Number of poor people decline by 180 000
Incomes Growth in Rural Botswana Lifts Thousands out of Poverty
WORLD BANK GROUP
Thousands of Batswana rose out of poverty thanks to increased growth in rural areas driven in part by rising agricultural incomes and welfare improvements, according to a World Bank Study released this week in Gaborone.
The Botswana Poverty Assessment report, found that the number of poor people in the country declined by nearly 180 000 between 2002/3 and 2009/10. This denotes a poverty rate decrease of 19.4% from 30.6% when using the national poverty line. In this period, 87 percent of the decrease in poverty occurred in rural areas, where 158,000 people rose out of poverty.
“Tackling poverty is at the heart of our National Development Plan. We are pleased to see that our welfare programs have improved the lives of many and made a dent in poverty levels, says Mr. Olebile Gaborone, the Permanent Secretary for Poverty Eradication, in the Office of the President of Botswana.
Based on two nationally representative household income and expenditure surveys conducted by Statistics Botswana in 2002/2003 and 2009/10, the report analyzes recent trends in the monetary and nonmonetary aspects of poverty in Botswana. It examines the drivers of poverty reduction by systematically looking at the demographic, labor, and human capital dimensions of poverty.
The report shows that increased agriculture incomes strongly supported by government subsidies and substantial changes in the demographic structure including the reductions in household sizes and dependency ratios were responsible for Botswana’s poverty reduction.
It found that the decrease in the incidence of poverty was accompanied by a significant decline in both the depth and severity of poverty. Furthermore, the poverty gap eased from 11.7 percent in 2002/03 to 6.2 percent in 2009/10, indicating that consumption has improved among the poor. Real consumption per capita rose 47.6 percent in rural areas compared to a nationwide real consumption per capita increase of 13.3 percent during the same period.
“Botswana has made much progress in its fight to end poverty. We will continue to support the Government efforts to make investments in a broad variety of areas to grow the economy, increase employment and eradicate extreme poverty”, says World Bank Country Director to Botswana, Guang Zhe Chen. “This is aligned with the World Bank’s mission to help end extreme poverty by 2030 and to boost prosperity among the poorest 40 percent in low- and middle-income countries”.
The study also revealed a decrease in inequality although with a Gini coefficient of 60.5 percent, Botswana remains one of the world’s most unequal countries. The level of inequality in Botswana is the world’s third highest, after South Africa and Seychelles. But between 2002/03 and 2009/10, inequality, the Gini fell from 64.7 percent to 60.5 percent. Most of the decline occurred due to welfare improvements in rural areas, while inequality in cities increased.
It also found that large numbers of people still live just marginally above the poverty line and at risk of falling back into poverty. Vulnerability was significantly reduced between 2002/03 and 2009/10. However, half of Botswana’s population remains either poor or vulnerable, with close to 31 percent classified as vulnerable.
“We see from our research that agricultural support programs were clearly a big part of the progress achieved during the period under review,” says World Bank Senior Economist Victor Sulla. “Going forwards, investments in human capital and efficient safety-net targeting will be critical to accelerating poverty reduction and reducing inequality further”.
The study also shows that the combined effect of labor, education and social protection improvements could help halve projected poverty by 2018 and eradicate it by 2030. It projects a fall in poverty levels of below 12% by 2018 and below 6% by 2030. However, inequality is not expected to fall significantly unless there is continued, broad-based employment growth.
The report recommends improving the quality of education and raising skills levels in order to close the skills gaps that dampen labor demand. It also recommends the development of a dynamic and productive private sector which is fundamental to creating more and better jobs and a greater focus on the most disadvantaged populations.
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Grit divests from Letlole La Rona
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.
Stargems Group establishes Training Center in BW
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.