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BCL’s Polaris 11 to boost GDP growth by 15%

Through the implementation of Polaris 2, BCL seeks transform itself from a mere resource mining company by adding value to its copper and nickel and by-products as a basis of reinvent itself as a fully diversified conglomerate through mergers and acquistions, according to BCL Divisional Manger Motsie Sibanda.


The company is planning ahead so that when the hen which lays the golden egg finally perishes, both BCL and the smoky town will be resurrected and reincarnated to remain relevant in continuing to provide decent wages supporting many families and providing impetus to economy of  Selibi-Phikwe.


In this regard, BCL is carrying out a major pre-feasibility study for establishing a 8000 ton per annum copper nickel refinery for making refined grade copper nickel cathade. The refinery proposition has the capacity to create about 600 additional jobs.

The study also seeks to expand and sustain nickel production circuit, develop a chemicals and by-products production circuit, develop a precious metals and other minerals production circuit, develop an iron production circuit, develop a coal production and beneficiation circuit, acquire equity interests in and develop a precious metals and other minerals production circuit and establish the basis for major chemicals and chemicals by-products industries.

BCL has found a lacuna to diversify from its current business model as it is clearly not sustainable.

The community of the greater SPEDU region would be adversely impacted by the closure of the BCL operations. POLARIS II seeks to address the projected demise by creating an industry that will be bigger than the current set up.


BCL strategic plan in the short to medium terms calls for beneficiation of its resource bases and making optimal use of its smelting facility and turning the company into an viable enterprise while in the long term, there are plans to turn the company into a regional diversified resource group attracting business from other base metal mining houses to add value to their mineral products using the smelter at BCL and venturing into the production of chemicals including acids and fertilizers.

The company also seeks to acquiring equity interest in coal, energy, iron and steel businesses and other minerals in order to further diversify its portfolio.


“BCL needs to diversify because its current business model is not sustainable. The people of greater SPEDU region would be adversely impacted by the closure of the BCL operations. Polaris 11 seeks to address the project demise by creating an industry that will be bigger than the current set up”, says Sibanda.


Precious mineral exploration licences have already been acquired and exploration is currently in progress. The construction of the steel production has been completed and was officially opened on October 25 this year and is expected to employ 1000 people. Scrap Metal is the major input for the plant.

Power is the second major input and gasifier produces gas by burning coal and is used to fire furnaces. A commitment with suppliers has been concluded to secure supply of scrap.

The production process of producing finished steel from scrap involves extraction of bulk steel in the induction. Furnace manufactures billets by feeding molten metal to a “concast”. Product could be exported in billet form; or billets could be further processed into higher value products.

The aspect of coal production and  beneficiation seeks to acquire coal resource  this year  and at the same time complete a coal to liquid study.

BCL is also determining the feasibility of utilizing the sulphur dioxide emissions  to produce valuable by products  and making Botswana self sufficient  in the production of fertilizers and thereby supporting other downstream industries. The company will further vigorously persue securing long term  minerals for the BCL smelter and medium to long term  exploration of other copper nickel deposits and toll treating opportunities.

This will include not only securing mineral concentrates for the smelter, but also future expansion refining capabilities and making more acquisitions of equities in their business entities. Beneficiation process will include more capacity for further stages in the refining of copper and nickel and other base metals.   


It is anticipated that at the end the economic and social benefits of efforts with Polaris 11 will be the generation of employment opportunities for approximately 4000 people directly when fully realized, industrialization of the economy, precisely the manufacturing sector, support government policies for economic diversification and growth and which in turn will contribute towards social, economic and political stability and extend the life of the city of Selebi Phikwe.


Other indirect economic benefits will the building of more infrastructure and the project has the potential to make a 15% contribution to Botswana’s GDP and increase manufacturing sector GDP by more than 2.5 times from the current 6%, when the project is fully operational.

The project will further add impetus to Botswana becoming a manufacturing hub  in the SADC  region and promoting the country  as hub for the production of fertilizers in all of Africa and  develop local community infrastructure in partnership with the government.


Direct economic and social impact will be the generation of employment opportunities for the local population of about 1000 people in the facility with further multiplier effects of generating employment  from associated projects  in construction of facilities and their maintenance, logistics and products distribution and supporting and promoting local businesses.

It is also anticipated that the project will  improve the living standards, increase disposable incomes and consumer spending and promote best practices in the use of fertilizers to increase yields in agricultural production and provide detergents and chemicals for office, household and industrial use.


The harzadous environmental effects of sulphur dioxide emissions will also be contained at last with 100% consumption  of harmful by-products while further ensuring compliance with all the government and international standards of emissions and effort to promote healthy living environment.

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Business

New study reveals why youth entrepreneurs are failing

21st July 2022
Youth

The recent study on youth entrepreneurship in Botswana has identified difficult access to funding, land, machinery, lack of entrepreneurial mindset and proper training as serious challenges that continue to hamper youth entrepreneurship development in this country.

The study conducted by Alliance for African Partnership (AAP) in collaboration with University of Botswana has confirmed that despite the government and private sector multi-billion pula entrepreneurship development initiatives, many young people in Botswana continue to fail to grow their businesses into sustainable and successful companies that can help reduce unemployment.

University of Botswana researchers Gaofetege Ganamotse and Rudolph Boy who compiled findings in the 2022 study report for Botswana stated that as part of the study interviews were conducted with successful youth entrepreneurs to understand their critical success factors.

According to the researchers other participants were community leaders, business mentors, Ministry of Trade and Industry, Ministry of Youth, Gender, Sport and Culture, financial institutions, higher education institutions, non-governmental institutions, policymakers, private organizations, and support structures such as legal and technical experts and accountants who were interviewed to understand how they facilitate successful youth entrepreneurship.

The researchers said they found that although Botswana government is perceived as the most supportive to businesses when compared to other governments in sub-Saharan Africa, youth entrepreneurs still face challenges when accessing government funding. “Several finance-related challenges were identified by youth entrepreneurs. Some respondents lamented the lack of access to start-up finance, whereas others mentioned lack of access to infrastructure.”

The researchers stated that in Botswana entrepreneurship is not yet perceived as a field or career of choice by many youth “Participants in the study emphasized that the many youth are more of necessity entrepreneurs, seeing business venturing as a “fall back. Other facilitators mentioned that some youth do not display creativity, mind-blowing innovative solutions, and business management skills. Some youth entrepreneurs like to take shortcuts like selling sweets or muffins.”

According to the researchers, some of the youth do not display perseverance when they are faced with adversity in business. “Young people lack of an entrepreneurial mindset is a common challenge among youth in business. Some have a mindset focused on free services, handouts, and rapid gains. They want overnight success. As such, they give up easily when faced with challenges. On the other hand, some participants argue that they may opt for quick wins because they do not have access to any land, machinery, offices, and vehicles.”

The researchers stated that most youth involved in business ventures do not have the necessary training or skills to maintain a business. “Poor financial management has also been cited as one of the challenges for youth entrepreneurs, such as using profit for personal reasons rather than investing in the business. Also some are not being able to separate their livelihood from their businesses.

Lastly, youth entrepreneurs reported a lack of experience as one of the challenges. For example, the experience of running a business with projections, sticking to the projections, having an accounting system, maintaining a clean and clear billing system, and sound administration system.”

According to the researchers, the participants in the study emphasized that there is fragmentation within the entrepreneurial ecosystem, whereby there is replication of business activities without any differentiation. “There is no integration of the ecosystem players. As such, they end up with duplicate programs targeting the same objectives. The financial sector recommended that there is a need for an intermediary body that will bring all the ecosystem actors together and serve as a “one-stop shop” for entrepreneurs and build mentorship programs that accommodate the business lifecycle from inception to growth.”

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Business

BHC yearend financial results impressive

18th July 2022
BHC

Botswana Housing Corporation (BHC) is said to have recorded an operating surplus of P61 Million, an improvement compared to the previous year. The housing, office and other building needs giant met with stakeholders recently to share how the business has been.

The P61 million is a significant increase against the P6 million operating loss realized in the prior year. Profit before income tax also increased significantly from P2 million in the prior year to P72 million which resulted in an overall increase in surplus after tax from P1 million prior year to P64 million for the year under review.

Chief of Finance Officer, Diratsagae Kgamanyane disclosed; “This growth in surplus was driven mainly by rental revenue that increased by 15% from P209 million to P240 million and reduction in expenditure from P272 million to P214 million on the back of cost containment.”
He further stated that sales of high margin investment properties also contributed significantly to the growth in surplus as well as impairment reversals on receivables amounting to P25 million.

It is said that the Corporation recorded a total revenue of P702 million, an 8% decrease when compared to the P760 million recorded in the prior year. “Sales revenue which is one of the major revenue streams returned impressive margins, contributing to the overall growth in the gross margin,” added Kgamanyane.

He further stated professional fees revenue line declined significantly by 64% to P5 million from P14 million in the prior year which attributed to suspension of planned projects by their clients due to Covid-19 pandemic. “Facilities Management revenue decreased by P 24 million from P69 million recorded in prior year to P45 million due to reduction in projects,” Kgamanyane said.

The Corporation’s strength is on its investment properties portfolio that stood at P1.4 billion at the end of the reporting period. “The Corporation continues its strategy to diversify revenue streams despite both facilities management income and professional fees being challenged by the prevailing economic conditions that have seen its major clients curtailing spending,” added the CEO.

On the one hand, the Corporation’s Strategic Performance which intended to build 12 300 houses by 2023 has so far managed to build 4 830 houses under their SHHA funding scheme, 1 240 houses for commercial or external use which includes use by government and 1 970 houses to rent to individuals.

BHC Acting CEO Pascaline Sefawe noted that; BHC’s planned projects are said to include building 336 flat units in Gaborone Block 7 at approximately P224 million, 100 units in Maun at approximately P78 million, 13 units in Phakalane at approximately P26 million, 212 units in Kazungula at approximately P160 million, 96 units at approximately P42 million in Francistown and 84 units at approximately P61 million in Letlhakane. Emphasing; “People tend to accuse us of only building houses in Gaborone, so here we are, including other areas in our planned projects.”

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Business

Commercial banks to cash big on high interest rates on loans

18th July 2022
Commercial-banks

Researchers from some government owned regulatory institutions in the financial sector have projected that the banking sector’s profitability could increase, following Bank of Botswana Monetary Policy Committee recent decision to increase monetary policy rate.

In its bid to manage inflation, Bank of Botswana Monetary Policy Committee last month increased monetary policy rate by 0.50 percent from 1.65 percent to 2.15 percent, a development which resulted with commercial banking sector increasing interest rate in lending to household and companies. As a result of BoB adjustment of Monetary Policy Rate, from 1.65 percent to 2.15 percent commercial banks increased prime lending rate from 5.76 percent to 6.26 percent.

Researchers from Bank of Botswana, the Non-Bank Financial Institutions Regulatory Authority, the Financial Intelligence Agency and the Botswana Stock Exchange indicated that due to prospects of high inflation during the second half of 2022, there is a possibility that the Monetary Policy Committee could further increase monetary policy rate in the next meeting in August 25 2022.

Inflation rose from 9.6 percent in April 2022 to 11.9 percent in May 2022, remaining above the Bank of Botswana medium-term objective range of 3 – 6 percent. According to the researchers inflation could increase further and remain high due to factors that include: the potential increase in international commodity prices beyond current forecasts, logistical constraints due to lags in production, the economic and price effects of the ongoing Russia- Ukraine conflict, uncertain COVID-19 profile, domestic risk factors relating to possible regular annual administered price adjustments, short-term unintended consequences of import restrictions resulting with shortages in supplies leading to price increases, as well as second-round effects of the recent increases in administered prices “Furthermore, the likelihood of further increases in domestic fuel prices in response to persistent high international oil prices could add upward pressure to inflation,” said the researchers.

The researchers indicated that Bank of Botswana could be forced to further increase monetary policy rate from the current 2.15 percent if inflation rises persistently. “Should inflation rise persistently this could necessitate an upward adjustment in the policy rate. It is against this background that the interest rate scenario assumes a 1.5 percentage points (moderate scenario) and 2.25 percentage points (severe scenario) upward adjustment in the policy rate,” said the researchers.

The researchers indicated that while any upward adjustment on BoB monetary policy rate and commercial banks prime lending rate result with increase in the cost of borrowing for household and compnies, it increase profitability for the banking sector. “Increases in the policy rate are associated with an overall increase in bank profitability, with resultant increases in the capital adequacy ratio of 0.1 percentage points and 0.2 percentage points for the moderate and severe scenarios, respectively,” said the researchers who added that upward adjustment in monetary policy rate would raise extra capital for the banking sector.

“The increase in profit generally reflects the banking industry’s positive interest rate gap, where interest earning assets exceed interest earning liabilities maturing in the next twelve months. Therefore, an increase of 1.5 percentage points in the policy rate would result in industry gains of P71.7 million (4.1 percent increase), while a 2.25 percentage points increase would lead to a gain of P173.9 million (6.1 percent increase), dominated by large banks,” said the researchers.

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