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Private sectors take on salary hike


Asset management firm African Alliance officials have indicated that the 6 percent salary increase by government would not necessarily guide the private sector decisions on salary adjustment because of a variety of reasons.


After three years of tussling between the members of the Public Service Bargaining Council, the Government and the public sector unions, last week the parties, for the first time ever, reached an amicable resolution.


Public Service Bargaining Council (PSBC) finally concluded the salary talks and agreed on an increase of 6 percent across board for mostly lower cadre employees who are on salary Grades D1 and below.


“The Council has resolved that a salary increase of 6 percent be awarded to all employees on salary grades D1 and below for the financial year 2015/16 effective 1st April 2015,” stated PSBC General Secretary Patlala Ulaula last week Thursday after the parties reached an agreement.


In view of the increase, the management of asset management firm African Alliance, told BusinessPost that the economy stands to benefit, with better spending power for earners and enhanced living standards. However, the assumption that private sector salaries will be guided by the public service increase, does not stand this time around as indicated by company closures and retrenchments showing economic pressures on the private sector.


“This year’s rise will be the first time in five years that the wage growth has outstripped inflation which means that civil servants will enjoy the biggest real increase in their take home pay over this period, benefiting over 50 percent of the working population,” said African Alliance in the response to an enquiry from this publication.


“Seeing that the increase is more than double the rate of inflation coupled with the low interest rate environment, we believe this will be positive for the economy as it means more disposable income for an average household which normally results in increased consumer expenditures and positive economic growth. This raises hope that the long squeeze in the cost of living may be coming to an end.”


“With interest rates at their lowest level ever, inflation at 2.8 percent (lowest in 15 years) and the economy still operating at below potential output we believe a 6 percent rise is sensible move in the context of the still limited budget available at a fiscal level.”


“Looking at the company closures and the number of retrenchments in most sectors of the economy, we are of the view that companies are trying to keep their cost levels as low as possible and will likely offer a slightly lower increase than what the government has offered – probably more in line with inflation at circa 4 percent.”


 “The sectors driving overall growth the most have been Government, Trade, Hotels and Restaurants and Transport and Communications. It seems likely that these will be sectors that experience the highest wage increases given their higher ability to do so.”


 “In terms of which sectors will benefit from this salary increase – we believe the non-mining sector, thus, the companies that benefit more from increased domestic demand/consumer spending  like banks, retail shops, etc will be the beneficiaries of this increase.”


African Alliance had, in August 2014 had stated in its monthly Marketwatch publication, that a 7 percent increase was adequate for the current economic conditions, saying that would balance the economy.


“We believe an increment of about 7 percent will balance inflation and support consumption. The current below-inflation wage increase of 4 percent, coupled with rising inflation, and a possible interest rate hike, will not favour the struggling consumer, hence we expect domestic household disposable income to remain under pressure affecting debt servicing and disadvantaging those businesses that depend on domestic demand for growth,” the firm said at the time.


This was after Government offered an arbitrary 4 percent increase to the public sector, a move which disturbed the trade unions as it was done outside the ambits of the PSBC.


 African Alliance also warned of negative ramifications of a large increase saying: “Recovery still remains fragile and the economy cannot afford further disruptions such as the 2011 strike, but a wage demand of 12 percent proposed by unions will likely overheat the economy.”


Chief of Investment at African Alliance, Justin de Klerk, told BusinessPost that a 12 percent raise, which was nearly three times the inflation rate at the time, would result in a surge, creating an over stimulus in the economy, which is possibly detrimental for the household debt situation, in the long term, saying households would likely take on more debt.

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China’s GDP expands 3% in 2022 despite various pressures

2nd February 2023
China’s Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.

The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The country’s fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.

In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.

Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.

China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.

Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.

On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.

According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry said.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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