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Master Farmer Masisi walking the walk through dwindling Agriculture data

Dr Masisi

President Dr Mokgweetsi Masisi’s efforts of being the ‘Agriculture President’, being a farmer himself, are going against the grain as statistics show that this country’s supposedly food producing sector is almost moribund.

BusinessPost has compiled data which shows that the mainstay of Botswana’s Agriculture sector (cattle), which is a source of food for households and beef export, has its numbers hit by the scourge of drought while commercial farming is almost non-existent in this country and would not make any statistical movement.

There are many alarming anomalies in the latest Annual Agricultural Survey Report 2019 where some vital data was seen as too trivial that it cannot make it to national statistics and 2018 farming statistics were omitted due to absence of survey that year.

The latest Agriculture survey said while Botswana consists of two distinct sectors, namely the commercial and the traditional sectors; the agricultural survey carried out in 2019 covered the traditional sector while the commercial sector coverage was low and as such cannot be used to produce meaningful results to guide policy and decision making. According to Stats Bots, the results of the 2019 survey will be compared with the 2017 survey results since there was no survey in 2018.

President Masisi cannot be relying on the available statistics which have omissions and staggering findings.  Masisi was subleased Banyana Farms for 14 years this year but the recent statistics do not show this country is making strides, if anything we are going against the outward passion for farming by the President has shown.

Masisi’ passion comes a long way, when he was still Vice President and that was the last time the agriculture survey was conducted. In 2017 before he became President, he told African leaders to increase efforts of achieving sustainable employment opportunities and food security on the continent by transforming the agricultural sector.

But locally statistics tell a melancholy story that contradicts Masisi’s dream as the cattle enterprise under the Livestock production subsector which showed a decline in 2019. Arable production showed a downward production trend in all the major crops compared to the 2017 Annual Agricultural Survey results.

“Cattle population for the traditional sector dropped from 1.1 million in 2017 to 935 000 in 2019. The decline in cattle population is attributed to an increase in cattle deaths from 64 447 in 2017 to 102 255 in 2019. Cattle lost due to straying/theft are lower than the 79 799 in 2017 but still considerably high at 53 571 in 2019. This indicates that a significant number of cattle were lost due to straying/theft in 2017 and 2019,” said the survey.

While the increase in cattle birth rate from 47.3 percent to 56.5 percent, the mortality rate offset that twice over, doubling from 5.9 percent in 2017 to 10.9 percent in 2019 and off-take rate enlarged from 5.5 percent to 7.0 percent during the same period.

According to the statistics, the mortality is attributed to the severe drought that ravaged the country during the 2017/2018 and 2018/2019 seasons. The scourge of drought became a menace in this country’s agriculture as both the years 2017/18 and 2018/19 were declared drought years for the whole country (Botswana Environment Statistics, Natural and Technological Disasters Digest 2019) and as such the decline in both crop and livestock production indicators is attributed to drought.

Botswana has been a drought country since 2001, and this continued for two decades save for the 2008/2009 and 2013/2014 seasons which were never declared as drought periods. The Prevalence of Food Insecurity which was released recently posted that at national level 50.8 percent of the population in Botswana was affected by moderate to severe food insecurity in 2018/19, while 22.2 percent of the population was affected by severe food insecurity only.

“The whole country was declared drought stricken during these periods: 2001-2005; 2007-2008; 2011-2013; 2014-2015; and 2016-2019. This report further reveals that cereal production does not meet the country’s cereal requirements, resulting in over dependence on imports. A total of BWP9.53 Billion was used to import cereals (maize, rice, sorghum, millet and wheat) during the period 2010-2019,” said the latest Statistics Botswana report.

The 2019 drought statistics suggests that the traditional crop sector experienced poor harvest compared to 2017. Sorghum production recorded a substantial reduction from 5,975 metric tons in 2017 to 826 metric tons (86.2 percent) in 2019. Maize production also experienced a huge reduction from 13,911 metric tons to a staggering 987 metric tons (92.9 percent), while millet production dropped from 1,099 metric tons to 313 metric tons (71.5 percent) in 2017 and 2019 respectively.

The beans/pulses also realized a significant reduction in production from 2,348 metric tons in 2017 to 583 metric tons (75.2 percent) between the 2017 and 2019 agricultural seasons. About 85 percent of Botswana’s agricultural output is derived from livestock production, mainly cattle. It is estimated that Botswana imported P6.32 million worth of food and agricultural products in 2014.

The Prevalence of Food Insecurity which was recently released by Statistics Botswana show that at national level 50.8 percent of the population in Botswana was affected by moderate to severe food insecurity in 2018/19, while 22.2 percent of the population was affected by severe food insecurity only.

When opening Mosisedi 4th Harvest Day in May, Masisi said the agricultural sector remained important to livelihoods of most Botswana citizens. Government had put in place numerous programmes and policies such as Integrated Support Program for Rain-fed Arable Agriculture Development (ISPAAD), Livestock Management and Infrastructure Development Programme (LIMID), and the Policy on National Food Security aimed at enhancing the sector.

The president further said these development initiatives were aimed at enhancing the lives of the majority of citizens especially those who lived in rural areas. President Masisi said Mosisedi farmers were a source of inspiration to many Batswana, particularly young farmers. He said the farmers had proven beyond doubt that commercial farming in the country was viable. Masisi believes young farmers are also inspired to venture into farming, but statistics are on the contrary.

According to the Annual Agricultural Survey Report 2019, the participation of youth in agriculture is still low, out of a total of 54,908 traditional farmers/holders countrywide, only 5.3 percent were aged between 15 and 35 years. The statistics further said the majority of farmers were in the 65 year age group and above (34.9 percent) and between 55-59 years at 12.4 percent.

Farming is still a man’s business if the released statistics are anything to go by. In the 2019 agricultural season, male farmers continued to dominate farming at 63.1 percent compared to their female counterparts with only 36.9 percent participation.
The land issue
International reports suggests that Botswana’s agricultural potential is limited due to the Kalahari Desert that occupies a large area in the country. The same study gives credence to the local survey of 2019 as it states that the subsistence/traditional farming are the norm with less than a 1,000 commercial farming enterprises.

Masisi on the other hand believes that he turn the country into a commercial farming force. In May at Mosisedi, Masisi said government would “fast track land allocation for commercial agriculture.” He also talked of government offering funding to farmers, so that they can help food insecurity and make Botswana a food exporter. Agriculture accounts for about 3 percent of Botswana’s GDP. In 2019, agriculture contributed around 1.95 percent to the GDP of Botswana, 28.3 percent came from the industry and 60.62 percent from the services sector.

When trying to convince African leaders about the importance of farming in 2017, Masisi said 50 per cent of available land in Africa was suitable for agriculture, but the sector was hindered from performing at its full potential by challenges such as drought, diseases, low productivity and lack of appropriate technology.

According to Stats Bots, compared to 2017 agricultural survey results, there was a decrease in area planted and area harvested for all the crops in 2019 except for millet which remained the same. The crop sector recorded substantially low yields during the 2019 season when compared to the 2017 cropping season, in terms of both yield per hectare planted and yield per hectare harvested.

The yields per hectare planted for sorghum dropped from 251 kg/ha in 2017 to 48 kg/ha in 2019, while maize yield was 225kg/ha in 2017 but dropped to 25kg/ha in 2019. The millet yield reduced from 353 kg/ha to 91kg/ha between 2017 and 2019 respectively, while the yield for pulses also showed a marked reduction from 86 kg/ha to 31 kg/ha between 2017 and 2019 survey years respectively.

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Business

Cresta cuts losses, pins recovery hopes on renewed travel sentiment 

20th October 2021
Cresta

Cresta Marakanelo Holidays Limited, Botswana’s leading hotel group, is battling the catastrophic effects of the Covid-19 pandemic and its far-reaching implications. 

The tourism and travel business was by far one of the most hit economic sectors. The key to containing the COVID-19 pandemic was the significant curtailment of movement of the people to reduce the spread of the virus. On the flip side, this delivered a massive blow to the tourism and hospitality business, which largely relies on accommodating travellers.

This week, Cresta released their unaudited condensed consolidated financial results for the half-year period ended June 2021. The Group, which operates 11 hotels in Botswana, reported a significant reduction in losses owing to stringent cost-containment measures deployed by management to ensure the business doesn’t plunge deeper into the negative figures zone.

The Group’s registered a six-month loss before Taxation of P34.1 million, which was P8.4 million lower than the prior-year first six months period, which reported a loss of P42.5 million. Cresta says the COVID-19 headwinds continue to significantly affect the tourism and hospitality industry, and Cresta Marakanelo Limited was not an exception.

During the six months to June 2021, the Government of Botswana continued to implement a raft of measures imposed in December 2020 to curb the spread of COVID-19. These measures, which include restrictions on inter-zonal travel, a ban on alcohol sales, and a limited number of conference guests, have had a direct effect on reducing the level of activity in hotels.

The resort town hotels, which ordinarily generate at least 50 percent of their business from incoming foreign travellers, were significantly affected by the lockdowns in the source countries and low travel sentiment even after the hard lockdown measures were lifted.  The first-quarter performance was low in line with the seasonality of the business. However, the performance was further slowed down by the pandemic induced low travel sentiment and pandemic mitigation controls in place.

The second quarter saw a rise in the performance of the business when compared to the first quarter, contributing 60% of the revenue generated for the six months ended 30 June 2021. The business enjoyed a steady month-on-month increase in revenues from January to June 2021.

Under the adverse operating conditions for the industry, Cresta Directors boast of the P8.4 million loss cut. This, according to a commentary alongside financials, was mainly driven by the cost reduction measures implemented, some of which will be continued in the long term, even after the pandemic has been contained.

Revenue for the period under review was P96.5 million, 4% (P3.3 million) higher than the same period last year. Earnings before interest, tax, and depreciation and amortization (EBITDA) achieved during the period was P2.2 million, an improvement on the prior year’s loss incurred of P2.5 million.

The reduced market base has seen a surge in price wars in the industry, a variable that further puts pressure on the company’s revenues. Cresta management noted that the Group would continue to focus on cost containment to ensure the business’s survival through this difficult pandemic season.

In a drive to reduce the operating leverage of the business to ensure the company continues to be a going concern, several measures were implemented, including the suspension of all non-critical capital expenditure projects and freeze on all discretionary expenditure. In addition, Cresta negotiated with staff, landlords and other strategic suppliers to reduce contractual obligations. Following these measures, Cresta was able to minimize the reduction in cash balances during the period.

From 31 December 2020, cash balances declined by P29.1 million for the six months to 30 June 2021, compared to a decline of P42.1 million during the same period in 2020 on largely the same level of revenue mirroring successful cash preservation.  In assessing the ability of the Group to continue as a going concern, management performed a sensitivity analysis on a 12-month cash flow forecast which the Board of Directors reviewed to their satisfaction.

A range of possible outcomes related to the COVID-19 pandemic were considered, and it was concluded that Cresta Marakanelo Limited would continue as a going concern. The single most significant assumption was that the business should make a turnaround for the better within 12 months period on the back of vaccination programmes both in the source market countries and locally.

Vaccination enhances travel sentiment for the market, and it is on its strength that most paid guests are opting to postpone their bookings rather than cancel altogether.  The company has also secured an additional working capital facility of P25 million. This will provide extra headroom while the business levels are low.

Based on the review of the Group’s cash flow forecasts, the Directors believe that the Group will have sufficient resources to continue to trade as a going concern for a period of at least 12 months from the date of approval of these financial statements and accordingly, the interim financial statements have been prepared on the going concern basis.

Last month Cresta announced that they had decided not to renew the lease for the Cresta Golfview Hotel in Lusaka, Zambia, which comes to an end on 31 January 2022. The landlord of the property will continue to run the hotel under a different brand, and preparations are currently underway for a smooth handover of the property, with the least possible impact to staff, suppliers and guests.

During the half-year, P11.7 million (2020: P25.8 million) was utilized in operating activities, primarily due to the subdued revenues. Net cash used in investing activities amounted to P2.5 million (2020: P14.4 million).

The reduction in cash outflow on investing activities was because of the capital expenditure freeze. With regards to financing activities, P15.2 million (2020: P4.1 million) was utilized, split between bank loan repayments of P3.7 million (2020: P1.5 million) and leasing hotel properties P11.5 million (2020: P11.6 million).

In the future, Cresta pins its full recovery hopes on the vaccination plan, which is envisioned to cultivate revived travel sentiment significantly. “As seen in other countries whose vaccination programmes were embraced by a significant part of the population, vaccination is expected to see the removal of conferencing restrictions, alcohol sale ban and lifting of travel restrictions,” the company said.

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Botswana possesses unexploited renewable energy 

20th October 2021
renewable-energy

The International Renewable Energy Agency’s (IRENA) latest Renewables Readiness Assessment of Botswana has made it known that the country enjoys considerable renewable energy potential. Notably, solar, wind and bioenergy are more prevalent. However, these remain largely untapped, despite the country’s ambitious plans for integrating renewable energy into its energy system.

According to the report, Botswana’s total primary energy supply (TPES) is fossil-based and largely reliant on oil products and coal, complemented by biomass and waste energy. In the Integrated Resource Plan (IRP) launched in December 2020, it was announced that renewable energy should account for at least 15% of the energy mix by 2030, whilst the country’s Vision 2036 calls for a 50% renewable energy contribution to the energy mix by March 2036. The ambitions are arguably aloof given the insufficient critical actions that could significantly impact the energy transition in Botswana.

Access to electricity stands at 65%, with 81% of urban areas illuminated and 28% of rural regions electrified. As of 2017, the country’s total energy supply of 2.9 million tonnes of oil equivalent consists of oil products (35%), coal (44%), (traditional) biofuels and waste (19%) and imported electricity (2%). The IRENA has established that electricity is mainly produced from coal or petroleum products imported from South Africa.

As is the case in most regions, Botswana’s power system is characterised by an unreliable power supply, lack of investment, poor maintenance, and high service costs. To meet its peak power demand, Botswana imports power from the Southern Africa Power Pool (SAPP) – mainly from South Africa – and when imports are not available, resorts to costly backup diesel power plants.

In 2013, the International Energy Agency’s (IEA) Clean Coal Centre found that Botswana has estimated coal resources of 40 gigatonnes (Gt) or 40 trillion Kg. In 2014, the only two measured coal reserves were Morupule and Mmamabula basins, with a capacity of 7.2 Gt. IRENA believes this abundant resource is underexploited as only a single coal mine, Morupule, is currently operating.

Already established, Botswana relies heavily on fossil fuels for its electricity generation. As shown by the country’s installed generating capacity of 893.3 megawatts (MW), comprising 600 MW from the coal-fired Morupule B, 132 MW from the also coal-burning Morupule A, 90 MW from Orapa power plant, which is a diesel peaking plant, 70 MW from Matshelagabedi power plant (diesel peaking plant) and 1.3 MW from Phakalane solar photovoltaic power plant, according to the then Ministry of Mining, Minerals, Energy and Water Resource (MMERW) in 2017, now under a new name.

IRENA posits that although the installed capacity can cover the country’s peak demand estimated at 610 MW, the Botswana Power Cooperation’s (BPC) interconnected system faces several challenges. According to the power parastatal, in 2017, Morupule A did not produce electricity and was closed down for refurbishment. It produced 25 gigawatt-hours (GWh) in 2018 but had to be shut down again to remedy defects identified during commissioning.

Morupule B has been running under capacity since its commissioning in 2013 due to plant breakdown and system failures. BPC is currently undertaking remediation, which is expected to be completed in 2023/24, with all units running 100% production.

As for the diesel power plants of Orapa, producing 90MW and Matshelagabedi’s 70MW, which are rented to Alstom, they were conceived to support peak load but are being used for regular electricity supply BPC reports. The Corporation’s two diesel power stations were not used during 2018 and remained on standby. The lack of capacity to satisfy electricity demand requires regular imports from surrounding countries.

Botswana relied on electricity imports to cover up to 94% of its demand until the progressive recovery of the Morupule B plant. IRENA noted that the share of electricity imports in total supply decreased to about 17%, or 594 gigawatt-hours (GWh) in 2018 from 1 297 GWh in 2017 due to lower demand from the mining sector.

BPC has been in a precarious financial state for many years due to high import costs, operational difficulties and inoperative assets and has been kept afloat by government subsidies.
Botswana has an exceptionally high rate of solar irradiation, making solar energy a promising renewable energy source in the country.

The semi-arid country has an estimated 3 200 hours of sunshine per year. According to a MMEWR study, the yearly solar resources from global horizontal irradiation (GHI) range from 2 050 to 2 920 kilowatts received in one hour by one square meter of a surface (kWh/m²). For comparison, these irradiation levels are similar to those in California, which is amongst the most competitive solar market today.

Botswana is also endowed with a range of bioenergy resources that could be used for energy production. Wood fuel remains the dominant cooking fuel for rural households, as 42% of the population relies on it. A 2016 World Bank study based on a government study from 2007 to assess biofuel production and use in Botswana revealed the potential for biodiesel production from Jatropha curcas and bioethanol from sweet sorghum and sugarcane crops.

The Central district presents the highest biodiesel potential from Jatropha production, while the North-West district’s bioethanol potential from sweet sorghum is mainly located in the Ngami sub-district. However, another study coordinated by IRENA found that Jatropha is not suitable to cultivate in Botswana, as 100% of the land is restricted due to protected areas, wetlands, existing agricultural lands or urban areas, as well as additional exclusion areas and other restrictions in terms of market access and water availability. Sugarcane crops were only viable if irrigated, and the extent of production could reach 9% of the land.

Furthermore, an analysis conducted by IRENA and United States-based Lawrence Berkeley National Laboratory (LBNL) for the Africa Clean Energy Corridor depicts some suitable zones for wind turbine power deployment, which are mainly located in the southern part of Kgalagadi district near Tsabong and the Southern region, with a technical potential of up to 1.5 GW.

In the foreword of Botswana’s Renewables Readiness Assessment, the Minister for Mineral Resources, Green Technology and Energy Security, Lefoko Moagi, said the release of the report coincides with the recent adoption by Parliament of the Botswana National Energy Policy – a key, strategic instrument for the successful and economic development of the local energy sector.

A prominent objective of the Policy is to achieve a substantive penetration of new and renewable energy sources in the country’s energy mix; the goal is to attain adequate economic energy self-sufficiency and security, as well as to position Botswana to fulfil its vision of becoming a regional net exporter, especially in the electricity sector. Director-General for IRENA Francesco La Camera said Botswana possesses considerable potential for renewable energy development.

In the introduction of the assessment, La Camera stated that the report presents clear and practical steps to maximise the country’s use of renewables in driving sustainable economic growth for Botswana. The extensive document identifies the need to adopt a broader range of renewable energy technologies to diversify Botswana’s power generation away from coal, generate socio-economic value and fulfil the country’s environmental and climate commitments.

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Business

NAMDEB extends life of mine for land operations by up to 20 years

19th October 2021

Joint venture between De Beers and Government of Republic of Namibia announces new plan, supporting economic, commercial, employment and community benefit, following receipt of royalty relief Namdeb Diamond Corporation (Proprietary) Limited (‘Namdeb’), a 50:50 joint venture between De Beers Group and the Government of the Republic of Namibia, today announced the approval of a new long-term business plan that will extend the current life of mine for Namibia’s land-based operations as far as 2042.

Under the previous business plan, the land-based Namdeb operations would have come to the end of their life at the end of 2022 due to unsustainable economics. However, a series of positive engagements between the Namdeb management team and the Government of the Republic of Namibia has enabled the creation of a mutually beneficial new business plan that extends the life of mine by up to 20 years, delivering positive outcomes for the Namibian economy, the Namdeb business, employees, community partners and the wider diamond industry.

As part of the plan, the Government of the Republic of Namibia has offered Namdeb royalty relief from 2021 to 2025, with the royalty rate during this period reducing from 10% to 5%. This royalty relief has in turn underpinned an economically sustainable future for Namdeb via a life of mine extension that, through the additional taxes, dividends and royalties from the extended life of mine, is forecast to generate an additional fiscal contribution for Namibia of approximately N$40 billion. Meanwhile, the life of mine extension will also deliver ongoing employment for Namdeb’s existing employees, the creation of 600 additional jobs, ongoing benefits for community partners and approximately eight million carats of additional high value production.

Bruce Cleaver, CEO, De Beers Group, said: “Namdeb, a shining example of partnership, has a proud and unique place in Namibia’s economic history. This new business plan, forged by Namdeb management and enabled by the willingness of Government to find a solution in the best interest of Namibia, means that Namdeb’s future is now secure and the company is positioned to continue making a significant contribution to the Namibian economy, the socio-economic development of the Oranjemund community and the lives of Namdeb employees.” Hon. Tom Alweendo, Minister of Mines and Energy for the Government of the Republic of Namibia, said: “Mining remains the backbone of our economy and is one of the largest employment sectors within our country.

Government understood the fundamental impact of what the Namdeb mine closure at the end of 2022 would have had on Namibia. Therefore, it was imperative to safeguard this operation for the benefit of sustaining the life of mine for both the national economy as well as preserving employment for our people and the livelihoods of families that depend on it.”

Riaan Burger, CEO, Namdeb Diamond Corporation, said: “After more than a century of production, these operations were approaching the end of their life, but the creation of this new business plan means we can continue to deliver for Namibia for many years into the future. This is great news for the hardworking women and men of Namdeb, as well as for all our community partners who we are proud to have worked with over the years. We now look forward to starting a new chapter in Namdeb’s proud history.”

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