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Why BHC houses are not selling…

Low salaries make BHC properties unattractive

The Chief Executive Officer (CEO) of the Botswana Housing Corporation (BHC), Mr Reginald Motswaiso has unravelled the Corporation’s mystique of providing affordable housing and also ensuring that they remain profitable.


Motswaiso’s statement in the BHC 2014 annual report attempts to accommodate the fact that the Corporation operates in an environment where the majority of its prospective customers are earning low salaries, mortgage packages are not affordable, and construction costs are high.


Motswaiso has indicated that BHC has faced a challenge in disposing of its houses because of the global economic slowdown which led to marginal salary increases over a number of years.


The CEO indicated in the BHC annual report that in the midst of low salaries, construction costs had continued to increase at a much faster pace hence the net effect of this has been reduced ability by some of the Corporation’s potential customers to afford its products. “In recognition of this affordability challenge, the Corporation adjusted its operating margins on its new developments downwards,” he said.


The BHC Board chairperson, Dr Bolelang Pheko indicated in her statement that the slow economic recovery had a negative impact on the BHC as government scaled down on new construction projects. She also noted that the prospective BHC customers were also affected as they struggled to afford the houses.


Dr Pheko said in some cases, prospective customers prioritised other basic necessities like food and clothing over home ownership.


She said it is evident that the BHC customers have not benefited from the low interest rates currently prevailing in the market due to issues of affordability of our houses. However the Board chairperson noted that it is expected that as the economy recovers and economic activity increases, BHC will see an increase in demand of its properties, especially in the urban areas where there is shortage of accommodation.


“Despite the economic challenges BHC through its strong leadership, has continued to be financially sustainable. The Corporation remained profitable as costs are closely managed to ensure that the revenues are not eroded.”
Dr Pheko further wrote that they recognise that for BHC to reach out to as many Batswana as possible their products should be reasonably priced.


“This has resulted in the Corporation reducing its profit margins on products in some areas in order to make houses attractive to buyers. We have however not lost sight of the fact that we have to recover our costs in order to be able to remain sustainable and meet our obligation as they become due,” she observed.


Meanwhile, the CEO, Mr Motswaiso indicated that in its effort of trying to empower Batswana with homeownership, the BHC had targeted to sell some 1036 housing properties during the 2014/14 financial year. The properties concerned were located in various parts of the country but principally in Phakalane.

However the Corporation only managed to sell 290 housing units. The main reason for the shortfall in the number of housing units sold was the sewerage capacity problem at Phakalane project.


According to the annual report, the BHC rental income stream remained virtually unchanged at P186.6 million, compared to P187.7 million in the 2012/13 financial year.


“The stagnation in the rental income stream is mainly attributable to the fact that the Corporation has not increased its rental charges since 2004. Whilst the rentals have remained stagnant, the costs related to the administration and upkeep of the properties making up the rental portfolio keeps on increasing year after year due to upward push exerted by inflationary pressures. As an illustration of this upward push, the cost of maintaining the rental portfolio increased from P35.5 million in 2012/13 to P39.5 million, an increase of 11 percent.”


Currently the BHC says it is pushing the strategy of building more and more houses for sale and they describe it as ‘paramount’ to their existence because they have been mandated to house the nation. “In order to accelerate homeownership drive, BHC has embarked on the sitting tenants campaign this financial year, which is intended to encourage sitting tenants to purchase the properties they are currently leasing in order to realise the value in this properties.”

However this has faced its own challenges, affordability levels of the Corporation’s existing customers is challenged compared with the mortgages the banks can offer. BHC hopes that the campaign will increase homeownership.

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No deal was made with Disney World – Tsogwane

16th April 2021
disney-carlifonia-park

President Dr Mokgweetsi Masisi has been touring the entire world since occupying Presidential office in 2018. Few months down the line, he flew to Florida in the United States of America where he landed at the Disney World.

This is the world’s largest entertainment complex opened in 1971, with four theme parks (consisting of Magic Kingdom, Epcot, Disney’s Hollywood Studios, and Disney’s Animal Kingdom).

Upon his return in the country from the fairytale land, Masisi said Botswana struck a partnership with Disney World. The partnership primarily focused on turning the country’s capital, Gaborone, into an international tourism and leisure destination.

“We have struck a partnership with Disney World as a company. They focus on making people happy and bringing tourists. I want tourists in this country. Visa restrictions are out. They will be issued on arrival. I have tasked Minister Makgato’s Ministry to categorize taxis so that there can be value in the taxi industry.

I am very committed to making Gaborone an international venue center and this will bring revenue to our country,” Masisi said at the time. Masisi, has now appointed Makgato as Botswana’s High Commissioner – designate to the Commonwealth of Australia.

However, two years later, there is no sign of Gaborone being turned into a tourism hub. In fact, the partnership Masisi struck with Disney World never emerged. It is now becoming more of a pipeline dream, and politicians are keen to know what really transpired.

In a dramatic turn of events, Masisi’s flanking Minister, Minister for Presidential Affairs, Governance and Public Administration, Kabo Morwaeng, slammed Vice President Slumber Tsogwane with questions on this said ghost partnership, demanding answers on Masisi’s long dead promise.

Vice President Tsogwane told Parliament on Thursday that Masisi was looking for investors to come and do business in Botswana, either in partnership with government or the private sector.

“The President and his delegation engaged in meetings with the management of Disney World to identify opportunities for the company to collaborate with in Botswana. There were a number of opportunities Mr. Speaker for collaboration that were identified to be followed up with by bilateral negotiations with various institutions.

The key area that was identified for collaboration was the implementation of an enhanced customer care training and development akin to that of Disney World.

The Botswana Public Service College was assigned to collaborate with Disney World, to roll out a training programme which will achieve excellent customer service for the public sector in Botswana, Tsogwane said via virtual Parliament.

He further said representatives of Disney World visited Botswana on a fact finding mission in May 2019.

“While in Botswana, the team toured selected sites such as Gaborone bus rank, Tlokweng Boarder post, and Department of Roads, Training and Safety offices amongst others. Following this, Disney World produced a scoping report which detailed training and engagement timelines for consideration by government,” said Tsogwane.

In fulfilment of their procurement requirement, Tsogwane said Disney Institute was requested to submit a proposal based on their scoping report indicating associated cost implications. He said, Disney declined to submit citing that it does not deal directly with government.

“After being advised by their Disney World Board, they therefore advised Botswana government to deal with another company in the United States of America, which according to them does the Disney World way. This never proceeded because our interest was on Disney World and not any other company that point in time.”

As a result, Tsogwane told Parliament that no deal or contract was signed with Disney World. “The issue of easing of restrictions which is part of the question, between any two countries is a matter that is negotiated through diplomatic channels and whenever agreements are reached, proper communication is made. With regard to Visa restrictions between Botswana and the US, Tsogwane says they will continue discussions on how to ease restrictions,” he said on Thursday.

Morwaeng wanted Tsogwane to update Parliament on: Government’s deal with Disney World, the terms of the deal propounded by the President in March 2019; Whether the deal was signed, when it was signed and clear specifics of the deal and its benefits to Botswana tourism; when visa restrictions between the two countries (Botswana and the United States of America) will be eased and visas issued on arrival as per the Disney World deal pronouncement; and If the deal struck with Disney World was not just mere electioneering talk that will never see the light of the day.

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Gov’t has no budget for Magosi’s SADC chase

12th April 2021
Elias Magosi

Despite the government of Botswana’s ambition to have one of its own to lead Southern Africa Development Community (SADC) since its establishment in 1980, the Presidency says there is no budget specifically dedicated to the campaign.

The Government has released the name of Permanent Secretary to the President, Elias Mpedi Magosi, as the candidate for the SADC Executive Secretary position. Magosi is expected to face off with Democratic Republic of Congo (DRC) candidate, Faustin Mukela. The position will become vacant in August this year.

However, despite the optimism the Botswana Government has not yet set aside a budget to assist Magosi to win against the seemingly DRC giant. “We all know that the COVID-19 pandemic has negatively affected the country’s ability to effectively fund any new project. This campaign is not an exception. As such, we do not have any budget for the campaign. However, we have so far managed to take advantage of His Excellency the President’s working visits to the neighbouring countries to also carry out the campaigns,” Press Secretary to the President, Batlhalefi Leagajang, explained.

Botswana has housed SADC since the establishment of the then SADCC in 1980, but has never occupied top most leadership positions at the SADC Secretariat.  “We therefore, strongly believe that we should also have an opportunity to contribute to the management of our regional body as it continues to drive the important issues of regional integration industrialization and socio-economic development.

This will also profile Botswana as a strong advocate of regional integration,” he responded to this publication’s questionnaire as to why the Government wants to occupy the plum post. SADC is a Member State driven organization. As such, Leagajang said, needs a well-grounded Executive Secretary with a blend of management and leadership acumen; a transformational leader with political awareness and integrity; private and public sector experience; a deep culture of corporate governance; as well as strategic agility and result-oriented consummate diplomat.

“These are the unique attributes of our candidate,” he said. So far President Mokgweetsi Masisi has visited nine out of 16 SADC member states on a working visit and also taking an opportunity to present to them his candidate.

“The countries have appreciated this effort and we remain hopeful. However, it is important to note that this is a democratic and competitive process which must be respected,” he responded when asked about the reception and assurances from various countries to cast a vote for Magosi.

In 2018, when Pelonomi Venson-Moitoi challenged for the Africa Union (AU) Chairperson, the government appointed former President Festus Mogae to be the campaign leader. Does the Government have anyone apart from Masisi to help with the campaign?

“The campaigns for the candidate are strictly led by the Government of Botswana. Since this is a candidate for Botswana, not just the Government, it will be appreciated if all Batswana, including the media, could also shoulder the responsibility to campaign for the candidate in their own spheres of influence,” Leagajang responded.

While there are sceptics on Magosi winning against the DRC man, the Government is confident and believes that with the unique traits that he possess, Magosi stands a chance. He is said to be a strong advocate of justice and fairness as he has played this role in his current role as PSP and in his previous roles as PS and in the private sector. He has helped individuals and companies to find justice and fairness in most of their dealings with Government.

Magosi is also said to be a proponent of corporate governance and which he has relentlessly pursued in most of his career including in Government and other sectors. A strong believer in following laid down procedures and laws. “He carries a variety of skills as an HR expert with experience in different sectors, a strategist and an Organization development specialist.

His experience and exposure spans government, parastatal, private sector and at regional level as well, thus making him a suitable candidate for the regional role. He has worked with governments, businesses, development partners and politicians and is comfortable navigating through all of them,” Leagajang concluded.

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Mzwinila’s P4.3 Billion gamble to keep water flowing

12th April 2021
orth-South-Carrier

The Minister of Land Management, Water and Sanitation Services, Kefentse Mzwinila looked a politician set to shoot the moon as he laid bare his billions of pula development agenda recently in Parliament.

His Ministry’s combined Recurrent and Development Budget Proposals for the 2021/ 2022 Financial Year is pegged at Four Billion, Three Hundred and Sixty – Five Million, two Hundred and Nineteen Thousand, Five Hundred and Sixty Pula (P4, 365, 219, 560). This is a budget 38.3% more than the allocation for the 2020/2021 Financial Year.

Mzwinila preluded his request to parliament with a demonstration that his Ministry has no champagne taste on a beer budget – indicating that his ministry’s expenditure at the end of February 2021P2.111 Billion or 96% of development budget; and P910 million or 90% of the recurrent budget.

Notwithstanding the budget dust, the Minister justified this year’s increase in the Ministry’s total budget. He attributed the escalation to the commencement of major projects under the water sector. These include the implementation of the North South Carrier (NSC) 22.2 covering various sub projects. Mzwinila noted that these are all public value projects which are aimed at improving the lives of Batswana.

Mzwinila’s Ministry has projected that the sum of Nine Hundred and Sixty –Three Million, Nine Hundred and Forty – Seven Thousand, Five Hundred and Sixty Pula (P963, 947, 560) be permitted for the Recurrent Budget and stand part of the 2021 / 2022 Appropriation Bill ( No. 1 of 2021).

“55% of the Recurrent Budget is geared towards the Revenue Support Grant for 12 Land Boards and their subordinate authorities while the sum of P5 Million is allocated to the Real Estate Advisory Council (REAC). The remaining 44% is proposed for the Ministry Departments.”

The sum of Three Billion, Four Hundred and One Million, Two hundred and Seventy –Two Thousand Pula (P3, 401, 272, 000), for the Development Budget was approved and stand part of the same schedule of the appropriation (2021/2022).

When breaking down the Development Budget, Minister Mzwinila noted that Water Supply and Sanitation projects will account for P1.098 Billion to finance the Maun Water and Sanitation project, Molepolole Sanitation projects and the Shakawe Water Treatment Plant Rehabilitation.

With all the implementation bottlenecks troubling several projects in the country, Mzwinila had to satisfy the question of whether his Ministry demonstrated a dire need for the budget with reference to its execution of the budget for the financial year 2020/2021 and its delivery of strategic initiatives and projects?

Mzwinila’s pitch found favour with parliament and his ministry will get an aggregate budget of P3.198 Billion for the 2020/ 2021 Financial Year. Within this allocation, P2.188 Billion is for the Development Budget and P1.010 Billion will cover the Recurrent Budget.

The Minister revealed his strategic interventions for land management, water and sanitation services. Highlighting that efforts by Government to provide serviced residential land to citizens on the waiting list are being hampered by limited resources. He shared that his ministry needs P94 Billion to cover such costs which will directly link to water, sewage, roads, electricity, telecommunications and storm water drainage leading to the allocation of 4 587 plots on un-serviced land.

The minister projected that 22 952 un-serviced residential plots are planned to be allocated in the next financial year. However, there is a trend where allocated land remains fallow and undeveloped which raises misgivings that the requests could have been made on speculative plans.

Mzwinila noted that in the spirit of forging stronger International connections, the Ministry will in June 2021 sign a Memorandum of Understanding on Land matters between Namibia and Botswana with the aim of opening doors to the creation of Dry Ports in the country, facilitate international trade through Walvis Bay Sea Port.

Botswana is already challenged by scarcity of naturally occurring water resources due to the aridity of the country creating persistent water shortages. The type of infrastructure required to improve national water security is a true reflection of intensive investment needed in the water sector The Minister stressed.

“An emerging issue such as the COVID -19 pandemic poses serious challenges as the control of the virus requires reliable water supply. In an effort to mitigate the challenge, the Ministry has undertaken extensive bowsing throughout the country which included the provision of additional capacity for supplementary bowsing to areas with pervasive water shortages, plus an additional forty one (41) un-gazetted settlements.

Operational costs due to bowsing were at an average of P6 Million per month before the COVID-19 pandemic and increased to an unsustainable amount of the order of P13 Million per month, since the beginning of the State of Emergency in April 2020,” the minister shared.

Through the support of a World Bank Loan, the Ministry is implementing several initiatives under the Botswana Emergency Water Security and Efficiency (BEWSE) project. Through BEWSE the Raw Water Pricing and Abstraction Strategy will assess the pricing of water in a manner that enables the provision of water to support new economic development, the strategy is planned to be completed in June 2021.

The Ministry has commenced the development of a long term National Water Security Strategy to improve resilience to climate change impacts. The strategy development entails prioritization of the proposed future mega water transfers such as the Chobe – Zambezi water transfer, the Atlantic Ocean water transfer to Botswana through Namibia and Lesotho – Botswana water transfer.

Following the signing of the tripartite Memorandum of Agreement (MoA) between Botswana, Lesotho and South Africa in November 2017 for the Lesotho –Botswana Water Transfer project, a 24 months contract for a combined prefeasibility and feasibility study for the development of a bankable Lesotho – Botswana Water Transfer project feasibility study was signed and is to be completed in 2022.

One of the Ministry’s famous major water supply projects such as the North South Carrier (NSC) 2.2 has experienced hiccups; having tenders for contract 1 (Masama to Mmamashia Pipeline) and Contract 2 (Mahalapye to Masama Pipeline) cancelled due to budgetary constraints.

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