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Investors eye stake in Trans Kalahari rail project


The Australian consultant engaged by Botswana Government to determine the feasibility of the Trans Kalahari railway line, last week handed over the final assessment report, the Trans Kalahari Railway Development Plan.


Coal Development Unit coordinator, Obakeng Moumakwa, told BusinessPost that “We met with the consultants the other week and they gave us their final report, which basically set out the financials and the realigned routes of the railway line.”
“The project is continuing,” declared Moumakwa, contrary to recent reports that the project has been shelved.


“Now we need to create a legislator framework for both safety and economic regulation and this will see some laws will having to be changed in Botswana and Namibia, to allow for the setting and operation of the railway,” said Moumakwa.
“The project, owned by both countries, could have been opened as early as January 2015 but will open any time and the countries will deal with staffing issues,” he said.


Moumakwa said that the railway line is an investment opportunity for anybody with money and he also revealed that potential investors call all the time with enquiries and they are awaiting Government to complete its initial processes.


Government is in the process of informing itself of the modalities of the project, something Moumakwa admits is “taking a bit long” to complete. “We are still to do a bankable feasibility study,” Moumakwa asserted.


However, Moumakwa said that as things stand none of the coal mining companies have expressed a wish to own the TKR, in part or the whole project.


The railway line, which comes with a P136 billion price tag, is expected to unlock the monetisation of Botswana’s coal resources, which are seen as a way to augment the depleting diamond resources that have been the mainstay of the country’s economy.
Aurecon has given the resultant capital expenditure costs at a total of USD14.2 billion, comprising USD8.6 billion for electrified rail, and USD1.9 billion for above rail, and USD3.6 billion for the port.



The “Pre-Feasibility Study of the TKR Report” prepared by Canadian firm, CPCS in 2011, contained capital and operating costs estimates for the rail and port but the new assessment by Aurecon is said to be 90 percent different due to several considerations such as, a high level review of these costs having been undertaken as a result of a number of issues; changes to the construction market since 2011; changes in operating philosophy of the rail, and proposed enhancements to the project.


Since the signing of the Memorandum of Understanding between Botswana and Namibia in early 2014, the Bilateral Agreement coal prices have fallen significantly.


The Bilateral Agreement envisaged a Public Private Partnership procurement method using the DBOOT model with the private sector financing the project and taking on demand risk. Until prices return to greater than $85/t a demand risk PPP will not be bankable.


However, Government has been presented with the option to fund up-front, over time or provide a state backed guarantee to the project company though “this is likely to be unaffordable to government”.


According to consultants Aurecon, future considerations regarding the structuring of the project will ultimately depend on the composition of the mining players at the time and this may also influence the regulatory regime.


As recommendations for the way forward, Government has been asked to simply acknowledge that the project is conditional upon the coal price. The report also states that, at the current coal price the project is not viable although long term outlook may be positive.


Government has also been urged to show commitment to the project by announcing an undertaking to resolve those project risks that the government can control. The foremost factors that will form the foundation for the project include, alignment (optimising and purchasing); Wildlife and stock management along alignment; Cross border regulations and the Electric vs diesel traction.


Key risks to the whole project include Coal Price; Cross Border Project; Land Acquisition; Alignment of participants and the presence of migratory animals in the likely path of the rail line along the three main wildlife corridors identified, linking the Kgalagadi Transfrontier Park and the Central Kalahari Game Reserve.


The master planning as set in the development plan by the consultants, has identified clusters of potential coal mines and developed connections to the Trans Kalahari Railway line, 11 clusters in total – some more likely to develop than others.


The main line of the rail way will start at the Mmamabula Coal Fields and pass through some clusters owned by Walkabout Resources. The north eastern extension of the rail line will reach clusters owned by among others, Anglo Coal (Pty) Ltd, Weldon Asenjo, African Energy Botswana (Pty) Ltd.


Mineral resources along the TKR corridor in Namibia may further improve the viability of the TKR, though this factor has not been assessed. Other potential contributors to the TKR identified include Copper deposits from North West Botswana and Manganese in southern Botswana.


Giving comment on the progress of the TKR, the Managing Director of Botswana Shumba Coal, and Mashale Phumaphi said, “I believe that the railway line is of strategic national importance to Botswana. The progress of the development is not as fast as one would want, however given the current constraints of lack of funding for the project and low coal prices it is understandable.”


When asked about confidence on the project, Phumaphi said, “The commodity markets tend to be cyclical, therefore the falling prices are not a worry to me, given that the developing countries have a huge appetite for gravel, lumber, steel, coal for energy and other materials needed to build roads and public works. This building spree is being prompted by population growth and increasing urbanization and thus I believe that over the medium to long term, coal prices will recover and continue to increase.”


He however revealed that Shumba would not invest on the project yet. “We do not have that intention at the moment but this may change in future,” he asserted.


“If the coal sector is developed in tandem with the power sector and thus making Botswana a regional power hub, I am of the belief that the revenues and jobs created would easily compete with the diamond sector,” Phumaphi posited.


South African mining Consultancy Analytika Holdings Director, Alan Golding was previously quoted in the media as saying the coal industry in Botswana was “moribund” due to little or no coal mining exploration underway in the country.
Golding also said that a more facilitative approach should be considered to develop the country’s coal resources and mitigate any challenges.


“If several smaller mines, with a one-million to two-million yearly production capacity, could be brought to production, it would be easier for the existing infrastructure and rail to cope with international exports and the required capacity,” Golding was quoted in South African media reports.


According to Golding, the mines could develop the required human resources and increase the local skills pool, as well as supply the local power generation market, which would allow for expansion in the coal mining industry and for the export of power to neighbouring countries that have shortages.


 “In the long term, Botswana could supply the international or African markets if the price is right,” Golding said.


He however also said that there should be no rush to invest in the coal sector since a no profit is currently expected to be gained from its mining. He further noted that current  coal prices, which averaged $66 per tonne to $67 per tonne for December 2014, and January 2015 shipments were negatively affecting the coal export market, as well as the ability of exploration companies to bring operations into production.

“Investors are not prepared to invest in exploration if they cannot, in the long term, see a deposit brought in to production,” Golding said, emphasizing that if the product cannot be taken to market, it remains only a resource and not a reserve.

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Business

5 Best Forex Trading Brokers in Botswana for beginners

17th August 2022

Botswana is a leading economy in Sub-Saharan Africa, and this environment has contributed to the growth of Forex trading amongst young investors in Botswana.

Beginner traders must sign up with a regulated Forex broker that offers a safe trading environment and a wealth of resources. Here, we have listed the 5 best Forex brokers for beginner traders in Botswana.

 

1. AvaTrade

Overview

AvaTrade is a reputable broker that features an interface that makes copy trading easy to use for beginners. Customers of AvaTrade have access to a variety of trading platforms. AvaTrade is considered a leading broker, when compared to rivals such as with AvaTrade vs. eToro.

Manual traders have access to both the mobile interface AvaTradeGo and the popular desktop platform MetaTrader4 (MT4). AvaTradeGo is a mobile version of MT4.

 

Pros and Cons

PROSCONS
Broad range of tradable instrumentsHigh EURUSD and inactivity fees
MetaTrader 4 and 5 available 
Excellent educational resources 

 

 

Features

FeatureInformation
RegulationCentral Bank of Ireland, MiFID, ASiC, BVI
Minimum deposit from$100
Average spread from0.9 pips
Commissions fromNo commission on Forex
Deposit/Withdrawal FeesNone
Maximum Leverage1:400
BonusesFirst Deposit Bonus
Customer Support24/5 – multilingual

 

 

2. Exness

Overview

Exness is an excellent choice for Forex trading in Botswana, especially for those looking for a low-cost broker they can trust. When opening an account with them, prospective traders in Botswana can take advantage of a Forex no deposit bonus, as Exness is widely regarded as one of the best Forex brokers in the country.

 

Pros and Cons

PROSCONS
Well-regulated 
Tight spreads 
Over 130 currency pairs 

 

 

Features

FeatureInformation
RegulationCySEC, FCA
Minimum deposit from$1
Average spread from1.3 pips
Commissions from3 USD and 10 USD per 1 lot for CFDs
Deposit/Withdrawal FeesNone
Maximum Leverage1:2000
BonusesStandard +10% Bonus Programme
Customer Support24/5 – multilingual

 

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3.Pepperstone

Overview

Since its founding in 2010, Pepperstone has experienced rapid growth. Both CFD and FX traders can take advantage of low spreads, fast support, and a variety of third-party platforms, including several social copy trading options.

 

Pros and Cons

Pros

 

No minimum deposit

Low trading fees for forex

No added costs for withdrawals or deposits

 

Cons

 

Limited number of instruments

No additional research tools

 

 

 

Features

FeatureInformation
RegulationFCA, ASIC
Minimum deposit fromAUD200
Average spread from0.4 pips
Commissions from‎$3.76 commission per lot per trade
Deposit/Withdrawal FeesNone
Maximum Leverage1:500
BonusesNone
Customer Support24/5

 

 

4.OctaFX

Overview

OctaFX is an electronic communication network (ECN) Forex broker that facilitates CFD trading in a wide range of underlying assets. In addition to its many trading accounts, OctaFX also offers extensive research tools, copy trading, bonus promotions, and more.

 

Pros and Cons

PROSCONS
Ultra-fast executionNo VPS available
More than 30 forex pairs available

Well-regulated

 

No Forex educational tools

 

Features

FeatureInformation
RegulationCySEC
Minimum deposit from$100
Average spread from0.7 pips
Commissions from None
Deposit/Withdrawal FeesNone
Maximum Leverage1:500
Bonuses50% Deposit Bonus
Customer Support24/5

 

 

5.XM

Overview

A common name in the field of foreign exchange, XM is a household brand. Trading on XM’s improved MetaTrader 4 and MetaTrader 5 platform provides access to over a thousand assets at competitive costs.

 

Pros and Cons

Pros

Low minimum deposit

Comprehensive educational offering

Streamlined account opening process

 

Cons

Inactivity fee charged after 90 days on live accounts

Limited product portfolio

 

 

 

Features

FeatureInformation
RegulationIFSC, ASIC, CySEC, FCA and DFSA
Minimum deposit from$5
Average spread from0.1 pips
Commissions from$3.5 commission per $100 000 traded
Deposit/Withdrawal FeesNone
Maximum Leverage1:30
Bonuses$30 Trading Bonus
Customer Support24/5

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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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