IIMA
MARCH-APRIL 2020 ISSUE 8
BOTSWANA EXPORT MARKETÂ
Page of Contents Introduction
2
The Journey to AfCTA Readiness
3
Young e-Logistics Entrepreneurs
6
Net Importers Gain in Crude Volatility 8 Where are the Visitors?
11
Diamonds Fading Glitter in 2020
15
Portfolio Re-Balancing in a Crisis
18
ESG Insights
20
Regulation & Policy
22
Remote Working Dynamics
24
Outlook
27
Ex p o r t M a r k e t i n t h e H e a r t o f C O V I D - 1 9
The sequential local and international events closing Q1 2020 is what you would expect to see when you are watching a Hollywood Science fiction movie only to discover that it is the new normal for those undergoing extreme social distancing and lockdown periods to contain the spread of COVID-19. 2020 started off on a positive note in Botswana with heavy rains that always signal good fortune and a handsome harvest for small and commercial farmers. The reception of the 2020/2021 budget speech was positive in the business community as the 5 year strategic roadmap was laid out for analysts to spot opportunities and align their business strategies accordingly. The excitement was short lived as the emergence of an infectious disease COVID-19 took the world by storm steering global capital markets into panic mode as economic activity halted in China and the rest of the international community.
I n t r o d u c t i o n | Pa g e 2
On the latest Impact Investing Magazine our Research & Analytics Unit delves into Botswana Export Market focusing primarily on the current COVID-19 developments in terms of impact on trade, economic development and productivity. We will also offer nuggets on why a business continuity plan should be embedded in business strategy in order to respond swiftly to unforeseeable circumstances. We highlight the growing e-Logistics sector and young Botswana entrepreneurs who created technological solutions to meet lifestyle changes in consumer demand by offering convenience and delivering food at the click of a button. The aftermath of COVID-19 will change how people in Botswana and the rest of the world do business as the digital way of life becomes the new reality for the next few months as the world returns to "normal" as we once knew it.
T h e J o u r n e y t o Af C T A R e a d i n ess
T ra d e M a r k e t | Pa g e 3
International Merchandise Trade Statistics P'Millions
Exports
Imports
Lindiwe Mafavuneh Founder & CEO LCM Capital
4,549.6 5,772.9 7,300.7 6,233.2
4,000 Source: Statistics Botswana
On the heels of the just ended 2020/2021 budget speech, this year was declared the year of revival of key economic sectors such as agriculture that had remained dormant for over a decade contributing less than 5% to the national gross domestic product (GDP). 2020 was supposed to be the year that will set the tone and spur momentum for the 5 year economic transformation agenda of the new administration. As previously mentioned on the February 2020 issue of the Impact Investing Magazine, the road to high income status is marred with challenges and hidden opportunities that requires bold visionary leadership to sail across the rough and turbulent waters. Q1 of 2020 started off on a good footing with heavy rains after months of dry and barren lands.
5,000
6,000
Nov 2019
Agriculture was back in the swing of economic activity as more people were enticed by the heavy rainfall and took heed of the advice of the youthful leadership at the helm of the Ministry of Agriculture and Food Security to consider agriculture as an alternative to youth job creation and food security. According to the International Merchandise Trade Statistics December 2019 report, total imports amounted to P6, 233.2 million, resulting in a decrease of 14.6 percent compared to the revised November 2019 value of P7, 300.7 million. Total exports for the current month were valued at P5, 772.9 million, representing an increase of 22.2 percent from the revised November 2019 value of P4,725.7 million. With a net import of P460.3 million can agriculture close the gap in subsequent months?
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Dec 2019
The end of Q1 2020 is engulfed by a world health pandemic Coronavirus (COVID-19) that no one anticipated when economic growth predictions were announced at the end of 2019 and beginning of 2020. The Economic Commission of Africa has issued a warning that COVID-19 could dent Africa growth, with oil exporting nations losing up to $65 billion in revenues as crude oil continue to spiral down. Africa growth is predicted will fall from 3.2% to approximately 2% due to disruption of global supply chains and unanticipated increases in health spending of $10.6 billion. COVID-19 will offer many net importing nations opportunities to revamp their trade strategies in an effort to cushion against future health hazards that will have the global economy on lock down.
T h e J o u r n e y t o Af C T A R e a d i n ess
T ra d e M a r k e t | Pa g e 4
"Africa growth is predicted will fall from 3.2% to approximately 2% due to disruption of global supply chains and unanticipated increases in health spending of $10.6 billion" ECA With the revision of the local economic growth rate from 4.4% imminent due to the unexpected impact of COVID-19, the private and public sectors will have to collaborate to come up with innovative ways to reduce health and economic impact. COVID-19 pandemic has exposed the heavy reliance of African States to external markets for food security and trade, and also the severe concentration risk of such reliance which result in pervasive impact to African growth and key economic markets. After the end of the COVID-19 storm, food security will be placed as a high economic priority and concerted efforts will be amplified in the agriculture sector. The importance of ICT as the corner stone of business continuity amidst unexpected events can never be emphasized enough. The companies that will continue operations with minimal impact are those that have embedded innovation at the heart of their business strategy.
Those on legacy systems will feel the impact as social distancing will affect front-line workers who do the daily operational duties. Companies that relied on face-to-face training will be forced to look at online delivery of training and conferences. COVID-19 has transformed business as usual in Botswana by showing that those who were early adopters of cloud-based solutions were ahead of the game and will outperform their peers who are facing enormous losses due to lack of business continuity plans (BCP). However, BCP plans are not enough for some economic sectors like the hospitality and tourism sector which relies heavily on human traffic volume to make profit. This is the sector that will be most impacted by the travel ban due to the severity of COVID-19. The journey to AfCTA readiness is off to a challenging start as borders are now monitored and nationalism will be reinforced to control the movement of people.
T h e J o u r n e y t o Af C T A R e a d i n ess
T ra d e M a r k e t | Pa g e 5
"COVID-19 lockdown will present opportunities for FMCG companies with e-commerce platforms to deliver groceries to consumers door steps. This will also ensure that the spread of COVID-19 is kept at a minimum as few people will visit grocery stores when they run out of essentials but instead order groceries using their smartphones for home deliveries. Our Research and Analytics team identified a poor local ecommerce penetration and a gap in e-commerce infrastructure as only one FMCG company Sefalana Group offers such services". LCM Capital Research & Analytics Team
Y o u n g e - L o g i s t i c s E n t r e p r e n eu rs
E m e r g i n g e - c o m m e r c e M a r k e t | Pa g e 6
The Brains Behind MyFoodness CEO-Boi Kgathi Rasmussen
As the global fight against COVID-19 persist and the lockdown is enforced, some entrepreneurs will see the silver lining to take their e-logistics business to great heights in a collaborative effort to join hands with those in the front lines to minimize impact by offering convenience to customers that are home bound. Botswana does have those visionaries that started e-commerce enterprises before it became mainstream. Young visionaries who identified a gap in the market and seized the moment to make customer centricity their core business and to offer solutions for their busy clientele who cannot make frequent grocery visits. In January 2018 Boi Kgathi Rasmussen launched a food delivery application to cater for private and corporate clients in Gaborone. That was before the roll out of optic fibre internet but she continued with her bold idea to be the uber of grocery shopping. Now three years later her services will be in high demand as many people will be forced to stay home due to the fight against a formidable force COVID-19.
www.myfoodness.co.bw
According to the latest internet statistics Botswana has 0.83 million active mobile users with 36% penetration. Most of the internet users have smartphones and are city bound where there is faster broadband making myfoodness a viable and bankable business to cater to the masses during the COVID-19 lockdown. The most vulnerable citizens remain adults over the age of 60 who would need assistance with grocery shopping as parents keep their children away from the old. Active Mobile Social Subs 3.8 Million CAGR 1.27%
Source: Q3 2019 Statistics Botswana
My foodness app will experience a surge in demand as consumers search for alternative ways to buy food in the wake of the deadly disease that is due to hit the Botswana shores. E-commerce will finally be embedded in the local shopping experience after COVID-19 storm.
Y o u n g e - L o g i s t i c s E n t r e p r e n eu rs
Add short body of text 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 2011 2012 2013
E m e r g i n g e - C o m m e r c e M a r k e t | Pa g e 7
Internet Subscriptons Q4 2011 to Q3 2019
2014
2015
2016
2017
2018
2019
Internet Subscriptions Source: Statistics Botswana
Internet subscriptions growth increased exponentially by 669% since 2011 demonstrating high penetration and consumer usage driven by consumers adaptability and need for fintech solutions and services. With 5G entering other international markets, Botswana will be an ideal market to take e-Commerce to greater heights and meet the needs of consumers looking for convenience.
N e t I m p o r t e rs G a i n i n C ru d e P r i c e V o l a t i l i t y
E n e r g y M a r k e t | Pa g e 8
Brent Crude Oil US$ 70 60 50 40 30 20 May
June
Jul
Aug
Sept
Source: Bloomberg
The Energy Market witnessed a steep decline in Brent Crude Oil prices from $50.52/bbl in February 2020 to $22.74/bbl at the end of the first quarter of 2020 representing a 54.99% decline in oil prices due to a sharp deterioration in global oil demand emanating from strict travel restrictions in China and some parts of the world affected by high numbers of COVID-19 infections. Although China has started to destabilize the spread of COVID-19 and nearing zero infection cases, some parts of the world are going through the early stages of the outbreak which is starting to affect economic activity. Botswana is yet to report a COVID-19 case at the end of Q1 2020, thus has issued a directive to enforce a partial lockdown with schools closed, restaurants & bars and retailers operating under restrictive times and conditions. The limited movement of people home bound will have adverse effect on oil demand as transportion comes to a complete halt across the country due to inactivity.
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Brent
According to the International Energy Agency (IEA) oil 2020 fuel report, demand in China will be low in the first quarter, with a year-on-year fall of 1.8 million barrels per day (mb/d). IEA reported that global demand will drop by 2.5 mb/d. Energy Markets Analysts predict that improvement in oil prices will be experienced in the second quarter in China and progressive recovery will take place as the economy has experienced the full cycle of the outbreak and now starting to breathe fresh air and resume productivity. The overall impact as reported by the IEA is that the magnitude of the drop in the first half will lead to a decline in global oil demand of around 90,000 barrels a day compared with 2019. Botswana is a oil net importer country with 100% oil products bought beyond the borders. 2017 IEA statistics show that 995 ktoe oil products were imported with zero exports. As crude oil prices continue to tumble down will net import countries bulk up for future use?
N e t I m p o r t e rs G a i n i n C ru d e P r i c e V o l a t i l i t y
E n e r g y M a r k e t | Pa g e 9
Light Green Energy
It is yet to be determined if the movement restriction will only be applicable to people not movement of goods. Botswana's neighbouring country South Africa exports most of her goods and products including oil to her friendly neighbour. While South Africa puts place complete lock down, the ramification on logistics is yet to be quantified at the end of Q1 2020. If logistics in terms of the free movement of goods across various border posts is not affected then there will be great arbitrage opportunity for the energy players to buy oil in bulk for storage while crude prices are at an all time low. According to the IEA transport consumes 92.2% of oil products compared to other sources including electricity. We will only see the benefits in Q2 or when the COVID-19 situation stabilize in Africa.
Transport Fuel By Source
0.0% 1.1% 3.7%3.0%
92.2%
Coal
63
Crude oil
Oil Products 2,588,508
Natural Gas
Bio-Fuels
Electricity
Source: 2017 IEA Statistics
83,589
5 104,714 31,269
N e t I m p o r t e rs G a i n i n C ru d e P r i c e V o l a t i l i t y
E n e r g y M a r k e t | Pa g e 1 0
"The
54.99% decline
in crude oil prices in Q1 2020 presents great opportunities for net oil import countries such as Botswana to exploit oil price arbitrage and increase their National Oil Reserves." Founder & CEO LCM Capital
W h e r e a r e t h e V i s i t o rs ?
T
he hospitality and tourism industry which
contributed 10.4% of the world GDP and a similar share of employment in 2018 according to the WEF Tourism Competitiveness Report has experienced unprecedented events over the past two months due to the aftermath of the fight against COVID-19. The global tourism industry was inundated with travel cancellations as border controls and travel restrictions were implemented to curb the spread of the virus that has spread as fast as lightning within a short period of time. The hospitality and tourism sector which is highly dependent on volume of people to break even has found itself asking "where are the visitors"? As many tourist attractions are left abandoned as visitors from far and near have gone in hiding in their home countries and own homes to try and escape catching the virus. COVID-19 has exposed how connected we are as a human race and the benefits and disadvantages that comes with belonging to one global village. Countries whose economies were heavily reliant on tourism will feel the emptiness of their beautiful resorts and attractions and miss the buzz, ambiance and flavour that visitors brought to their economies that not only made their economies flourish but kept eveyone employed.
H o s p i ta l i t y & T o u r i s m I m p a c t | Pa g e 1 1
"Local Listed hospitality & tourism equities valued at US$108M remain robust amidst the early stages of COVID-19 pandemic in Africa at the end of Q1 2020". Prior to COVID-19 outbreak, Statistics Botswana indicated that a total of 275,406 passenger Empty text were recorded during Q3 2019. This movements was an increase of 20.1 percent compared to passenger movements recorded in the prior period Q2 2019. The significant increase was due to a change in methodology to include scenic flights to Maun and Kasane. International and domestic passenger movements increased by 11.6 percent and 32.5 percent respectively compared to Q2 2019. LCM Capital Research & Analytics sensitivity analysis indicate that a 95% decrease in passenger movements at the heart of the Covid-19 will reduce the total to below 20,000 which will be mainly domestic visitors in Q2 2020 if the lockdown persist. The impact of the partial lockdown has not been felt yet by the local stock market, with hospitality & tourism stocks still showing healthy and attractive financial results.
W h e r e a r e t h e V i s i t o rs ?
H o s p i ta l i t y & T o u r i s m I m p a c t | Pa g e 1 2
PRICE
EPS
ROE
ROA
Chobe
P11.50
0.99
25.11%
16.51%
Cresta
P1.35
0.19
16.39%
5.64%
Hotel &Â Tourism Industry Stock Industry performance at the end of Q4 2019 was 16.63% showing that local equities were performing nearly at par or above industry average prior to Covid-19.
Empty text
W h e r e a r e t h e V i s i t o rs ?
H o s p i ta l i t y & T o u r i s m I m p a c t | Pa g e 1 3
Global Add short body of Hotels text & Tourism Industry Stock Performance October 2019-March 2020 20 10 0 -10 -20 -30 -40 Oct 19 Nov 19 Dec 19 Jan 20 Feb 20 Mar 20 Hotel & Tourism Industry Stock Performance Source:CSI Market
OVER THE PAST TWO MONTHS,
us$332b HOSPITALITY & TOURISM MARKET CAP REDUCED
W h e r e a r e t h e V i s i t o rs ?
H o s p i ta l i t y & T o u r i s m I m p a c t | Pa g e 1 4
International capital markets that have graduated from the early stages of the pandemic have seen $332 Billion wiped off valuations across 116 publicly traded airlines by the end of Q1 2020 according to the Visual Capitalists insights. The sustainability of the rosy picture of Botswana hospitality and tourism equity stocks will be determined by the preparedness of those in charge to curtail the spread in the country and the duration of the outbreak in international markets. By the end of Q2 2020 real impact will be quantified by analysts.
T ra d e Ta l ks
Diamonds have been the bedrock and bread and butter of Botswana's economic transformation and development since independence in 1966. The discovery of diamonds in 1969 ensured that free education was enjoyed by the majority creating an inclusive society in the 1980s where every child in Botswana was given the opportunity to access free education and health care, which after 53 years still stands. Unlike neighbouring countries South Africa, Zimbabwe, Zambia and Namibia whose early infrastructural transformation is the result of colonialization, Botswana's transformation was an organic evolution as a result of dividends earned from selling their natural resource. The country has over the years worked hard to diversify the export basket which is still heavy on diamonds by focusing efforts on other commodities, manufacturing and services. The economic diversification agenda gospel has not delivered the desired results yet due to macro economic challenges over the years.
D i a m o n d s Fa d i n g G l i t t e r | Pa g e 1 5
However, diversification efforts are gradually gaining momentum with services primarily Commercial Banks and Hospitality and Tourism sector performing above sub-par on the local stock exchange. The contribution of the services and hospitality and tourism sector although good and a welcome development is still nothing to rave about as diamonds exports and revenue continue to dominate and contribute more than 90% to the export basket. According to Statistics Botswana total exports at the beginning of Q1 2020 were P5, 178.8 million with diamond exports representing 91.3% of the total exports. When we zoom our lenses on the local stock exchange, mining still dominates with a 85% concentration risk on Anglo American with the highest market capitalization as at 31 March 2020. The headwinds of COVID-19 will be felt in both the export revenues and the local stock exchange as diamond site sales have been halted until further notice.
T ra d e Ta l ks
D i a m o n d s Fa d i n g G l i t t e r | Pa g e 1 6
Can the diamond industry weather the COVID-19 Despite the bleak interim outlook on diamond storm to bring back the glitter by the end of Q2 industry over the past consecutive quarters, Lucara 2020 when businesses have returned to normalcy Botswana has defied the odds and continue to as we know it? According to Statistics Botswana Empty uncover text largest stones from its wholly owned mine Index of the Physical Volume of Mining Production Karowe Mine. In January 2019, the Botswana listed Second Quarter 2019 report, diamond mining Diamond Company announced the recovery of production was on a downward trajectory in Q1 two top white gem diamonds weighing 240 carats and Q2 of 2019, closing Q2 with a negative and 127 carats, as well as a 223 carat. In late April quarter to quarter growth of 4.2%. The cited 2019, one of the largest diamonds recorded in reason contributing to the negative Diamond history weighing 1,758 carat was mined, later production is attributable to weaker trading named “Sewelô” by the citizens of Botswana. In conditions as well as being cautious to September 2019, Lucara made another recovery macroeconomic uncertainty. As macroeconomic of a 123 carat gem quality top white diamond, a activity persist due to social distancing the mining 9.73 carat gem quality blue diamond and a 4.13 sector will continue to feel the pressure as carat gem quality pink diamond. All three production is reduced or halted to meet demanddiamonds were recovered from direct milling of supply economics. The outlook in the short to South Lobe ore from the Karowe Mine. All these medium term does not look rosy for diamonds but recoveries provided the glitter needed in 2019 to production might be ramped up when the coast is brighten the gloomy picture of macroeconomic clear in terms of the fight with COVID-19. uncertainity in the mining industry.
D i a m o n d s Fa d i n g G l i t t e r | Pa g e 1 7
T ra d e Ta l ks
Add short body of text
High and Low Trading Prices TSX (CDN$)
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Three quarterly dividends in 2019 of CDN$0.025 per share for a total annual dividend of CDN$0.075 per share. A total of 411,732 carats were sold generating gross revenues of $192.5 million. Record year of performance in the plant processing 2.8 million tonnes of ore and recovering 433,060 carats, including 29,990 carats from previously milled material. Ore and waste mined of 3.3 million tonnes and 6.5 million tonnes, respectively, supported the strong plant performance.. Source: Lucara Botswana 2019 Annual Report
Portfolio Management
As a well rounded finance professional who has studied extensively internationally across many finance disciplines; Actuarial Science, Finance and Accounting I can opine that COVID-19 crisis is an extraordinary event that has never been captured or televised in the history of mankind. What makes COVID-19 unlike any other epidemic or pandemic is that it has halted travel and movement of people globally reducing economic activity to below 50% in most economies. The limited economic activity has eroded investor confidence as many governments enact defensive mechanisms to shield their economies from further infections causing a downward spiral in economic growth. Portfolio Managers find themselves looking at past financial crisis to gather insights on the best strategies to adopt dealing with an unprecendented crisis.
P o r t f o l i o R e ba l a n c i n g i n a C r i s i s | Pa g e 1 8
To boost investor confidence during times of uncertainty a leading local pension fund manager by asset under management issued a COVID-19 response to assure Pensioners and the investment community not to panic as history has proven that capital markets always recover in the long term. Since the investment horizon of pension funds is long term, is the buy and hold the best strategy? According to the Portfolio Management Research webinar that took place in the United States of America on how research into past crises can help us navigate the current market conditions, investment experts recommended that portfolio managers should consider mechanical rebalancing. Mechanical rebalancing is defined as an active strategy of buying losers and selling winners with the intention of increasing drawdowns.
Portfolio Management
P o r t f o l i o R e ba l a n c i n g i n a C r i s i s | Pa g e 1 9
"Here we explore the role of "strategic rebalancing" in which the trend signals are used to time the rebalancing decision. For example if equity is in a negative trend, managers should avoid rebalancing" Rattray, Van Hermet and Granger Source: Portfolio Management Research
The Botswana Stock Exchange trading as at 9 April
d2020 short body of text was flat with 8,079 shares worth BWP 8,560 transacted compared to 2 million shares worth BWP 7.4 million on 8 April 2020. The majority shareholders on the local stock exchange are institutional investors with a passive buy and hold strategy, hence the exchange tends to be illiquid compared to other capital markets that may endure high drawdowns during a recession or crisis. According to the Best Strategies for Worst of Times: Can Portfolios be crisis proofed? research paper, empirical findings based on performance of a number of defensive strategies, both active and passive, between 1985 and 2018, with a particular emphasis on the eight worst drawdowns where the S&P 500 fell by more than 15% and three US recessions suggest that it is possible to hedge the risk but it comes with a high price. Evidence show that a passive strategy that continually holds put options on the S&P 500 is a prohibitively expensive leading to a return drag of more than 7% per year.
A strategy that passively holds US 10-year Treasuries is an unreliable crisis hedge, given that the post-2000 negative bond-equity correlation is historically atypical. Long gold and short credit risk sit in between puts and bonds in terms of both cost and reliability according to our research. The time-series momentum strategies and quality stocks strategies faired well during both severe equity market drawdowns and recessions. It is however recommended that investors be careful in defining “best” when selecting the best of strategies in the worst of times. It is essential to understand not just the performance but the overall cost of implementing various protective measures. Importantly, every crisis is different. For each crisis, some defensive strategies will turn out to be more helpful than others. Therefore diversification across a number of promising defensive strategies may be most prudent (RVG, 2019).
A g r i c u l t u r e I n s i g h ts
E S G I n s i g h ts | Pa g e 2 0
The year 2019 was dedicated to strategically position agriculture favourably to the young and old as a venture with a lot of untapped opportunities and which the young could seek unemployment refuge by tapping into different commercial businesses along the agriculture value chain. However, those efforts are yet to bear fruits as Q4 2019 nominal gross domestic product results show that the agriculture sector growth had contracted by -1.0% attributable to a decline in the Livestock industry and harsh climatic conditions due to drought and erractic rainfall. Q1 of 2020 showed favourable climatic condtions for the agriculture sector as the spell for lack of rain was broken and the heavens poured rain on a continous basis putting a smile on many farmers faces throughout the country. This year harvest season was going to be a great harvest for the farmers who took advantage of the heavy rainfall during the beginning of Q1 2020. Revenues from their hardwork are now at risk as extreme social distancing have lockedin potentail customers for the next 28 days. The good news is that agriculture services have been declared an essential service, meaning that those providing produce and services are allowed movement. These service providers will have to utilise ingenious ways of bringing their produce to the comfort of their consumers homes to reap benefits and increase GDP contribution.
E S G I n s i g h ts | Pa g e 2 1
A g r i c u l t u r e I n s i g h ts
Add 5 Year Grain Purchases Analysis Per Mt 45,000 short 40,000body of text 35,000 30,000 25,000 20,000 15,000 Source: Statistics Botswana 10,000 5,000 0 Sorghum
Maize
2012/13 2013/14 2014/15 2015/16 2016/17
Pulses
According to Botswana Agriculture Marketing Board (BAMB) during the 2017/2018 harvesting season, a total of 26,430 Mt of grains were purchased from small holder and commercial farmers. 2016/2017 BAMB sales show that sorghum is the most climate resistant crop with 69% sales achieved compared to maize and pulses which had mere 17% and 14% output respectively.
T h e I m p o r ta n c e o f B u s i n ess C o n t i n u i t y P l a n s
Early this year when the Global Risks Report 2020 was released the impact of an infectious disease was placed 10th on the risk register with climate change taking the center stage. According to the global risk report, despite considerable efforts towards ending the Ebola epidemic in West Africa in 2014-2016 empirical evidence suggest that the health systems worldwide were under prepared to deal with future significant outbreaks of other emerging infectious diseases. A recent comprehensive assessment of health security and related capabilities across 195 countries found fundamental weaknesses around the world that no country was fully prepared to handle an epidemic or pandemic. Post COVID-19 outbreak the conclusion drawn from the health security assessment is profound and true as developed countries with advanced health systems are battling to contain a deadly infectious disease that took the world by storm within a short period of time. To reduce the risk of infection governments have called for complete or partial lockdowns which are hindering economic activity and productivity. For large corporations business continuity management is at the heart of their business strategy as many fire drills simulations are performed on a regular basis and few employees work from home occassionaly to check the robutness of the BCP in case of unexpected events or loss. However, those simulation plans would not have factored a COVID-19 event where the whole world is on lockdown.
R e gu l a t i o n & P o l i c y | Pa g e 2 2
Nonetheless, BCP will ensure a smooth transition for workers to work remotely as many of such companies would have adopted cloud soultions were everyone including front line workers can work anywhere where there is access to internet. Social distancing also calls for alternative ways of working whether through shifts or remote working. Many companies that operate through face to face dealings will have a complete shock and inteference if they did not have a BCP to deal with these uneventful circumstances. Nobody knows when the travel ban will be lifted as some countries in Africa are in the early stages of the outbreak and are entering the winter season which will last until end of August 2020. Therefore, severe strain will be felt by the SMMEs which mostly work off legacy systems and rely on face-to-face interactions with clients. Innovative companies will continue to weather the COVID-19 storm as many have taken their clients online by offering e-Services and telecommunication services to reduce the lead time of office walk-ins due to social distancing. Botswana Post E-Services Vehicle Licence Renewal Prepaid Electricity Money Transfer Pay Water Bill Dstv Subscriptions
BURS e-Tax Services E-filing tax returns Online Payments Issuance & Verification of tax clerance certificates Online registration for tax purposes Online viewing of accounts balances
T h e I m p o r ta n c e o f B u s i n ess C o n t i n u i t y P l a n s
R e gu l a t i o n & P o l i c y | Pa g e 2 3
Organizations offering e-services will continue operating as business as usual as customer traffic will be diverted online versus to their physical brick and mortar establishments. Should SMMEs who are late adopters of technology and innovative solutions accept their fate and be reactive and halt activity while waiting to be rescued by COVID-19 stimulus packages? The answer is that it is not too late for the SMMEs to find ways to assess their business models and offer their customers options to deliver their services without further damages due to loss of inactivity. How can they adopt business continuity management systems at the heart of a pandemic? According to ISO 22301, Security and Resilience – Business continuity management systems standard, ISO 22301 is applicable to all organizations, regardless of size, industry or nature of business and is useful for business continuity and risk professionals, supply chain directors, audit managers and associates, developers of corporate social responsibility reports, regulatory bodies and anyone else involved or interested in business continuity. USA CORONA STIMULUS PACKAGE
$2 TN
19% ALLOCATED TO SMALL BUSINESS Source: Cares Act Bill @ Visual Capitalist
How Can SMMEs Get Started? Ensure you have buy-in from top management. A business continuity management system can only be effective if those in decision-making positions provide genuine support and treat it as a high priority. Do a readiness assessment to establish where you are in relation to the standard’s requirements and what level of resources you will require to meet them. Undertake a business recovery exercise to consider carefully what you would currently do should there be a disruption to any area of your business. This will help you to be clear on how capable your organization is to respond and how ISO 22301 can help.
T h e N ew N o r m a l Â
R e m o t e W o r k i n g D y n a m i c s | Pa g e 2 4
SINCE 2015,
125% GROWTH IN REMOTE WORKING Source: Global Workplace Analytics
As developing countries are grappling with the new developments of forced remote working due to combating COVID-19, for others it is a seamless progression as remote working is embedded in their business processes. Multinational Corporations that have a global presence have since adopted the concept of remote working before it was popularized by the digital economy through social media over the last decade. For companies primarily those in emerging economies remote working is still a new concept that is mostly designated to "freelancers" and bloggers who can pretty much work from anywhere that has wi-fi access. The definition of working as we once knew it, was commuting from home to work at a physical place with team members under one roof where meetings were conducted face to face on a regular basis.
After my 18 years international experience stunt I have been fortunate to be exposed to remote working in my corporate experience. The concept of remote training through webinars and virtual teams is not new, for many people such as myself these new dynamics are not something to be apprehensive about. The new normal of working anywhere in your home requires a paradigm shift that the lockdown period will facilitate as many people will have adapted by the end of 21 days or 28 days.The economic impact of COVID-19 will be felt the most by SMMEs who adopt a shutdown approach for the month of April 2020 instead of looking at remote working as an alternative to continue business. Some may be relying on the P2 Billion stimulus package to soften the economic blow but there is a solution to most of the SMMEs with access to wifi to consider working from home to reduce their losses.
T h e N ew N o r m a l
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Benefits of Telecommuting Increased Productivity Work-Life Balance Cash Savings for Companies: $11,000 Per Person Big Savings on Fuel and Vehicle Maintenance No Rental Office Expenses Cash Savings on Office Wear & Dining
According to the GetVoip Remote Work in 2019: Facts, Figures, Tips and Anecdotes, in 2016, Dell announced plans to expand its telecommuting and remote work programs, citing savings of $12 million a year from reduced office space costs. It was also estimated that Dell employees who worked remotely 10 days a month saved about $350 a year in commuting costs.
BW 1st Digital Impact Investing Magazine
T h e N ew N o r m a l
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Add short body of text "The ramifications of COVID-19 have brought a global experiment on remote working to the foe making those familiar with the dynamics walk in stride and those unfamiliar begging for "normal" to return. The experts in telecommuting are now envisioning a post COVID-19 landscape were there will be more opportunities for remote work as the social experiment would be successful in initiating everyone including students in the digital way of life and hopefully everyone would come out of the whole experience unscathed". Lindiwe Mafavuneh Founder & CEO LCM Capital
Post COVID-19
As the people of Wuhan in China return to normalcy after almost three months of hibernating from COVID-19, the rest of world begins to look up with renewed hope as evidence that the storm does not last always and there is a solution to keep the virus in remision. Most African countries started the COVID-19 fight journey by the end of Q1 2020 with lessons learnt from those who have won the fight or rather controlled the spread of the virus for the past two months. The economic impact is still yet to be realised as the local stock market has not had adverse reaction compared to other global capital markets at the end of Q1 2020. As this is a novel experience by global standards, the most impacted industry will be the hospitality and travel industry as movement of people continues to be controlled and national borders remain closed. Economists have estimated subdued African growth prospects of below 3% due to interruption in global supply chains. This has resulted in S&P credit agency downgrade of some African countries. At the start of Q2 we have seen South Africa downgraded to junk status and Botswana from A- to BBB+ status due to weakening fiscal and external balance sheets attributable to prolonged depressed diamond market. Time will tell if the stimulus package of P2 Billion + P29 Million private donations is enough to cushion the economy from the worst case scenario. What we can be certain of is that the digital way of doing business has found its way to our dailiy lives and the way we conduct business. It is yet to be seen if Africa will finally leapfrog and realize the full benefits that will come from an unfortunate incident.
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Lindiwe Mafavuneh Founder& CEO LCM Capital