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ODC 2021sales revenueset to surpass P10bn

Okavango Diamond Company(ODC), the 100 percent Botswana Government owned rough diamonds marketing and sales company is recovering well from the 2020 economic downturn. ODC, established in 2012 as a homegrown entity to sell Botswana diamonds outside De Beers price book and channels has sofar registered sales revenue exceeding US$830 million for its trading year 2021.

This was achieved in the first eight (8) months of the current financial year 2021, a 484% jump from the 2020 sales revenue of US$181 million. The 2020 sales revenue was a 48% declinefrom US$371 million sales revenue in 2019). The decline in 2020 was mainly due to several cancelled sales (and ODC not generating any revenue) since the end of March 2020 as markets showed signs of uncertainty, because of to the COVID-19pandemic.

ODC started the year 2020 on such precarious grounds and was unfortunate given that 2019 was also a weak trading year for the industry and by extension ODC. ODC a key player in rough diamond trading in the world, anticipates growth until at least the end of Q1 next year. “We are still left with the last quarter of our 20201 trading year, so we anticipate out sales revenue to reach US$1 billion, and if you convert that to Pulas, that’s a lot of money,”said Okavango Diamond Managing Director, Mmetla Masire.

Masire said industry profitability remains healthy and demand throughout the diamond pipeline remains robust with slight softening in some categories of diamonds. Furthermore, overall liquidity is generally good, and the state-owned entity believes that this healthy trend is positive news that was needed given the negative impact of the COVID-19 pandemic that almost crippled the entire industry.

“As you are all aware our diamonds are sourced from Debswana, Botswanas flagship diamond mining company that accounts for over 98% of Botswanas diamond production. Therefore, whenDebswana sneezes, ODC catches a cold, we are therefore, relieved, and happy to see that Debswana has recently increased production and look forward to future increases,” ODC’s Board Chairman, Dr Gape Kaboyakgosi said in his welcome remarks.

According to the ODC, its sales revenues showed improved growth this year, due to a lot of positive market dynamics and the companys response to being able to read their customer buying behaviour as accurately as possible, and make informed decisions about how, when and what they should sell.

The company explained that last year in June, it took very radical decisions about what ODC would and would not be prepared to sell and at what prices as this was validated by the companys market intelligence and its perceptions of the market. To date ODC has continued to be very careful in managing its diamond inventory to ensure that they are not encumbered by excessive stock which is difficult to sell in a downward market, explained Masire.

The company has seemingly so far been making the right decisions to ensure it protects the long-term sustainability of its business. Early on, prior to the government lockdown, ODC started pre-emptively planning its business continuity framework to handle Covid-19 situation while helping generate sustainable economic benefits for Botswana and Batswana. Our vision is to be to be a world leader in the sales and marketing of natural diamonds, and we are excited by the journey ahead,” Masire said during the business update press briefing.

In addition, ODC board Chairman, Dr Kaboyakgosi explained that ODC has proven to be an agile organisation that can pivot inline with prevailing operating conditions. The impact of COVID-19 on the whole world and the perations of the global diamond market couldnt have been foreseen and yet ODC has managed to not only survive the pandemic but to thrive with record sales volumes.

ODC earned US$110 million during its October Spot Auction sale which coincided with the companys participation at the world-acclaimed EXPO 2020 Dubai. Prior to the October sale, ODCs September Spot Auction sale generated US$123 million. The September 2021 sale is said to represents the largest one-day Diamond Auction sale ever conducted for rough natural diamonds, however, ODC recently broke the September record again.

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Grit divests from Letlole La Rona

22nd March 2023

Grit Services Limited, a member of the pan African real estate group, London Stock Exchange listed Grit Real Estate Income Group is divesting from Letlole La Rona Limited (LLR), a local real estate company established by government investment arm Botswana Development Corporation over a decade ago.

The Board of Directors of Letlole La Rona Limited this week announced in a statement to Unitholders that Grit Services Limited (‘Grit’) has informed them of its intention to exit its investment in the company.

Grit has been a material shareholder in LLR since 2019. On 07 March 2023, Grit sold 6 421 000 linked units, representing 2.29% of the Company’s total securities in issue, at a market value of BWP 22 537 710.

This trade follows previous sales of 6.79% in December 2022, as communicated to Unitholders on 10 January 2023, as well as a further sale of 4.78% (representing 13 347 068 linked units) on 24 February 2023 to various shareholders.

In aggregate, Grit has sold 13.9% shareholding in the Letlole La Rona between December 2022 and March 2023, resulting in current shareholding of 11.25% in the Company.

Letlole La Rona said in the statement that the exit process will take place in an orderly manner so as to maintain stability of the Company’s share price.

The statement explained that Grit’s sale of its entire shareholding in LLR is in line with its decision to exit investments where it does not have majority control, or where it has significant exposure to currencies other than US dollar, Euro or hard-currency-pegged revenue streams.

“Grit has announced similar decisions pertaining to certain of its hospitality assets in Mauritius recently. The Company would like to advise Unitholders that it remains focused on long-term value delivery to all stakeholders” LLR said

In July last year as part of their Go-to-Africa strategy Letlole La Rona acquired an initial 30% equity stake in Orbit Africa Logistics, with an option to increase this investment to 50%. OAL is a special purpose vehicle incorporated in Mauritius, owning an industrial asset in a prime industrial node in Nairobi, Kenya.

The co-investment was done alongside a wholly owned subsidiary of London listed Grit. The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of Nairobi center, serving the main industrial node, the port of Mombasa and the industrial town of Athi River and is strategically located 11 kilometers south of the international airport and 9.6 kilometers from the Inland Container Depot.

Grit shareholding in Letlole La Rona was seen as strategic for LLR, for the company to leverage on Grit’s already existing continental presence and expand its wings beyond Botswana borders as already delivered by Kenya transaction.

Media reports have however suggested that LLR and Grit have since late last year had fundamental disagreements on how to go about the Go-to-Africa strategy amongst other things, fuelled by alleged Botswana government interference on the affairs of LLR.

Government through LLR founding shareholder – Botswana Development Corporation has a controlling stake of around 40 percent in the company. Government is the sole shareholder of Botswana Development Corporation.

Letlole La Rona recently released their financial results for the six months ended December 2022, revenue increased by 4% to P50.2 million from P48.4 million in the prior comparative six months, whilst operating profit was up 8% to P36.5 million. Profit before tax of P49.7 million was reported, an increase of 8% on the prior comparative six months.

“We are encouraged by the strong results, notwithstanding a challenging economic environment. Our performance was mainly underpinned by annual lease escalations, our quality tenant base and below average market vacancy levels, especially in our warehouse portfolio,” Kamogelo Mowaneng, Letlole La Rona Chief Executive Officer commented.

LLR reported a weighted average lease expiry period of 3.3 years and escalation rates averaging 6.8% per annum for the period ended 31 December 2022.Its investment portfolio value increased by 14% year-on-year to close the period at P1.4 billion, mainly driven by the acquisition of a 30% stake in OAL in July 2022.

The Company also recorded a significant increase in other income, predominantly due to foreign exchange gains on the OAL shareholder loan. “We continue to explore pipeline opportunities locally, and regionally in line with our Go-to-Africa strategy and our interest remains on value-accretive investments,” Mowaneng said.

An interim distribution of 9.11 thebe per linked unit was declared on the 6th of February 2023 for the half-year period to 31 December 2022, comprising of a dividend of 0.05 thebe and debenture interest of 9.06 thebe per linked unit which will be paid to linked unit holders registered in the books of the Company at the close of business on 24 February 2023.

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Business

Stargems Group establishes Training Center in BW

20th March 2023

Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.

The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.

“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.

In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices.  Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.

“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.

Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy,  Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.

“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.

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Business

Food import bill slightly declines

20th March 2023

The latest figures released by Statistics Botswana this week shows that food import bill for Botswana slightly declined from around P1.1 billion in November 2022 to around P981 million in December during the same year.

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