The Botswana Football Association (BFA) National Executive Committee has decided to intervene in the commercialisation of clubs debate, which has so far seen clubs ailing over the power struggle.
WeekendSport has learnt that the NEC is working around the clock to consult with relevant stake-holders on what model local teams can adopt to traverse the route of professionalism.
To date, three so- called big teams in the elite league have adopted different models of running their clubs but lately indications are that the styles of running the clubs are attracting serious back lash.
Three clubs that are faced with this conundrum include Gaborone United, who boast property developer, in Nicholas Zakhem as financer; Mochudi Centre Chiefs financed by another business property mogul, Said Jamali; and Township Rollers who roped in Indian tycoon, Jagdish Shah.
However, the three teams have, of late, found themselves fighting a bitter war regarding control of the clubs. The chief catalyst igniting the unexpected fires is, in the eyes of many, the inability to dissolve societies. From time immemorial, the local teams have been administered and controlled by groups of people who in many times are sacrificing their finances to better the clubs.
While the noble act dying off, such famous teams opted for financiers to help them drive the commercialisation blue print. Gaborone United is currently at war, with many plotting to push out Zakhem, with a view that he has turned the “money machine” into his own business entity. On the other hand Township Rollers stands on the verge of collapse as the brutal war between the two major shareholders Jagdish and Somerset rages on, intensifying with each passing week. Mochudi Centre Chiefs also has their fair share of problems, which too are ocean deep. The team is caught up in an identity crisis after realisation struck that the team had two societies registered, while another idea of forming an independent trust is raising eyebrows.
Kitso Kemoeng, the football association’s talented Chief Executive Officer admitted that the NEC is busy consulting to try and find a better model of club ownership. “Yes, there has been that issue of commercialisation. Our own clubs are in danger after attracting financers, we are consulting and we want to help them grow better and bigger,” he said.
On the available models, there is one known as membership make up. This is the model the BFA is likely to pursue, according to informed sources. This mould sees card carrying members of a club electing a board and a president. The members have a certain fee they are expected to pay in each and every month. This model of governance has four key strategic areas.
The first area is the prioritization of sporting success, with the playing and football management team rebuilt and refinanced with positive results. The other strategic area is the reassertion of member democracy and improvements in transparency of club governance, and the establishment of a campaign to increase club membership as a vehicle to build the financial strength of the club.
The third area is the implementation of a commercial strategy designed to generate increased revenues from off-field activities and improve financial performance while an aggressive commercial strategy, the implementation of an innovative series of corporate social responsibility initiatives as part of a carefully crafted strategy designed to demonstrate that it is indeed an institution that explicitly recognises a set of wider social and cultural obligation comes as the fourth key element. The association is expected to furnish its clubs with the best possible model before long.
BUT CAN OWNERSHIP MODEL BE REPLICATED IN LOCAL TEAMS? Since the elevation of Jamali, Zakhem and Jagdish in their respective clubs as financers, the supporters and management at the football teams have embraced a new era of commercialism, and accepted the need to operate in the global market, and expand commercial activities by appealing to new markets such as Africa in order to achieve success on the field and commercial success off it.
This may seem ironic, given that one of the reasons Somerset Gobuiwang and Jagdish Shah, for instance, are at odds over each other is because it is felt that the club is becoming too commercially oriented and there is a worry that it is becoming a privately owned company rather than a members’ club.
However, where the business model at such clubs differed from their infant stages is that the commercial driven model is based on strong cultural and social principles. The commercial strategy, according to the eye of observers, is finely balanced with maintaining the traditions of the club, such as member democracy and corporate social responsibility, while at the same time achieving sporting success.
This model of ownership appears to indicate that the relationship between member democracy, commercial strategy, corporate social responsibility and sporting success is symbiotic.
The model of ownership will therefore epitomize a well-run football club that aggressively markets itself around the world as the very embodiment of sporting excellence and cultural sophistication with all the associate romance of an institution that is truly owned by its members and that stands for something.
However, there is still a question as to whether this model will really work in local teams. It is widely practiced by high flying clubs like Juventus, Real Madrid and Barcelona- the same clubs that the CEO mentioned, not once.
It is still blur when assessing the reason for the ultimate wars coming with these business men. It will appear that they seek to remodel the clubs as a modern corporation. Shah, for instance, is in many ways typical of the new breed of businessman taking charge of football in the 1990s. In style and management he seems to be echoing the political ambition of clubs that keeps the core of players for too long.
However, the answer to this question may be that while no large premiership club may voluntarily convert to such a mutual ownership model, bankruptcy at a major club as the country moves out of global economic recession, it may well create an opportunity for a well-organized group of supporters at clubs like Extension Gunners and Township Rollers, where there is a strong fan culture and sense of tradition and of course, moral ownership.
What the this model demonstrates is that there is nothing inherent that disallows the development of teams capable of participating more champions league or of building a sustainable financial strategy independent of the need for equity/shareholder investment.
What is required as football analyst, Jimmy George will contend is the ability of the local football supporters to organize themselves into a democratically accountable and disciplined body capable of taking over a large club. “It is very possible and we need to be organised and disciplined and the opportunity to engage in such a takeover will be simple,” George said.
Mowana Copper Mine in Dukwi will finally pay its former employees a total amount of P23, 789, 984.00 end of this month. For over three years Mowana Copper Mine has been under judicial management. Updating members, Botswana Mine Workers Union (BMWU) Executive Secretary Kitso Phiri this week said the High Court issued an order for the implementation of the compromise scheme of December 9, 2021 and this was to be done within 30 days after court order.
“Therefore payment of benefits under the scheme including those owed to Messina Copper Botswana employees should be effected sometime in January latest end of January 2022,” Kitso said. Kitso also explained that cash settlement will be 30 percent of the total Messina Copper Botswana estate and negotiated estate is $3,233,000 (about P35, 563,000).
Messina Copper was placed under liquidation and was thereafter acquired by Leboam Holdings to operate Mowana Mine. Leboam Holdings struck a deal with the Messina Copper’s liquidator who became a shareholder of Leboam Holdings. Leboam Holdings could not service its debts and its creditors placed it under provisional judicial management on December 18, 2018 and in judicial management on February 28, 2019.
A new company Max Power expressed interest to acquire the mining operations. It offered to take over the Mowana Mine from Leboam Holdings, however, the company had to pay the debts of Leboam including monies owed to Messina Copper, being employees benefits and other debts owed to other creditors.
The monies, were agreed to be paid through a scheme of compromise proposed by Max Power, being a negotiated payment schedule, which was subject to the financial ability of the new owners. “On December 9, 2021, Messina Copper liquidator, called a meeting of creditors, which the BMWU on behalf of its members (former Messina Copper employees) attended, to seek mandate from creditors to proceed with a proposed settlement for Messina Copper on the scheme of compromise. It is important to note that employee benefits are regarded as preferential credit, meaning once a scheme is approved they are paid first.”
A savingram the Ministry of Local Government and Rural Development sent to Town Clerks and Council Secretaries explaining why councilors across the country should not have access to their terminal benefits before end of their term has been revealed.
The contents of the savingram came out in the wake of a war of words between counselors and the Ministry of Local Government and Rural Development. The councilors through the Botswana Association of Local Authorities (BALA) accuse the Ministry of refusing to allow them to have access to their terminal benefits before end of their term.
This has since been denied by the Ministry. In the savingram to town councils and council secretaries across the country, Permanent Secretary in the Ministry of Local Government and Rural Development Molefi Keaja states that, “Kindly be advised that the terminal benefits budget is made during the final year of term of office for Honorable Councilors.” Keaja reminded town clerks and council secretaries that, “The nominal budget Councils make each and every financial year is to cater for events where a Councilor’s term of office ends before the statutory time due to death, resignation or any other reason.”
The savingram also goes into detail about why the government had in the past allowed councilors to have access to their terminal benefits before the end of their term. “Regarding the special dispensation made in the 2014-2019, it should be noted that the advance was granted because at that time there was an approved budget for terminal benefits during the financial year,” explained Keaja. He added that, “Town Clerks/Council Secretaries made discretions depending on the liquidity position of Councils which attracted a lot of audit queries.”
Keaja also revealed that councils across the country were struggling financially and therefore if they were to grant councilors access to their terminal benefits, this could leave their in a dire financial situation. Given the fact that Local Authorities currently have cash flow problems and budgetary constraints, it is not advisable to grant terminal benefits advance as it would only serve to compound the liquidity problems of councils.
It is understood that the Ministry was inundated with calls from some Councils as they sought clarification regarding access to their terminal benefits. The Ministry fears that should councils pay out the terminal benefits this would affect their coffers as the government spends a lot on councilors salaries.
Reports show that apart from elected councilors, the government spends at least P6, 577, 746, 00 on nominated councilors across the country as their monthly salaries. Former Assistant Minister of Local Government and Rural Development, Botlogile Tshireletso once told Parliament that in total there are 113 nominated councilors and their salaries per a year add up to P78, 933,16.00. She added that their projected gratuity is P9, 866,646.00.
A surge in consumer spending is expected to be a key driver of Botswana’s economic recovery, according to recent projections by Fitch Solutions. Fitch Solutions said it forecasts household spending in Botswana to grow by a real rate of 5.9% in 2022.
The bullish Fitch Solutions noted that “This is a considerable deceleration from 9.4% growth estimated in 2021, it comes mainly from the base effects of the contraction of 2.5% recorded in 2020,” adding that, “We project total household spending (in real terms) to reach BWP59.9bn (USD8.8bn) in 2022, increasing from BWP56.5bn (USD8.3bn) in 2021.” According to Fitch Solutions, this is higher than the pre-Covid-19 total household spending (in real terms) of P53.0 billion (USD7.8bn) in 2019 and it indicates a full recovery in consumer spending.
“We forecast real household spending to grow by 5.9% in 2022, decelerating from the estimated growth of 9.4% in 2021. We note that the Covid-19 pandemic and the related restrictions on economic activity resulted in real household spending contracting by 2.5% in 2020, creating a lower base for spending to grow from in 2021 and 2022,” Fitch Solutions says.
Total household spending (in real terms), the agency says, will increase in 2022 when compared to 2021. In 2021 and 2022, total household spending (in real terms) will be above the pre-Covid-19 levels in 2019, indicating a full recovery in consumer spending, says Fitch Solutions. It says as of December 6 2021 (latest data available), 38.4% of people in Botswana have received at least one vaccine dose, while this is relatively low it is higher than Africa average of 11.3%.
“The emergence of new Covid-19 variants such as Omicron, which was first detected in the country in November 2021, poses a downside risk to our outlook for consumer spending, particularly as a large proportion of the country’s population is unvaccinated and this could result in stricter measures being implemented once again,” says Fitch Solutions.
Growth will ease in 2022, Fitch Solution says. “Our forecast for an improvement in consumer spending in Botswana in 2022 is in line with our Country Risk team’s forecast that the economy will grow by a real rate of 5.3% over 2022, from an estimated 12.5% growth in 2021 as the low base effects from 2020 dissipate,” it says.
Fitch Solutions notes that “Our Country Risk team expects private consumption to be the main driver of Botswana’s economic growth in 2022, as disposable incomes and the labour market continue to recover from the impacts of the Covid-19 pandemic.” It says Botswana’s tourism sector has been negatively impacted by the Covid-19 pandemic and the related travel restrictions.
According to Fitch Solutions, “The emergence of the Omicron variant, which was first detected in November 2021, has resulted in travel bans being implemented on Southern African countries such as South Africa, Botswana, Lesotho, Namibia, Zimbabwe and Eswatini. This will further delay the recovery of Botswana’s tourism sector in 2021 and early 2022.” Fitch Solutions, therefore, forecasts Botswana’s tourist arrivals to grow by 81.2% in 2022, from an estimated contraction of 40.3% in 2021.
It notes that the 72.4% contraction in 2020 has created a low base for tourist arrivals to grow from. “The rollout of vaccines in South Africa and its key source markets will aid the recovery of the tourism sector over the coming months and this bodes well for the employment and incomes of people employed in the hospitality industry, particularly restaurants and hotels as well as recreation and culture businesses,” the report says.
Fitch Solutions further notes that with economies reopening, consumers are demanding products that they had little access to over the previous year. However, manufacturers are facing several problems. It says supply chain issues and bottlenecks are resulting in consumer goods shortages, feeding through into supply-side inflation. Fitch Solutions believes the global semiconductor shortage will continue into 2022, putting the pressure on the supply of several consumer goods.
It says the spread of the Delta variant is upending factory production in Asia, disrupting shipping and posing more shocks to the world economy. Similarly, manufacturers are facing shortages of key components and higher raw materials costs, the report says adding that while this is somewhat restricted to consumer goods, there is a high risk that this feeds through into more consumer services over the 2022 year.
“Our global view for a notable recovery in consumer spending relies on the ability of authorities to vaccinate a large enough proportion of their populations and thereby experience a notable drop in Covid-19 infections and a decline in hospitalisation rates,” says Fitch Solutions. Both these factors, it says, will lead to governments gradually lifting restrictions, which will boost consumer confidence and retail sales.
“As of December 6 2021, 38.4% of people in Botswana have received at least one vaccine dose. While this is low, it is higher than the Africa average of 11.3%. The vaccines being administered in Botswana include Pfizer-BioNTech, Sinovac and Johnson & Johnson. We believe that a successful vaccine rollout will aid the country’s consumer spending recovery,” says Fitch Solutions. Therefore, the agency says, “Our forecasts account for risks that are highly likely to play out in 2022, including the easing of government support. However, if other risks start to play out, this may lead to forecast revisions.”