Local Bulb Manufacturing Company, The Bulb World operating from the special economic zone of Selibe Phikwe is preparing to enter the South African market, the company Chief Executive Officer told journalists at a media tour in Phikwe last week. Ketshepaone Jacob said the only stumbling block in South Africa is COVID-19 induced cross border travel restrictions.
“We have been allocated a factory space in Mogwase by the North West Provisional Government in South Africa. As soon as travel between Botswana and South Africa is back in full swing we beginning production that side, to supply the South African market.” Officially launched last year, The Bulb World started operating in 2018 as one of the companies earmarked for resuscitation of the economy of Selibe Phikwe and the entire eastern region.
The town has been adversely impacted by the closure of BCL mine in October 2016. The mine which employed over 5000 people was the town and the region‘s economic nucleus for over 5 decades. Founded by Ketshepaone Jacob, a youthful entrepreneur and innovator, Bulb World manufactures Light Emitting Diode (LED). The company currently employs 30 young Batswana at the factory in Selibe Phikwe and additional more administration and marketing personnel at their Gaborone office as well as Regional Area Managers in Ghantsi, Tsabong, and Maun amongst other regions.
PERFORMANCE OF THE PRODUCT IN THE MARKET
Mr Jacob told the media that since the products hit the market, they have been well received by consumers. “Like any new entrant we had to work extra hard to establish our share in the market, we also had to hand out bulbs for free for consumers to appreciate the uniqueness of our products,” he said. Further narrating the infant stages of a company that is today well known and celebrated countrywide, Jacob said the demand has since reached impressive levels within a relatively short space of time.
“Batswana have truly humbled us and with the way they receiving the product, we have listed in almost all major retail outlets in the country and the products are moving fast from the shelves.” Jacob said their major breakthrough client was Boitekanelo College. The Gaborone based health sciences trainer procured the bulbs in bulk which in turn boosted the business’ cash flow and picked the demand curve.
The Bulb World CEO said during the COVID-19 lockdown, demand for their products went significantly up. “We realized during the lockdown that our products are truly essential, sales went significantly up, as people stayed home energy demand increased and people needed to renew their bulbs, giving space for some to try our products as they visited the shelves.”
Mr Jacob said his company’s vision is to be the leading provider of LED lighting solutions in Botswana and the SADC region for commercial and industrial factories as well as private residence. Bulb World lights are said to be designed to save energy by 80% on lighting costs and have a production span of up to 50,000 hours and a 36-month guarantee. Coming at a time when residents of Selibe Phikwe are still hard hit by the aftermath of BCL Mine closure, Jacob underscored Bulb World’s capability to contribute meaningfully to the revitalization of Phikwe and entire SPEDU region.
“Our ambition as Bulb World is to employ as many young people as possible in our bid to create employment and we do absorb our recruits straight from tertiary institutions and offer on the job training, we can and are going to create over 5000 jobs,” he said. Furthermore, Jacob said his team is currently working tirelessly to penetrate the SADC regional market. “The plan is to list with all major retail outlets in Southern African by March 2021.”
Recently The Bulb World launched the “Lesedi Ke Mpho”, a nationwide campaign to light up boarding schools in Botswana. “We launched this initiative because of the sad state of boarding schools in Botswana, we had went to market our products but to our shock we found devastating circumstances that are not conducive for l earning at all,” said Jacob.
The company has thus far partnered with First National Bank Botswana (FNBB) through the FNBB Foundation to power up and refurbish lighting network at Lobatse Senior Secondary School. “We are looking for more partners so that we power up all junior and senior secondary schools with poor lighting around Botswana,” The Bulb World CEO said.
The recent study on youth entrepreneurship in Botswana has identified difficult access to funding, land, machinery, lack of entrepreneurial mindset and proper training as serious challenges that continue to hamper youth entrepreneurship development in this country.
The study conducted by Alliance for African Partnership (AAP) in collaboration with University of Botswana has confirmed that despite the government and private sector multi-billion pula entrepreneurship development initiatives, many young people in Botswana continue to fail to grow their businesses into sustainable and successful companies that can help reduce unemployment.
University of Botswana researchers Gaofetege Ganamotse and Rudolph Boy who compiled findings in the 2022 study report for Botswana stated that as part of the study interviews were conducted with successful youth entrepreneurs to understand their critical success factors.
According to the researchers other participants were community leaders, business mentors, Ministry of Trade and Industry, Ministry of Youth, Gender, Sport and Culture, financial institutions, higher education institutions, non-governmental institutions, policymakers, private organizations, and support structures such as legal and technical experts and accountants who were interviewed to understand how they facilitate successful youth entrepreneurship.
The researchers said they found that although Botswana government is perceived as the most supportive to businesses when compared to other governments in sub-Saharan Africa, youth entrepreneurs still face challenges when accessing government funding. “Several finance-related challenges were identified by youth entrepreneurs. Some respondents lamented the lack of access to start-up finance, whereas others mentioned lack of access to infrastructure.”
The researchers stated that in Botswana entrepreneurship is not yet perceived as a field or career of choice by many youth “Participants in the study emphasized that the many youth are more of necessity entrepreneurs, seeing business venturing as a “fall back. Other facilitators mentioned that some youth do not display creativity, mind-blowing innovative solutions, and business management skills. Some youth entrepreneurs like to take shortcuts like selling sweets or muffins.”
According to the researchers, some of the youth do not display perseverance when they are faced with adversity in business. “Young people lack of an entrepreneurial mindset is a common challenge among youth in business. Some have a mindset focused on free services, handouts, and rapid gains. They want overnight success. As such, they give up easily when faced with challenges. On the other hand, some participants argue that they may opt for quick wins because they do not have access to any land, machinery, offices, and vehicles.”
The researchers stated that most youth involved in business ventures do not have the necessary training or skills to maintain a business. “Poor financial management has also been cited as one of the challenges for youth entrepreneurs, such as using profit for personal reasons rather than investing in the business. Also some are not being able to separate their livelihood from their businesses.
Lastly, youth entrepreneurs reported a lack of experience as one of the challenges. For example, the experience of running a business with projections, sticking to the projections, having an accounting system, maintaining a clean and clear billing system, and sound administration system.”
According to the researchers, the participants in the study emphasized that there is fragmentation within the entrepreneurial ecosystem, whereby there is replication of business activities without any differentiation. “There is no integration of the ecosystem players. As such, they end up with duplicate programs targeting the same objectives. The financial sector recommended that there is a need for an intermediary body that will bring all the ecosystem actors together and serve as a “one-stop shop” for entrepreneurs and build mentorship programs that accommodate the business lifecycle from inception to growth.”
Botswana Housing Corporation (BHC) is said to have recorded an operating surplus of P61 Million, an improvement compared to the previous year. The housing, office and other building needs giant met with stakeholders recently to share how the business has been.
The P61 million is a significant increase against the P6 million operating loss realized in the prior year. Profit before income tax also increased significantly from P2 million in the prior year to P72 million which resulted in an overall increase in surplus after tax from P1 million prior year to P64 million for the year under review.
Chief of Finance Officer, Diratsagae Kgamanyane disclosed; “This growth in surplus was driven mainly by rental revenue that increased by 15% from P209 million to P240 million and reduction in expenditure from P272 million to P214 million on the back of cost containment.” He further stated that sales of high margin investment properties also contributed significantly to the growth in surplus as well as impairment reversals on receivables amounting to P25 million.
It is said that the Corporation recorded a total revenue of P702 million, an 8% decrease when compared to the P760 million recorded in the prior year. “Sales revenue which is one of the major revenue streams returned impressive margins, contributing to the overall growth in the gross margin,” added Kgamanyane.
He further stated professional fees revenue line declined significantly by 64% to P5 million from P14 million in the prior year which attributed to suspension of planned projects by their clients due to Covid-19 pandemic. “Facilities Management revenue decreased by P 24 million from P69 million recorded in prior year to P45 million due to reduction in projects,” Kgamanyane said.
The Corporation’s strength is on its investment properties portfolio that stood at P1.4 billion at the end of the reporting period. “The Corporation continues its strategy to diversify revenue streams despite both facilities management income and professional fees being challenged by the prevailing economic conditions that have seen its major clients curtailing spending,” added the CEO.
On the one hand, the Corporation’s Strategic Performance which intended to build 12 300 houses by 2023 has so far managed to build 4 830 houses under their SHHA funding scheme, 1 240 houses for commercial or external use which includes use by government and 1 970 houses to rent to individuals.
BHC Acting CEO Pascaline Sefawe noted that; BHC’s planned projects are said to include building 336 flat units in Gaborone Block 7 at approximately P224 million, 100 units in Maun at approximately P78 million, 13 units in Phakalane at approximately P26 million, 212 units in Kazungula at approximately P160 million, 96 units at approximately P42 million in Francistown and 84 units at approximately P61 million in Letlhakane. Emphasing; “People tend to accuse us of only building houses in Gaborone, so here we are, including other areas in our planned projects.”
Researchers from some government owned regulatory institutions in the financial sector have projected that the banking sector’s profitability could increase, following Bank of Botswana Monetary Policy Committee recent decision to increase monetary policy rate.
In its bid to manage inflation, Bank of Botswana Monetary Policy Committee last month increased monetary policy rate by 0.50 percent from 1.65 percent to 2.15 percent, a development which resulted with commercial banking sector increasing interest rate in lending to household and companies. As a result of BoB adjustment of Monetary Policy Rate, from 1.65 percent to 2.15 percent commercial banks increased prime lending rate from 5.76 percent to 6.26 percent.
Researchers from Bank of Botswana, the Non-Bank Financial Institutions Regulatory Authority, the Financial Intelligence Agency and the Botswana Stock Exchange indicated that due to prospects of high inflation during the second half of 2022, there is a possibility that the Monetary Policy Committee could further increase monetary policy rate in the next meeting in August 25 2022.
Inflation rose from 9.6 percent in April 2022 to 11.9 percent in May 2022, remaining above the Bank of Botswana medium-term objective range of 3 – 6 percent. According to the researchers inflation could increase further and remain high due to factors that include: the potential increase in international commodity prices beyond current forecasts, logistical constraints due to lags in production, the economic and price effects of the ongoing Russia- Ukraine conflict, uncertain COVID-19 profile, domestic risk factors relating to possible regular annual administered price adjustments, short-term unintended consequences of import restrictions resulting with shortages in supplies leading to price increases, as well as second-round effects of the recent increases in administered prices “Furthermore, the likelihood of further increases in domestic fuel prices in response to persistent high international oil prices could add upward pressure to inflation,” said the researchers.
The researchers indicated that Bank of Botswana could be forced to further increase monetary policy rate from the current 2.15 percent if inflation rises persistently. “Should inflation rise persistently this could necessitate an upward adjustment in the policy rate. It is against this background that the interest rate scenario assumes a 1.5 percentage points (moderate scenario) and 2.25 percentage points (severe scenario) upward adjustment in the policy rate,” said the researchers.
The researchers indicated that while any upward adjustment on BoB monetary policy rate and commercial banks prime lending rate result with increase in the cost of borrowing for household and compnies, it increase profitability for the banking sector. “Increases in the policy rate are associated with an overall increase in bank profitability, with resultant increases in the capital adequacy ratio of 0.1 percentage points and 0.2 percentage points for the moderate and severe scenarios, respectively,” said the researchers who added that upward adjustment in monetary policy rate would raise extra capital for the banking sector.
“The increase in profit generally reflects the banking industry’s positive interest rate gap, where interest earning assets exceed interest earning liabilities maturing in the next twelve months. Therefore, an increase of 1.5 percentage points in the policy rate would result in industry gains of P71.7 million (4.1 percent increase), while a 2.25 percentage points increase would lead to a gain of P173.9 million (6.1 percent increase), dominated by large banks,” said the researchers.