Rising food prices is said to be reaching crisis level with the Botswana Agricultural Marketing Board (BAMB) sounding the alarm. There are fears that Botswana is sliding into food price crisis if sounding bells by BAMB whose mandate is to provide a market for locally grown scheduled crops such as cereals, pulses/beans and oilseeds, and ensure that adequate supplies exist for sale to customers at affordable pricesis anything to go by.
BAMB revealed this week that it has adjusted prices for its products. In a memo that was jointly signed by the organization’s CEO, Benjamin Ditsele and head of finance Dinah Kesebonye, the agency states that, “Please be advised that there will be an increase of 12% on BAMB’s products and services effective on the 11th of July 2022.” These products include crops such as cereals, pulses/beans and oilseeds.
“The increase is necessary due to the ongoing global rise of raw material prices and the added pressure on transportation of these, caused by the rise in fuel prices,” BAMB said. It says all processed orders made before 11th of July will be honoured with the current price. According to the Chairman of Botswana Millers Association, Christo Ellis they are in consultation with the Ministry with a view to achieve affordability and absorb some of the possible rising costs.
He said active engagements with Ministry of Trade and Industry and retailers are ongoing and all role-players in the supply chain are doing their bit to see what they could do to assist consumers without putting their business and jobs at risk. “As inward and outward logistics are a large part of a millers cost structure, price adjustments were already given through to the market,” said Ellis. Ellis who is also the Chief Executive Officer of one of the major millers, Bolux, said further price adjustments will depend on what direction oil prices and exchange rates take going forward.
“We are all living in extremely volatile times with occurrences in one part of the world impacting everyone globally,” said Ellis. His observation is that, “Businesses and consumers need to adapt to these rapid changes and remain relevant.” Reports indicate that Bokomo Botswana Chief Executive Officer Werner de Beer was recently quoted as saying they were in consultation with BAMB to find ways of mitigating the current situation of escalating raw material prices.
Sources were also quoted as saying that millers and suppliers, who are still struggling to regain their footing after months of continued increases in fuel prices that in turn lead to increases in transport costs, are perturbed that the domino effect could have an impact on recovery of their businesses. This publication recently reported that BAMB has lost millions of Pula to alleged mismanagement and impropriety of funds. This was revealed in an internal report that was conducted by the agency’s internal audit committee late last year. The report also shows how some employees were ill-treated while others were unfairly dismissed.
The report discovered among others illegal procurement of BAMB inventory and services using strategic reserve funds (SRG). Apart from other findings raised by the Internal Audit Report, one of the significant issues raised was that SGR funds were used to buy BAMB products and services worth more than P30 million contrary to the provisions of the SGR /BAMB agency agreement.
According to the report, between 2019 and 2020, BAMB blew P31 million on red sorghum, day old chicks feed and some professional services. The report shows that currently SGR is owed P289 million mainly due to acquisition and selling of SGR products at a loss. The report states that more details on breach of SGR agreement are covered in the SGR internal audit report. Further the Ministry of Agricultural Development and Food Security has commenced SGR audit and has requested information from the in-house internal audit team.
The report also uncovered some mismanagement dealings relating to signing of unprofitable and unfair sales contracts resulting in huge BAMB losses with products sold taken from National Food Reserve threatening national food security. “BAMB reported a P47 million loss last financial year and also owes SGR around P290 million due to these unprofitable sales agreements,” the report says.
The report shows that 3100 tonnes of sweet sorghum worth around P8.7 million was exported to a South African based company at a loss of more than P1 million. The report states that the P1 million loss does not include other business operational costs. “Currently Botswana does not have enough sorghum; therefore, BAMB is planning to import sorghum to supply local millers. The Board has instructed management to further make investigations on the dealings made with the company in question,” the report says.
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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.”