BTO to intensify development of domestic market post COVID-19
Business
COVID-19 has affected all sectors of economy, international travel restrictions and global lockdown has halted trade and businesses across the world. The travel and tourism industry is one of the worst hit industries, receiving the heaviest blow in ZERO earnings and bookings cancellation. Botswana has not been spared of this catastrophe.
As early as February this year, uncertainty was already engulfing global economies, eroding business sentiments and reversing all new year positive growth prospects. Travel and tour operators started receiving cancellations of bookings as COVID-19 spread across the world.
On Friday Minister of Finance & Economic Development, Dr Thapelo Matsheka revealed that the trade, hotels & restaurants sector which houses much of travel and tourism business will contract by 32 % during the year 2020.
This week Myra Sekgororoane, Chief Executive Officer of Botswana Tourism Organization (BTO), the countrys national tourism promotion agency said the sector would shrink by an estimate of between 30-50 %, subject to when the pandemic will be contained.
Due to the fact that we are dealing with a moving target and also having had a higher monetary contribution from overseas markets despite their lower volumes, our industry is also dependent on when and how the international markets recover and start to travel, she said when briefing members of the media on Monday.
She noted that the 30 to 50% contraction could be a minimum impact scenario. I wish not to speculate on the worst scenario at this stage but while we must remain optimistic, we must as well start to internalize worse final impacts than currently predicted.
Earlier this year, World Travel and Tourism Council (WTTC) warned that COVID-19 pandemic would put up to 50 million jobs in the global travel and tourism sector at risk, with travel likely to slump by a quarter this year. WTTC said in its statement early March that once the outbreak is over, it could take up to 10 months for the industry to recover.
The equivalent to a loss of three months of global travel in 2020 could lead to a corresponding reduction in jobs of between 12% and 14%, the WTTC said, also calling on governments to remove or simplify visas wherever possible, cut travel taxes and introduce incentives once the pandemic is under control.
However, according Sekgororoane, Global Tourism has historically been a resilient industry and has survived other disasters. What we need to bear in mind is that recovery can be slow especially with the current disaster.
When this pandemic is over, because it will come to pass, we will need to be patient and persevere as our tourists recover at different times financially as well as recover from possible fear of travelling especially to far away and unknown places, she said.
In response to the catastrophic impact of the pandemic on the local industry which has resulted in ZERO income, Sekgororoane said BTO as the custodian of the countrys tourism business has come up with short term strategies to cushion the industry; as well as mid – long term strategies to catalyze recovery of the industry post corona and build resilience going forward.
The BTO Chief said the strategies going forward will as has always been be formulated through engagement with the tourism private sector bodies or associations with a common drive to revive the industry. She underscored that much of focus will be on intensifying development of domestic market to augment international arrivals into building a resilient industry that can stand against any global shocks.
Latest statistics indicates that Botswana registers around 1.7 million tourist arrivals per year .According to 2017 arrivals, 84 % were from the African Continent primarily the Sub-Saharan Region. Only 16% were overseas visitors. The top three overseas tourist markets for Botswana are the United States of America, followed by Germany and the United Kingdom at third.
We are keenly following what is going on around the world and what other countries are experiencing with their tourism industries. What is obvious is that recovery, enough to travel is going to be varied with some markets taking one to two years, said Sekgororoane.
She revealed that BTO is already developing strategies geared towards the Regional Market i.e. Sub-Saharan Africa and the Domestic Market being Botswana as the country starts to intensify its inward looking approach.
Stimulation of domestic market will include events put together to encourage Botswana nationals to visit other geographic places within Botswana. Sekgororoane added that some of the events would be also geared towards enticing neighbouring countries to attend thus developing the nearer regional market.
Yes, we have postponed our BTO major events such as the Khawa Dune Challenge and Cultural Event, the Toyota 1000km Desert Race, the Makgadikgadi Epic and other events to 2021, but this does not mean that we cannot re-direct the budgets and effort towards new events for stimulation of our domestic and regional markets with new doable events in the medium term, she said.
BTO says going forward E-Marketing and Social media presence will play a more prominent role in its campaign as it intensified development of domestic and regional market.
The agency intends to cultivate more interest from millennials and young travelers We will focus on regional Media, including regional TVs , more technology will be utilized to communicate, including webinars to discuss industry issues, input into strategies and keep up to date with global reaction and learnings, said the CEO on Monday.
Sekgororoane said sustainable tourism has been a core demand especially from Botswana long-haul markets prior to corona. This will become even more so post corona. Therefore, our renowned and unwavering Policy on Sustainable Tourism to ensure preservation of our natural resources for future generations will become even more pronounced in our strategies.
In the long term BTO indicated that Botswana needs an overarching and implementable Travel and Tourism Disaster Management Policy and actionable Plans that would kick in as soon as any disaster of significant magnitude hits the country. This would be for any disaster such as financial, diseases, impact of any form on the countrys key natural resources.
Furthermore Sekgororoane said individual Travel and Tourism companies would need to develop their own Disaster Management Policies and Plans.SMMEs in particular would need to be mentored in ideal Insurance Coverage for their businesses e.g. Business Interruption and Continuity.
We all optimistically expect all tourism categories to recover. With Government Interventions and the tourism industrys own resilience, reinforced by how the industry can help itself for survival, the travel and tourism industry needs to introspect, learn from current experiences and re-engineer how the industry needs to work in the future compared to the past and adapt where necessary, she said.
Business
ICT sector contributed P1.6 billion in Q4 2022
The latest figures by the government owned statistics entity, Statistics Botswana show that the Information and Communications Technology (ICT) sector in this country registered significant growth during the fourth quarter of 2022 (Q4 2022).
According to the figures the ICT sector made a contribution of 2.5 percent to the total Gross Domestic Product (GDP) at current prices, in Q4 2022.
The figures show that at constant prices, the ICT sector realized an annual growth rate of 4.6 percent and the sector contributed around P1.6 billion to the economy during the fourth quarter of 2022. “In Q4 2022, the contribution of ICT sector to the economy stood at 2.5 percent of total GDP at both current and constant prices. The ICT sector’s value added at current prices amounted to P1, 633.6 million while at constant prices it amounted to P1, 242.2 million. The sector registered an annual growth rate of 4.6 percent in constant prices,” according to the Botswana Information and Communication Technology recent update by Statistics Botswana. The statistics entity noted that the Postal and Courier Services sector’s value added amounted to P67.2 million in current prices, which constituted 0.1 percent of total GDP in Q4 2022.
Giving an update regarding the performance of other ICT sub sectors Statistics Botswana stated that fixed telephone line subscriptions decreased by 2.3 percent in Q4 2022, from 93,925 subscriptions recorded in Q3 2022 to 91,725. Mobile cellular telephone subscriptions however increased by 0.8 percent in Q4 2022, from 4,315,368 registered in Q3 2022 to 4,348,010. Comparing Q4 2022 to the same quarter of 2021, fixed telephone lines decreased by 30.8 percent while mobile cellular telephone subscriptions went up by 4.5 percent. Both pre-paid and post-paid mobile cellular telephone subscriptions increased in Q4 2022. Pre-paid mobile cellular telephone subscriptions rose by 0.8 percent from 4,149,143 in Q3 2022 to 4,181,783 while post-paid mobile cellular telephone subscriptions increased slightly in Q4 2022 from 166,225 registered in Q3 2022 to 166,227, according to Statistics Botswana.
Total internet subscriptions both mobile internet plus fixed internet subscriptions increased by 3.6 percent in Q4 2022, from 2,875,153 registered in Q3 2022 to 2,977,845. Mobile internet subscriptions went up, registering an increase of 4.5 percent from 2,721,946 subscriptions in Q3 2022 to 2,844,958 in Q4 2022. Meanwhile fixed internet subscriptions decreased by 13.3 percent (from 153,207 registered in Q3 2022 to 132,887 in Q4 2022).
Statistics Botswana stated that mobile money subscriptions have been increasing over the years. In Q4 2022, mobile money subscriptions went up by 1.3 percent, from 1,788.551 registered in Q3 2022 to 1,811,036. Mobile money is a technology that allows customers to receive, store and spend money using a mobile phone. To enjoy the benefits of mobile money, a customer has to register and open an account with a mobile money service provider. Existing mobile money services in Botswana include Smega by BTC, Orange Money by Orange Botswana, Myzaka by Mascom and Poso Money by Botswana Post.
The statistics entity stated that on-net fixed telephone domestic calls (Fixed to fixed telephone calls) traffic went down by 8.0 percent in Q4 2022, from 15.4 million minutes registered in Q3 2022 to 14.1 million and added that off net fixed telephone domestic calls (Fixed to mobile telephone calls) traffic decreased as well in Q4 2022. It went down by 0.6 percent from 23.9 million minutes in Q3 2022 to 23.7 million minutes.
With regard to mobile telephone domestic calls traffic, on-net mobile telephone traffic decreased by
0.8 percent in Q4 2022 while off-net mobile telephone traffic increased by 1.6 percent. While mobile to fixed telephone traffic decreased by 1.1 percent in Q4 2022. International outgoing fixed telephone calls traffic declined by 8.2 percent in Q4 2022, from 1.1 million minutes in Q3 2022 to 1.0 million.
The entity noted that outgoing international mobile telephone calls traffic increased slightly by 0.8 percent in Q4 2022, from 4.1 million minutes recorded in Q3 2022. On-net short message services (SMS) declined by 1.5 percent and off-net SMS traffic also went down by 0.5 percent in Q4 2022, according to figures from the statistics entity.
Business
State owned MDCB comes to Minergy’s rescue
Government owned mining investment firm Mineral Development Company Botswana(MDCB) has agreed to bail out embattled Minergy Coal, and clear its arrears with mining contractor – Jarcon, the Botswana Stock Exchange coal miner said in a circular to the market this week.
In the statement Minergy which operates Masama Coal Mine in Media, near Lentsweletau said it has signed a term sheet for funding offered by its main funder, the Minerals Development Company Botswana (Pty) Ltd.
The facility terms are subject to normal legal counsel review, satisfactory due diligence, final documentation, and the review, acceptance, and execution of the relevant financing agreements by the MDCB and the fulfilment of suspensive conditions.
The funding will be utilised to significantly repay the arrears of the Jarcon trade account as required by the Term Sheet. The statement said Minergy and Mineral Development Corporation intends to finalise and allow the disbursement of funds by no later than 30 June 2023.
The funding will allow Minergy to initially continue operations in a reduced sales environment with the associated reduced-cost initiatives implemented to stabilise the business ahead of ramping up to pre-shutdown levels.
In mid- March Minergy announced the halt of Mining operations at Masama due to what it termed a drastic decline in coal prices which resulted in a cash flow crisis.
It emerged that the infant coal miner owed it’s mining contractor, Jarcon over P80 million in arrears. Jarcon had reached a decision to tool down and let go of some of its employees citing cash flow shortfalls as it sought to demand clarity on outstanding payments from Minergy.
Minergy has previously received funding in hundreds of millions from Mineral Development Company (MDC), another Botswana Government 100 percent owned entity.
MDCB, which is housed under the Ministry of Minerals & Energy, is the wholly owner of Morupule Coal Mine. The relatively new minerals investment company also owns 15 percent of De Beers Group on behalf of Government.
Minergy ’s other state funders are Botswana Development Corporation (BDC), the state owned investment entity, 100 percent owned by Government of Botswana, housed under the Ministry of Trade & Industry.
Combined, BDC and MDC have previously pumped over P300 million debt funding to Minergy to bring Masama coal mine to production and later for expansion.
Minergy incurred a net loss during the year ended 30 June 2022 of P131 151 034 (2021: P106 903 609). As at 30 June 2022 the Group had accumulated losses of P376 420 873 (2021: P245 269 838) and its net liabilities exceeded its net assets by P180 279 583 (2021: net liabilities exceeded its net assets by P56 030 697).
This gave rise to a material uncertainty that casted significant doubt on the Group’s ability to continue as a going concern, and therefore, that it may be unable to realise its assets and discharge the normal course of business.
Significant progress towards stabilizing the business was made during the financial year in mitigating the going concern which included receipt of the final tranche of debt funding, completion of debt restructuring to stabilise the business and successful commissioning of Stage 4 of the Processing Plant (Rigid Screening and Stock Handling section) which allows it to now operate at nameplate capacity.
In addition to this, the ongoing war in Ukraine stimulated high coal prices from the end of the third quarter of FY22, as the energy market and the security of supply came under severe pressure. This led to extraordinary demand, allowing access to previously uncompetitive and uneconomical exports into the seaborne market during the fourth quarter.
Minergy successfully exported coal via Walvis Bay, with two 30 000-tonne vessels dispatched in May and June 2022 on a FOB basis. The Group also exported coal through Maputo via rail to the port, with two trains dispatched in June 2022 on a Free-On-Rail (“FOR”) basis. These events increased sales volume for the financial year by 40%, with record sales achieved in May 2022. These increased sales levels have been maintained post year end.
Business
G4S Botswana gross profit down P12 million
G4S Botswana Limited gross profit for the year ended 31 December 2022 declined by around P12 million, according to the company’s consolidated financial statements released by Botswana Stock Exchange (BSE) this week.
G4S Botswana gross profit declined by P12, 373 000.00 from P51, 289 000.00 recorded for the year ended December 2021 to P38, 916 000.00 for the year ended 31 December 2022.
G4s Botswana provides security services to among others, financial services industry and the services include cash transportation, counting and reconciling cash, sorting of notes for use in ATMs, counterfeit detection and removal, redistribution of cash to bank branches, ATMs and retail customers. The company also collects and processes cash notes within the retail environment.
In the recent financial statements, the BSE listed security services provider noted its revenues and profits were negatively affected by increase in fuel prices and cost of proving security services. “The significant decline in gross profit for the year was as a result of the abnormal price increases on fuel, as fuel expenses increased by 88% for the full year, compared to prior year adding significantly to total cost. Additionally due to the heightened security risk environment, the business invested in enhanced security upgrades to its infrastructure specifically in the cash service line. Investment in live monitoring of all cash vehicles further added to the cost of providing service putting further pressure to total costs.”
The company recently indicated that following the increased national security risks characterized by attacks on cash in transit vehicles, the company was forced to improve security of its vehicles, by adopting the latest technology.
According to the company’s management the significant miss in Gross Profit (GP) largely drives the decline in the profit before tax (PBT) year on year. “Added to the PBT decline is the increase in administrative expenses owing to the normalization of the alarm monitoring and response (AMR) teams wherein from September 2021 Management added back the full crew complement to the AMR response crew structure which had been reduced during 2020 – effectively experiencing the full cost of this change in the whole of 2022.
G4S Botswana management meanwhile noted that its revenue for the period increased by 6.45% driven primarily by good growth in the manned guarding service line and added that the top line growth was despite the contract losses experienced during the period under review primarily because of the new Citizen Economic Empowerment (CEE) legislation. “The Cash service line grew marginally by 4% while the Electronic Security Systems (ESS) remained largely unchanged as it continues to experience intense competition from new entrants particularly in the Alarm monitoring and response (AMR) space.”
G4S Botswana management noted that the company will continue to focus on growing revenue following encouraging increases in revenue quarter on quarter for both the third quarter and fourth quarter of 2022, indicating that revenue lost during the first half of 2022 is systematically being recovered. “We will continue driving the sale of integrated security solutions to ensure that we remain at the forefront of security capability in Botswana. The trading conditions remain challenging with significantly fewer opportunities than in prior years primarily due to CEE legislation. As a response, Management continues to drive its commercial strategy of focusing on industry-specific growth such as the retail growth strategy that has driven revenue growth. The infusion of technology into our service offering has also been successful as a revenue driver. Specific focus for the year is on cost management with driving efficiencies across the business and continued fuel management aimed at managing profitability.”
G4S management noted that the company will continue to focus on improving profitability. “Despite the reduced performance of the company, in lieu of stated reasons, the Board of Directors and Management are confident of the company’s going concern status and will continue to work hard towards improved profitability in the foreseeable future.”