Wilderness Holdings, the Botswana incorporated tourism company has announced that it completed agreements with Monitor International Holdings Limited to acquire a 51% stake in six of its subsidiary companies, namely: Musiara Limited, Governors’ Aviation Limited, Goodison Ninety One Limited, Goodison Forty Two Limited (all registered and operating in Kenya); and Governors’ Camps Rwanda Limited and Governors’ Safaris Rwanda Limited (both registered and operating in Rwanda).
The subsidiary companies own and operate the Governors’ Camp Collection of camps and lodges in East Africa.
According to the group’s statement, the rationale for the acquisition is that “current operations are concentrated in southern Africa, and acquisition of a controlling stake in the Governors’ business represents a compelling opportunity for expansion into East Africa.” Among some of the benefits the group expects to derive post-merger are that the Governors’ main market is sourced from Europe, whereas Wilderness Safaris’ main source market is the United States and this will create cross selling opportunities.
Also, the Governors’ business represents an ideal springboard for expansion into other East African countries using a well-known local brand and management who are familiar with local markets and conditions.
The P69m acquisition adds an additional wild-side asset to an already compelling mix of camping and safari offerings.
The expansion is part of the group’s larger strategic plan. In the company’s annual report for 2015, Chief Executive Officer, Keith Vincent expressed; “In line with our vision to be Africa’s leading ecotourism organisation, creating life-changing journeys in order to build sustainable conservation economies and inspire positive action, the Wilderness Group is well placed to expand into new regions that offer authentic ecotourism opportunities.”
Wilderness expands into East Africa at a time when the tourism sector, especially in Kenya, one of Africa’s prominent tourist destinations, has slumped. The BMI Kenya Tourism Report 2016 has attributed the slump to major terrorist attacks in the country. “Tourism arrivals will decrease again in 2016, though to a lesser extent than in previous years.
From 2017, a gradual revival is expected. International tourism receipts are expected to pick up in conjunction with arrivals for the remainder of the forecast period to 2020,” read the report. The report also pointed to strong efforts from the government to revive the sector through infrastructure projects and promotional campaigns aimed at both local and international markets.
However, Wilderness Holdings, the BSE and JSE dual listed outfit has shown resilience during tough times. The company posted very strong results for the last full year financial results for the year ended February 2015 despite an Ebola outbreak in West Africa which scared tourists away from the continent. The outbreak had spelled so much doom for African tourism that SafariBookings.com, the largest online booking site for African safaris, September 2014 survey of more than 500 safari operators showed up to 70% decline in bookings. Despite Southern Africa, where Wilderness operations are concentrated, being far from the epicenter of Ebola in West Africa, the region saw cancellations in bookings and a marked reduction in tourist numbers. Despite this, the company registered a restated revenue growth of 12% to P945 million and bed nights sold increased by 11%.
Last year it looked like Tourism Company Wilderness Holdings might be bought out and delisted from the JSE. The company not the most liquid investment on the domestic bourse received a buyout offer from its anchor shareholder, Wine Investments.
There was even talk of a merger with fellow tourism and travel specialist Cullinan Holdings.
While Wilderness will itself probably remain a takeover target for larger tourism and travel companies keen on this niche, analyst have advised that it might be an opportune time for the company to issue shares-for-cash to increase liquidity and entice the institutional big-game hunters.
Wilderness Holdings Limited is the holding company for the ecotourism brands of Wilderness Safaris, Wilderness Air, and Wilderness Collection among others. It operates some 45 safari camps and lodges, and 10 scheduled overland safaris in Botswana, Congo (Brazzaville), Kenya, Namibia, Seychelles, South Africa, Zambia and Zimbabwe.
This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.
The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.
Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.
He was speaking in Parliament on Tuesday delivering Parliament’s Finance Committee report after assessing a motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.
Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.
The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.
The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.
The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.
This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.
Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.
Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.
However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.
Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.
When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.
This as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.
Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.
The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.
Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.
In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.
Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.
Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.
Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.
Acknowledging the need to draw down from GIA no more, current Minister of Finance Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”
He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”