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KAZUNGULA BRIDGE: Botswana Ash Readies for Central African Market

KAZUNGULA BRIDGE PROJECT

Kangangwani Phatshwane, Managing Director of Botswana Ash (Botash), the country’s sole industrial salt and soda ash producer says the completion of Kazungula Bridge brings endless opportunities for the company as it seeks to expand its business.

Speaking at a media briefing recently, Phatshwane said the bridge comes at a time when the company is implementing new strategies to penetrate new markets, and diversify its product offerings.
Botswana Ash which produces mainly Soda Ash, and Salt currently exports more than 90% of its products to South Africa, Zambia, Zimbabwe, Malawi, DRC, and Namibia. For Phatshwane, with the near completion of Kazungula Bridge new opportunities, new markets lie in the horizon.

Kazungula Bridge is a billion pula world class structural masterpiece that crosses the mighty Chobe River, connecting Botswana and Zambia. The bridge is 923-metre-long and 18.5-metre-wide with its longest span of 129 metres, featuring a single-line railway track between two traffic lanes and pavements for pedestrians.

The Botash MD explained that currently Soda Ash accounts for the bulk percentage of the company’s product profile, while Salt accounts for just about 25%. He however noted that Bots-Salt as the product is popularly known in the market is a sought after commodity hence its strong market share across key markets in Southern Africa.

The MD shared that in Malawi, Zimbabwe and Zambia, Bots-Salt is the primary house hold product, out beating any other salt imported by those countries. “Our market share in Zimbabwe is over 98 % , while in Zambia we boast of a market share of almost 100 % , Zambia then moves further to export this excess salt to Democratic Republic of Congo , in the region 50 000 tonnes,” he said.

Phatshwane observed that the strong demand of Botswana‘s salt suggests that the product would do well in other markets up north across equator. “We are patiently waiting for the commissioning of the Kazungula Bridge, this will offer us a smooth corridor to the Central Africa, where our expansion drive is heading to, our future as a company lies on the Central African market as we grow our business,” he said.

With regards to diversifying its product offerings Botswana Ash MD revealed that the company is currently embarking on massive product diversification drive to broaden the business. The partly government owned miner is moving swiftly albeit COVID-19 obstacles to kickstart production of Potash, a well sought after fertilizer.

Phatshwane explained that construction of the pilot processing plant is nearing completion and should be commissioned anytime soon; while material testing and assessment of equipments and components to be used in the manufacturing plant is ongoing in Eastern Germany where they will be procured.

He further noted that the Potash project will be a major boost not only to Botash as a business but to Botswana’s food security ambitions as the product is a high output fertilizer of large scale crop production. Another major project in the offing is the production of Bi-carbonate of Soda which will be used to capture sulphur emission from coal burning power generation plants at Murupule and other upcoming coal fueled electricity production projects.

“This Bicarbonate product will help in curbing atmospheric pollution, while in the process producing other industrial products,” said Phatshwane. Botswana Ash (Pty) Ltd (Botash) is owned by the Government of Botswana and Chlor Alkali Holdings (CAH) Group, a South African company, at 50% shareholding each.

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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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