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Creating Botswana’s Next Value Frontiers

Tuelo Botlhole

Many economists have published detailed models about how steep a curve the movement from middle income status to high status is.

The middle-income trap has left many cabinets and high-powered delegations of experts drawing economic formulas that have left nothing beyond growing bodies of theory and a few actions that have delivered the much sought-after value. Emerging markets still remain emerging markets – a status quo long predicted to remain as such for many lifetimes.  A few countries have broken away from the middle-income barriers since the establishment of the World Trade Organisation (WTO). Our republic has been having the same debate for more than a generation whilst our economic diversification debate is still on full steam.

As we confront a changing world and new realities we have to answer difficult questions about where we are and where we are going. As a predominantly import economy, how much value do we derive from this economic model versus in-country capacity building in manufacturing? How is the balance of trade between our exports and our imports?  Which value frontiers remain untapped? What can give a genuine jump into a high-income economy? How do we get over the – ‘we are better than most adage and complacency?’  How can our natural endowments be the spring board of international competitiveness? What happens when basic goods run dry because exporters cannot even meet their own home demand?

As a construction industry player, I dream of a belt of vast factories – strong primary industries that mushroom from our cities and towns from Ramokgwebana to Charles Hill and beyond – giving beam and life to our people. Skills are harnessed, transferred and shared with our people as we forge a winning coalition of elevating our country beyond what we are and where we are now.  I remember the pride of our fathers when they came back from mines back in the yester years, the mere pride of using their own hands and skills in productivity.  They understood their contribution in the value chain. In Selibe Phikwe the ‘unending smoke’ from the BCL Mine represented life for the town and its people. A strong sense of nostalgia and a blend of emotions drew tears for many when for the first time in two generations the smoke failed to rise to the skies. The clear skies were symbolic of the new era a new time and a new reality – all minerals are finite. They are abundant today and they are depleted tomorrow.

Nkosi Mwaba, the former Botswana Export and Manufacturers Association Chairman (BEMA) and the current Chairman of Association Entrepreneurs Botswana (AEB) in a recent documentary commented on the pride of strong, local, vibrant manufacturing sector within our shores. “The global value chain can still be fully optimised for a strong manufacturing backbone in our country. We can support existing local manufactures to compete, increase their quality models and have sufficient capacity to cater for our economy and export. I worked for Bolux, they mastered their raw materials, where they source them at competitive rates, created a strong human capital base and today they do not only supply Botswana they supply the region,” says Mwaba.

Many global case studies support this. Germany was resilient in the 2008 global recession because of small enterprises that are a major contributor to the economy. The recession which changed the economic perking order in Europe acknowledged Germany is a supreme economy which was almost insulated when the global economy weaned in horror.

The rise of nationalism is a wave that is sweeping across different nation-states globally.  Exacerbated by the new reality of Covid-19 our regional trade is slowly creating a ‘one man for himself’ atmosphere. One of the senior Executive Managers Teedzani Majaula at Botswana National Productivity Centre (BNPC) asked a question. “What happens when South Africa closes its borders to us? What happen when they switch off their power, fuel and food produce? We have to reach a burning platform which will drive and trigger action,”

His assertions go beyond the normal free market economics argued by the ‘old school’ of markets and economics. The argument of raw materials, cost of production and natural endowments may be a to an extent hindrance towards stabilising critical tenets of our economy and day to day livelihoods for the long term. Israel is one of the largest exporters of produce with a climate similar to ours because of the huge numbers of scientists per capital in the country. What may have been dismissed as bear lands and desert terrains is at the centre of harvesting and exporting thousands of tonnes of produce per year.

The new economic model should look into how much of the import bill should be diverted towards the growth of local manufacturers across different industries. Where there is capacity there is no need for imports where there is a shortage there can be a balanced trade-off which includes imports to mitigate shortages. Moatlholdi Sebabole argues that there has to be a balance between increasing local capacity and disturbing FDIs for the broader health of our GDP. “Any form of protectionism may trigger unwanted circumstances in attracting FDIs. There has to be a well-managed narrative in terms of how this is structured,” he argues.

“Establishment of industries is built on assumptions, the access to raw materials at reasonable costs, labour markets that can deliver value, creation the entire value chain considers the profitability and the profitability growth. Going against this grain in hope of support may trigger unwanted circumstances. However, when the quality of products is good the Government can protect those good,” notes Majaule.

For PPC Botswana, the burning platform has always been how the local manufacturer which used local fly ash from Morupule B for years before the arrangement changed can continue employing Batswana.

The quarries in Kgale, Francistown and Mokolodi are part of a value chain which has strong downstream industry beneficiation. The plant at Gaborone West Industrial are a chemical process of cement production which has emboldened and empowered local applied chemistry experts, chemical engineering gurus amongst others. That entire value is lost when the emphasis is on imports at the expense of establishing a full operation. Materials used in blasting rocks, the people behind the science, the expertise and the blending process of cement drives the conversation about having globally competitive assets that can compete in any part of the globe as outlined by the vision of the National Human Resource Development Strategy. With over BWP120 million paid in taxes, imagine how big an impact the cement industry can be if all players had set up shop in-country.

A lot of good quality players have not seen enough of sunlight in many manufacturing industries, not because they cannot compete but because the products and services which were tailored for the market were overlooked for goods and services from far away. When FDIs come into Botswana they should have different strategic options of setting up not just green field where they start from scratch, they should have options of licensing, joint ventures and buying out local players. This will give a huge return to local players and their shareholders.  Indonesia has introduced industry protection for the same reasons. The Motor industry in South Africa is protected against grey imports. In Zimbabwe the cost of importing attracts 100% duty for specific goods which are available in-country.

Our philosophy of supporting local enterprise development, community building and CSI projects for SMMEs is our step of demonstrating that true value should include how players impact and influence SMMEs.  We have been part of the community growth and development with our signature rising buildings across the country, a testament to our quality management process. For close to half a century our buildings still stand.  Matsiloje, PPC and other local manufacturers have good products, the only thing left is for us to answer the question -what do we want to be. An import economy or a vibrant force of nature that is self-sustaining no matter what?

We are at a crossroads, if sings of Covid-19 are anything to go buy, the future of our manufacturing sector is buying local and enhancing capacity of our home-brewed brands. The avenues for new value frontiers are available. The question is -are we bold enough to take the vital steps to make it happen?

*Dumisani Ncube is Digital Executive at PR Practice

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Corporate

Customer-centric Banking Solutions Are Essential to Maintain Market Relevance

19th December 2020
shutterstock_1149916751

The reimagined banking experience

2020 has brought with it many changes to different industries, and all propelled by the Covid-19 pandemic. Recent reports show that – banks, like most companies, face an urgent imperative to reimagine themselves, with the pandemic accelerating consumer behaviour shifts and causing significant earnings challenges given, the tough macroeconomic environment and extensive risk of financial distress for both consumers and businesses.

As consumer behaviour continues to shift, this will push banks all over the globe to rapidly develop and implement continuous improvements to their customer value proposition in order to remain as agile as possible.

These improvements include establishing and growing digital banking platforms, constant and relevant engagements with customers and providing the appropriate and personalised offering to corporate and commercial banking clients. And done right, this will ensure customer retention and acquisition of new clients, every bank’s ultimate objective.

Bolstering customer value proposition through digital banking platforms

While branch networks will remain a crucial part of the banking industry’s value-chain, a continuous redefinition of the digital banking journey has now become the driving force in ensuring a customer-centric approach and addressing customers’ current banking needs.

Investing in the bank’s digital capability is imperative, in that it warrants streamlined operational and decision-making processes. Additionally, it ensures that banks enjoy extended industry reach and higher brand authority as well as allowing for better and more frequent B2B partnership opportunities.

Ensuring retention and acquisition of customers

As a new market entrant, acquiring new clients is always the primary goal, however for emerging industry players, success lies in the level of retention rates. As customer needs are constantly evolving, banks not only have to adapt to meet these needs but also navigate uncharted territory due to the Covid-19 pandemic, while also understanding that customers are struggling financially as a result of the current subdued economic environment.

Banks have had to come to the fore and secure customer loyalty by offering financial aid in the form of payment holidays, extending loan tenures as well as providing additional support to SMEs and retail customers in unfavourable economic conditions.

 

Ensure appropriate conversations with customers

Having conversations that are not only beneficial to the bank but to the customer as well, demonstrates a customer-centric approach that focuses on providing a positive customer experience. Therefore, in order to succeed in a market dominated by ongoing cost pressures, stringent regulatory requirements, and increasing competition between ‘new-born digital’ entrants, like fintech and digital banks, and established market leaders – the only thing that will set you apart and ensure competitor advantage is excellent customer service. A well-executed customer-centric strategy will assist in building trust in the brand and ultimately ensure an overall positive reputation.

Enhancing the corporate and commercial banking offering

Early 2020 reports showed that rising customer expectations, disruptive competitors, new technologies and increased regulation are just a few of the ongoing pressures forcing commercial banks to reimagine and evolve their business and operating models.

Aggressive investments to drive efficiency and enhance the client and employee experience will keep them in the lead. 2020 is seen as the year commercial banks went from digitisation to digital by building on these investments and truly unlocking the power of their data. Here are some trends that are due to take centre stage into the future:

  • Relationship managers are poised to grow revenues and customer satisfaction with vastly improved, digitally driven business insights
  • Market leaders are increasingly implementing AI and predictive analytics solutions, growing their businesses with real-time decisions at higher returns
  • Legacy systems can be reliable but stall change efforts. Innovation will kick-start migration towards full digital transformation
  • Data and integration options in Open Banking (banks providing greater financial transparency options for account holders ranging from open data to private data) enable a rich ecosystem to help banks differentiate products and provide customer-centric services

Customer-centricity is about more than just asking customers what they want and making good on it. It requires banks to re-evaluate what they know about customers with the aim to understand who their customers are, what interests them, what they value, and what drives them.

It’s about building a relationship that is more meaningful than the transactional one banks traditionally have with their customers — a relationship that looks more like a partnership, and that is attuned to the customer’s needs.

Addressing customer needs also encompasses digital transformation within the banking industry. The emergence of a reimagined customer-centric banking experience has proven that digital is key at every level of the banking value chain. The banking industry should thus keep adapting and repurposing itself in order to ensure it stays ahead of the curve and continues to innovatively meet customer needs.

BancABC, Retail Department

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Corporate

The BancABC Customer First-hand Experience

26th November 2020
Thatayotlhe

In the past six months, entrepreneurs all over Botswana have rushed into the sanitizer market. However, Kutz & Tutz Hygiene founder and Executive Director Thatayotlhe Mmereki spotted the need – and acted – more than eleven years ago.

She explains how the business grew from its humble beginnings. ‘In 2009, I left my job because I had a vision. We were determined to bring Purell hand sanitizers to Botswana. While studying in Canada, we discovered the product and knew that our fellow citizens would love it, too. We started by going door to door, searching for companies who could be our first customers,’ she says.

‘There were a lot of rejections. But I was determined. And I’ve never been a big believer in the word no,’ she laughs. Sure enough, after months of focus and persistence, Kutz & Tutz Hygiene had its first two corporate clients. ‘Those first clients gave us what we needed at the time, which was a little bit of regular income,’ explains Thatayotlhe. ‘After a while however, we noticed their needs evolving.

Soon they were asking us for hand soap, paper towels — even mobile toilets. The business was suddenly diversified and booming.’ ‘There are a lot of sanitizer salespeople out there,’ she smiles. ‘But that’s not us. We are a passion driven portfolio. We exist to raise awareness. We are compelled by a sense of cleanliness: to give our clients a better, healthier environment in which to live and work,’ she explains. ‘We are here to elevate their state of being.’

Today, Thatayotlhe finds herself at the top of an entire group of companies under the Kutz & Tutz Hygiene umbrella, employing 60 people. ‘The hygiene industry is very broad and as time has gone by we have recognized the opportunity to expand into different areas of the value chain.

We don’t just supply personal hygiene products, we also run an innovative contract cleaning and disinfection business as well as a clinical waste portfolio where we do collection, treatment and disposal. From our offices in Gaborone, Francistown and Maun, we service clients all over the country.’

She encourages SMEs in Botswana to get their priorities right. ‘Our business grows because we are not led by money. Customer relationships come first, every day. As a result, the money follows us.’ ‘The onset of COVID-19 simply reinforced what our company has been saying since 2009: healthy hands save lives.  ‘Demand for our products and services continued to grow consistently before, during and after the Lockdowns. But we faced our own cash flow challenges: that’s when BancABC rose to the occasion.’ ‘

Our biggest clients were struggling to pay us on time. Many were months behind. Our relationship manager at BancABC came to us with a perfect solution. They anticipated our need for cash, reached out to us and offered us the overdraft facility we needed to stay afloat— before we even asked for it. Amazing.’ ‘Because of this assistance, we’ve been able to make significant progress in a very uncertain time. I love BancABC. They understand us.’ Thatayotlhe says she has regional expansion plans for Kutz & Tutz Hygiene, with the next chapter of growth already mapped out. Today, her eyes are fixed on the African market.

Business Banking, BancABC.

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Corporate

JSE lifts Choppies trading suspension

16th November 2020
Ramachandaran

The founding directors of Botswana and JSE-listed retailer, Choppies Enterprises Limited (“Choppies” or “the Company” or “the Group”) backed the Group’s turn-around strategy to the tune of just over P11,000,000.00 million recently.

Messrs. Ramachandran Ottapathu and Ismail Farouk acquired 18 597 724 shares on the open market at an average price of approximately 63 thebe per share on the Botswana Stock Exchange in a slew of transactions at the end of October.

“As a management team, we faced numerous challenges during the past number of years. The retail environment continues to experience headwinds, exacerbated by the coronavirus pandemic. As a significant shareholder and director, I am confident that the worst is behind Choppies and that we’re close to the bottom of the cycle. “Our investment strongly aligns us with shareholders as we now focus on further improving corporate governance and growing profitability,” comments Chief Executive Officer Ramachandran Ottapathu.

The founding directors are currently involved in litigation against the Company’s former auditor and audit partner for delaying the publication of the Company’s audited results following breaches of independence and unlawful changes to the scope of the audit. This resulted in the suspension of trade in the Company’s shares on both the Botswana Stock Exchange (“BSE”) where it holds a primary listing as well as on the JSE Limited (“JSE”).

The JSE lifted the suspension of trade in the Company’s shares, following a similar decision by the BSE in July this year. Botswana based Kwabena Antwi from Kgori Capital says that shareholders will take courage from the fact that the Group is now current on its financial statements, following the BSE’s lifting of the trading suspension.

“Shareholder confidence is usually linked with shareholders returns. Getting Choppies back to an overall profitable position, where they are capable of paying dividends will go a long way in shoring up shareholder confidence. The next phase will focus on implementing governance structures throughout the Group. Some progress has been made, but there is still more to be rolled out,” he says.

At the presentation of the audited financial results for the year ended 30 June 2020, the Company said it has discontinued or disposed of its lossmaking operations in South Africa, Kenya, Tanzania, and Mozambique. This resulted in a once-off loss of approximately P371 million from discontinued operations and an increase in negative equity to P467 million for the financial year ended 30 June 2020.

“The board of Choppies considered the 2021 budgets, detailed cash flow forecasts that were stress tested, as prepared by management, banking facilities and covenants, undertakings of financial support by the founder shareholders, the economic outlook of the countries in which it operates as well as the possible future impact of the Covid-19 pandemic.

“Based on the evidence provided by management, the Board concluded that the Group has already taken the necessary steps to remedy the past situation by discontinuing loss making operations the Company and the Group should be a going concern for the foreseeable future.

“As founder shareholders we remain committed to the turn-around strategy of Choppies, and confident of growing profitability in the short to medium term,” says Ottapathu.

The turnaround at Choppies follows implantation of turnaround strategy to improve corporate governance and exit of underperforming operations in South Africa, Mozambique, Kenya and Tanzania

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