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Japanese Volunteers transform Mmea, Xere settlements

Two Japanese Volunteers working partnership with the Remote Area Development Programme (RADP) office in Boteti have launched a flourishing project that has created employment in the small settlements of Mmea and Xere in the Boteti Sub District.

The project, aptly dubbed gifts for Botswana involves the making of handy crafts like bags, necklaces, bracelets, earrings, ties, and pouches by the inhabitants of the two settlements. Handy crafts, in addition to traditional crafts like baskets, wooden crafts, wooden chairs and other items are then sold not only to individuals but to lodges, hotels and shops in sightseeing areas in Botswana and abroad.

This innovative project is being executed with the assistance of Japan International Corporation Agency (JICA) where volunteers from Japan are actively involved in carrying out daily project activities in the ethnic Basarwa settlements. Owing to this, many of the items and accessories created and built in Xere and Mmea have found their way to Japan and the Asian market.

According to Etsuko Nagayama a volunteer through JICA, two volunteers from Japan who are stationed at the Boteti sub district council have been very instrumental in the project. “The Boteti Sub District Council through the Social Welfare and Community Development Department had dispatched a team of volunteers to the settlements around Boteti with the aim of devising ways to help the local community. After our visit we proposed this idea of income generation activities by making crafts. Then the proposal was approved by the council and this is how this project started” Etsuko who prefers being addressed by her Setswana name Naledi says.

She says in many villages and settlements in rural Botswana the majority of the inhabitants cannot make their living without financial help from the government thus they had to think of strategies to help create employment and upholding the principle and spirit of Ipelegeng.  

She says the main goal of the project is to create jobs in remote areas so that rural dwellers can get income by themselves and better their life “and also because we want to energise the craft sector in Botswana, we realised that they are many tourists from outside of Botswana these days, and they expect something made in Botswana. We believe that it is a very good opportunity for the tourism sector to flourish. To accomplish these goals, we encourage people making crafts to promote these items and market them to an international audience” she adds.

She says they sell many of the products in Japan through the internet “people like our items especially handy crafts using German print, currently we have three members in Xere and six members in Mmea who are making handy crafts. More than ten people are registered as producers of these traditional crafts” she reveals. She said the project which only begun its operation in April 2014, struggled in its first year as they couldn’t make any sales, through sheer perseverance and determination, the group is now doing better in sales having sold more than P 7,325 worth of products from May to December 2014 and P 26,270 worth of sales from January to August 2015.

At the moment the group has more than 15 partner-shops and lodges locally who are selling their items.  She says however, that the amount of money they have made amounts to less than P500 salary for each person in the group per month. “We need more customers who are interested in our items. We would like to get more partner-shops. And we also want to promote our items to companies that want gifts or prizes for their customers. Furthermore, it would be great if we met someone who comes from abroad who could introduce and sell made in Botswana crafts to their country, like me, a Japanese can sell these items to Japan” she pleads.  

She says that individuals in Botswana can also help as they are willing to offer local partners’ special prices for bulk orders from a minimum P500 per order. “It would be great if someone could buy our items together with their friends or colleagues. We need support not only from government but also from communities. There are so many good items and producers who can make these items in rural areas. The problem is marketing. I believe we can overcome this problem with people in all Botswana, including people from abroad fully behind us” she says.  

She says while she drives the project, she would like it known that it is funded by the government through Boteti Sub district Council RADP program and that they are working together with local officers in Boteti Sub District. “They give good advice and help to operate this project” she says.

She says their main challenges are lack of business operating skills by members, lack of knowledge in using computers, internet and English for the mainly Basarwa ethnic group in the settlements.  She says there is no electricity at the project sites and that some members cannot read and write “it is also not easy for us to reach market as we are located in a very rural area. It takes too much cost to go and sell our products in towns and abroad” she adds.

She says they are doing everything in their power to teach the residents business operations skills to ensure sustainability of the project long after they are gone “but it is tough for them with their literacy rate. It would be better if a Motswana in town could help to operate the project for them. So, I am looking for someone who would help us” she says.  She says looking into the future, they are trying to get bulk orders from retail shops, companies and individuals by phone, mail or internet. Saying some lodges and shops have already indicated interest in partnering with the group to sell their wares.

She posits that as this is a community based project that has created employment for many they are obliged to call for help in promoting and intensifying marketing for the handy crafts project and its activities so that more people would know what they are doing. While the project is based in Xere and Mmea settlement, it will soon operate in all four remote area settlements of Xere, Mmea, Khwee and Kedia in Boteti. She says, they have recently created a website, http://giftbotswana.jimdo.com/ where their products can be seen and ordered from anywhere in the world.

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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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