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COVID-19: Small businesses suffering 

-Small-businesses-suffering

The month of August is known for strong winds and sunny, long days. In front of Lentsweletau Sub-land board offices lies small, worn-out shacks of three women trying to make a living out of something.

For some, these old cottages can be deemed hogwash, but these women see them as their ‘saving grace.’ They have been dented by the strong winds, in any case.

These women sell fat cakes for students who attend Lentsweletau Junior Secondary School, which is adjacent to land board offices. During lunch hour, students are not allowed to go outside the school premises. Therefore land board employees will visit these shacks to buy something to eat.

COVID-19 came over, and there have been sequential closing of schools. This was done to prevent the virus from spreading among students. On this particular sunny day, upon arrival at the small shacks, the women looked so hopeless. There are no students; therefore, that means there is less business. The fat-cakes are still wedged inside the Mango Achar bucket.

Lunch hour is approaching, but land board employees are not coming for lunch. Twenty minutes later, one man hopped out of his car and asked what was in there to eat. He was told that there was no meat, he then continued with his journey. This man came to ask for services from the land board offices; he is not a regular customer. An hour later, two officers from the land board came and sat in one of the three shacks. They ate their lunch.

Sebonetse Modise is one of the three old women trading in this place. Besides selling food, she vends sweets, oranges and snacks for students. Now that COVID-19 is here, none of what she sells goes. When times are hard, she returns home with all her food. She has no choice but to feed her children.

Ke itshetsa ka gone go apaya abo ke rekisetsa bana ba sekolo di sweets. Jannong COVID-19 e re amile. Dikolo sale di tswalwa. Kana re tsaya ma P1 mo banning, yaanong fa dikolo di tswetswe jaana, ga gona sepe se re se bonang. Re kotama jaaka o re bona re kotame jaana. Le tsone dijonyana tse re kgona go apaya, batho ba le boutsana go sena theko mo e leng gore o kgona go bowa ka tsone bana ba go ja ko lapeng, kamoso ga gona sepe se o se rekang.”

In an interpreted description, Modise said, “I survive by selling food and sweets for children who attend school here. Now that the COVID-19 is here, schools have been closed. We get P1.00 to buy sweets, but since schools are closed, absolutely nothing is coming in. We spend time sitting here, as you can see.

Even with the food that we are selling, people come in small numbers to buy. At times we are forced to go back with the food that we eventually give to children; tomorrow, you have nothing to use to buy stock.”

COVID-19 (coronavirus) has exacerbated existing growth challenges, leading to an estimated real gross domestic product (GDP) contraction of 7.9% in 2020 (the largest on record). The economy should expand robustly in 2021, supported by sturdier domestic demand; this is according to experts.

Moreover, pent-up foreign demand and higher commodity prices bolster exports, particularly key diamond sales. Risks are tilted to the downside, however, amid continued uncertainty over the course of the pandemic and the speed of the vaccine drive.

FocusEconomics analysts project the economy to grow 7.2% in 2021, up 0.3 percentage points from last month’s forecast and 6.4% in 2022.

Since COVID-19 hit the country, the government introduced food relief packages and funds for those severely affected by the pandemic. In Lentsweletau, this is news to Modise. “Ga gona, ga gona. Ga re ise re bone le faele sepe. Re tlhola re kokomaletse gore gongwe mongwe o ka tla ka pula a reka sweets gongwe tse pedi. Go thata tota, re a sotlega tota.”

“We haven’t received anything from the government. Absolutely nothing. We spend all days waiting for a customer and hoping they purchase a sweet or at least two of them. It’s rough; we are suffering.”

Similarly, feeling the COVID-19 high temperature like Modise, Magdeline Barobetse survives on zero revenue. Having been operating as an entrepreneur in this place in 2016, this is the first time since COVID-19 that she goes home with nothing.

Ke sale ke dira madi fa ka 2016. Mme e rile go simologa ga COVID-19, ke wetse ko tlase. Fa ele gompieno gone, go worse. Ke ne ke duba borotho ka sekotlele se setona, e re nako e, abo bo fedile. Ke ne ke duba 12.5kg, gompieno ke duba 2.5kg. Ke ne ke apaya nama ya P250.00, le koko   

“I started operating here in 2016, and I was making much money. Ever since COVID-19 came over, I have fallen flat. Today is extremely worse. I used to make bread with a larger bowl, and the bread will sell out. Nowadays, I only produce a quarter of that, and I have also cut down on the size of meat I used to cook.”

She denies ever having help from the government, particularly the Member of Parliament. The Lentsweletau-Mmopane MP is Naniki Makwinja. “Nna mopalamente ga re mo itse. Re bone, motho go mo tlhopha. Maabane nkile ka bona manobonobo a dikoloi a feta yaana, gotwe ke tsa ga mopalamente di ya Dikgatlhong. Le ekare a feta fa, ga a kake a fapoga. O ka tlala leswe.”

Barobetse said, “We don’t know our Member of Parliament. We only voted her into power, but we don’t know her. Yesterday I saw luxurious vehicles passing by going towards Dikgatlhong village. I was told that they were the MP’s convey. Even if she can pass by many times, she wouldn’t stop by t east to see us who voted her to be where she is now. She will get dirty.”

She further indicated that the food relief package was just predisposed and evenly distributed. For some prominent families, they were given food in small quantities. There was no consideration of what people eat or do not eat.

LENTSWELETAU MP SPEAKS

When reached for comment, area MP Makwinja said, “There are social workers and councillors in my constituency. These people have my mobile number and every time they need something, they call. I am trying, by all means, to be there for my constituents, but this is made difficult by the COVID-19. Every weekend I am out checking on my voters. But of course, people never complain, but I do try my best.”

When asked to comment on issues raised by small business owners, Makwinja acknowledged that many problems are arising from the COVID-19 crisis. She also indicated that these street vendors are not the only ones affected by the contagion.

“The fact of the matter is that if these people cannot find help at council offices, there is a ward councillor. If the councillor cannot help them, they can reach me so that I link them with relevant officers. They should get my number, and we map how we can help them.”

LEA AIDS THE INFORMAL SECTOR

The government introduced the Informal Sector, Stimulus Fund, through the Ministry of Investment, Trade and Industry. The Fund was relief support for individuals who are fully dependent on their informal businesses for livelihoods.

All formally employed individuals in Government, Parastatals and Private sector operating informal businesses part-time were not eligible to apply or receive the Informal Sector, Stimulus Fund.

Administered by the Local Enterprise Authority (LEA), all registered and eligible Informal sector business owners were credited with P1 000.00 once-off grant. However, these small business owners in Lentsweletau denied ever being assisted under this Fund.

“We do not have a source of information about these particular initiatives. It’s a surprise that government communicates these initiatives on social media. We do not even know what that is. We don’t have phones to receive such information. All we know is that our representatives in Parliament quarrel all day without agreeing on any tangible solutions.”

UNDP, COVID-19 AND INFORMAL SECTOR

Unlike workers in the formal economy, who benefit from legal and social protections, informal workers earn their living without a safety net. They are mostly women and primarily self-employed, engaged in occupations such as street vending, domestic work, transportation, and garbage collection.

Some also work as off-the-books day labourers in factories, farms, and other formal businesses that don’t extend full rights or protections to all employees. Measures taken by many countries to fight the pandemic—including lockdowns implemented without significant assistance for those whose jobs are affected—have threatened the livelihoods of informal workers and pushed them further into poverty, hunger, and homelessness. Millions of informal jobs have been lost in just a few weeks, and millions more have been put at risk.

According to United Nations Development Programme (UNDP), Botswana’s seven weeks of national lockdown and closure of facilities had immediate adverse effects on the domestic economy as consumer demand declined and the supply chain was disrupted.

Business revenue-generating activity within the informal sector was paused due to the inability of businesses to trade during this period. Affected sectors were widespread across Botswana’s economy and included public transport, hawkers and street vendors, hair salons, liquor stores and restaurants.

In particular, the informal sector bore the major brunt of the national lockdown as staying at home and social distancing is antithetical to the nature of its economic activity and the means of livelihood for participants in this sector. Their plight is expected to worsen.

In its June 2020 forecast, the International Monetary Fund (IMF) states that the “pandemic’s still rapid spread indicates that social distancing measures will need to remain in place for a longer time, depressing economic activity in the second half of 2020.

STATISTICAL QUICK REFERENCE FINDINGS 

(Data from 2015 Multi-Topic Household Survey Report 2015/16, and 2015 Project to Conduct an Informal Sector Study for Botswana)

  • Total estimated number of persons employed in the informal sector: 191,176
  • Total estimated number of informal sector businesses: 116,571 (Avg. 1.64 persons per company)
  • Total Estimated Annual Economic Output from the Informal Sector in Botswana: P7, 875,730,039
  • Portion of Botswana Gross Domestic Product (Ministry Interviews): 5.3%
  • The percentage change in the number of informal sector businesses 2007 – 2015: +233%

Business

Botswana records first trade surplus since January

7th October 2021
Botswana-records-first-trade-surplus-

Botswana has recorded its first trade surplus for 2021 since the only one for the year in January.

The country’s exports for the month of July surpassed the value of imports, Statistics Botswana’s July International Merchandise Trade data reveals.

Released last Friday, the monthly trade digest reports a positive jump in the trade balance graph against the backdrop of a series of trade deficits in the preceding months since January this year.

According to the country’s significant data body, imports for the month were valued at P7.232 billion, reflecting a decline of 6.6 percent from the revised June 2021 value of P7.739 billion.

Total exports during the same month amounted to P7.605 billion, showing an increase of 6.1 percent over the revised June 2021 value of P7.170 billion.

A trade surplus of P373.2 million was recorded in July 2021. This follows a revised trade deficit of P568.7 million for June 2021.

For the total exports value of P7.605 billion, the Diamonds group accounted for 91.2 percent (P6.936 billion), followed by Machinery & Electrical Equipment and Salt & Soda Ash with 2.2 percent (P169.7 million) and 1.3 percent (P100.9 million) respectively.

Asia was the leading destination for Botswana exports, receiving 65.2 percent (P4.96 billion) of total exports during July 2021.

These exports mostly went to the UAE and India, having received 26.3 percent (P1. 99 billion) and 18.7 percent (P1.422 billion) of total exports, respectively. The top most exported commodity to the regional block was Diamonds.

Exports destined to the European Union amounted to P1.64 billion, accounting for 21.6 percent of total exports.

Belgium received almost all exports destined to the regional union, acquiring 21.5 percent (P1.6337 billion) of total exports during the reporting period.

The Diamonds group was the leading commodity group exported to the EU. The SACU region received exports valued at P790.7 million, representing 10.4 percent of total exports.

Diamonds and Salt & Soda Ash commodity groups accounted for 37.8 percent (P298.6 million) and 6.2 percent (P48.7 million) of total exports to the customs union.

South Africa received 9.8 percent (P745.0 million) of total exports during the month under review. The Diamonds group contributed 39.9 percent (P297.4 million) to all goods destined for the country.

 

In terms of imports, the SACU region contributed 62.7 percent (P4.534 billion) to total imports during July.

The topmost imported commodity groups from the SACU region were Fuel; Food, Beverages & Tobacco, and Machinery & Electrical Equipment with contributions of 33.3 percent (P1.510 billion), 17.4 percent (P789.4 million) and 12.7 percent (P576.7 million) to total imports from the region, respectively.

South Africa contributed 60.1 percent (P4.3497 billion) to total imports during July 2021.

Fuel accounted for 32.1 percent (P1.394 billion) of imports from that country. Food, Beverages & Tobacco contributed 17.7 percent (P772.0 million) to imports from South Africa.

Namibia contributed 2.0 percent (P141.1 million) to the overall imports during the period under review. Fuel was the main commodity imported from that country at 82.1 percent (P115.8 million).

During the months, imports representing 63.5 percent (P4.5904 billion) were transported into the country by Road.

Transportation of imports by Rail and Air accounted for 22.7 percent (P1.645 billion) and 13.8 percent (P996.2 million), respectively.

During the month, goods exported by Air amounted to P6, 999.2 million, accounting for 92.0 percent of total exports, while those leaving the country by Road were valued at P594.2 million (7.8 percent).

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Business

The 2021/2022 Stanford Seed Transformation Program Begins

7th October 2021

Founders from twenty companies have been accepted into the program from Botswana, Namibia, and South Africa

The 4th Cohort of the Stanford Seed Transformation Program – Southern Africa (STP), a collaboration between Stanford Graduate School of Business and De Beers Group commenced classes on 20 September 2021. According to Otsile Mabeo, Vice President Corporate Affairs, De Beers Global Sightholder Sales: “We are excited to confirm that 20 companies have been accepted into the 4th Seed Transformation Programme from Botswana, Namibia, and South Africa. The STP is an important part of the De Beers Group Building Forever sustainability strategy and demonstrates our commitment to the ‘Partnering for Thriving Communities’ pillar that aims at enhancing enterprise development in countries where we operate in the Southern African region”. Jeffrey Prickett, Global Director of Stanford Seed: “Business owners and their key management team members undertake a 12-month intensive leadership program that includes sessions on strategy and finance, business ethics, and design thinking, all taught by world-renowned Stanford faculty and local business practitioners. The program is exclusively for business owners and teams of for-profit companies or for-profit social enterprises with annual company revenues of US$300,000 – US$15million.” The programme will be delivered fully virtually to comply with COVID 19 protocols. Out of the 20 companies, 6 are from Botswana, 1 Namibia, and 13 South Africa. Since the partnership’s inception, De Beers Group and Stanford Seed have supported 74 companies, 89 founders/CEOs, and approximately 750 senior-level managers to undertake the program in Southern Africa.

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Business

Minergy overcomes challenges – improves revenue and produces record breaking coal sales to date

7th October 2021
Minergy

Minergy, the coal mining and trading company with the Masama coal mine, this week released results for the year ended 30 June 2021. The company achieved revenue of P193 million (2020: P81 million) with significant improvement in sales volumes surpassing 415 000 tonnes sold for the year.

The performance was divided into two distinct periods with very different operating environments. The first eight-month period (July 2020 – February 2021), was negatively impacted by delayed funding, COVID-19 impacts and excessive rain; and the last four-month period (March – June 2021), was a more stable production environment moving toward nameplate capacity.

According to Minergy CEO, Morné du Plessis, production and sales initially recovered in July and August 2020 with the easing of COVID-19 restrictions and recoveries were further bolstered by the successful launch of the rail siding. Delays experienced in concluding the funding contributed to contractors limiting operations to manage arrears.

“However, the heavy rains we experienced from December 2020 through February 2021 flooded the mine pit making access difficult and impacting both production and sales. Fortunately, the rain subsided in March 2021, and we entered a more stable environment, with a positive impact on operations. Good recoveries in production and sales were experienced during the last four-month period of the year, with the mine moving closer toward a breakeven position.”

“Despite these operational constraints, including the effects of COVID-19 on logistics and manning of shifts, we expect to reach consistent nameplate capacity in the 2022 financial year,” du Plessis added.

FINANACIAL REVIEW

In addition to the revenue reported above, the company incurred costs of sales of P256 million (2020: P150 million) with operating costs of P23 million (2020: P31 million). This effectively resulted in an operating loss of P86 million (2020: P100 million). Finance costs of P51 million (2020: P17 million) were incurred, bringing the net loss before taxation to P136 million (2020: P117 million).

Du Plessis explains that the adverse conditions in the first eight-month period contributed to 86% of the gross loss, while the more stable four-month period alone contributed to 50% of total sales value, helping to decrease monthly gross losses, albeit below breakeven levels.

The company benefited from a strengthening in the South African Rand (“ZAR”) supporting higher back-on- mine sales prices.

“As announced, we’re pleased to have secured P125 million of additional convertible debt funding through the Minerals Development Company Botswana (Proprietary) Limited (“MDCB”). Minergy remains grateful for this support.”

He added that the first tranche of additional funding provided by the MDCB had been received in December 2020, which allowed Minergy to settle the majority of the contractor’s arrears and allowed their teams to be remobilised. The second and final tranche was paid post the financial year-end and will allow the business to reach nameplate capacity in the new financial year.”

COAL SALES AND MINE PERFORMANCE

Sales volumes increased by 110%, supported by increased sales in Botswana and internationally in South Africa and Namibia. Sales for June 2021 exceeded 56 000 tonnes, a record since the inception of the mine, with pricing increasing late in the financial year on the back of buoyant international prices and a strengthening ZAR.

Minergy also concluded a further 12-month off-take agreement to the existing off-take agreement, with a further agreement finalised post year end.

Overburden moved during the reporting period increased by 86% and extracted coal by 50%. Coal mined in June 2021 alone exceeded 100 000 tonnes. “This is a good performance considering the challenges faced such as sacrificing pre-stripping activities for a period to manage arrears, excessive rain and COVID-19,” du Plessis indicated.

“The wash plant was initially starved of coal due to the factors noted already. Despite this, overall plant throughput performance was 37% higher than 2020. Consistent output was supported by the completion of the Stage 2 rigid crushing section as well as the water saving dewatering screen with filter press contributing to a reduction in water usage of 60% per tonne of coal. A record throughput of more than 84 000 tonnes was achieved in March 2021 and this consistency has been maintained.”

OUTLOOK

According to du Plessis, the completion of Stage 4 of the Processing Plant, the rigid screening and stock handling section, remains a key optimisation step, which has associated benefits. “The completion was unfortunately delayed by a southern African wide shortage of structural steel but was commissioned post year-end.”

Minergy expects the positive momentum in international coal pricing for southern African coal to remain in place. Higher coal prices have resulted in coal being withdrawn from the inland market in favour of lucrative international markets. Du Plessis added that the regional market is currently under- supplied with sized coal, which supports higher pricing and new customer opportunities for Minergy.

“Our objective for the 2022 financial year is to achieve nameplate capacity by completing final ramp-up of operations. This will enable the company to generate sufficient cash flow to stabilise the business at breakeven or better. The bullish coal market is also providing support. COVID-19 will still be closely managed, and we look forward to the lifting of the State of Emergency, as announced, and trust that vaccination programmes will achieve herd immunity in Botswana during the next 12 months.”

Du Plessis expressed his excitement on prospects stating that, “The Eskom due diligence process is continuing, and we are hopeful of receiving feedback during the current financial year. In addition to this opportunity, Minergy is also investigating participation in the request by the Government of Botswana to provide a 300MW power station for which the company has been shortlisted.”

The approved process to issue shares for cash is showing positive leads and he concluded by saying that a listing in London is still being investigated.

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