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HR investment on the strategic agenda for African business

GERHARD HARTMAN

African businesses are taking the imperative of strategic human resources (HR) management seriously as they begin to compete on the global stage as well as strive to address growing regulatory and legislative compliance demands.

That’s according to Gerhard Hartman, Head of Department at Sage HR Africa, who says that African organisations are making heavy investments in new business systems – and especially HR solutions – to cater for a more competitive business environment.

“Many African businesses are moving fast to adapt as countries transition from cash-based economies into modern economies. There is a growing focus on regulatory compliance and corporate governance,” says Hartman. “As a result, demand is growing for modern business applications that help companies improve controls, automate processes, and sharpen regulatory compliance.”

Hartman says that challenges in Africa are as diverse as the continent itself – for some countries, power generation or high Internet costs are key issues, while others are wrestling with skills shortages or inflexible laws. But across sub-Saharan Africa, most are experiencing the same challenges in retaining talent in the workplace and in making sure that business are compliant with statutory legislation.

“Like businesses throughout the world, African organisations are facing pressure to be more efficient; to meet the growing demands of lawmakers and regulators; and to attract, retain and enhance the performance of talent in the workplace,” says Hartman. “Recruiting top talent and retaining it is a massive challenge for companies. Skills development is a key focus for companies and they are investing more and more in training and development for their employees”.

One item high on the agenda for African organisations is employee engagement. Many African businesses are asking how they can better create workplaces, interactions and value propositions that keep their employees satisfied, says Hartman.

It’s encouraging that a study published last year by Emergence Growth in partnership with Aon Hewitt found that 72% of employees in sub-Saharan Africa are considered engaged. The figures are similar to those of other emerging economies and significantly higher than developed economies. “This is good news since an engaged workforce with the right skills and competencies delivers a vast return on investment for any business,” says Hartman.

“Multiple studies have shown that an engaged employee base is good for a company’s turnover, profitability, customer satisfaction and productivity. For example, the US-based Corporate Leadership Council’s study of the engagement level of 50,000 employees around the world found that engaged companies grow profits as much as three times faster than their competitors.”

Because of this new focus on human capital, many African companies are investing in HR solutions that help them manage their talent as a strategic resource. They are taking a strategic approach to attracting, recruiting and developing the right employees to build a skilled and passionate workforce.

HR applications help by automating routine paperwork and providing data for better decision-making, says Hartman. This allows the HR department to focus on things that matter most, like aligning the workforce with the business strategy, sharpening the employee value proposition, and attracting top talent.

The cloud is helping African businesses to get up-and-running on the HR solutions they need at a rapid pace and with minimal upfront spending. Larger businesses and multinationals prefer the cloud because it makes it easier to provision solutions to remote offices where they might not have ICT skills, says Hartman. One major challenge is that not every country has cost-effective, high-quality connectivity to support use of the cloud. Electricity constraints in many countries are also still a major concern. But these issues are falling away fast and cloud adoption is rising.

Gerhard Hartman, Head of Department at Sage HR Africa

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Botswana on high red alert as AML joins Covid-19 to plague mankind

21st September 2020
Botswana-on-high-alert-as-AML-joins-Covid-19-to-plague-mankind-

This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.

The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.

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Finance Committee cautions Gov’t against imprudent raising of debt levels

21st September 2020
Finance Committe Chairman: Thapelo Letsholo

Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.

He was speaking in  Parliament on Tuesday delivering  Parliament’s Finance Committee report after assessing a  motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.

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Gov’t Investment Account drying up fast!  

21st September 2020
Dr Matsheka

Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.

The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.

The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.

The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.

This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.

Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.

Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.

However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.

Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.

When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.

This  as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.

Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.

The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.

Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.

In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.

Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.

Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.

Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.

Acknowledging the need to draw down from GIA no more, current Minister of Finance   Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”

He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”

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