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Barclays still open for business in Africa

Barclays Bank Botswana is still open for business and is committed to investing in Botswana, Barclays Botswana Managing Director Rienette van der Merwe said this week.

This follows the UK banking group Barclays Group’s intention to sell its 62.3% stake in Barclays Africa Group. Barclays is scaling back its presence in Africa, by selling down its 62.3 per cent stake in  Barclays Africa Group, its Johannesburg-listed subsidiary, over two to three years to a level that allows it to be deconsolidated from the group.

Barclays Bank Plc currently owns 62.3% of Barclays Africa Group Limited (BAGL) which controls banks in 10 African countries including Ghana, Kenya, Tanzania and Uganda.

Addressing the media, van der Merwe said “This announcement will not affect you, our customers, in any way and we at Barclays Bank Botswana will continue to serve you as we have done for over 65 years.”

Barclays is being forced to sell assets, such as its  "Barclays set to exit African business" African subsidiary, because of punitive fines by authorities. Barclays Group said Absa is a well-diversified business and a high quality franchise.

The Chief Executive Director of the Barclays group, Jes Staley said “however the stake in BAGL presents specific challenges to Barclays as owners, such as the level of capital held in respect of BAGL, the international reach of the UK Bank Levy, the GSIB buffer, and MREL/TLAC and other regulatory requirements.”

“When conduct charges consume our profits, as they have for the past three years, we have no choice but to meet them by shrinking our franchise selling or closing businesses which reduces our capacity to support the real economy.”

The bank carries 100% responsibility with only 62.3% benefits, it said at its results presentation. Barclays said the sell-down will lead to further simplification of the group, resulting in cost reductions.

Barclays has seen its share price fall over 30 percent over the last two years amid a tumultuous period of changing leadership and restructuring.

Potential investors would need to raise nearly $4bn to buy Barclays. The intended sale is subject to shareholder and regulatory approvals.

The announcement came as the UK bank announced net losses more than doubled last year.

Barclays Group Africa on Tuesday reported a 17% return on equity for 2015 in its stand alone local currency results versus the 8.7% return reported for Africa Banking in Barclays’ results, the group said.

Staley said in his year-end review on Tuesday Africa Banking performed well despite currency headwinds. “Through Barclays Africa, we have excellent franchises in Africa, with a great management team,” said Staley.

Barclays Group Africa's share price dropped 3.20% to R131.65 shortly after the announcement.

BARCLAYS AFRICA REPORTS HEADLINE EARNINGS GROWTH OF 10%

Meanwhile Barclays Africa Group Limited this week announced a 10% increase in headline earnings for the year ended 31 December 2015, delivering a solid performance underpinned by a three-year strategy implemented in 2014.

Maria Ramos, Chief Executive of Barclays Africa Group Limited says: “We delivered solid results, demonstrating that our strategy is working. Our ambition to be Africa’s leading bank remains unchanged. We are a strong, well-capitalised and independently funded business that is uniquely positioned to achieve our goals across the continent.”

Group headline earnings increased to R14.3 billion on the back of increased income while costs remained well managed. 

Costs increased by only 5%, even as the group continued to make appropriate investments in our infrastructure to deliver material improvements to our service.

Return on equity improved to 17%, the highest level since 2008 and Barclays Africa is now top three by revenue in four of our five largest markets; that is, South Africa, Botswana, Ghana and Zambia. We are gaining revenue traction in key focus areas across geographies and businesses and we have seen strong loan growth in the right areas.

Retail and Business Banking (RBB), the group’s largest business unit, continued its turnaround and had another strong year with headline earnings growing 14%, playing a key role in driving overall Barclays Africa growth. RBB recorded solid revenue growth and managed costs well. The continued improvement in the quality of the home loans book and a strong collections performance in personal loans resulted in lower credit impairment. RBB’s non-interest income rose 7%.

“We added 855,000 new-to-bank customers in 2015 – an achievement that I am particularly pleased with,” says Ms Ramos. “Our RBB unit continues to make good progress in its turnaround and we have had one of our strongest revenue months on record in January 2016,” Ms Ramos says.

Improvements in the branch network and other channels, supported by investments in mobile and other technologies supported RBB’s progress.

In Corporate and Investment Banking (CIB), headline earnings increased 6% to R3.9 billion. The group’s pan-African strategy is working, with CIB’s business outside of South Africa increasing to now account for 37% of overall earnings, demonstrating that clients are seeing the benefit of the group’s integrated regional presence.

Wealth, Investment Management and Insurance (WIMI) delivered strong growth in headline earnings, increasing 11%. The WIMI offering was expanded into East Africa, with the launch of Barclays Life Assurance Kenya and the acquisition of a controlling stake in First Assurance, which also gives the group scale and presence in Tanzania.

While the commodity downturn and reduced economic growth weakened general sentiment towards the continent, Barclays Africa’s operations in the rest of Africa performed well and enhanced group growth. This shows that creating the Barclays Africa group in 2013 is working.

Revenue from operations outside of South Africa increased to 14% while headline earnings grew 17%. Operations outside of South Africa accounted for just over a fifth of revenue during 2015 and earnings growth in this region should continue to exceed those of South Africa. There is a clear path to increasing return on equity from those operations.

While the focus of the numbers we released today is on financial performance, this is only one component of our success as a business.

Barclays Africa has adopted a Shared Growth approach which for us, means generating a positive impact on society while delivering shareholder value.

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Business

Gambling Authority tender dangles as a jittery lottery quandary

30th November 2020
SEFALANA MD: CHANDRA CHAUHAN

Lucrative and highly anticipated national lottery tender that saw several Batswana businessmen partnering to form a gambling consortium to pit against their South African counterparts, culminates into a big power gamble.

WeekendPost has had a chance to watch lottery showcase even before the anticipated and impending national lottery set-up launches. A lot has been a big gamble from the bidding process which is now set for the courts next year January following a marathon legal brawl involving the interest of the gambling fraternity in Botswana and South Africa.

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The uncertainty of getting the next meal in Botswana

30th November 2020
uncertainty of getting the next meal

Households representing more than half of Botswana’s population-mostly residing in rural areas- do not know where their next meal will come from, but neither do they take into consideration the quality and/or quantity of the food they consume.

This is according to the latest Prevalence of Food Insecurity in Botswana report which was done for the 2018/19 period and represents the state of food insecurity data even to this time.
The Prevalence of Food Insecurity was released by Statistics Botswana and it released results with findings that the results show that at national level 50.8 percent of the population in Botswana was affected by moderate to severe food insecurity in 2018/19, while 22.2 percent of the population was affected by severe food insecurity only.

According to the report, this translates to 27 percent of the population being food secure that is to say having adequate access to food in both quality and quantity. According to Statistician General, Burton Mguni, when explaining how the food data was compiled, Food and Agriculture Organization of the United Nations (FAO), is custodian of the “Prevalence of Undernourishment (PoU)” and “Prevalence of moderate or severe food insecurity in the population based on the Food Insecurity Experience Scale (FIES)” SDG indicators, for leading FIES data analysis and the resultant capacity building.

“The FIES measures the extent of food insecurity at the household or individual level. The indicator provides internationally comparable estimates of the proportion of the population facing moderate to severe difficulties in accessing food. The FIES consists of eight brief questions regarding access to adequate food, and the questions are answered directly with a yes/no response. It (FIES) complements the existing food and nutrition security indicators such as Prevalence of Undernourishment.

According to the FIES, with increasing severity, the quantity of food consumed decreases as portion sizes are reduced and meals are skipped. At its most severe level, people are forced to go without eating for a day or more. The scale further reveals that the household’s experience of food insecurity may be characterized by uncertainty and anxiety regarding food access and compromising the quality of the diet and having a less balanced and more monotonous diet,” says Mguni.

The 50.8 percent of the population in Botswana which was affected by moderate to severe food insecurity are characterized as people experiencing moderate food insecurity and face uncertainties about their ability to obtain food. These people have been forced to compromise on the quality and/or quantity of the food they consume according to the report on food insecurity.

Those who experience severe food insecurity, the 22.2 percent of the population, are people who have typically run out of food and, at worst, gone a day (or days) without eating. According to the statistics, rural area population experienced moderate to severe food insecurity at 65 percent while urban villages were at 46.60 percent and cities/town were at 31.70 percent. Those experiencing the most extreme and severe insecurity were at rural areas making 33.10 percent while urban villages and towns were at 11.90 percent and 17.50 respectively.

According to a paper compiled by Sirak Bahta, Francis Wanyoike, Hikuepi Katjiuongua and Davis Marumo and published in December 2017, titled ‘Characterization of food security and consumption patterns among smallholder livestock farmers in Botswana,’ over 70 percent of Botswana’s population reside in rural areas, and majority (70%) relies on traditional/subsistence agriculture for their livelihoods.

The study set out to characterize the food security situation and food consumption patterns among livestock keepers in Botswana. “Despite the policy change, challenges still remain in ensuring that all persons and households have access to food at all times. For example, during an analysis of the impacts of rising international food prices for Botswana, BIDPA reported that food prices tended to be highest in the rural areas already disadvantaged by relatively low levels of income and high rates of unemployment,” said the study.

According to the paper, about 9 percent of households were found to be food insecure and this category of households included 6 percent of households that ranked poorly and 3 percent that were on the borderline according to the World Food Programme’s (WFP) definition of food security.

Media reports state that the World Bank has warned that disruption to production and supply chains could ‘spark a food security crisis’ in Africa, forecasting a fall in farm production of up to 7 percent, if there are restrictions to trade, and a 25 percent decline in food imports.

Food security in Botswana or food production was also attacked by the locust pandemic which swept out this country’s vegetation and plants. The locust is said to have contributed to 25 percent loss in production.

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Business

Solid demand for diamonds towards the ‘gift’ season

30th November 2020
Diamonds

Global lockdown have been a thorn in diamonds having shiny sales, but a lot of optimism shows with the easing of Covid-19 restrictions, the precious stones will be bought with high volumes towards festive season. The diamond market is however warned of the resurgence of Covid-19 in key markets presents ongoing risks amid the presence and optimist about the new Covid-29 vaccines.

The latest findings published as De Beers Group’s latest Diamond Insight ‘Flash’ Report, which looks at the impact of the pandemic on relationships and engagements, has revealed that in the US that more couples than ever are buying diamond engagement rings. Bridal sales is mostly the primary source of diamond jewellery demand in recent months, De Beers said.

According to De Beers, interviews with independent jewellers around the US revealed that the rate of couples getting engaged has increased compared with the period when Covid-19 first had an impact in the US in the spring.

“In addition, despite challenging economic times, consumers were spending more than ever on diamond engagement rings – often upgrading in colour, cut and clarity, rather than size. Several jewellers speculated that with consumers spending less on elaborate weddings and/or honeymoons in the current environment, they had more to spend on choosing the perfect ring,” said De Beers.

According to De Beers, a national survey of 360 US women in serious relationships, undertaken in late October in collaboration with engagement and wedding website, The Knot. This survey is said to have found that the majority of respondents (54%) were thinking more about their engagement ring than the wedding itself (32%) or the honeymoon (15%), supporting jewellers’ hypothesis that engagement ring sales were benefiting from reduced wedding and travel budgets in light of Covid-19 restrictions.

When it came to researching engagement rings, online was by far the predominant channel for gaining ideas/inspiration at 86% of consumers surveyed, with 85% saying they had saved examples of styles they liked, according to De Beers. According to the survey, only a uarter of respondents said they had looked in-store at a physical location for design inspiration.

“For many couples, the pandemic has brought them even closer together, in some instances speeding up the path to engagement after forming a deeper connection while experiencing lockdown and its associated ups and downs as a partnership. Engagement rings are taking on even greater symbolism in this environment, with retailers reporting couples are prepared to invest more than usual, particularly due to budget reductions in other areas,” De Beers CEO Cleaver said.

According to De Beers Group, its Diamond Insight Flash Report series is focused on understanding the US consumer perspective in light of Covid-19 and monitoring how it evolves as the crisis evolves. Also, the company said, it is augmenting its existing research programme with additional consumer, retailer and supply chain touch-basis to understand the pain points and the opportunities for stakeholders across the diamond pipeline.

Demand for diamonds is as hard and resilient as the precious stone itself. De Beers pocketed US$ 450 million in its recently held ninth rough diamond sales cycle, and the company says it is more flexible approach to rough diamond sales during the ninth sales cycle of 2020, with the Sight event extended beyond its normal week-long duration.

“Steady demand for De Beers Group’s rough diamonds continued in the ninth sales cycle of the year, reflecting stable consumer demand for diamond jewellery at the retail level in the US and China, and expectations for reasonable demand to continue throughout the holiday season. However, the resurgence of Covid-19 infections in several consumer markets presents ongoing risks,” said De Beers CEO Bruce Cleaver recently.

High expectations are on diamonds being a sentimental gift for holiday season or as the most fetished gift. However the ninth cycle was lower than the eighth which registered US$ 467 million. For the last year period which corresponds with the current one, De Beers managed to raise US$ 400.

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