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P10 billion to slip through Botswana’s hands as Gov’t bans travel, tourism

Minister of Health and Wellness Lemogang Kwape this week took to mainstream media to announce Botswana’s preparedness against the rapidly spreading coronavirus with cases in South Africa, exceeding a hundred (100).

The most important part of Kwape’s announcement was evoking the  Public Health Act 2013, which temporarily bans travel of “All individuals coming to Botswana from the following high-risk countries will not be allowed entry; China, Japan, South Korea, Iran, USA, UK Austria, Belgium, Denmark, France, Germany, Italy, Netherlands, Norway, Spain, Sweden, Switzerland, and India.” Furthermore the Minister announced that Batswana and residents returning from high-risk countries will be subjected to 14-day mandatory quarantine as per protocol.

Issuance of Visa at Ports of entry and all embassies is suspended with immediate effect, according to the ministry. Current visas are also canceled with immediate effect until further notice. “International travel by all government employees, parastatals and State-owned Entities is suspended with immediate effect,” said the health ministry.

Kwape’s announcement albeit met with fear, discomfort, and chagrin by many in the travel and tourism industry was guided by the Public Health Act whose mandate is to, “make the notification of certain diseases compulsory and to control such diseases; to make provision regarding diseases subject to the International Health Regulations; to prevent the spread of smallpox; to prevent the introduction of diseases into Botswana; to control advertisements and publications concerning venereal disease; to regulate sanitation and housing; to provide for the protection of foodstuffs and water supplies; to regulate the use of cemeteries, and generally to make provision for public health.”

By banning travels the ministry could have evoked Section 3 of the Act which gives the ministry functions, “to prevent and guard against the introduction of disease from outside; and to prevent or control the communicable disease.” However a temporary ban will mean Botswana is set to fall short on the fraction of the money made on travel and tourism to the GDP. Most of these countries especially China where the coronavirus outbreak was discovered last year November, are major contributors to Botswana’s travel and tourism sectors. On the other hand, South Africa which is hit by a rapidly growing number of coronavirus cases is the major trade partner of Botswana especially in the travel or business sector. Travel and tourism’s direct contribution to GDP is P10.13 billion.

Absa Botswana economist Madala told BusinessPost the outbreak of COVID-19 has dampened the outlook for the local economy as already the travel restrictions associated with the COVID-19 pandemic complicates diamond sales, tourism and trade. She said uncertainty associated with the outbreak of COVID-19 is also likely to influence consumer and business confidence, which can potentially dent domestic spending and investment.

Cursory research already shows the negatives of COVID-19 which has spread within Botswana, affecting this country’s tourism sector. BusinessPost has seen a survey done on 361 safari tour operators just before the health ministry announced temporary travel bans. These findings have concluded that more than 86 percent of operators are experiencing a significant decline in bookings due to fear of the virus outbreak. This report was done by a safari media outlet SafariBookings with a website SafariBookings.com, which is the largest online marketplace for African safari tours.

According to the survey, a quarter of operators experienced a staggering 75 percent decrease in bookings while only 14 percent reported no decrease and for these operators it has been business as usual. It is a heavy blow for the industry and the numerous wildlife reserves that rely on its revenue. One safari operator who also owns a travel and tour company in Botswana and contributed to the survey, Kenewang Chobacho African Bush Lovers Travel & Tours Safaris, said: “So far we have four trips which have been canceled due to the virus. This is affecting us a lot.”

Jane Bettenay of Ulinda Safari Trails in Botswana said people are “shy” to send money as they are concerned they will not be able to travel. Oliver Madibela of Mosu Safari Tours said most of the clients are very sensitive about this issue (coronavirus), so it is not easy for them to confirm their bookings as they are particularly afraid to travel. However just before the ministry announced travel bans this week, Mark Hathaway of Gondwana Tours & Safaris in Botswana has been trying to preach positive information about Botswana, which has so far not registered any case.

“At the moment we are reassuring clients who ask that there have been no cases of coronavirus in the main tourist destinations in Africa. Given that many clients are coming from countries where there have been reported cases then they would be safer in Africa,” said Hathaway.
Most tourists use air transport to come to Botswana according to national statistics. Air Botswana has said it anticipates adverse impact, given its feeder status and reliance on other airlines.

There have been cancellations of major events around the world, according to Air Botswana, this paints a bleak future in the short term. “Given the depressed passenger travel patterns, the airline’s schedule has been modified to reflect the impact of the pandemic, in line with the low business activity that is currently being observed,” says Air Botswana in a recent statement.

According to World Bank, Botswana spends around P0.6 billion on travel and tourism services. The Bank says infection of coronavirus from one continent to another-one country to another- will affect trade. Global value chains are expected to suffer as they account for nearly half of global trade, according to the Bank, which further stated that this is due to global trade being disrupted by factory shutdowns and delayed resumption of operations.

That transmission is likely to occur through several channels. The first is the trade: global value chains, which account for nearly half of global trade and are being disrupted by factory shutdowns and or are delayed. Coronavirus also brings harp drops in commodity prices which will harm developing countries that rely on them for much-needed revenue. The World Bank says developing countries like Botswana are hit hard on transport and tourism, a major revenue stream for these countries. According to the Bank, transport and tourism in many developing countries are shrinking with declining demand and expanding travel restrictions.

At the beginning of this month, World Bank Group made available an initial package of up to $12 billion or P120 billion in immediate support to assist countries in coping with the health and economic impacts of the global outbreak. According to the Bank, this financing is designed to help member countries take effective action to respond to and, where possible, lessen the tragic impacts posed by COVID-19. “…What comes next will be crucial: in the coming weeks, all countries—even those without a single coronavirus patient—will need to take concrete policy steps to protect their people and limit harm to their economies,” says the World Bank.

World Bank advice President Mokweetsi Masisi and his government

To Botswana and other developing countries, there is a need to move swiftly in boosting spending on health. According to the Bank: “In many developing countries, public health systems remain weak, making their populations vulnerable to the rapid spread of the outbreak.  Governments should boost investments that strengthen these systems to enable faster treatment and containment.”

Botswana should also strengthen the safety net by making cash transfers and free medical services for the most vulnerable people available, this could help contain the outbreak and also limit its financial harm. There is also need for this country to support the private sector since all kinds of businesses are likely to be hit, according to the Bank, they would benefit from short-term credit, tax breaks, or subsidies.

According to the World Bank there should be counter financial-market disruptions where central banks in developing countries like Bank of Botswana —particularly those that are sensitive to bouts of risk aversion—should stand ready to react to disorderly financial market movements. Also, Bank of Botswana may need to lower interest rates and inject liquidity to restore financial stability and boost growth, according to the World Bank.

Business

Matsheka seeks raise bond program ceiling to P30 billion

14th September 2020
Dr Matsheka

This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.

“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.

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Lucara sits clutching onto its gigantic stones with bear claws in a dark pit

14th September 2020
Lesedi La Rona

Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.

A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.

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Botswana Diamonds issues 50 000 000 shares to raise capital

14th September 2020
Diamonds

Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.

A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.

Each Placing Share, according to Botswana Diamond Executives has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from, 7th September 2020, being the date of the Placing Warrants issue.

In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.

The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.

In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.

Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.

The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”

In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.

Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.

The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.

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