The Bank of Gaborone Managing Director, Andre Barnard
From the beginning of time, saving has been synonymous with the human lifestyle. It is inbuilt within traditions and cultural practices. Our forefathers built silos for storing harvest after a successful ploughing season. Bulk grain would be ‘saved’ for gloomy days.
As time evolved, so did the methods of saving. Fast forward to the 21st century, farmers still harvest, and package and store their produce in more technically advanced methods like fortifying and freezing them. The same principle can be applied in saving money.
For global markets the conversation is not just about saving anymore, but also about markets and investments. A publication on Global Imbalance: A saving and Investment Perspective, suggests that, the world economy is experiencing changes in both saving and investment behaviour that are having implications for the configuration of current account imbalances and the level of real interest rates.
Their consumers then ask, ‘to save or invest’ and ‘is investment a better idea’. Consumers are looking into different ways of saving and what markets can offer.
An October 2012 World Bank report highlighted that 16 percent people in Botswana had made a saving in the past 12 months. The same low numbers were captured on the Bank of Botswana Financial Statistics report where household savings made only 22 percent of the P 53 billion of the banks’ deposits. This greatly puts a spotlight on the culture of saving in Botswana.
The product offering by Bank Gaborone are efforts to say, saving can start at any age or stage, at however much income and is not limited to the working class. Saving is even easy with Bank Gaborone; the Wiz Kid account tailored for children offers a debit card, free withdrawals, free gift and competitive rates.
Ipeele and Sure Save cater for Batswana from all walks of life; with an opening balance of P120, no maintenance fees and FREE funeral cover on Ipeele, saving couldn’t be easier. The products are a solution tailored for the different challenges and financial status of the customers.
The Bank of Gaborone Managing Director, Andre Barnard reiterated that, “Savings do not only benefit the individual but are also necessary for the growth and development of an economy. There is evidence of household debt being higher than household deposits. Bank Gaborone believe that financial prudence, temperance and self-control are keys to financial freedom. If all those are exercised, a steady increase in saving will make a remarkable contribution to the economy”.
Saving money does not come as naturally to all of us. There are those people who genuinely understand the benefits of putting money aside, forfeiting some of life’s luxuries and some who plainly believe in spending all of their income and wait on manna during dark days.
It is this mind-set that needs to be eradicated through financial literacy. We lose out on the benefits of saving in our day to day lives without even noticing it. There are many benefits of saving that can however be enjoyed without so much renege on the saving plan. The simple tripod model below can help anyone start their saving journey.
Have a reason-to be able to put money aside does not come easy to all of us. Therefore, the savings process becomes easy when it is tied to a goal. The goal then serves as better motivation to keep at the task. This could be a short term goal like saving to buy a pair of shoes to long term goals like travelling, paying for tuition. Much as the net income determines how much one can save, at the end of it all, it must not be about the money but about the bigger picture.
Competitive rates- in Albert Einstein’s words, “compound interest is the eighth wonder of the world. He who understands it earns it, he who doesn’t, pays it”. It goes without mention that we entrust financial institutions with our monies so we get benefits of interests. Therefore a thorough research and understanding of the market is necessary when choosing where to save ones money.
Financial discipline- a weigh of what matters on the spending scale will go a long way. This requires the ability to delay gratification. Unfortunately the society has conditioned the “get money, spend money” mentality from a very young age.
Lack of financial discipline starts when you give a P2.00 coin to you child, spending on candy is the first that comes to their mind. At least five things that they badly want should spring to mind, like the precious doll on the window display, the Go-Cart ride, that colourful colouring book.
Fast forward to adulthood, there should be tiers of expenses in order of importance and urgency. It is important to be able to say NO I cannot afford it or NO not now. Financial discipline plays a great role in the ability to save. If one leans more on the spender side of the graph, that inevitably slopes revenue to save.
Precautionary saving should be a lifestyle practiced by everyone. It does not have to be determined by the level of income. Savings should be a fall back plan or a cushion on a rainy day. Bank Gaborone can help you start, it is never too late, they also offer the best rates.
Developing markets are miles ahead. Effects made into individual and household saving do not only empower those who practice it, but unlock happiness and financial freedom. The reward of saving and accomplishing the set goals goes beyond it goes as far as reducing household debt as a whole.
Botswana has recorded its first trade surplus for 2021 since the only one for the year in January.
The country’s exports for the month of July surpassed the value of imports, Statistics Botswana’s July International Merchandise Trade data reveals.
Released last Friday, the monthly trade digest reports a positive jump in the trade balance graph against the backdrop of a series of trade deficits in the preceding months since January this year.
According to the country’s significant data body, imports for the month were valued at P7.232 billion, reflecting a decline of 6.6 percent from the revised June 2021 value of P7.739 billion.
Total exports during the same month amounted to P7.605 billion, showing an increase of 6.1 percent over the revised June 2021 value of P7.170 billion.
A trade surplus of P373.2 million was recorded in July 2021. This follows a revised trade deficit of P568.7 million for June 2021.
For the total exports value of P7.605 billion, the Diamonds group accounted for 91.2 percent (P6.936 billion), followed by Machinery & Electrical Equipment and Salt & Soda Ash with 2.2 percent (P169.7 million) and 1.3 percent (P100.9 million) respectively.
Asia was the leading destination for Botswana exports, receiving 65.2 percent (P4.96 billion) of total exports during July 2021.
These exports mostly went to the UAE and India, having received 26.3 percent (P1. 99 billion) and 18.7 percent (P1.422 billion) of total exports, respectively. The top most exported commodity to the regional block was Diamonds.
Exports destined to the European Union amounted to P1.64 billion, accounting for 21.6 percent of total exports.
Belgium received almost all exports destined to the regional union, acquiring 21.5 percent (P1.6337 billion) of total exports during the reporting period.
The Diamonds group was the leading commodity group exported to the EU. The SACU region received exports valued at P790.7 million, representing 10.4 percent of total exports.
Diamonds and Salt & Soda Ash commodity groups accounted for 37.8 percent (P298.6 million) and 6.2 percent (P48.7 million) of total exports to the customs union.
South Africa received 9.8 percent (P745.0 million) of total exports during the month under review. The Diamonds group contributed 39.9 percent (P297.4 million) to all goods destined for the country.
In terms of imports, the SACU region contributed 62.7 percent (P4.534 billion) to total imports during July.
The topmost imported commodity groups from the SACU region were Fuel; Food, Beverages & Tobacco, and Machinery & Electrical Equipment with contributions of 33.3 percent (P1.510 billion), 17.4 percent (P789.4 million) and 12.7 percent (P576.7 million) to total imports from the region, respectively.
South Africa contributed 60.1 percent (P4.3497 billion) to total imports during July 2021.
Fuel accounted for 32.1 percent (P1.394 billion) of imports from that country. Food, Beverages & Tobacco contributed 17.7 percent (P772.0 million) to imports from South Africa.
Namibia contributed 2.0 percent (P141.1 million) to the overall imports during the period under review. Fuel was the main commodity imported from that country at 82.1 percent (P115.8 million).
During the months, imports representing 63.5 percent (P4.5904 billion) were transported into the country by Road.
Transportation of imports by Rail and Air accounted for 22.7 percent (P1.645 billion) and 13.8 percent (P996.2 million), respectively.
During the month, goods exported by Air amounted to P6, 999.2 million, accounting for 92.0 percent of total exports, while those leaving the country by Road were valued at P594.2 million (7.8 percent).
Founders from twenty companies have been accepted into the program from Botswana, Namibia, and South Africa
The 4th Cohort of the Stanford Seed Transformation Program – Southern Africa (STP), a collaboration between Stanford Graduate School of Business and De Beers Group commenced classes on 20 September 2021. According to Otsile Mabeo, Vice President Corporate Affairs, De Beers Global Sightholder Sales: “We are excited to confirm that 20 companies have been accepted into the 4th Seed Transformation Programme from Botswana, Namibia, and South Africa. The STP is an important part of the De Beers Group Building Forever sustainability strategy and demonstrates our commitment to the ‘Partnering for Thriving Communities’ pillar that aims at enhancing enterprise development in countries where we operate in the Southern African region”. Jeffrey Prickett, Global Director of Stanford Seed: “Business owners and their key management team members undertake a 12-month intensive leadership program that includes sessions on strategy and finance, business ethics, and design thinking, all taught by world-renowned Stanford faculty and local business practitioners. The program is exclusively for business owners and teams of for-profit companies or for-profit social enterprises with annual company revenues of US$300,000 – US$15million.” The programme will be delivered fully virtually to comply with COVID 19 protocols. Out of the 20 companies, 6 are from Botswana, 1 Namibia, and 13 South Africa. Since the partnership’s inception, De Beers Group and Stanford Seed have supported 74 companies, 89 founders/CEOs, and approximately 750 senior-level managers to undertake the program in Southern Africa.
Minergy, the coal mining and trading company with the Masama coal mine, this week released results for the year ended 30 June 2021. The company achieved revenue of P193 million (2020: P81 million) with significant improvement in sales volumes surpassing 415 000 tonnes sold for the year.
The performance was divided into two distinct periods with very different operating environments. The first eight-month period (July 2020 – February 2021), was negatively impacted by delayed funding, COVID-19 impacts and excessive rain; and the last four-month period (March – June 2021), was a more stable production environment moving toward nameplate capacity.
According to Minergy CEO, Morné du Plessis, production and sales initially recovered in July and August 2020 with the easing of COVID-19 restrictions and recoveries were further bolstered by the successful launch of the rail siding. Delays experienced in concluding the funding contributed to contractors limiting operations to manage arrears.
“However, the heavy rains we experienced from December 2020 through February 2021 flooded the mine pit making access difficult and impacting both production and sales. Fortunately, the rain subsided in March 2021, and we entered a more stable environment, with a positive impact on operations. Good recoveries in production and sales were experienced during the last four-month period of the year, with the mine moving closer toward a breakeven position.”
“Despite these operational constraints, including the effects of COVID-19 on logistics and manning of shifts, we expect to reach consistent nameplate capacity in the 2022 financial year,” du Plessis added.
In addition to the revenue reported above, the company incurred costs of sales of P256 million (2020: P150 million) with operating costs of P23 million (2020: P31 million). This effectively resulted in an operating loss of P86 million (2020: P100 million). Finance costs of P51 million (2020: P17 million) were incurred, bringing the net loss before taxation to P136 million (2020: P117 million).
Du Plessis explains that the adverse conditions in the first eight-month period contributed to 86% of the gross loss, while the more stable four-month period alone contributed to 50% of total sales value, helping to decrease monthly gross losses, albeit below breakeven levels.
The company benefited from a strengthening in the South African Rand (“ZAR”) supporting higher back-on- mine sales prices.
“As announced, we’re pleased to have secured P125 million of additional convertible debt funding through the Minerals Development Company Botswana (Proprietary) Limited (“MDCB”). Minergy remains grateful for this support.”
He added that the first tranche of additional funding provided by the MDCB had been received in December 2020, which allowed Minergy to settle the majority of the contractor’s arrears and allowed their teams to be remobilised. The second and final tranche was paid post the financial year-end and will allow the business to reach nameplate capacity in the new financial year.”
COAL SALES AND MINE PERFORMANCE
Sales volumes increased by 110%, supported by increased sales in Botswana and internationally in South Africa and Namibia. Sales for June 2021 exceeded 56 000 tonnes, a record since the inception of the mine, with pricing increasing late in the financial year on the back of buoyant international prices and a strengthening ZAR.
Minergy also concluded a further 12-month off-take agreement to the existing off-take agreement, with a further agreement finalised post year end.
Overburden moved during the reporting period increased by 86% and extracted coal by 50%. Coal mined in June 2021 alone exceeded 100 000 tonnes. “This is a good performance considering the challenges faced such as sacrificing pre-stripping activities for a period to manage arrears, excessive rain and COVID-19,” du Plessis indicated.
“The wash plant was initially starved of coal due to the factors noted already. Despite this, overall plant throughput performance was 37% higher than 2020. Consistent output was supported by the completion of the Stage 2 rigid crushing section as well as the water saving dewatering screen with filter press contributing to a reduction in water usage of 60% per tonne of coal. A record throughput of more than 84 000 tonnes was achieved in March 2021 and this consistency has been maintained.”
According to du Plessis, the completion of Stage 4 of the Processing Plant, the rigid screening and stock handling section, remains a key optimisation step, which has associated benefits. “The completion was unfortunately delayed by a southern African wide shortage of structural steel but was commissioned post year-end.”
Minergy expects the positive momentum in international coal pricing for southern African coal to remain in place. Higher coal prices have resulted in coal being withdrawn from the inland market in favour of lucrative international markets. Du Plessis added that the regional market is currently under- supplied with sized coal, which supports higher pricing and new customer opportunities for Minergy.
“Our objective for the 2022 financial year is to achieve nameplate capacity by completing final ramp-up of operations. This will enable the company to generate sufficient cash flow to stabilise the business at breakeven or better. The bullish coal market is also providing support. COVID-19 will still be closely managed, and we look forward to the lifting of the State of Emergency, as announced, and trust that vaccination programmes will achieve herd immunity in Botswana during the next 12 months.”
Du Plessis expressed his excitement on prospects stating that, “The Eskom due diligence process is continuing, and we are hopeful of receiving feedback during the current financial year. In addition to this opportunity, Minergy is also investigating participation in the request by the Government of Botswana to provide a 300MW power station for which the company has been shortlisted.”
The approved process to issue shares for cash is showing positive leads and he concluded by saying that a listing in London is still being investigated.