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Tough times force PrimeTime to reduce rentals

The Botswana Stock Exchange listed company, PrimeTime Group has been forced to revise, downwards, its rentals due to the tough economic challenges prevailing in the Sub-Saharan region.  PrimeTime operates business and retail properties in Botswana, Mauritius and Zambia.

In its annual report for 2019 released this week, PrimeTime said the current property rates were a reflection of the touch economic conditions.  “In some of our other properties we have had to rebase rentals down to current market rates as a reflection of the tough economic conditions that are prevailing in Sub-Saharan Africa,” the company said.

“While reducing rentals can be unpalatable, we strive to ensure a reciprocal upside for PrimeTime when agreed to; such as a new long lease on renewal, which in turn protects and enhances our property values. The increase in operating expenses year-on-year reflects several line items.”
However, despite the reduction in rentals, the blue chip company added three properties in Botswana to its list. “Firstly the three property additions in the prior year mentioned above resulted in a full year of costs in the current year. Secondly, in line with our longer-term strategy we have invested heavily during the year in maintenance costs to secure and retain quality tenants.

“This resulted in some significant new leases and renewals secured, including Letshego Holdings at Letshego Place for three years, Barclays Bank at Hillside Mall Lobatse for five years, Ackermanns and PEP at Nswazwi Mall for five years, Exact and Options at Pilane Crossing for five years and Corpus Legal Practitioners at PwC Office Park in Lusaka for five years. Lastly on the expense side, considerable costs have been incurred on consultancy fees to streamline the group structure.

This includes rationalising the number of subsidiaries held in both Zambia and Mauritius and commencing operations in South Africa. Such an exercise comes at an initial cost but will lead to savings/increased revenues in the longer term. We are very pleased to advise that we have finally overcome the effects on the trade licencing issue that plagued us since the opening of Pilane Crossing in September 2016. Mr Price have taken occupation and are due to start trading early in 2020 and Options have taken up the remaining unit,” PrimeTime said.

It said in Botswana, the first phase of Pinnacle Park at Setlhoa would be completed next month and for the ground-work of a new central business district (CBD) plot to commence. “A refurbishment is also planned for the exterior of our South Ring Mall property and an extension to Boiteko Junction in Serewo based on strong demand for the centre.  There are also further investment prospects that are currently under consideration by the board, to which unit-holders will be alerted in due course.

“In Zambia we are working hard to fill the remaining vacancies at Chirundu and Munali as the malls bed down. To deal with the current power supply issues in the currently we are currently evaluating proposals to install solar power on all our properties there. “Our management team and associates in Zambia have identified and secured further development prospects which could provide investment opportunities for PrimeTime subject to our usual parameters of securing good tenancies,” the company announced.

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

21st September 2020

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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