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Executives jailed as ‘Blue Train corruption’ slide off rails

As things stand, about P750 million is poised to leave the coffers of the Botswana Railways in the course of the next two financial years, but it has come to light that brazen oversight will be required to ascertain that this money represents the true value of services offered to the organisation and that the characters involved are not up to no good.

The Directorate on Corruption and Economic Crime (DCEC) and the Directorate on Intelligence Security (DIS) were this week called to action to prove or disprove allegations of corruption against some top executives of the Botswana Railways. Three of them ended up spending a night in jail; some had their gadgets confiscated by the corruption busting agencies.  

“This serves to confirm that the Directorate on Corruption and Economic Crime (DCEC) is currently conducting investigations on Botswana Railways. The investigations have been ongoing for more than a week now,” wrote Botswana Railways CEO Dominic Ntwaagae in a memo to staff on Wednesday.

Botswana Railways in currently involved in a number of transactions involving millions of Pula, hence some staff members have noticed questionable decisions within the organisations that border on corruption on the part of some executives hence the involvement of the DCEC. Some Board members have told this publication that they have been reduced to puppets by the management and they could not continue to watch the alleged corruption episode explode without intervention of the authorities.

“We wish to inform staff that as an organisation, being owned by government, it is expected and appreciated that from time to time government agencies mandated to carry out such exercises may visit us to ensure that processes and procedures are dully followed,” Ntwaagae further expressed in his ‘call for calm’ memo to staff.  He further indicated that his organisation should be held to account in all its dealings. He vowed to be supportive to “the ongoing investigations, to clear all allegations of corruption against the organisation”.

Ntwaagae said the organisation would not reveal the detail or discuss the contents of the investigations, “as professionally we believe it is unethical to discuss the matter while the investigations are still underway”.  In his memo, Ntwaagae did not put a face behind the investigation; he randomly used words to indicate that it was the “organisation” that was being investigated for corruption and “to clear allegations of corruption”.

THE GENESIS OF SPOOKY COACHES

Government through the Ministry of Transport and Communications, headed by Tshenolo Mabeo has committed Botswana Railways to bring back the passenger train.

Ntwaagae, the BR CEO told staff this week that the Passenger train will be launched on March 22, 2016 at Lobatse, behind Peleng Dam. Weekend Post has established that it will be a mixed train along the way, because the margins are not adding up in terms of profit when it comes to operating the passenger train. The night passenger trains will commence on March 23rd from Lobatse and Francistown.

As a result of the decision to reintroduce the passenger train, which was stopped in 2009, Botswana Railways was forced to procure new coaches. A tender was flighted and several companies from Africa and Asia expressed interest in supplying the Botswana Railways with 37 coaches. Currently the Botswana Railways offices are more like a war zone, where words are weapons, on who actually won this tender.

A Board member who spoke to this publication on condition of anonymity disclosed that a committee member had told him that the tender was initially awarded to a Chinese company. China is known for trading in steel and it has a developed manufacturing sector for coaches.  “But it later came out that the assessment marks were tinkered with to undermine the Chinese company,” he said.  But this, he said, was for the investigators to prove or disprove.

South African based Transnet Engineering which has bases in Cape Town and Pretoria was given the job to construct 37 NEW coaches for Botswana Railways at the tune of P280 million. Botswana Railways has already paid R82 million towards the job. It is expected that before March 22nd they will have supplied Botswana Railways with at least 10 coaches. Weekend Post has learnt that Minister Mabeo, the CEO, Director of Operations and Engineering, the Board chairman – Modise Modise and others visited South Africa recently to go and assess the extent of progress in relation to the supply of the coaches. The plant sites are in Cape Town and Pretoria, they visited both.  

Indications are that the deadlines for the delivery of the 37 coaches are too tight for the supplier despite initially agreeing to the terms and conditions of the deal. This publication is informed that a deal was struck to the effect that they could instead supply Botswana Railways with old coaches as long as there was a patch up job of repainting them.

Impeccable sources indicate that priority was given to the deadline of launching the passenger train, but it is not clear how the costs will be dealt with, “for example, if there is need to revise down the cost of the initial quote”, a board member revealed. The board member further indicated that some of them had asked these questions and they were shot down fast. Another matter that arose is that of the bogie (the steel base or frame that supports the coaches); it is clear that Transnet will have to order it from elsewhere, presumably China. Board members had asked why the deal was not given to a company that could bring a complete package; still they were hauled at by part of management.

Therefore Transnet will patch an old bogie and deliver it in the meantime.  

MORE QUESTIONS FROM THE BOARD

Meanwhile the Botswana Railways management is said to be confident that all the coaches will be delivered by the end of April this year. But some of the Board members want the DCEC to ask direct questions regarding the P280 million deal, they want the original tender documents, they want to know how much was revealed to the minister in relation to the coaches and the repainting job, they want to know how this will affect the original cost and whether there will be compensation to the Botswana Railways. It is evident that the Board had in most cases been overlooked when these deals were reached or approved.

AMERICANS GET P375 MILLION DEAL FROM RAILWAYS

Meanwhile as the Botswana Railways top brass has to ward off corruption allegations levelled against the ‘organisation’, an American company, Electro Motive Diesel is demanding that it be furnished with a Letter of Credit for the manufacture and supply of eight locomotives.

Botswana Railways has awarded the American company the deal at a value of $34 million. This publication has established that Botswana Railways paid 50 percent of the amount in September 2015 but has been dilly dallying when asked to produce the Letter of Credit. The New York based company has indicated that it will need 18 months to put the heads together and be in a position to supply.

The deal between the two parties was supervised by attorneys from Collins Newman and they have since slapped Botswana Railways with a bill of P8 million, which the Botswana Railways Board had wanted to distance itself from only to realise that management had committed to the Law firm already. The negotiations and the deal were sealed at Rail Park mall last year.

UNREPORTED LOCOMOTIVE ACCIDENTS

Three Botswana Railways locomotives veneered off the railway line and crashed on 22nd December last year and the incident was never reported. One of the locomotives is said to be almost beyond repair but management is said to have decided to repair all the three anyway. A source at the Ministry of Transport and Communications revealed that the accidents occurred as a result of negligence because the locomotives actually sped off unmanned for 5km after a mechanical error occasioned by one of the engine men. It is estimated that the cost of the damage is in the region of P50 million. The damaged locomotives are currently piled at Lobatse.

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Mowana Mine to open, pay employees millions

18th January 2022
Mowana Mine

Mowana Copper Mine in Dukwi will finally pay its former employees a total amount of P23, 789, 984.00 end of this month. For over three years Mowana Copper Mine has been under judicial management. Updating members, Botswana Mine Workers Union (BMWU) Executive Secretary Kitso Phiri this week said the High Court issued an order for the implementation of the compromise scheme of December 9, 2021 and this was to be done within 30 days after court order.

“Therefore payment of benefits under the scheme including those owed to Messina Copper Botswana employees should be effected sometime in January latest end of January 2022,” Kitso said. Kitso also explained that cash settlement will be 30 percent of the total Messina Copper Botswana estate and negotiated estate is $3,233,000 (about P35, 563,000).

Messina Copper was placed under liquidation and was thereafter acquired by Leboam Holdings to operate Mowana Mine. Leboam Holdings struck a deal with the Messina Copper’s liquidator who became a shareholder of Leboam Holdings. Leboam Holdings could not service its debts and its creditors placed it under provisional judicial management on December 18, 2018 and in judicial management on February 28, 2019.

A new company Max Power expressed interest to acquire the mining operations. It offered to take over the Mowana Mine from Leboam Holdings, however, the company had to pay the debts of Leboam including monies owed to Messina Copper, being employees benefits and other debts owed to other creditors.

The monies, were agreed to be paid through a scheme of compromise proposed by Max Power, being a negotiated payment schedule, which was subject to the financial ability of the new owners. “On December 9, 2021, Messina Copper liquidator, called a meeting of creditors, which the BMWU on behalf of its members (former Messina Copper employees) attended, to seek mandate from creditors to proceed with a proposed settlement for Messina Copper on the scheme of compromise. It is important to note that employee benefits are regarded as preferential credit, meaning once a scheme is approved they are paid first.”

Negotiated estate is P35, 563,000

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Councilors’ benefits debacle-savingram reveals detail

18th January 2022

A savingram the Ministry of Local Government and Rural Development sent to Town Clerks and Council Secretaries explaining why councilors across the country should not have access to their terminal benefits before end of their term has been revealed.

The contents of the savingram came out in the wake of a war of words between counselors and the Ministry of Local Government and Rural Development. The councilors through the Botswana Association of Local Authorities (BALA) accuse the Ministry of refusing to allow them to have access to their terminal benefits before end of their term.

This has since been denied by the Ministry.  In the savingram to town councils and council secretaries across the country, Permanent Secretary in the Ministry of Local Government and Rural Development Molefi Keaja states that, “Kindly be advised that the terminal benefits budget is made during the final year of term of office for Honorable Councilors.”  Keaja reminded town clerks and council secretaries that, “The nominal budget Councils make each and every financial year is to cater for events where a Councilor’s term of office ends before the statutory time due to death, resignation or any other reason.”

The savingram also goes into detail about why the government had in the past allowed councilors to have access to their terminal benefits before the end of their term.  “Regarding the special dispensation made in the 2014-2019, it should be noted that the advance was granted because at that time there was an approved budget for terminal benefits during the financial year,” explained Keaja.  He added that, “Town Clerks/Council Secretaries made discretions depending on the liquidity position of Councils which attracted a lot of audit queries.”

Keaja also revealed that councils across the country were struggling financially and therefore if they were to grant councilors access to their terminal benefits, this could leave their in a dire financial situation.  Given the fact that Local Authorities currently have cash flow problems and budgetary constraints, it is not advisable to grant terminal benefits advance as it would only serve to compound the liquidity problems of councils.

It is understood that the Ministry was inundated with calls from some Councils as they sought clarification regarding access to their terminal benefits. The Ministry fears that should councils pay out the terminal benefits this would affect their coffers as the government spends a lot on councilors salaries.

Reports show that apart from elected councilors, the government spends at least P6, 577, 746, 00 on nominated councilors across the country as their monthly salaries. Former Assistant Minister of Local Government and Rural Development, Botlogile Tshireletso once told Parliament that in total there are 113 nominated councilors and their salaries per a year add up to P78, 933,16.00. She added that their projected gratuity is P9, 866,646.00.

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Households spending to drive economic recovery

17th January 2022

A surge in consumer spending is expected to be a key driver of Botswana’s economic recovery, according to recent projections by Fitch Solutions. Fitch Solutions said it forecasts household spending in Botswana to grow by a real rate of 5.9% in 2022.

The bullish Fitch Solutions noted that “This is a considerable deceleration from 9.4% growth estimated in 2021, it comes mainly from the base effects of the contraction of 2.5% recorded in 2020,” adding that, “We project total household spending (in real terms) to reach BWP59.9bn (USD8.8bn) in 2022, increasing from BWP56.5bn (USD8.3bn) in 2021.”  According to Fitch Solutions, this is higher than the pre-Covid-19 total household spending (in real terms) of P53.0 billion (USD7.8bn) in 2019 and it indicates a full recovery in consumer spending.

“We forecast real household spending to grow by 5.9% in 2022, decelerating from the estimated growth of 9.4% in 2021. We note that the Covid-19 pandemic and the related restrictions on economic activity resulted in real household spending contracting by 2.5% in 2020, creating a lower base for spending to grow from in 2021 and 2022,” Fitch Solutions says.

Total household spending (in real terms), the agency says, will increase in 2022 when compared to 2021. In 2021 and 2022, total household spending (in real terms) will be above the pre-Covid-19 levels in 2019, indicating a full recovery in consumer spending, says Fitch Solutions.  It says as of December 6 2021 (latest data available), 38.4% of people in Botswana have received at least one vaccine dose, while this is relatively low it is higher than Africa average of 11.3%.

“The emergence of new Covid-19 variants such as Omicron, which was first detected in the country in November 2021, poses a downside risk to our outlook for consumer spending, particularly as a large proportion of the country’s population is unvaccinated and this could result in stricter measures being implemented once again,” says Fitch Solutions.

Growth will ease in 2022, Fitch Solution says. “Our forecast for an improvement in consumer spending in Botswana in 2022 is in line with our Country Risk team’s forecast that the economy will grow by a real rate of 5.3% over 2022, from an estimated 12.5% growth in 2021 as the low base effects from 2020 dissipate,” it says.

Fitch Solutions notes that “Our Country Risk team expects private consumption to be the main driver of Botswana’s economic growth in 2022, as disposable incomes and the labour market continue to recover from the impacts of the Covid-19 pandemic.”
It says Botswana’s tourism sector has been negatively impacted by the Covid-19 pandemic and the related travel restrictions.

According to Fitch Solutions, “The emergence of the Omicron variant, which was first detected in November 2021, has resulted in travel bans being implemented on Southern African countries such as South Africa, Botswana, Lesotho, Namibia, Zimbabwe and Eswatini. This will further delay the recovery of Botswana’s tourism sector in 2021 and early 2022.”  Fitch Solutions, therefore, forecasts Botswana’s tourist arrivals to grow by 81.2% in 2022, from an estimated contraction of 40.3% in 2021.

It notes that the 72.4% contraction in 2020 has created a low base for tourist arrivals to grow from.  “The rollout of vaccines in South Africa and its key source markets will aid the recovery of the tourism sector over the coming months and this bodes well for the employment and incomes of people employed in the hospitality industry, particularly restaurants and hotels as well as recreation and culture businesses,” the report says.

Fitch Solutions further notes that with economies reopening, consumers are demanding products that they had little access to over the previous year. However, manufacturers are facing several problems.  It says supply chain issues and bottlenecks are resulting in consumer goods shortages, feeding through into supply-side inflation.  Fitch Solutions believes the global semiconductor shortage will continue into 2022, putting the pressure on the supply of several consumer goods.

It says the spread of the Delta variant is upending factory production in Asia, disrupting shipping and posing more shocks to the world economy. Similarly, manufacturers are facing shortages of key components and higher raw materials costs, the report says adding that while this is somewhat restricted to consumer goods, there is a high risk that this feeds through into more consumer services over the 2022 year.

“Our global view for a notable recovery in consumer spending relies on the ability of authorities to vaccinate a large enough proportion of their populations and thereby experience a notable drop in Covid-19 infections and a decline in hospitalisation rates,” says Fitch Solutions.
Both these factors, it says, will lead to governments gradually lifting restrictions, which will boost consumer confidence and retail sales.

“As of December 6 2021, 38.4% of people in Botswana have received at least one vaccine dose. While this is low, it is higher than the Africa average of 11.3%. The vaccines being administered in Botswana include Pfizer-BioNTech, Sinovac and Johnson & Johnson. We believe that a successful vaccine rollout will aid the country’s consumer spending recovery,” says Fitch Solutions.  Therefore, the agency says, “Our forecasts account for risks that are highly likely to play out in 2022, including the easing of government support. However, if other risks start to play out, this may lead to forecast revisions.”

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