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Botswana could google her way to prosperity

The information, Communication and technology (ICT) sector could create thousands of jobs. Technology experts revealed to the participants at the first annual Job Summit that a change in mindset in embracing ICT will lead to prosperity.

As a keynote speaker, Rapelang Rabana, Founder and Chief Executive Officer, Rekindle Learning, enthralled the audience as she took them on her journey through the male dominated ICT industry. Her conquests in ICT include being a co-founder of Yeigo Communications, an innovative company that developed some of the earliest mobile VoIP application.

But her biggest achievement to date is being the founder of Rekindle Learning, which provides learning and performance support tools. It was such a great feat that it earned her a spot on the cover of Forbes magazine. However Rabana did not only talk about herself at the job summit, she extolled the virtues of ICT and the unlimited opportunities it offered.


“Technology and the internet is a powerful tool for prosperity,” she announced to the already encapsulated participants. Rabana urged the youth not to be heavily dependent on the government, adding that they should not see the government as a “money making scheme.”

Instead they should seek to engage in businesses that offer sustainable growth, businesses that can change lives. She also had sound advice for the government. “Set up the government and get out of the way,” she said this was because the government has a way of limiting people through its bureaucracy and lack of understanding of certain things, particularly the unlimited opportunities ICT offers.


The high flying technological entrepreneur said Botswana should become more open to trading with other countries. In matters of ICT, she called on the government to provide quality broadband and low cost bandwidth. Rabana reminded the audience that the internet knows no borders, “On the internet Botswana is not a landlocked country” therefore it should not limit itself in pursuing ICT excellence.

To show the power of the internet, Rabana confirmed that when they started their first mobile applications, they did not know everything; they had to literally google their way to success. As a parting shot, she persuasively said, “If underdevelopment can be designed, so could prosperity.”


Richard Neill, Director Special and Strategic Projects, Botswana International University of Science and Technology (BIUST), said that “Botswana is in its second phase of transformations, from agriculture to diversified knowledgeable economy.”

He added that in the knowledge economy, Botswana comes fifth in Africa but the country is still struggling in the world rankings. Neill said that knowledge economy is about sustainable development, furthermore it creates quality jobs.


However, knowledge economy requires substantial funding in the fields of “research and innovation” in the ICT sector. Moreover, he said that the benefits and returns of ICT outweigh the costs.

“Every pula invested in IT will pay off in growth and GDP. For example Mauritius created about 10000 jobs in the ICT sector.” Neill said investments in infrastructure are not enough, what is required and needed is proper ICT infrastructure.


Going forward, Neil hopes that the government and private sector would realise that ICT is the core to efficiency. He also said given the highest number of mobile penetration in Botswana, the government and private sector should take advantage of this and improve E-commerce.

Although there are challenges such as skills, competence and managing projects, Neil is hopeful that it’s something that can be solved through a deeply embedded collaboration between the government and private sector.


If there ever was a time for global approach and solutions, the time is now. At least that’s what Monametsi Kalayamotho, Founder and Chief Executive Officer, Moro Group, told the participants at the Job summit. Monametsi, one of Botswana’s successful ICT entrepreneurs, talked about his passion for ICT and seeing youth lead in creating jobs. “I used to be passionate about ICT, and now I’m obsessing about ICT and jobs creation,” he confessed.

It’s not hard to see the fire that burns when Kalayamotho talks about ICT, he is a man on a mission to do right. He has been told to tone it down, but he won’t because he “Sincerely believes we could be creating applications in Botswana.”


It is this sincere belief that has put him on collision course with people who just don’t get it, but it appears Kalayamotho is scoring some victories in convincing them that ICT is the future. Kalayamotho said that we need leaders who believe in themselves and if they don’t, then they should give the opportunity to someone who believes in their ability. Regarding the economic stimulus package, Kalayamotho does not hide his disappointment.

“ICT should have been given priority together with those identified sectors that need to be stimulated. In fact ICT should be the driver, it should be the pillar,” he said, adding that its nothing new since even during budget allocations ICT is not given priority. This is something he really wants to change.


“We need a change in mindset. Do not see ICT as a by product,” he said. Kalayamotho believes the most important thing is the jobs that can be created through ICT. To do these, it will require cutting down on the import bill because some of the things imported could be assembled in Botswana thus creating jobs.

“It doesn’t mean if it’s made in Botswana, it’s going to be different,” he chuckled before explaining that in ICT they adhere to the highest international standards, meaning any product assembled here will meet international certifications.


Kalayamotho gave credit to the government for improving the broadband and fibre infrastructure development as well as rolling it to many areas. Nonetheless he had some wisdom to share concerning the infrastructure. “When you talk infrastructure, you talk applications and content. That’s when people use your infrastructure. What’s the point of having infrastructure when you don’t have content?” he asked. Kalayamotho says this is where the bulk of the ICT jobs will come from. 

There are too many applications and content to create, it could be games, educational applications, health applications even language content. He beamed when he talked about the talented youth in the country, although he conceded they will need further training and education so that they could be the best.

“We should appreciate how ICT works. Applications and content is a huge opportunity. I’m talking 3000 jobs in 24 months,” he said, adding that this is because content changes every day. In essence jobs in ICT could be said to be regenerative particularly in content creation, it’s a continuous process of development and enhancement.


Kalayamotho is not naive to the challenges that lie ahead, and he fully understands them. He called on the private sector to be supportive to entrepreneurs. He pleaded with the Human Resource Development Council to come on board by paying for ICT training. Kalayamotho says there a need to continuously build capacity locally. He applauded BOCRA for doing a fine job in ensuring that people get access to connectivity.

In his closing argument, he pleaded with the government and private sector to not be dismissive when ICT businesses require a higher capital injection, because “Sometimes it’s not about number of the jobs that will be created but the scale of impact it would have on people’s lives.” This was met with a thunderous applause from the audience.

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Business

DIAMOND SLUMP: De Beers’ revenue down P27 billion in two years

9th March 2021
DIAMOND SLUMP

In the 24 months period ended December 2020 De Beers Group, the world largest diamond producer by value has cumulatively lost over P27 billion from its revenue earned when gauged against 2018 figure of $6.1 billion.

According to official figures contained in the Anglo American yearend financial report released this week De Beers has suffered another massive decline in revue in 2020 following another huge slump in 2019.

THE 2019 DOWNTURN

In 2019 , total revenue dropped by 24% from $6.1 billion (approximately P61 billion) to $4.6 billion (approximately P46 billion) with rough diamond sales falling by 26% to $4.0 billion from $5.4 billion in 2018.This in local currency mirrored a whooping P15 billion decline in De Beers total revenue for the year 2019.

This was due to an 8% decrease in consolidated rough diamond sales volumes to 29.2 million carats from 31.7 million carats in 2018 and a 20% reduction in average realized price to $137/ct from $171/ct in 2018.  The reduction in realized price was driven by a 6% decline in the average rough price index and from a lower value mix of diamonds sold, in response to the weaker demand for higher value diamonds that year.

In response to the challenging midstream trading environment, De Beers offered increased supply flexibility to Sightholders and sold a lower value and volume of rough diamonds to the midstream, while increasing marketing expenditure to $178 million( over P1.8 billion from $166 million( over 1.6 billion) in 2018 to further drive consumer demand for diamond jewellery.

Underlying EBITDA decreased by 55% that year, to $558 million from $1,245 million in 2018 owing to lower sales volumes, a lower value sales mix which curtailed mining margins, and the lower rough price index which reduced margins in the trading business. This 2019 slump in De Beers’s revenue was due to a range of factors that created significant challenges for rough diamond demand during the year.

In late 2018, stock market volatility and US-China trade tensions resulted in lower than expected holiday retail sales, which led to higher than anticipated stock levels in the industry’s midstream at the start of 2019.

Throughout the course of 2019, the midstream inventory position was under further pressure due to the closure of some US ‘bricks and mortar’ retail outlets, an increase in online purchasing (where inventory levels are lower), and retailers increasing their stock held on consignment. Tighter financing also affected the midstream’s ability to hold stock, all of which resulted in lower demand for rough diamonds during the year 2019.

OVER P12 BILLION PULA DECLINE IN 2020

The year 2020 was another catastrophic year for De Beers Group and the entire global diamond industry. The lucrative business began the year on a high note with De Beers and Alrosa, both world’s leading producers, registering a significant upswing in rough diamond sales.

However that was short-lived as the COVID-19 pandemic which broke out of China in late 2019 spread across the world, halting international trade and restricting both movement of people and shipment of goods.

The onset of the Covid-19 pandemic, and measures taken by governments in response, had a profound impact on global diamond supply and demand. Much of the industry was temporarily unable to operate, with up to 90% of jewellery stores closed at the peak of lockdowns, first in China, then in Europe and the US.

Reduced demand from jewellery retailers due to store closures combined with the closure of diamond cutting and polishing factories in India from April to June, led to a substantial reduction in rough diamond purchases in the first six months of 2020.

In response, De Beers reduced production and offered significantly increased flexibility to customers. The gradual easing of restrictions across the globe led to improved trading conditions and an increase in demand throughout the supply chain in the second half of the year.

As a result of the difficult market conditions, lockdowns in India and associated flexibility offered to customers, De Beers total revenue decreased by 27% to $3.4 billion(around P34 billion) from $4.6 billion( over P46 billion) in 2019 with rough diamond sales falling by 30% to $2.8 billion from $4.0 billion in 2019.

Rough diamond sales volumes decreased by 27% to 21.4 million carats (2019: 29.2 million carats). The average realized price decreased by 3% to $133/ct (2019: $137/ct), with a 10% decline in the average rough index largely offset by an increased proportion of higher value rough sold in 2020, driven by midstream demand and inventory mix.

Rough diamond production decreased by 18% to 25.1 million carats (2019: 30.8 million carats) in response to lower demand due to the pandemic and the Covid–19-related shutdowns in southern Africa during the first half of the year.

In Botswana, where De Beers operates a 50-50 joint venture with Government , production decreased by 29% to 16.6 million carats (2019: 23.3 million carats), with volumes at Jwaneng reduced by 40% to 7.5 million carats (2019: 12.5 million carats), while production at Orapa decreased by 16% to 9.0 million carats (2019: 10.8 million carats).

This was largely due to a nationwide lockdown from 2 April to 18 May, and the planned treatment of lower grade material at both Jwaneng and Orapa, following their restart, as a production response to lower demand. Both mines substantially reconfigured their mining operations to preserve costs in light of the lower levels of production, thereby preserving the mining margin.

In Namibia, production decreased by 15% to 1.4 million carats (2019: 1.7 million carats), while next door in South Africa, production increased to 3.8 million carats (2019: 1.9 million carats). Across oceans In Canada, production decreased by 15% to 3.3 million carats (2019: 3.9 million carats) principally reflecting Victor reaching the end of its life in the first half of 2019. Gahcho Kué production decreased by 4% to 3.3 million carats (2019: 3.5 million carats) as a result of the implementation of Covid-19 workforce protection measures.

PROSPECTS ARE HOWEVER LOOKING GOOD

De Beers says recent consumer demand trends have been positive in key markets and industry inventories are in a healthier position, providing the potential for a continued recovery in rough diamond demand during 2021, subject to the ongoing impact of Covid-19.

The London headquartered diamond mining giant says consumer desirability for natural diamonds is set to remain high over the medium to long term despite the economic impact of the pandemic and increasing supply of lab-grown diamonds.

De Beers says in the longer term, the impact of Covid-19 has accelerated the transformation that was already underway across the industry and which is expected to continue at pace. This includes more efficient inventory management, increased online purchasing, and a growing consumer desire for products with demonstrable ethical and sustainability credentials, including an enhanced appreciation for the natural world.

The long term outlook for the sector remains positive as De Beers continues to focus on its business transformation to support the continued growth of its own business and the wider diamond value chain.  For 2021, production guidance is 32–34 million carats, subject to trading conditions, the extent of further Covid-19related disruptions and ongoing operational challenges.

The higher production is driven by an expected increase in ore and improved grade performance at both Jwaneng and Venetia. Unit cost guidance is c. $55/ct, reflecting the increase in production volumes and the benefits of the restructuring undertaken in 2020.

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Energy sector foreign dominated, locals urged on

9th March 2021
Energy Sector

The energy sector is by far one of the most lucrative spaces for business and making money, because the sector drives life, businesses, industries and entire economic activity across board.

Locally the sector is foreign dominated from all aspects and measures, ownership and control. In power supply, the country is dependent on South African state owned producer Eskom for over half of its power demand.  In oil and petroleum, when refineries and distribution channels are disrupted across borders in foreign production bases Botswana crashes into supply shock, the 2020 COVID-19 induced situation is testament to that fact.

Botswana doesn’t only depend on foreign producer countries that have the natural resources but also largely depend on foreign companies to deliver the products cross border in to the local consumer market. Majority of companies transporting and trading with energy products, bringing the goods into Botswana are foreign owned, the same is the case with distribution companies.

On Tuesday, Member of Parliament for Shoshong Aubrey Lesaso questioned government’s efforts in facilitating participation of Batswana owned companies in the gas industry. The Shoshong lawmaker wanted Minister of Mineral Resources, Green Technology & Energy Security Lefoko Moagi to appraise parliament on how his ministry will create an environment that will incorporate indigenous Batswana into the industry and further state the potential jobs the gas industry could create for Batswana in the value chain.

In response Minister Moagi told parliament that the Liquefied Petroleum Gas (LPG) industry in Botswana has been unregulated over the years. He noted however that Parliament passed the Botswana Energy Regulatory Authority (BERA) Act in 2016 to regulate the provision of energy services including LPG.

“To fully establish how the LPG industry has been functioning, my Ministry through the Botswana Energy Regulatory Authority (BERA) has commissioned a Gas Market Study which will be completed by April 2021” Minister Moagi told parliament.

The study is among other things, looking into the market structure in terms of the value chain, market participants including company shareholding, pricing of LPG, investments into the sector including ownership of assets, as well as citizen Participation and Safety and health issues pertinent to the sector.

Minister Moagi also revealed that the local gas market currently has six (6) importers and ten (10) known distributors while the retail space comprises of numerous small businesses that sell gas to consumers.  Retailers which are Batswana range from those with cages of varying sizes to a small man in the street known as “bakkie boys”. The six importers are Afrox, Easigas, Tswana Gas, Air Liquide, Quick Gases and Simsa Gas.

The Minister told parliament that only one importer-company (Tswana Gas) has majority citizen shareholding at 57.4% while the other five (5) companies are foreign owned. Despite the temporary closure of Quick Gases, the local gas market continues to operate efficiently, serviced by the other five importers.

“We did experience some disruptions last year due to challenges in South Africa at the refineries but it was for a short time. Therefore, there are generally non significant challenges experienced regarding the supply of LPG into the country” Moagi said  All volumes imported into the country are filled into cylinders of varying sizes (9kg, 14kg, 19kg and 48kg) and distributed accordingly. Currently there are ten (10) known distributors being Lobatse Gas Works, owned 70% by Citizens and 30% Foreigners.

Other distributors are Salubrious and City Gas both at 80% Citizens and 20% Foreign, and Seahorse Investment, BC&LM, Shanaz Gas, Viking Voyagers all the four (4) are 100% foreign and Sefalana Tsabong which is 100 owned by Sefalana Holding Company Limited. Calvin Technology is the only wholly indigenous Citizen owned distributor.

Minister Moagi told parliament that the Botswana Energy Regulatory Authority (BERA), as the licensing Authority in the energy sector, continues to ensure that Batswana are facilitated by way of granting licenses to operate businesses in the energy sector, including LPG. The licensing committee of BERA sits every Friday to consider license applications brought before the Authority.

Furthermore, Moagi said Botswana Oil Limited has been established as a government strategic entity to amongst other objectives; ensure meaningful citizen participation in the petroleum sector, including LPG. “My Ministry through its strategic entities will ensure that Batswana companies are capacitated through awareness sessions on issues pertaining to running sustainable operations in the energy sector, including LPG.”

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Business

Covid-19 sheds off P125 from FNBB profits

9th March 2021
FNBB CEO: Bogatsu

First National Bank Botswana (FNBB), the country’s largest commercial bank by all measures has received significant blow from the COVID pandemic in the six months trading period ended 31st December 2020.

In its unaudited condensed consolidated financial results for the six months ended 31 December 2020 the bank has reported a decline in profits following downward pressure on its revenue during the period. Profit before tax and profit after tax both declined by 23% due to pressure on top line revenue and increased credit provisioning to adequately provide for the effects of COVID-19.

During the period under review profit before taxation was registered at P419 053 from P544 913 recorded in the previous half year period ending 31 December 2019. The resultant return on equity was 17.9% compared to 25.4% in 2019

FNBB Executives however said these half year results were within the expected parameters given the prevailing operating environment. “The overwhelming impact on the December 2020 results was the difficult trading environment created by COVID-19, which the banking industry as a whole continues to navigate responsibly,” the bank Executives said in the financial results released on Tuesday.

FNBB observes that the COVID-19 pandemic has presented itself as a real and severe economic test, bank however boasts of having shown that its income streams are resilient while a key focus has been on strengthening the balance sheet. Interest income decreased following both an 8% decrease in gross advances, and the cumulative Bank Rate cut of 100 basis points.

The deposit mix shifted towards overnight funding, resulting in the interest expense reducing significantly by 12% while customer deposits increased by 6%. The impairment charge for the year increased by 16% year-on-year with a charge of P199m, due largely to an increase in stage 1 and 2 impairments in the tourism and transport industries.

The bank continues to provide prudently for the expected downward pressure on customer risk profiles and realisable collateral values in the overall context of COVID-19. Non-interest revenue (NIR) decreased 4% year-on-year following a decrease in foreign income revenue, while other core revenue lines remained resilient.

NIR was mainly driven by service-related revenue increasing by 16%. This was in turn supported by both an increase of 9% in the customer base and an annual rise of 2.8% in the tariff. An additional 795 Point-Of-Sale (POS) devices resulted in commission income growth of 5%, notwithstanding card transaction volumes remaining flat.

The total number of POS devices in use exceeds 10,000. The overall NIR decline was largely due to a sharp decrease in foreign exchange revenue, following muted activity in cross-border transactions. Costs decreased by 6%, with reduced variable costs. Employee costs reduced by 3% year-on-year emanating from a reduction in discretionary remuneration, while the other operating expenses fell by 8%.

The main contributors towards the reduced other operating expenses were; a net reduction in foreign expenses, the digitisation of training, and reduced entertainment and travel in line with COVID-19 restrictions. The increased cost-to-income ratio of 49.2% (2019: 47.0%) is largely a factor of reduced net interest income.The cost-to-income ratio reflects FNBB’s continued steadiness in balancing cost management initiatives with strategic investments.

On the outlook FNBB says given the current uncertainty surrounding the rollout and impact of the COVID-19 vaccine and the second wave of infection being seen across the world, it expects that 2021 will continue in a state of overall uncertainty.

“We anticipate that pressures on discretionary household income will be sustained and that businesses will defer capital expenditure to conserve cash reserves pending stronger signs of imminent recovery. Furthermore, with credit default pressure rates mounting despite low interest rates, the operating environment for financial services is likely to remain challenging.”

FNBB says its forward-thinking approach to technology and innovation will remain a core priority. The majority of the workforce has been successfully working remotely over the past 6 months, and consideration will be made towards maintaining similar flexible working arrangements in the longer term.

The bank assessment is that Botswana’s economy has registered a contraction of 8.1% in 2020, with expectation to rebound to 3.9% growth in 2021. This should in part be driven by structural recovery, and most significantly in tourism and mining, which were severely impacted in 2020.

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