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Tourism: Botswana loses its shine


Botswana is among African countries that continue to experience a severe decline in rankings as an attractive tourist destination, a recent tourism survey has indicated.

Although the tourism sector is now reported to have become the second biggest revenue earner for the country, and the country continues to witness more tourism ventures rising, the government seems to be failing to effectively market the country’s tourism riches and its attractive destinations to the outside world.

Attributed to its decline as an attractive tourist destination, is the lack of growth in its tourism receipts over the past years along with a better relative performance from its main competitors.

According to the Bloom Consulting’s Country Brand Ranking Tourism Edition 2014/2015, Botswana dropped by four (4) places down compared to its last position in the 2013 report. Botswana is now ranked at position 17 in Africa and position 132 in the world as an attractive tourists’ destination.  

The survey explains that Botswana and other nations like Nigeria and Madagascar have lower global positions than those they held in 2013 due to an improved focus on tourism and tourism infrastructure in other regions of the world, as well as the weaker tourism brand strategies of the many African countries with poor CBS Ratings. Subsequently, these nations which are said to have underdeveloped tourism industries also have low Digital Demand and little revenue from tourism receipts.

However in the country brand strategy (CBS) ratings, Botswana is rated slightly stronger. CBS evaluates the accuracy of the strategy by each National Tourism Organization (NTO) for all 180 countries included in the ranking.

The report measures the NTO’s branding accuracy by means of formulae that compare the most popular brand tags for a specific country to the brand tags most heavily promoted by that country’s NTO. A Country Brand receives a higher rating if that country’s NTO focuses its strategic and promotional positioning on the tourism-related brand tags with the highest demand as measured by total online searches from international tourists.

Excelling on the surveys is Botswana’s neighbor, South Africa, which for the first time ever, tops the list in the African continent of Bloom Consulting's Country Brand Ranking 2014/ 2015 Tourism Edition. Taking advantage of a debilitated Egypt which came second in Africa, South Africa has steadily risen to the top slot in the region recording a strong CBS Rating and Digital Demand.

The report states that South Africa taking the leadership in the region is the most impressive change of this year’s Country Brand ranking Tourism Edition in Africa. South Africa, in addition to its credits, is the only African country to break into the global top 25 for the first time. It has moved up four places from last year’s report to rank 24th.

In Africa, South Africa has overthrown the previously undefeated Egyptian tourism Country Brand. Egypt, due to it’s political instability, decrease in tourism receipts, relatively weak CBS Rating and unfavorable online presence, has fallen from it’s regional throne, dropping to only the second strongest tourism-related Country Brand in Africa. Morocco continues to maintain its 3rd place position in Africa.

With the exception of Egypt, the top three (3) countries are said to have improved on their 2013 positions.  

According to the report, Kenya and Tanzania who took position four and five respectively, rely on fewer but wealthier tourists coming for safaris and other nature-centric excursions. Their strong CBS Ratings, tourism receipts and ever-increasing popularity help the two nations to continually improve their positions in our ranking; Tanzania, for example, has accessed the regional top five for the first time, defeating the tropical tourism paradise of Mauritius which dropped to position six.

The report indicates that Zimbabwe and Sudan have experienced an extraordinary improvement in the ranking mainly due to their recent amazing growth rate in tourism receipts. Sudan has moved up six places to position 19 while Zimbabwe has moved up five times to position 13.

Bloom Consulting further forecasts that stagnancy and a reduction in positions for the rest of the African Nations will occur in the next edition of the Country Brand ranking as lower numbers of Europeans will travel due to economic limitations, security issues and the Ebola crisis.  

For the global top 25 performers rank United State of America, Spain and Germany continues for the fourth consecutive year to dominate first position. This is due to its dominance in total tourism receipts, along with the effectiveness of its NTO strategy (as measured by its very strong CBS Rating) and a high level of Digital Demand. Spain and Germany follow at position two and three respectively.

Along with South Africa, India was also the second new country welcomed to the global top 25, with it improving three positions to 23rd place. These newcomers have, inversely, knocked two formerly top-ranked countries from last year’s Country Brand ranking out of the global top 25 being Egypt and the United Arab Emirates.

Bloom Consulting is an 11 year-old Country Branding consultancy which annually ranks 180 countries through key variables used to analyze their success as well as their relative performance as compared to one another. This include economic prowess of a country’s tourism sector, its online performance, Digital demand and country brand strategy.

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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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Business

Commercial banks to cash big on high interest rates on loans

18th July 2022
Commercial-banks

Researchers from some government owned regulatory institutions in the financial sector have projected that the banking sector’s profitability could increase, following Bank of Botswana Monetary Policy Committee recent decision to increase monetary policy rate.

In its bid to manage inflation, Bank of Botswana Monetary Policy Committee last month increased monetary policy rate by 0.50 percent from 1.65 percent to 2.15 percent, a development which resulted with commercial banking sector increasing interest rate in lending to household and companies. As a result of BoB adjustment of Monetary Policy Rate, from 1.65 percent to 2.15 percent commercial banks increased prime lending rate from 5.76 percent to 6.26 percent.

Researchers from Bank of Botswana, the Non-Bank Financial Institutions Regulatory Authority, the Financial Intelligence Agency and the Botswana Stock Exchange indicated that due to prospects of high inflation during the second half of 2022, there is a possibility that the Monetary Policy Committee could further increase monetary policy rate in the next meeting in August 25 2022.

Inflation rose from 9.6 percent in April 2022 to 11.9 percent in May 2022, remaining above the Bank of Botswana medium-term objective range of 3 – 6 percent. According to the researchers inflation could increase further and remain high due to factors that include: the potential increase in international commodity prices beyond current forecasts, logistical constraints due to lags in production, the economic and price effects of the ongoing Russia- Ukraine conflict, uncertain COVID-19 profile, domestic risk factors relating to possible regular annual administered price adjustments, short-term unintended consequences of import restrictions resulting with shortages in supplies leading to price increases, as well as second-round effects of the recent increases in administered prices “Furthermore, the likelihood of further increases in domestic fuel prices in response to persistent high international oil prices could add upward pressure to inflation,” said the researchers.

The researchers indicated that Bank of Botswana could be forced to further increase monetary policy rate from the current 2.15 percent if inflation rises persistently. “Should inflation rise persistently this could necessitate an upward adjustment in the policy rate. It is against this background that the interest rate scenario assumes a 1.5 percentage points (moderate scenario) and 2.25 percentage points (severe scenario) upward adjustment in the policy rate,” said the researchers.

The researchers indicated that while any upward adjustment on BoB monetary policy rate and commercial banks prime lending rate result with increase in the cost of borrowing for household and compnies, it increase profitability for the banking sector. “Increases in the policy rate are associated with an overall increase in bank profitability, with resultant increases in the capital adequacy ratio of 0.1 percentage points and 0.2 percentage points for the moderate and severe scenarios, respectively,” said the researchers who added that upward adjustment in monetary policy rate would raise extra capital for the banking sector.

“The increase in profit generally reflects the banking industry’s positive interest rate gap, where interest earning assets exceed interest earning liabilities maturing in the next twelve months. Therefore, an increase of 1.5 percentage points in the policy rate would result in industry gains of P71.7 million (4.1 percent increase), while a 2.25 percentage points increase would lead to a gain of P173.9 million (6.1 percent increase), dominated by large banks,” said the researchers.

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