Global Competitiveness Report by the World Economic Forum also showed that the restrictive labour regulation variable rose 2%. This is attributable to the increasingly stringent regulations around immigration regulations where scores of foreigners are being denied work permits by government.  Several quarters have previously raised concern against the point based work permit system claiming that it was abused with reputable business people and professionals being denied permit renewals.

The Chinese are among those that sounded the bell on the tight immigration regulations.

Deputy Head of Mission at the Chinese Embassy, Li Nan told a local newspaper that several Chinese companies were disadvantaged by the regulations when they needed to bring skilled personnel to run their operations in the country. He cited Huawei, an ICT solutions company, among those that were disadvantaged. “Huawei was denied permits when they needed permits to bring seven engineers to the Gaborone office, something that can impact daily operations of the company,” said Nan. He added that the stringent immigration regulations have forced Chinese companies that wanted to invest in Botswana to seek alternative investment destinations.

Minister of Labour and Home Affairs, Edwin Batshu says their hands are clean. Fielding questions from this reporter regarding the BCL loss of money due to its inability to get short term work permits, Batshu referred this reporter to BCL to establish what really transpired. “Why were the permits rejected? Had BCL met all the requirements?” he asked rhetorically. Batshu emphasized that BCL was critical to the economy and they are interested in seeing it do it well. “We wouldn’t just punish it,” he retorted. Batshu says their permit rejection rate is 11% and argued that it compares fairly with that of other countries.

“No country has a 100% permit approval rate,” he suggested, further pointing out that people whose applications for permits get rejected either pose a threat to the security of the country, or came in under the pretext that they are investors and upon assessment is discovered that they do not add any value to the economy. “Some are outright criminal elements that we cannot tolerate as a country,” he said.

The BCL has admitted to losing P270 million as a result of the extended smelter shutdown. The BCL Acting Public Relations and Marketing Manager, Ofe Motiki confirmed to The WeekendPost that the extended smelter shutdown led to 50 days loss of production in 2015 valued at P230 million for the BCL Metal Revenue and P40 million for the Nkomati Toll Revenue, adding up to a total revenue loss of P270 million. “It’s worth noting that the whole smelter shutdown value was P754 million. The decline in commodity prices where nickel dropped from a 10 year average of $9.2 a pound to $4.0 a pound, resulting in a 57% loss in value, has not made the situation any easier,” she said.

On the issue of the delayed work permits, Motiki admitted that the issuing process by government authorities was indeed delayed. She, however, underscored that “required submissions were made on time.” She lamented that the delays affected project timelines hence the extended period. In response, Motiki says BCL is engaging on a business reorganisation exercise which objective is to improve operational efficiencies, functions, processes and structures throughout the business.

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CA SALES revenues rose to R9.5 billion

27th March 2023

The Botswana and Johannesburg Stock Exchange listed distributor of fast-moving consumer goods

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Grit divests from Letlole La Rona

22nd March 2023

Grit Services Limited, a member of the pan African real estate group, London Stock Exchange listed Grit Real Estate Income Group is divesting from Letlole La Rona Limited (LLR), a local real estate company established by government investment arm Botswana Development Corporation over a decade ago.

The Board of Directors of Letlole La Rona Limited this week announced in a statement to Unitholders that Grit Services Limited (‘Grit’) has informed them of its intention to exit its investment in the company.

Grit has been a material shareholder in LLR since 2019. On 07 March 2023, Grit sold 6 421 000 linked units, representing 2.29% of the Company’s total securities in issue, at a market value of BWP 22 537 710.

This trade follows previous sales of 6.79% in December 2022, as communicated to Unitholders on 10 January 2023, as well as a further sale of 4.78% (representing 13 347 068 linked units) on 24 February 2023 to various shareholders.

In aggregate, Grit has sold 13.9% shareholding in the Letlole La Rona between December 2022 and March 2023, resulting in current shareholding of 11.25% in the Company.

Letlole La Rona said in the statement that the exit process will take place in an orderly manner so as to maintain stability of the Company’s share price.

The statement explained that Grit’s sale of its entire shareholding in LLR is in line with its decision to exit investments where it does not have majority control, or where it has significant exposure to currencies other than US dollar, Euro or hard-currency-pegged revenue streams.

“Grit has announced similar decisions pertaining to certain of its hospitality assets in Mauritius recently. The Company would like to advise Unitholders that it remains focused on long-term value delivery to all stakeholders” LLR said

In July last year as part of their Go-to-Africa strategy Letlole La Rona acquired an initial 30% equity stake in Orbit Africa Logistics, with an option to increase this investment to 50%. OAL is a special purpose vehicle incorporated in Mauritius, owning an industrial asset in a prime industrial node in Nairobi, Kenya.

The co-investment was done alongside a wholly owned subsidiary of London listed Grit. The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of Nairobi center, serving the main industrial node, the port of Mombasa and the industrial town of Athi River and is strategically located 11 kilometers south of the international airport and 9.6 kilometers from the Inland Container Depot.

Grit shareholding in Letlole La Rona was seen as strategic for LLR, for the company to leverage on Grit’s already existing continental presence and expand its wings beyond Botswana borders as already delivered by Kenya transaction.

Media reports have however suggested that LLR and Grit have since late last year had fundamental disagreements on how to go about the Go-to-Africa strategy amongst other things, fuelled by alleged Botswana government interference on the affairs of LLR.

Government through LLR founding shareholder – Botswana Development Corporation has a controlling stake of around 40 percent in the company. Government is the sole shareholder of Botswana Development Corporation.

Letlole La Rona recently released their financial results for the six months ended December 2022, revenue increased by 4% to P50.2 million from P48.4 million in the prior comparative six months, whilst operating profit was up 8% to P36.5 million. Profit before tax of P49.7 million was reported, an increase of 8% on the prior comparative six months.

“We are encouraged by the strong results, notwithstanding a challenging economic environment. Our performance was mainly underpinned by annual lease escalations, our quality tenant base and below average market vacancy levels, especially in our warehouse portfolio,” Kamogelo Mowaneng, Letlole La Rona Chief Executive Officer commented.

LLR reported a weighted average lease expiry period of 3.3 years and escalation rates averaging 6.8% per annum for the period ended 31 December 2022.Its investment portfolio value increased by 14% year-on-year to close the period at P1.4 billion, mainly driven by the acquisition of a 30% stake in OAL in July 2022.

The Company also recorded a significant increase in other income, predominantly due to foreign exchange gains on the OAL shareholder loan. “We continue to explore pipeline opportunities locally, and regionally in line with our Go-to-Africa strategy and our interest remains on value-accretive investments,” Mowaneng said.

An interim distribution of 9.11 thebe per linked unit was declared on the 6th of February 2023 for the half-year period to 31 December 2022, comprising of a dividend of 0.05 thebe and debenture interest of 9.06 thebe per linked unit which will be paid to linked unit holders registered in the books of the Company at the close of business on 24 February 2023.

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Stargems Group establishes Training Center in BW

20th March 2023

Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.

The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.

“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.

In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices.  Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.

“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.

Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy,  Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.

“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.

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