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Private sector’s 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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Business

NAMDEB extends life of mine for land operations by up to 20 years

19th October 2021

Joint venture between De Beers and Government of Republic of Namibia announces new plan, supporting economic, commercial, employment and community benefit, following receipt of royalty relief Namdeb Diamond Corporation (Proprietary) Limited (‘Namdeb’), a 50:50 joint venture between De Beers Group and the Government of the Republic of Namibia, today announced the approval of a new long-term business plan that will extend the current life of mine for Namibia’s land-based operations as far as 2042.

Under the previous business plan, the land-based Namdeb operations would have come to the end of their life at the end of 2022 due to unsustainable economics. However, a series of positive engagements between the Namdeb management team and the Government of the Republic of Namibia has enabled the creation of a mutually beneficial new business plan that extends the life of mine by up to 20 years, delivering positive outcomes for the Namibian economy, the Namdeb business, employees, community partners and the wider diamond industry.

As part of the plan, the Government of the Republic of Namibia has offered Namdeb royalty relief from 2021 to 2025, with the royalty rate during this period reducing from 10% to 5%. This royalty relief has in turn underpinned an economically sustainable future for Namdeb via a life of mine extension that, through the additional taxes, dividends and royalties from the extended life of mine, is forecast to generate an additional fiscal contribution for Namibia of approximately N$40 billion. Meanwhile, the life of mine extension will also deliver ongoing employment for Namdeb’s existing employees, the creation of 600 additional jobs, ongoing benefits for community partners and approximately eight million carats of additional high value production.

Bruce Cleaver, CEO, De Beers Group, said: “Namdeb, a shining example of partnership, has a proud and unique place in Namibia’s economic history. This new business plan, forged by Namdeb management and enabled by the willingness of Government to find a solution in the best interest of Namibia, means that Namdeb’s future is now secure and the company is positioned to continue making a significant contribution to the Namibian economy, the socio-economic development of the Oranjemund community and the lives of Namdeb employees.” Hon. Tom Alweendo, Minister of Mines and Energy for the Government of the Republic of Namibia, said: “Mining remains the backbone of our economy and is one of the largest employment sectors within our country.

Government understood the fundamental impact of what the Namdeb mine closure at the end of 2022 would have had on Namibia. Therefore, it was imperative to safeguard this operation for the benefit of sustaining the life of mine for both the national economy as well as preserving employment for our people and the livelihoods of families that depend on it.”

Riaan Burger, CEO, Namdeb Diamond Corporation, said: “After more than a century of production, these operations were approaching the end of their life, but the creation of this new business plan means we can continue to deliver for Namibia for many years into the future. This is great news for the hardworking women and men of Namdeb, as well as for all our community partners who we are proud to have worked with over the years. We now look forward to starting a new chapter in Namdeb’s proud history.”

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Business

Botswana records first trade surplus since January

7th October 2021
Botswana-records-first-trade-surplus-

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).

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Business

The 2021/2022 Stanford Seed Transformation Program Begins

7th October 2021

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.

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