Connect with us
Advertisement
[spt-posts-ticker]
Thursday, 18 April 2024

Covid-19, informal sector joins P40 billion economic clichés

Business

What is it all about this 2020/21 – 2022/2023 Economic Recovery and Transformation Plan (ERTP) much talked about this week? Notably, the word Covid-19 has inevitably forced itself into the economic jargon while the fiscus’ perpetual mere mention or omission at most time, informal sector, joined the other clichés this time.

BusinessPost engaged the new services of new sophistication, Data Journalism Tools, which makes a quick guide to find tools to analyze and visualize data, to see the peculiarity of the 64 document which was coveted by many hands this week. This publication introspected the language, tone and words behind the much anticipated ERTP.[ihc-hide-content ihc_mb_type=”show” ihc_mb_who=”1,2,3″ ihc_mb_template=”1″ ]

As expected the word “Covid” or “covid-19” would obviously make a bigger part of this report as the pandemic has now became part of humanity to replace old stories of world wars, diseases and almost fictitious tales about horrific scarecrowing phantoms. According to results by the data journalism tool of Word Counter used by this publication, the word “sector.” Word Counter is a tool which shows a picture of the words used most often in a document.

In Word Counter, “sector” was the most used word before the word “economic,” making 68 appearances in the ERTP document while the later made 66 out of 12369 words. It was mostly expected for “economic” to be used the most since it forms the economic jargon and clichés of every modern economy’s fiscus.

However a high frequency to the mentioning of the word “sector” could mean that the fiscus is more ‘serious’, ‘concerned’ or ‘committed’ to anything that forms a sentence with “sector” according to any mortal observation. Back to the key word “covid”, it has made into many bigrams or two word phrases and trigrams (three word phrases) about 40 times. The ERTP document start by the phrase, “The impact of coronavirus the (COVID-19) pandemic.”

Another tool Word Wanderer shows that the word sector has been used 66 times. In observation of this tool word “sector” was mostly used next to the word “informal” or “private.” This could means the words informal or private sector made much part of the fiscal soup that was created by Ministry of Finance and Economic Development permanent secretary Dr Wilfred Mandlebe and the central bank governor Moses Pelaelo. This words could have been part of their fiscal brain when coming with ERTP or The Plan.

The projected to be funded by P40 billion ERTP project was made under the auspices and guidance of the COVID-19 Economic Advisory Committee, which is co-chaired by the permanent secretary and Governor (BoB). “The objectives of the ERTP are to support the restoration of economic activity and incomes, facilitate economic growth and the further expansion of productive capacity, accelerate economic transformation and build the resilience of the economy.

The aim is to promote implementation of the pre-COVID-19 development and transformation agenda, while assimilating the lessons learned and seizing new opportunities to pursue the path towards high-income status by 2036,” reads the 64 pages ERTP report released on Tuesday.

With all the big economic jargon laden report anticipated by Batswana, the ERTP modestly touched the ground and went to the people with its mention of the ‘surprise package’ of the document, “informal and or private sector” just as early as page 7. “There are also supporting initiatives from stakeholders such as the United Nations Development Programme and Business Botswana on the development of the private sector recovery plan, as well as support for the informal sector,” the ERTP notes.

The crux of the matter

A study of the ‘INTERVENTIONS, PROJECTS AND TRANSFORMATION AGENDA’ part of the ERTP document, shows that the informal sector, often mentioned as if it is the black sheep of the economic sector of this country, made it into the 64 pages talking funding of P40 billion.

During lockdowns, WeekendPost captured stories of struggling people in the informal sector as they seem to be mostly closed down by the Covid-19 measures. The informal sector has been regarded as the hope for those who lost way to the formal sector. It is also seen as somehow a nursery of development for the private sector. The International Labor Organization says in Africa up to 90 percent of jobs outside agriculture are in the informal sector.

The COVID-19 Economic Advisory Committee document or ERTP put together that the informal sector businesses are found in a wide range of activities such as the creative sector, retail, clothing, catering, car washes, construction, agriculture, transport services, light manufacturing and fabrication, leisure, travel and accommodation, among others.

The recent ERTP document raised a concern that for these businesses and activities, there will be income losses as long as disease containment measures persist. The ERTP further raised concerns that this can have a devastating impact on livelihoods, and runs the risk of long-term dependency on Government support.

However, the positive side of the informal sector is that it can be resilient, adaptive and thrive alongside the formal sector, according to the ERTP. In many respects, the informal sector provides a social safety net and contributes to household resilience, said the document. “It is important, therefore to assist with access to basic facilities and an accommodating regulatory environment, which can reduce costs and facilitate business,” says the ERTP.

The ERTP admitted to informal sector’s almost economic exclusion when saying, most businesses in the informal sector have limited liquidity and access to credit. These businesses are financed from cash flow, household savings or sale of assets, according to the ERTP.

When issuing a report on response to covid-19, the International Monetary Fund (IMF) says there are currently bigger challenges in emerging and low-income countries with large informal sectors. The IMF mentioned an issue of limited sources of information on employment and income for most of their population. ”This note discusses the importance of citizen ID systems, integrated socioeconomic databases, and digital delivery systems in extending coverage of social protection in such contexts,” advised the IMF.

Measures that will come with ERTP

According to the ERTP document, the COVID-19 experience showed government that there is a dire need for authoritative data on the informal sector. This data will be used to to inform effective policymaking and sectoral support.
The ongoing LEA exercise to collect information to build a database of medium, small and micro enterprises includes informal enterprises, who should be encouraged to participate,” says the ERTP.

Little is known about the financial aspects and needs of SMMEs, which also constrains the design of effective interventions, according to ERTP. The ERTP says this can be addressed by conducting a FinScope SMME survey (similar to the ongoing FinScope household survey) on access to finance, to better inform policy.

Another factor looked at by the ERTP is the issue of “Deregulation.” “The informal sector thrives in a deregulated environment, and it is important to make sure that excessive regulation does not unduly restrict informal sector activities. Therefore, there is need for a rapid implementation of some of the regulatory changes already agreed, e.g. abolishing most licensing requirements (except where there is a public health and safety issue) and moving away from licensing to registration,” the document reads.

Adding to that, the implementation of concessions for small and micro enterprises, for example, allowing operation from residential plots (subject to restrictions on noise and other forms of pollution/disturbance), says ERTP.
According to The Plan, local authorities should also avoid being excessively punitive in their enforcement of trading regulations, for instance in terms of places where informal sector enterprises are permitted to trade. There is also an initiative of loan guarantees.

“The current loan guarantee scheme (implemented through the banks and BECI with an 80% government guarantee) is not easy for small and micro-enterprises (SMEs) without a strong banking history to access. It may be necessary to provide an enhanced and more accessible loan guarantee product (e.g. with 100% government guarantee) for existing, viable SMEs,” reads the report.

[/ihc-hide-content]

Continue Reading

Business

LLR transforms from Company to Group reporting

9th April 2024

Botswana Stock Exchange listed diversified real estate company, Letlole La Rona Limited (“LLR” or “the Company” or “the Group”), posted its first set of group financial statements which comprise the Company and Group consolidated accounts, which show strong financial performance for the six months ended 31 December 2023, with improvements across all key metrics.

The Company commenced the financial year with the appointment of a Deputy Chairperson, Mr Mooketsi Maphane, in order to bolster its governance and enhance leadership continuity through the development of a Board and Executive Management Succession Plan.

At operational level, LLR increased its shareholding in Railpark Mall from 32.79% to 57.79% and proudly took over the management of this prime asset.

The CEO of LLR, Ms Kamogelo Mowaneng commented “During the period under review, our portfolio continued to perform strongly, with improvements across all key metrics as a result of our ongoing focus on portfolio growth and optimisation.

“We are pleased to report a successful first half of the 2024 financial year, where we managed to not only grow the portfolio through strategic acquisitions and value accretive refurbishments but also recycled capital through the disposal of Moedi House as well as the ongoing sale of section titles at Red Square Apartments. The acquisition of an additional 25% stake in JTTM Properties significantly uplifted the value of our investment portfolio to P2.0 billion at a Group level. Our investment portfolio was further differentiated by the quality of our tenant base, as demonstrated by above market occupancy levels of 99.15% and strong collections of above 100% for the period”.

The growth in contractual revenue of 9% from the prior year’s P48.0 million to the current year P52.2 million, increased income from Railpark Mall, coupled with high collection rates, has enabled the company to declare a distribution of 9.11 thebe per linked unit, which is in line with the prior year.

 

In line with its strategic pillars of ‘Streamlined and Expanded Botswana Portfolio’ as well as ‘Quality African Assets’, the Group continuously monitors the performance of its investments to ensure that they meet the targeted returns.

“The Group continues to explore yield accretive opportunities for balance sheet growth and funding options that can be deployed to finance that growth” further commented the CEO of LLR Ms Kamogelo Mowaneng.

Ms Mowaneng further thanked the Group’s stakeholders for their continued support and stated that they look forward to unlocking further value in the Group.

 

Continue Reading

Business

Botswana’s Electricity Generation Dips 26.4%

9th April 2024

The Botswana Power Corporation (BPC) has reported a significant decrease in electricity generation for the fourth quarter of 2023, with output plummeting by 26.4%. This decline is primarily attributed to operational difficulties at the Morupule B power plant, as per the latest Botswana Index of Electricity Generation (IEG) released recently.

Local electricity production saw a drastic reduction, falling from 889,535 MWH in the third quarter of 2023 to 654,312 MWH in the period under review. This substantial decrease is largely due to the operational challenges at the Morupule B power plant. Consequently, the need for imported electricity surged by 35.6% (136,243 MWH) from 382,426 MWH in the third quarter to 518,669 MWH in the fourth quarter. This increase was necessitated by the need to compensate for the shortfall in locally generated electricity.

Zambia Electricity Supply Corporation Limited (ZESCO) was the principal supplier of imported electricity, accounting for 43.1% of total electricity imports during the fourth quarter of 2023. Eskom followed with 21.8%, while the remaining 12.1, 10.3, 8.6, and 4.2% were sourced from Electricidade de Mozambique (EDM), Southern African Power Pool (SAPP), Nampower, and Cross-border electricity markets, respectively. Cross-border electricity markets involve the supply of electricity to towns and villages along the border from neighboring countries such as Namibia and Zambia.

Distributed electricity exhibited a decrease of 7.8% (98,980 MWH), dropping from 1,271,961 MWH in the third quarter of 2023 to 1,172,981 MWH in the review quarter.

Electricity generated locally contributed 55.8% to the electricity distributed during the fourth quarter of 2023, a decrease from the 74.5% contribution in the same quarter of the previous year. This signifies a decrease of 18.7 percentage points. The quarter-on-quarter comparison shows that the contribution of locally generated electricity to the distributed electricity fell by 14.2 percentage points, from 69.9% in the third quarter of 2023 to 55.8% in the fourth quarter. The Morupule A and B power stations accounted for 90.4% of the electricity generated during the fourth quarter of 2023, while Matshelagabedi and Orapa emergency power plants contributed the remaining 5.9 and 3.7% respectively.

The year-on-year analysis reveals some improvement in local electricity generation. The year-on-year perspective shows that the amount of distributed electricity increased by 8.2% (88,781 MWH), from 1,084,200 MWH in the fourth quarter of 2022 to 1,172,981 MWH in the current quarter. The trend of the Index of Electricity Generation from the first quarter of 2013 to the fourth quarter of 2023 indicates an improvement in local electricity generation, despite fluctuations.

The year-on-year analysis also reveals a downward trend in the physical volume of imported electricity. The trend in the physical volume of imported electricity from the first quarter of 2013 to the fourth quarter of 2023 shows a downward trend, indicating the country’s continued effort to generate adequate electricity to meet domestic demand, has led to the decreased reliance on electricity imports.

In response to the need to increase local generation and reduce power imports, the government has initiated a new National Energy Policy. This policy is aimed at guiding the management and development of Botswana’s energy sector and encouraging investment in new and renewable energy. In the policy document, Minister of Mineral Resources, Green Technology and Energy Security Lefoko Moagi stated that the policy aims to transform Botswana from being a net energy importer to a self-sufficient nation with surplus energy for export into the region. Moagi expressed confidence that Botswana has the potential to achieve self-sufficiency in electric power supply, given the country’s readily available energy resources such as coal and renewable sources.

Continue Reading

Business

MMG acquires Khoemacau in a transaction valued at P23Bn

9th April 2024

MMG Limited, the Hong Kong-based mining company specializing in base metals, has successfully concluded the acquisition of Khoemacau Copper Mine, a state-of-the-art, world-class copper asset nestled in the northwest of Botswana.

On Monday, MMG announced that the acquisition of Khoemacau Mine in Botswana was finalized on 22nd March 2024. “This acquisition enriches the company’s portfolio with a top-tier, transformative growth project and signifies a monumental milestone in the Company’s journey,” MMG communicated in an official statement published on the Hong Kong Stock Exchange.

Upon completion of the acquisition, MMG remitted to the Sellers an Aggregate Consideration of approximately US$1,734,657,000 (over P23 billion), a sum subject to potential adjustments post-Completion.

In addition to the Aggregate Consideration, MMG, in accordance with the Agreement, advanced an aggregate amount of approximately US$348,580,000 (over P4.5 billion) as the Aggregate Debt Settlement Amount, to settle certain debt balances of the Target Group (Cuprous Capital/Khoemacau).

On November 21, 2023, Khoemacau announced that the shareholders of its parent company [Cuprous Capital] had agreed to sell 100% of their interests to MMG Limited.

MMG is a global resources company that mines, explores, and develops copper and other base metals projects on four continents. The company is headquartered in Melbourne, Australia, and has a significant shareholder, China Minmetals Corporation, which is China’s largest metals and minerals group owned by the Government of the People’s Republic of China.

On December 22, 2023, Khoemacau Copper Mining (Pty) Ltd received the approval from the Minister of Minerals and Energy of Botswana regarding the transfer of a controlling interest in the Project Licenses and Prospecting Licenses associated with the Khoemacau Copper Mine, a result of the Acquisition.

 

The Botswana Competition & Consumer Authority (CCA) on January 29, 2024, notified the market that it had given its approval for the takeover of Khoemacau Copper Mining by MMG Limited.

On January 29, 2024, the CCA issued a merger decision to the market, stating that after conducting all necessary assessments, it was ready to proceed.

The Competition Authority affirmed that the structure of the relevant market would not significantly change upon implementation of the proposed merger as the proposed transaction is not likely to result in a substantial lessening of competition, nor endanger the continuity of service in the market of mining of copper and silver ores and the production, and sale or supply of copper concentrate in Botswana.

Furthermore, the CCA stated that the proposed merger would not have any negative impact on public interest matters in Botswana as per the provisions of section 52(2) of the Competition Act 2018.

Earlier this month, Minister of Minerals & Energy, Lefoko Maxwell Moagi, informed parliament that his Ministry was endorsing the Khoemacau acquisition by MMG Limited. He noted that not only was the company acquiring the existing operation but also committing to an expansion program that would cost over $700 million to double production, create more jobs for Batswana, and increase taxes and royalties paid to the Government.

Continue Reading