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Defence, Security

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BOTSWANA’S BUILT ENVIRONMENT NEWSPAPER | Vol. 6, Issue 1 | FEBRUARY 2016 GUEST COLUMNIST

www.boidus.co.bw

INTERIOR DESIGN

The Real Estate Advantage Financing for housing in Africa p4

Design Pad Pad: Kitchens - An evolution of countertops p9

PROFESSIONAL PRACTICE

Common procedures in dispute determination and resolution

p10

2016 BUDGET SPEECH

By HonoUraBlE o.K. MaTaMBo Minister of Finance & Development Planning By Boidus Admin

Five Reasons why the

Economic stimulus

Programme construction projects will fail

By HK Mokwete If histories, hard evidence through examples of issues are anything to go by, then there are plenty of indications around to show that the 1.5 billion proposed for the Economic Stimulus Programme construction projects will end up in abject failure. There are many reasons that can be advanced for this assertion but the following five are compelling enough to deliver the verdict; p14

• P 1.62 billion for Economic Stimuls Programme • ESP explained as NDP 10 Backlog projects clearance • Contruction industry in line for a big budget windfall • Schools, Police stations, roads all see significant spending under ESP.

KeyEconomic Priorities Sector Projects The Stimulus Programme Budget for various projects P50 million / Ministry of Health

P257 million

Rural electrification

P35 million

Teachers houses

P250 million

P272.9 million

Lands and housing

Road projects

P1.62

billion

llion

P315.04 million

Minerals, d Water

Rural development

P440.35 million Teachers houses

ons

P440.35 million

MoE

P1.41

For the construction of teachers’ houses, classrooms and laboratories under ESP.

billion

evelopment Budget

MDJS

P3.59

billion For the provision of Defence equipment, Communication equipment, and Infrastructure in order to improve BDF’s defence capabilities. as well as for the Construction of police stations at Mmathubudukwane, Maitengwe and

dEVELoPmEnT AGEndA BEYond 2017 The proposed budget allocations for 2016/2017 cover key thematic areas of: investing in infrastructural development; creating employment opportunities; strengthening human capital; enhancing national security; and strengthening local governance. For the full budget analysis, see pages 3 and 6 p3.6

Vision 2016 and the

Built Environment:

Achievements & Failures By Tlotlo Tsamaase Vision 2016 was envisioned by the Presidential Task Team appointed by former President Sir Ketumile Masire in 1996 to develop a long-term vision to tackle the broad aspects of social, economic, entrepreneurial, political, spiritual and cultural lives of Batswana. To achieve prosperity for Botswana, seven pillars were set: An Educated, Informed Nation; An Open, Democratic and Accountable Nation; A Moral and Tolerant Nation; A United and Proud Nation; A Safe and Secure Nation; A Prosperous, Productive and Innovative Nation; A Compassionate, Just and Caring Nation.

p7,14


local / INTERNATIONAL news P2

BOIDUS FOCUS FEBRUARY 2016

Low-cost Rural Studio homes Sowing seeds for contractor aspire to be built for $20,000 competence

by Kisto Dickson

Permanent Secretary to the Ministry of Infrastructure, Science and Technology, Dikagiso Mokotedi says the construction industry bill will allow proper grading and assessments of related professions that accord to contractors, immediate opportunity to compete both locally and internationally.

One major reason why tiny homes are so popular is probably because they are cheaper to build than your average home, usually costing anywhere from a few thousand to many thousands of dollars -- still cheaper than average. The only drawback is that tiny homes are, well, tiny, typically measuring under 280 square feet. But what if you could get a home twice the size, for about the same price? That’s the aspiration behind Rural Studio of Auburn University’s 20K House, a decade-old project that has aimed to design low-cost, efficient homes for the broader public. First founded by Sam Mockbee back in 1993 as a place to engage in “social justice architecture,” Rural Studio’s students have designed and refined more than a dozen prototypes of homes sized at around 550 square feet. This January, the program partnered with a commercial developer to build two cottages for an artists’ residency program located in Serenbe, a “high-end, new-urbanist-pastoral community” south of Atlanta. According to Fast Company, thousands of hours have been spent to refine the concept behind the houses -- something that is built unconventionally and intelligently, yet doesn’t look completely out of place. Says Rusty Smith, associate director of Rural Studio: The houses are designed to appear to be sort of normative, but they’re really high-performance little machines in every way. They’re built more

like airplanes than houses, which allows us to have them far exceed structural requirements. ... We’re using material much more efficiently. But the problem is your local code official doesn’t understand that. They look at the documents, and the house is immediately denied a permit simply because the code officials didn’t understand it. Some instances of these unconventional but efficient methods of building include elevating the structure on piers and wooden joists, instead of using a typical concrete foundation, which saves on material but makes for an even stronger foundation. Airflow underneath the house is promoted in this way, encouraging passive heating and cooling. Windows are kept to a minimum as they are costly, but are placed in strategic areas to maximize light and air. Inside the home, transom openings are built in over the bathroom and bedroom doors to help with cross ventilation. Ultimately, the idea is to build something that not only meets the needs of those who need it most, but to disrupt business-as-usual. Says Smith: “The most daunting problems aren’t brick and mortar problems, they’re these network and system problems that are threaded together and all intersect in the built environment. We’re able to attack all these problems simultaneously—when we see a lever over here and wiggle it, we can very clearly see the implication it has on other systems down the road.”

Mokotedi is satisfied registering contractors on an intentionally accepted standard will confine them to parameters of legal requirements to be recognized as a contractor and how they will work in concert with others within the construction sector. “This is a major development. We are now laying rules and discipline by which the construction company has to operate,” he said on the sidelines moments after the draft bill was handed to Infrastructure Minister Nonofo Molefhi. The draft bill, compiled by PPC Cement, the government and other industry bodies now awaits cabinet appreciation and a rigorous debate in parliament before it could be passed into law. The timetable might see this going to parliament next year should it miss out on this year’s sessions, according to Molefhi. “We would be more than happy to use this instrument for implementation to ensure the industry is orderly arranged,” he pronounced in his remarks during the hand over. Mokotedi, re-assured the bill is “the missing piece” and “an interest to the economy” and says the leadership of the country

has expressed concerns over the state of construction industry, pointing out to lack of a clear growth direction. “This is why we have started with registration of engineers, architects and quantity surveyors. These are the consultants in the construction industry,” he noted. “You have to understand that we did not have any legislation to delve on other factors of the construction industry. So, other people who have been operating within the industry have been doing it in a vacuum, to an extent that anybody can just come and set up construction company.” In his thinking, not only will this help companies or individuals propel, but will caution end-users against exploitation without recourse. “You get a contractor registered under the law, they will have legal responsibility to do certain things because it is required by law,” he said. Meanwhile, General Manager at PPC Cement Botswana Werner De Beer laid bare a commitment by his company to accelerate the construction sector’s fortunes that are already underway through initiatives like the Construction Summit. “The industry has taken a lot of flak as some well-known major projects were previously not delivered on time and in accordance with specification.” He said.

Continental-Re’s spine for revenue by Kitso Dickson Insurance and reinsurance firms say they have envisaged multiplier effects unfolding through the Economic Stimulus Package (ESP) to the benefit of the industry as a whole. The remarks were bred by government’s plans to effect a fresh round of clearing project backlog during the fiscal year (FY) 2016/17 which will witness heavy developments infrastructure. Before Finance Minister, Kenneth Matambo could crunch numbers, economists had already forecast a ballooning infrastructure development budget which will also be in line with the National Development Plan 11(FY17/18) and the Vision 2036. “Definitely with talks of ESP, the expectation is increased spending on government projects and that should boost the construction sector,” Moatlhodi Sebabole, Research Manager at First National Bank Botswana said. “Naturally, a booming construction sector means increase in production or imports of cement,” he further stated. ESP, according to Khama’s pronouncements will witness construction of buildings: houses, teachers’ and nurses’ accommodation, classrooms and laboratories, and roads. Cassim Hansa, Managing Director at Continental Property and Engineering Risk Services, a pan-African reinsurance company, says major classes of insurance business likely to be positively impacted would be the Marine (in event of importing plant and materials for farming and manufacture) and the Construction/Building insurance programmes. “Then too we should note – specifically for

buildings/housing, farming and manufacture - the insurance sector will further benefit on an annual premium basis since these ‘assets’ have to be insured after being built/occupied and when operational,” he said responding to Boidus inquiry. According to Hansa, the ESP alone will hopefully represent at least another 4%-5% of much needed new growth revenue inflows. “Insurers allow for organic growth on basis that property assets sums insured always need to increase to keep track of inflation (cost/currency escalations),” he says. But the chances of prosperity lie in medium to large infrastructural projects unfolding in Botswana this year besides the ESP. “Without going into specifics, we know and expect development with Railways; Power and Transmission lines (strengthening of existing and new sub-stations); Water and Sanitation, township/housing infrastructure and construction, Infrastructure - Roads and Highways,” he says. In the public domain, hopes are pinned on the Morupule B Power Station extensions continuing and the Trans Kalahari Railway (TKR) project which is still pending. Whilst there is perceived growth opportunities within the local market, experts say a pivotal challenge the insurance market is faced with is its ability to establish the sector as a tool to potentially attract both economic and non-economic value. Most believe that client base as well as its investors will testify its sustainability, eventually facilitate the various stakeholders to understand the value of the market.


MaIN FEaTURE P3

BOIDUS FOCUS FEBRUARY 2016

2016 BUDGET SPEECH

implementation of EDD initiatives, creation of Special Economic Zones, as well as regulatory reforms and improving efficiency.

By HonoUraBlE o.K. MaTaMBo

Minister of Finance and Development Planning By Boidus Admin water and improved waste water management. For the Greater Gaborone area, Government intends to meet water demands by, among others, increasing water storage capacities and construction of new primary water pipelines. Phase II of the North-South Carrier Water Scheme, which involves construction of a parallel pipeline to the existing line is underway. Other initiatives include exploring the possibilities of accessing water from Lesotho and the Chobe-Zambezi area.

Continued from the FRONT PAGE

of agricultural land.

Energy Investing in Infrastructural development The solar electrification programme is also ongoing The country is currently faced with water in Government schools and associated facilities and electricity supply shortages due to the that are far away from the national power grid. drought situation and continued technical Furthermore, the implementation of the National problems related to power supply, respectively. Electricity Standard Cost, which was established Shortages of such critical utilities do not only to reduce the burden of high connection cost for inconvenience the general public, but also domestic consumers, is ongoing. undermine growth in the economy; as they adversely affect business operations. As such, Recurrent Budget EsP all projects for water and electricity will be Some of the economic activities with potential accorded high priority in the allocation of the In addition, initiatives are underway to reclaim for creating employment opportunities, which budget in 2016/2017. waste water, as an alternative water resource. P7.53 billion Government will be undertaking during The construction of a waste water P10.64 reclamation billion 2016/2017 include: infrastructure backlog plant in Mahalapye is underway. This Plant will Water20.4 % 28.8 % Remaining Ministries eradication, road networks and maintenance, produce 3.9 million Cubic Meters ofMinistry water per Government has embarked on a number of of Education andin Departments wildlife and tourism initiatives, continued 40 hectares projects various districts to ensure security of annum, with a potential to irrigate and Skills Development

Recurrent Budget

Development Budget P1.11 billion Ministry of State President

P36.99 billion

P4.17 billion P2.02 billion 27.5 %

5.5 %Ministries and Other

MinistryDepartments of Transport and Communication

Ministry of Education and Skills Development

Teachers houses Remaining Ministries and Departments

P4.95 billion 13.4 %

203.8 million 2015/16 versus 2016/17 Health projects Development Budget Development Budget Comparison 344.7 million 2015/16 versus 2016/17 Development Budget Comparison P3.59 billion 24.2 %

Ministry of Defence, Justice and Security

300 million Agric infrastructure

Ministry of Local Government and Rural Development

453 million

Projects KeyEnergy Priorities Sector Projects Economic Stimulus Programme

P1.41

billion

M Ju ini sti str ce y o an f D d S ef En ec enc er M ur e, gy in ity i & st W ry at o er f M Re in so era M ur ls ini ce , str s y Co of m Tra m n un sp M ica or ini str tio t & yo ns Ru f L ra oc l D al ev Go elo v’t M ini pm an str en d yo t Sk f ills Ed u De ca ve tio lop n a m nd Ot en he t rM ini De st pa rie rtm s a M en nd ini ts str yo fA gr icu M ini ltu str re yo fS ta te Pr es ide nt

P1.41

P1.41 billion 9.5 %

P14.82 billion Ministry of Minerals, 2016/17 Energy and Water Resouces2015/16

Road projects

300 million Agric infrastructure

billion billion

Teachers houses

P4.661 billion

681.2 million For the provision of Defence equipment, Education projects and Infrastructure Communication equipment, in order to improve BDF’s defence capabilities. P315.04 million as well as for the Construction of police stations Rural development at Mmathubudukwane, Maitengwe and Semolale, and including staff houses.

P440.35 million

P50 million

For ESP projects including; primary school facilities, village infrastructure and construction of customary courts.

MoE

P1.41

billion

MSP P600.08 million

To cater for upgrading of The MLGRD budget health facilities and construcMoH mainly caters for Ipelegeng and Destitute P741.81 tion of staff houses throughShared million out the country. Housing programmes.

billion MoA P813.04 million

The MTC budget takes the third largest share to cater for construction

MTC

P1.41

billion

P354 million

Land Administration and Processes, Capacity and System (LAPCAS)

Development Budget

P14.82 P338.38 million Land servicing

billion

For Botswana Power Corporation to cater for emergency power supply.

MMEW

billion

P1.22 MLH P910.37 million

For the construction of teachers’ houses, classrooms and laboratories underP1.35 ESP.

P3.43

MLGRD

P4.17 billion

For road projects under the ESP.

P1.62 P3.59

P440.35 million

billion Ministry of Transport and Communications

P250 million

MDJS

P3.43 billion Development Budget 23.1 %

This caters for additional poverty eradication packages under ESP. million P315.04

P250 million

332.1 million Land servicing

4 3.5P272.9 million Lands and housing 3 2.5 2 1.5 1 0.5 0

681.2 million Education projects

MTC

The MTC Ministry budgetoftakes the third Local Government largest share to cater for Development construction and Rural of secondary roads, bridges, bitumen and trunk roads.

housing

4.5 billion

billion

P1.22 billion

P250 million Ministry of Education

Development For and roadSkills projects under the ESP. P1.22 billion 8.3 %

203.8 million P440.35 million 2015/16 versus 2016/17 Rural electrification MoEDevelopment P35 million classrooms and laboratories under ESP. Budget Comparison 344.7 million Teachers houses Health projects P50 million / Ministry of Health P257 million For the construction of teachers’ houses,

P4.661

MLGRD P14.82

Ministry of Health

13.5 %

housing

332.1 million Land servicing

P5.75 billion P315.04 million 15.5 Rural % development

Ministry of Defence P440.35 million Justice and Security Teachers houses P4.99 billion

Ministry of Transport and Communications

P1.09 billion 7.4 %

billion billion

Ministry of Transport Ministry of Health and Communication

Ministry of Minerals, Energy and Water Resouces

Road projects

P36.99 P1.62

P5.75 billionP2.02 billion 5.5 % 15.5 %

P1.41 billion 9.5 %

4.5 4 P315.04 P4.17 billion million 3.5 For ESP projects including; primary school 27.5 % facilities, village Other infrastructure 3 Ministries and and constructionDepartments of customary courts. 2.5 2 1.5 The MLGRD budget mainly caters for Ipelegeng and Destitute 1 Housing programmes. 0.5 0

P250 million

Lands and housing Ministry of State President

P3.43 billion Ministry of Local Government and Rural Development 23.1 %

Ministry of Local Government and Rural Development

Ministry of Education and Skills Development

P1.11 billion P272.9 3.0 % million

P4.99 billion 13.5 %

P1.22 billion 8.3 %

Continues to p7

P257 million P10.64 billion Rural electrification 28.8 %

P35 million 20.4 %

Ministry of Defence, Justice and Security

billion

Ministry of Defence billion JusticeP1.09 and Security 7.4 %

P50 P7.53 million / Ministry of Health billion

P3.59 billion 24.2 %

P14.82

P4.95 billion 13.4 %

The implementation of the ESP will create jobs especially in the construction sector and rural areas. In the same vein, youth owned construction companies and individual youths with vocational skills in maintenance should be given priority in the implementation of the ESP through the Youth Empowerment Reservation Programme. Currently, the Programme reserves 15 percent of minor maintenance budget of Government facilities for youth companies and youth with vocational skills in construction.

Key Priorities Recurrent Sector Budget Projects Recurrent Budget Recurrent Budget

Development Budget 2016/17

3.0 %

Infrastructure Backlog Eradication The global financial and economic crisis led to a number of projects being deferred, especially in the areas of social and economic infrastructure such as in education, health, and roads. In this regard, Government, through the ESP is embarking on fast-tracking backlog eradication, which covers construction of classrooms, staff quarters, and customary courts; upgrading of health facilities; and rural electrification.

MDJS

P257 million P3.59 ESP for rural electrification

billion

P257 million

sub-station For the provision ofRakola Defence equipment, Communication equipment, and Infrastructure in order to improve BDF’s defence capabilities. P225 million as well as forTransmission the Construction P135 million grid of police stations at Mmathubudukwane, Maitengwe and Morupule A Power Semolale, and including staff houses. Station rehabilitation

453 mill Energy Pr


GUEST COLUMNIST P4

BOIDUS FOCUS FEBRUARY 2016

The Real Estate Advantage:

Financing for Housing in Africa By Sethebe Manake, ©vantage properties

4. Policy and regulator evolution to match investor interest 5. Growing experience and investor sophistication.

My most favorite annual report on Africa is out. The Housing Finance in Africa 2015. The report is an annual report published by the Centre for Affordable Housing Finance in Africa. I thought this time, in reading it, I could share some very interesting insights about the Key Issues discussed in the 2015 edition and how they relate to Botswana’s Housing Finance conditions.

Innovative Financing:

In this years’ edition the report speaks to 5 key trends that are found in housing finance in Africa, being 1. Innovative Financing 2. Opportunity in Residential 3. Identification of Niche Markets and appreciation of the affordability challenge

The mortgage market is also seeing extensive review across the board where countries are striving to achieve at least mortgage contribution to GDP of 5%. A deep and wide mortgage market allows for flexible and wide opportunities for housing ownership. Developers are also able to be more targeted in their delivery of housing.

These sounded like music to my ears but how did Botswana fair?

One would say that in terms of pricing Botswana is doing well with low interest’s rates by Africa Standards, but why are we not able to achieve

Opportunities in Residential:

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at least average global standards. For a country with advanced and secure land ownership regimes we should be able to price the risk on the actual property lower and make it easier for the average household to afford their mortgage.

Investing in residential property at a professional level has been generally avoided local and internationally for its administrative baggage. However in recent times residential property has proven that it is able to deliver returns that far out way its inconvenient nature. The interesting thing is that the best and highest return are a set on the lower income levels than usually locally targeted. So let us also seize the opportunity with caution. Any high return investment comes with a high risk factor and mitigation is fundamental.

Identification of Niche Markets and appreciation of the affordability challenge; The reality is as we have seen from various reports on financial inclusion and poverty, a higher portion of the population is able to access traditional mortgages. Countries across Africa are looking for ways to provide products and mechanisms that allows them to provide affordable accommodation and benefit the most out of it. I have been a believer and I continue to believe that the time is now for us to have products that service our market.


BoIDUs FEaTURE P5

BOIDUS FOCUS FEBRUARY 2016

ndP could get caught under the wrath of falling revenue By Kisto Dickson

sector at Business Botswana, an advocate for private sector, said in a statement to Boidus. He still insists the construction industry’s hopes for prosperity lie somewhere within the ESP, against all the odds of plunging revenue. “I do believe we should always question what happens in our economy and in our country in general. In this instance of economic stimulus – this should be welcomed by all as the construction industry has suffered and with it the whole economy. The projects that we believe will be called to be undertaken are necessary and vital additions to the infrastructure of Botswana” he said in his statement.

• The decline may vest over two years • Government should be cautious about spending • The private sector needs to adjust to less spending Botswana as a primary resource exporter of minerals, the largest donor of government’s revenue, has been hit along with other resource based economies by sinking commodity prices and subdued demand. On February 1’st, Finance Minister Kenneth Matambo, laid bare, before parliament, a global shift that is central to a decline in mineral revenues which could extend to coming years. Yet a dominant portion of the infrastructure budget relies on these proceeds for construction activities under the National Development Plan 11 (NDP), Boidus Focus writer, Kitso Dickson reports. Moatlhodi Sebabole, a Research Manager at First National Bank Botswana says there is a need for medium-term budget review and dedicated project management team to permit close monitoring of expenditure vs. return on investment, given the 2016/17 fiscal budget. “As we have seen in the past, once the government revenue dwindles as was the case from 2009, government has a propensity to undergo fiscal consolidation and spend less. This affects the infrastructure budget more than the recurrent budget (since government is less likely to do mass layoffs of the employees). This will have an effect of slowing development of infrastructure and subsequently slower economic activities within the construction sector,” he says responding to this publication’s questions. According to Matambo, total revenues and grants for 2016/2017 are estimated at P48.40 billion, a decrease of P3.36 billion compared to the revised budget of P51.76 billion for

2015/2016, with Mineral revenue contributing 35.2 percent of the total revenues. “The reduction in the 2016/2017 revenues compared to 2015/2016 is a result of the projected fall of 6.9 percent in mineral revenues and 23.8 percent in customs and excise receipts,” he said during his budget proposal. Concerns over the health of the global economy, especially China has incited analysts’ sentiments over further declines running up to 2018 before commodity prices could rebound. It’s difficult to tell, but when they rebound it’s anybody’s guess, Garry Juma, Head of Research at Motswedi Securities said. Available figures represent a slide in mineral revenue from the period of June to September and economists had already projected budget shortfalls vesting over fiscal years 2015/16 and 2016/17. By Tuesday 2nd of February, the day after the Budget Speech, the public was already aware of the P14.82 billion proposed to fast track the back log of public infrastructure as many of the most were certain the increase will accommodate the implementation of the National Development Plan 11 and the Economic Stimulus Package (ESP). “It is an incontrovertible fact that there is a shortage of work and a hunger for work by consultants and contractors. If there is a capacity by our government and other entities to build then we should encourage this in every manner possible. And be very pleased that we live and work here!,” Markas Markides, chair of the construction

However, Keith Jefferis, Managing Director at eConsult forewarned the government against over spending which could bleed dry proceeds. He had already suspected a measly spending under the ESP, given its medium-term strategy. “The public infrastructure needs have been provided, and the future will see upgrades and maintenance,” he opines, predicting that Botswana may not witness constructions of any more airports, universities etc. While the government has hinted possibilities of borrowing from foreign and domestic reserves, Jefferis thinks it would make sense provided the projects will have economic return. He holds that projects discussed on ESP have no positive economic gain, and advises the private sector to adjust to less spending by the government. Most of private contractors had already lost hope, folding businesses to hop aboard farming models. Nic Van Rensburg, Executive Director at Association of Botswana Building and Civil Engineering says none of his members still do sources of government revenue

business with the government. Statistics show that the construction sector became the fastest growing industry in 2011 and 2012 at 23.1% and 14.4% respectively, a time where construction of roads was at a boom and the CBD constructions were also at a peak. Since 2012, the growth in the construction sector has trended below 5% and observers think it shows the lack of major government projects as government underwent fiscal consolidation. Sebabole argues that infrastructure should support sustainable growth and thus the expectation is for the infrastructure budget to address the country needs and demand for fixed investments. In his mind, good measure of attaining growth in construction sector will be the gross fixed capital formation as a % of GDP – being a progressive measure of benefit derived from government’s fixed investments.

“It is impossible to speak to progressive growth without alluding to contribution of construction sector. The sector embodies construction of road and rail networks, social facilities and facilities that will allow for improvement of livelihood,” he says. The developments, he says, act as enablers since roads, rail networks, air transport facilities and other facilities are used as avenues to boost trade and economic activity, as well as improve the attractiveness of the country as a destination hub for businesses to set-up and operate export-oriented businesses. “The creation of hubs gives an opportunity to develop facilities that will attract FDIs and streamlined economic activity,” he states.


billion

billion

P1.09 billion % COLUMNIST P6 MAIN FEATURE 7.4 / GUEST

BOIDUS FOCUS FEBRUARY 2016

Ministry of Education and Skills Development

P3.43 billion 23.1 %

2016 BUDGET SPEECH P1.22 billion 8.3 %

P1.41 billion 9.5 %

Ministry of Local Government and Rural Development

Ministry of Minerals, Energy and Water Resouces

P315.04 million Rural development

P440.35 million Teachers houses

by Honourable O.K. Matambo Ministry of Transport and Communications

Continued from the FRONT PAGE

P440.35 million

MoE

P1.41

P315.04 million

For ESP projects including; primary school facilities, village infrastructure and construction of customary courts.

For the construction of teachers’ houses, classrooms and laboratories under ESP.

billion

The MLGRD budget mainly caters for Ipelegeng and Destitute Housing programmes.

billion

P1.22

billion

For the provision of Defence equipment, Communication equipment, and Infrastructure in order to improve BDF’s defence capabilities. as well as for the Construction of police stations at Mmathubudukwane, Maitengwe and Semolale, and including staff houses.

Development Budget

P14.82 billion

MTC

P1.41

The MTC budget takes the third largest share to cater for construction of secondary roads, bridges, bitumen and trunk roads.

P3.59

MLGRD

P250 million

For road projects under the ESP.

MDJS

billion

P50 million

This caters for additional poverty eradication packages under ESP.

To cater for upgrading of health facilities and construction of staff houses throughout the country.

P1.35 billion

For Botswana Power Corporation to cater for emergency power supply. MSP P600.08 million

MoH P741.81 million

P4.17

MoA P813.04 million

P35 million

P3.43

billion

Shared

billion

For ESP, to cater for; grey water re-use, Lotsane irrigation project, Glenn Valley infrastructure rehabilitation, grading of roads, and Agricultural Service Centres.

MMEW P354 million

P338.38 million Land servicing

Rakola sub-station

P135 million

Morupule A Power Station rehabilitation

Transmission grid

Under ESP aimed at accelerating ongoing programmes.

contractors to take out Engineering covers that suit their unique business operations. In this article we will look at Contractors All Risks (CAR) Insurance in detail, and see how it benefits the insured.

The government has announced an Economic Stimulus Programme which aims to promote economic growth through accelerated infrastructure development. With the upcoming project opportunities it is advisable for all

P225 million

P272.9 million

Construction Insurance

By Christopher Burton

ESP for rural electrification

P257 million

Land Administration and Processes, Capacity and System (LAPCAS)

MLH P910.37 million

P257 million

Contractors All Risks offers comprehensive protection against loss or damage that can occur to the contract works as well as any third party claims for property damage or bodily injury in connection with the ongoing project. The property covered may for example be a road, bridge, dam, building, factory or even a power station and may include or exclude mechanical and electrical plant such as generators, boilers, lifts, gantry cranes etc, whilst being assembled and installed therein. Risks normally covered under CAR policy include

but are not limited to fire, flood, earthquakes, theft or accidental damage. Contractors All Risks does not however, cover deliberate Acts, War, Warlike Operation, Cessation of Work, Financial Losses/ Penalties and or Nuclear Reaction/Radioactive Contamination. The extent of cover required will normally depend therefore on the nature of the contract and what is stipulated in the contract documents; and that available in the market where the insurance is placed. Construction policies may either be arranged for single projects or on an annual policy basis covering a variety of projects falling below an agreed estimated final contract value and within certain contract risk types. The larger projects

tend to be insured on an individual basis. The policy may be taken out by the Contractor or Employer. The arrangement of these insurances will be dictated by the contract conditions, whilst the risk of the contract site will be that of the contractor except for certain defined perils such as war risks. The contractor’s responsibility starts from the commencement of the works and ends on the date stated on the completion certificate or occasionally 7 days thereafter. Completion certificates may be issued for the whole or part of the works. Before purchasing any engineering insurance policy, search for appropriate coverage by assessing your needs and the potential risk. This may require an insurance Broker or Agent to advise. Read the fine print, and always remember cheap is not always the best, as the extent of cover can vary considerably according to the premium.


BOIDUS FEATURE P7

BOIDUS FOCUS FEBRUARY 2016

Vision 2016 and the Built Environment:

Achievements & Failures By Tlotlo Tsamaase

Continued from the FRONT PAGE National Development Plans implement policies and key programmes set to achieve Vision 2016’s goals. The Tenth National Development Plan NDP 10 spans the years April 2009 to March 2016. Though, it has now been proposed to extend NDP 10 to March 2017 thereby extending NDP 11 to April 2017. This extension would allow for completion of projects and programmes that weren’t implemented to meet the set target: March 2016. The period NDP 10 faced delay in major projects and some which were removed because of budget constraints. Such examples were hospitals projected for construction in Moshupa, Tonota, Mabutsane, Lerala, Mmathubudukwane and Letlhakeng. Several issues are still a concern: high levels of poverty and unemployment still persist. Because of several constraints realized during the period of NDP 10, they have been affecting other sectors, such as the agricultural sector, which still carries a low contribution to the Gross Domestic Product (GDP).

In regards to the water services: in the 2013 Mid-Term Review of NDP 10, which assesses the progress of the NDP 10 during its first half of implementation towards 2016, several successes under the water subsector of the infrastructure category were noted:

rienced service providers and procurement challenges” as stated in the Mid-term review of NDP 10. A policy briefing by Tshepo Setlhogile and Ross Harvey titled Water Governance in Botswana states, “The government has implemented water sector reforms but progress is slow and limited to establishing new roles for the WUC (Water Utilities Corporation) and the DWA (Department of Water Affairs). These reforms have arguably delayed the shift towards demand management, which is crucial, as the WUC is struggling to maintain supply to all settlements and the country regularly experiences severe water supply shortages. The reforms have led to the development of a draft water policy that has yet to be approved.” In regards to power, the indices for electricity generation developed by Statistics Botswana as sourced from Botswana Power Corporation (BPC) are: The year 2015 experienced a decrease in electricity generated from the second quarter (629,976 MWH) to the third quarter (591,983MWH) by a decline amount of 37,993MWH. The year-on-year comparison of 2014’s third quarter to 2015’s third quarter indicated 27.5 percent decrease in electricity generation. This is resultant to the challenges that Morupule B power plant faced. Incidentally, BPC had introduced a 35MW plant which only contributed 612MWH. Despite this implementation, there was still a shortage in electricity generated of 52.9 percent.

Several dams of Thune, Lotsane and Dikgatlhong dam were constructed. • A draft of the National Water Conservation policy was developed and finalized. • Village water schemes were completed: Middle-pits—Khawa, Zutshwa—Ngwatle, Lecheng—Matlhakola, Mahalapye—Bonwapitse and Mmopane—Metsimotlhabe. Pitfalls regarding the Water sub-sector were experienced. These included the failure of infrastructure projects to be completed in time. Incidentally, such projects failed to keep to budget and required specifications. The causes of this were “insufficient skilled personnel, limited expe-

Thunne Dam

Regards with imported electricity in the year 2015, there was a 3.1 percent decline from the second quarter to the third quarter. Despite this deficit value, the year-on-year comparison data indicated a 65.7 percent rise of imported electricity from 2014’s second quarter to 2015’s second quarter. In regards to electricity distributed, there was a 5.0 percent decline rate deduced from 2015’s second quarter to the third quarter. The statistics contrast between imported electricity and electricity generated locally are meant to indicate the country’s self-reliance by improving its own local generation as opposed to relying too much on importation. As dictated from the Budget Speech, allocation was set for several projects: “Morupule A refurbishment at P100 million; electrification of villages at P100 million; North West Power Transmission Grid at P50 million; Rakola Power Substation at P50 million and ZIZABONA regional power project at P33 million. The Botswana Power Corporation has also been allocated P1.5 billion to cover tariff subsidy and some operational expenses.” In the 2013 Mid-Term review of NDP 10, several successes under the energy subsector of the infrastructure category were noted: • The Energy Policy draft was finalised. This included areas of “electricity generation and transmission infrastructure as well as storage and supply infrastructure for petroleum. The policy focuses on the supply of adequate, affordable and reliable energy resource” as stated in the Mid-term review of NDP 10. • The National Electricity Standard Cost (NESC) was implemented to reduce household connection costs.

p14


HOME IMPROVEMENT P8

BOIDUS FOCUS FEBRUARY 2016 BOIDUS FOCUS JANUARY 2016

HOME IMPROVEMENT P10

DIY Projects - How to Build and Install a Sliding Door

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Step 6: Attach Plywood and Insulate

[Source: www.diynetwork.com]

Attach the plywood sheet to the back of the door. Apply wood glue on all top surfaces of the pieces of both your inner and outer frames. Place the plywood on top of the frame, apply wood glue and secure it with screws once it’s aligned.

Get Started: Build, Paint and Hang

Before building the door, measure the doorway. The barn door looks best if it overlaps the opening by at least 2” on all sides. This project was based on a doorway with a 4’ x 8’ foot opening.

Step 8:Install Hardware

Measure 6” in from either end of the bottom of the door to attach rolling casters. Secure with drywall screws. Install 1” circle brackets to the top of the door frame 6” in from either side of the door. Mount the door handle at a comfortable height by screwing into the spot prepared for it by internal supports.

Step 4: Plan for the Handle

Step 2: Cut Wood Pieces

Mount a 1” x 2” x 11” piece of wood on either side of the frame at the height you would like your door handle to be. Our handle is larger, so we mounted three pine pieces next to each other to ensure the handle would screw in later.

Cut 1”x2”x8’ boards to make the outer frame of the door. Our door is 8’ tall so we cut two 8’ pieces and four 47” pieces. Put two 47” pieces aside to use later. Screw together the two 8’ pieces and two 47” pieces to make a rectangle.

Step 5: When You’re Finished

Here’s what your frame should look like after you’ve built the frame (pictured left) and installed additional supports (pictured right).

Step 3: Frame It

Use the other two 47” pieces of wood to make the horizontal supports in the interior frame. When you install them, they should divide your door horizontally into thirds, about 32” apart. Apply wood glue everywhere two wood pieces meet and attach with screws. In each section, cut and add 31” pieces of 1 x 2” boards to tie into the 47” horizontal pieces to create more support. This will give your door structure.

Flip the door so that the newly attached plywood side faces down. Use a utility knife to cut squares out of a half sheet of foam insulation to fit inside the spaces between ribs. Spray each square with a small amount of expanding foam to secure the square inside the frame. This cuts down on noise passing through your door. When the foam has dried, secure the final piece of plywood to the door. Apply wood glue on the frame, and lay the luan plywood on top of the frame. Secure the plywood with wood screws.

Step 7: Paint It

Use spackle to fill in the screw holes. Lightly sand to ensure your entire surface is smooth and ready for paint. Apply an even coat of white primer to all sides of the door. After the primer has dried completely, roll on your paint color.

Step 8:Hang It

Installing the hardware is best accomplished with the help of a buddy. Start by running a galvanized pipe through the two circle brackets on the top of the door. Keeping it inside the brackets, hold the pipe up as high as it will go and measure from the bottom of the casters to the middle of the galvanized pipe. This measurement will provide the correct height at which to attach your round base plates to the wall. Once one end is threaded and secured to the wall, thread the 90-degree elbow onto the pipe. Attach the last base plate to the elbow, and secure the second base plate to the wall in its correct position.


guest columnist P9

BOIDUS FOCUS FEBRUARY 2016

Design Pad:

KITCHENS - An Evolution of Countertops By Tshepiso Motlogelwa, Interior Designer, tsmotlogelwa@gmail.com

Still basking under the recently ended holidays, it is without shame that one chooses to reminisce on all the festivities. From the warm and slow afternoon, the high fashion and shopping frenzy to the delicious meals prepared and shared within a gathering of friends and family. It is quite true that for most African families, all celebratory events are earmarked by the collaborative cooking expertise showcased by women. With this in mind, I decided to explore the space where women’s culinary artistry is experienced, that is, the kitchen. Realizing the wider variety of topics one has to delve into were kitchens are concerned, i chose to tackle the elephant from its head‌the kitchen counter tops! Long gone are the days were kitchens would be with dull grays and browns as the main colors of the kitchen. Also disposed are the ideas that kitchen slabs had to be granite or concrete. These, despite having served their purposes have a plethora of problems. Granite being a natural stone has the tendency to lose its initial luster [when sealed] over time. It is highly porous and as such allows for moulds and bacteria to easily fester. One has to be cautious when handling colorful foods as granite could easily get stained and its weight generally increases the cost of installing and maintaining it. Marble slabs are also preferred by a few for the color plus touch of class they exude. These are beautiful and are seen by a few as a game changer as the counter tops can be matched with the floor tiles and the kitchen cabinets. Their glazed polished surface allows an illusion of cleanliness and elegance.

Also the fact that it comes in huge slabs means it leaves less room for joints and allows for less spaces for bacteria to fester. The only challenges with marble are primarily because it is natural. This meant that it could be affected by all natural elements including water and heat. Here, it is not advisable to place a hot plate on it directly as the heat could change the color of your marble counter. Aside from that, it is imperative to continuously re-seal it to ensure little water penetration as marble is highly porous and would eventually change color due to the seeping through of moisture. The regular maintenance and the installation ultimately means that the lovely kitchen experience is too costly and an option for only a privileged few. To abate the above challenges and to add color and a touch of personal character to the kitchens, engineered stone was invented. This came in all bright colors and even had sparkles of gold and star dust. These came in different thicknesses and are easier to install plus low to maintain. It gave rise to red, orange and black kitchens which transformed the kitchen spaces and made them vibrant and lively. What was lovely was that you were guaranteed longer life on them as Quartz and Caesar stone do not easily succumb to the natural elements. Coupled together, this allowed for beautiful, well-coordinated kitchen spaces. They however had limited disadvantages with the most common being their inability to resist scratches. Due to their stony look, people highly perceived them to be scratch proof and heat resistant but the opposite

Martina Gualtieri, area manager at Laminam Spa says, "It is completely fire proof. Laminam is fired at 1200 degrees and it is completely fire proof. If you forget a hot pot on its surface, it remains unchanged. Laminam is also scratch resistant, you can cut directly into it with a knife and it will remain unchanged with no scratch."

was true especially as engineered stone also contains plastic. This meant that hot pots could discolor or damage them and chopping directly onto them is discouraged. The most recent innovation that is current and well suited for the counter tops is Laminam slabs.

These are huge porcelain slabs that have all the high technical features of any top Italian porcelain tile. Their sizes which vary from 1m X 3m to 1,6m X 3,2m allow for innovative and unique kitchen designs. What is most peculiar about Laminam slabs is their overall weight. Their 1m X 3m slabs weigh only 25kgs whilst having the slim thickness of between 3mm to 12mm. The slim thicknesses allow Laminam slabs to be utilized on every available surface in the kitchen. They are made at a temperature of above 1200 degrees and the slim flat feature is enhanced due to the homogeneous pressing done to completely eradicate air, moisture and spaces within the slab. This implies that the slabs are able to withstand heat, are fireproof and do not have pores, and hence are non-absorbent. Due to the constant pressure they are placed under throughout the manufacturing process, Laminam slabs are scratch proof and one can chop their food directly on them without worry. Being non-absorbent means that they are also stain resistant and as such, one does not have to worry about stains when strong elements like red wine are spilled on them. What is most wonderful and attractive about Laminam slabs is that, they are flexible and versatile and can be applied on any flat surfaces. This means one can easily match the textures and colours of their kitchen tops to their floors, cabinets, splash backs and even ceilings! One would expect that due to its thickness, perhaps there is specialized installation required but a regular adhesive can be used to fix them on existing floors, fix them to existing kitchen counters, apply them to existing walls or ceilings without worrying about the surfaces looking bulky. Laminam slabs therefore become the solution and the future of kitchen tops!


GUEsT colUMNIsT P10

BOIDUS FOCUS FEBRUARY 2016

Common procedures in dispute determination & resolution By Natalie Reyneke

We seem to be moving into times of great disputes in the construction industry. Money is tight and tempers are flaring. We thought it would be a good idea to provide a brief summary of the option available to contracting parties to settle disputes in construction contracts.

The negotiated procedures offer a concrete and distinct alterative.

The following options are commonly used in a wide range of contractual disputes and in construction contract disputes in particular: • Early neutral evaluation; • Expert determination; • Adjudication; • Dispute review or adjudication boards; • Mediation/conciliation; • Arbitration; and • Litigation • Any combination of these.

Litigation There is a philosophy of ‘litigation is to be avoided wherever possible’. Determinative justice may be a bad fit. However there are some cases in which litigation must be used. • There is a need for an authoritative interpretation of the law; • There is a risk of harm to reputation, whether of an individual, a company or a product; • There is a need to discourage similar future disputes; and • The issues involved are of a criminal, constitutional or civil rights issues.

All the procedures, other than litigation, are commonly and generally referred to as Alternative Dispute Resolution or ADR.

The South African Law Commission, Issue Paper 8, Project 94, Alternative Dispute Resolution.

“This definition of (the procedures), however, makes no mention of a vital consideration. This is that ADR provides an opportunity to resolve disputes and conflict through the utilisation of a process best suited to the particular dispute or conflict (Our emphasis). For this reason many practitioners prefer to use the acronym to denote the words ‘appropriate dispute resolution’.”

Arbitration In principle, arbitration has a number of real advantages - choice of tribunal, privacy and convenience, technical knowledge, speed of resolution, cost effectiveness and finality and certainty. However, in recent years, there have been some unhappy experiences in arbitration, especially in the construction field, which have diminished the effect of these advantages, or at least some of them.

These procedures can be divided into two main procedural categories - the determinative and the negotiated. Litigation, arbitration and the adjudication fall into the former category. Dispute review boards, mediation and conciliation fall into the latter. Determinative decisions have the advantage that judgments are made and enforceable. Their disadvantages are that the parties do not have control over the proceedings, the judgments made and enforced are limited and in favour of one side only damaging relationships.

There are several causes for this, some of them being: • Traditionally arbitrators have played a somewhat passive role in the arbitration process, occasionally giving directions but generally content to wait until the parties are ready to move the process forward. • Arbitrators also are generally conditioned to expect each party to appear with its own advocates and lawyers and teams of experts and witnesses with each party carefully

planning in advance how it will conduct the proceedings. The result has been that many arbitrations become afflicted with the same problems of legal technicalities, expense, delay and appeals that have caused the sidelining of litigation as an effective means of dispute resolution for the construction industry and arbitration, like litigation, has to some extent been marginalized. mediation / Conciliation Mediation and conciliation are very similar procedures. Both are a voluntary form of dispute resolution. They are distinct but are often referred to interchangeably in the published materials. In mediation, the mediator, a neutral party, is appointed by the parties to facilitate settlement of the dispute between them. The mediator helps the parties to identify the issues between them and assist them to find a solution to their problem for themselves. He then assists them to reduce that solution to an agreement. Mediation is a non-binding form of dispute resolution until agreement is reached. The parties are free to explore ways of settling their dispute in complete confidence, without final commitment and without prejudice to their legal positions, until they are ready and prepared to commit themselves to agreement. Once an agreement has been reached between the parties, that agreement is binding on them. By its nature and from its background, that agreement has every chance of being honoured. In conciliation, the neutral party, called a conciliator, like the mediator, seeks to help the parties to reach agreement over their dispute. However, the conciliator adopts the more proactive role than the mediator. He is generally asked to develop ideas for settlement, suggest possible solutions and persuade the parties along the lines of settlement. If the parties fail to reach an agreement to settle the dispute he will usually be asked to come up with a recommendation for settlement. dispute Review or Adjudication Boards The precise role and procedure of a DRB will be determined by the terms of the contract. Ultimately, however, and at best, the role of a DRB is very similar to that of a conciliator. It will help the parties to identify issues and will suggest

solutions to the dispute. Commonly, a DRB will consist of one or three members but the parties may select any number that they want. There are various accepted ways of appointment of members. Some processes dictate that a person can only be a DRB member if accepted by the both sides. Others provide for the third member to be appointed by the two other members each appointed by one side. A DRB can be appointed ad hoc to deal with a particular dispute or it can be appointed before the commencement of a contract and for its duration. If the latter is chosen, the contract will generally require the members to visit the site at regular intervals and ‘particularly at critical construction events’. A DRB is generally empowered to examine all disputes and make recommendations to the parties for settlement. These recommendations can be binding or non-binding. Adjudication Broadly, disputes are referred to a single adjudicator, who is required to dispose of the matter within a relatively strict timetable and in a relatively informal procedure. The adjudicator’s decision is binding on the parties unless it is varied in arbitration or litigation. An example of problems faced by adjudicators is the nature of the disputes that can be adequately deal with under the summary procedure and strict time limits that they are obliged to use. Another example, from a different perspective, is the basic right of a party to have a reasonable time to deal with the case against him. Adjudicators should be neutral, technically competent for the scope of the project and acceptable to all parties. Conclusion The ADR options above have been described in very brief detail. It is comforting to know that there are other options available to contractors besides going to court, and these options should be explored. The majority of standard form contracts provide for some form of ADR, but it might be worth your while to pay a little bit more attention to what each contract says in this regard. You will want to choose the ADR mechanisms that best suit the task at hand.

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PUBLICATION OIDUS FOCUS NEWS | page 02

EDITORIAL | page 04

Letlole Larona Breaks Ground at the Kromberg and Schubert Botswana (Pty) Plant

Government to Promote Introduction of Residential Development into the CBD

SUSTAINABILITY | page 06

EDUCATION | pages 15

How ready is Botswana for the Inevitable Change towards Global Decarbonisation targets?

Guide to School Programmes: 2013 Built Environment Careers Guide

Registered at GPO as a Newspaper | Volume 3, Issue #2

Botswana’s Architecture design & Urban Landscape Newspaper | M A R C H 2 0 1 3 www.boidus.co.bw

NEWS | page 02

BUILDINGS | page 06

A Luta Continua on the Land Question Airport Roof Gone with the Wind

The Idea of Eco Cities: Need for harmony between policy and green initiatives

HOUSING | page 16

PRACTICE | pages 14, 18

Buy or Build a new Home: The Pros and Cons

Disentangling the Web – A Look at Infrastructure Project Management

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OIDUS FOCUS

Registered at GPO as a Newspaper | Volume 3, Issue #4

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BOIDUS EXCLUSIVE FEATURE >

BOIDUS EXCLUSIVE >

“Public Piazza, Mixed Use Podium and Sky gardens coming to Gaborone”

by Kibo Ngowi & HK Mokwete

by Kibo Ngowi & HK Mokwete

Red East Construction: Award Winning Chinese Contractor

FNB’s CBD HQ – Intelligent Corporate Architecture

Boidus Focus sat down with the Managing Director of Red East Construction, a

company apart from its counterparts and defied the perception of poor con-

First National Bank (FNB) has moved into its newly built headquarters in

Subsidiary of the Zhengtai Group Mr Zhu Dexiang to try and understand

struction workmanship as a uniquely Chinese problem.

Gaborone’s rapidly developing Cen Central Business District (CBD). Located in

Banking, Private Banking, Property Finance, WesBank, Firstcard to mention

what has set this Chinese construction

>>> CONTINUED PAGE 07

plot 54362, the Head Office called First Place, boasts the banks’ “one-stop-

but a few, customers get a full bouquet of FNBB products under one roof.

shop” capability. With an expansion of

>>> CONTINUED PAGE 07

by Kibo Ngowi

by Kibo Ngowi / H. Killion Mokwete

the office facilities accommodating all the Bank’s divisions such as Electronic

Birds-eye view

Government to Promote Introduction of Residential Development into the CBD

Top: Guests and delegates at the CBD Event Bottom: Architect and Urban Designer Jo Noero from Noero Architects and University of Cape Town Right: Hon. Assistant Minister of Trade and Industry, Keletso J. Rakhudu, officially opening the event

The Boidus Media, State of our CitiesCBD Executive Seminar recently held

and the public in sharing of ideas and opportunities about our upcoming

at Masa Centre was by any measure a resounding success. The Seminar

CBD. Envisaged as the future heart of Gaborone City, the CBD is slowly taktak

event brought together for the first

make it a centre stage focus of discusdiscus sions and professional deliberations.

by Boidus Admin

In this Boidus Focus Special, find event abstracts:

Introduction Thank you to the organizers for inviting

As you reflect on the ‘challenges and opportunities’ of developing a CBD, I would like to encourage all of you to think of this as what our generation will be remembered for having done, not only for this City, but for the nation, albeit through the toughest times. Assistant Min. of Trade & Industry, Hon. Keletso J. Rakhudu

A Successful CBD represents among other things; • A success CBD Image of the city and the country • Generation of the country’s prosperity • Successful partnership between the Government & PVT sector Dimitri Kokinos: Portfolio Structuring Manager (Stanlib)

>>> CONTINUED PAGES 08, 13, 18

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Public Piazza

views from across the City. Boidus

The Iconic tower which has been

was recently given exclusive tour of the construction site to experience

slowly emerging off the skyline of Fairgrounds is setting unmissable

first hand this exciting project as it becomes reality.

view of a gleaming honey comb

to be critical and identify perceived

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TO COMMERCIAL

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where problems have been identified. That is what we hope the seminar will

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concentrate upon. From a DTRP standpoint, the forum

In organizing it, BOIDUS have directly

ANSWERS QUESTIONS. Interactive session for learning and networks.

failings of the CBD concept but more challenging to come up with solutions

responded to our concern that it is easy

IDEAS EXPO BOTSWANA is an event designed to combine the best of creativity, business and technology in which participants are invited to give talks, do demonstrations, and show their work. Renowned experts in branding, business and marketing.

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ing shape and the seminar sought to

time ever in Botswana, key stakeholders of the New CBD development such as investors, development owners, government, industry champions

>>> CONTINUED PAGES 08, 13

The Relocation of the Office of The President Is it the Right Move Or Not? by HK Mokwete

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the President (OP) is missing the big-

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W www.mdaconsulting.co.za

>>> CONTINUED PAGE 04

CBD EXECUTIVE SEMINAR - Oct 2014 CBD EXECUTIVE SEMINAR - May 2013 DESIGNER’S FORUM - Apr 2012 BOTSWANA PROPERTY MARKET - Feb 2015 BOTSWANA PROPERTY MARKET - Sep 2013 HOUSING AFFORDABILITY IN BOTSWANA - Mar 2012 FNBB AFFORDABLE HOUSING MARKET - Dec 2013

[

SOCIAL MEDIA Professionals Information Seekers Students Organization Affiliations Find us online:

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GUEST COLUMNIST P11

BOIDUS FOCUS FEBRUARY 2016

Fideicommissum? By Obakeng Andreck

Fideicommissum is a legal institution in terms of which the testator/testatrix transfers a benefit to a particular beneficiary, who becomes its owner and who can use and enjoy it. At the end of a certain period of time, the benefit goes to a further beneficiary, who becomes the new owner. A fideicommissum, when created in a will, is another form of testamentary substitution whereby a benefit, usually fixed property, is bequeathed to one person (the fiduciary) subject to the condition that on the occurrence of a specified event or the fulfilment of a specified condition, usually the death of the fiduciary, that inheritance or part thereof is to pass on to another person or class of persons (the fideicommissary). The intention of the testator to create a fideicommissum has to be clear and the fideicommissum has to comply with the legal requirements in order to make the condition valid. The fideicommissum may also be created by implication in instances where it has not been created expressly. The proprietary right of the

fiduciarius is ended (after the lapse of a stipulated period, or when a condition has been met) and the property is transferred to the fideicommissarius (the sequential owner). A typical example would be where a testator provides in his will that his farm should go to his son A, on condition that the farm goes to A’s son B upon A’s death. In this example, the testator, therefore, creates a fideicommissum with regard to his farm. With regard to the farm, A will then be known as the fiduciarius, while B will be known as the fideicommissarius. A is also alternatively referred to as the bare dominum owner. The legal requirements for a valid fideicommissum: 1. There has to be a clear intention to create a fideicommissum. In this instance the testator has to unequivocally express a clear intention to bequeath the property as such. The words

have to be in the imperative form and should not be vague; 2. An effective “gift over” in favour of a specified fideicommissary has to take place. This means that the property which is subjected to the fideicommissary condition has to on fulfilment thereof devolve on the fideicommissary; 3. The encumbered property, the fiduciary and the fideicommissary has to be adequately described in the will; 4. The fideicommissary has to have legal capacity to the benefit; 5. The fideicommissay condition has to be valid, it should not be vague and uncertain or impossible to fulfil. Its creation and registration. The fideicommissum (condition) is created in the Power of Attorney and is brought forward in the deed, i.e. the executor in the deceased’s estate must transfer the farm to A, subject to the fideicommissum. A is not described as a fiduciarius in the vesting clause. The only way of determining whether the property that was transferred to A, is indeed subject to a fideicommissum, is by reading

Our precision simply comes standard..

What happens when A passes away? When A passes away, his executor will have to transfer the farm to B, in terms of the fideicommissum condition and not according to A’s will. The will doesn’t even have to be lodged. Because it is transferred according to the fideicommissum condition, reference must also be made to the condition in the causa. How is a property that is subjected to a fideicommissum transferred? Before this is explained, it must be remembered that the fiduciarius only has a fiduciary right to the land. What is the content of this right? What does this mean? The fiduciarius is the owner of the land, but this is a limited proprietary right, i.e. he can deal with the property as far as he is permitted by the fideicommissum (condition). This usually means that the fiduciarius may not transfer the land unless subject to the fideicommissum. Fideicommissa may also be imposed by agreement inter vivos created on transfer of land imposed by the transferor and may be inserted direct into the deed of transfer from the power of attorney to transfer such land. Until the fideicommissum has been accepted by the fideicommissary, a fideicommissum can be revoked by the person imposing it with the consent of the fiduciary ( Van der Plank v Otto 1912AD327). In the case of a fideicommissum, the fideicommissum does not fail if the fideicommissary heir dies before the fiduciary. It passes to the heir of the fideicommissary in the absence of any specific direction to the contrary.

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In the case of Nicolette Erasmus NO v Estate Late Booysen, the case concerned the interpretation of two separate but related wills of two different persons. These two persons were the great grandfather and the great-great grandmother of a minor child, Jonique. The great-grandfather was the father of Jonique’s parental grandfather whereas the great-great grandmother was the mother of that great-grandfather. Jonique’s father had predeceased his father, the late Barend Christiaan Booysen (the deceased).

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the testamentary condition in the deed.

The deceased was a fiduciary of a fideicommissa which was established by the respective wills of his father (Janique’s great-grandfather) and grandmother (Jonique’s great great grandmother). The question which was before both the High Court and the Supreme Court of Appeal was whether Jonique could inherit the farm, as a fideicommissory, when her father had predeceased the deceased. High Court: The High Court held that the fideicommissum established in terms of the wills terminated upon the death of Jonique’s father and that Jonique was not entitled to inherit in terms of the aforementioned wills. Supreme Court of Appeal: The SCA ruled that the principle of representation in our law of succession entails that, where an ancestor leaves descendants, a presumption arises that the descendants should inherit per stirpes. This principle has the natural consequences that, in our law, in circumstances where a grandchild’s parents predeceased the grandchild’s grandparents, the grandchild will ordinarily inherit from his or her grandparents. A grandchild is not disqualified from inheritance merely as a result of the fact that one or both of the grandchild’s parents predeceased the grandparents. The clear intention of both the testators was that, without distinction among them, the grandchildren of the deceased should inherit the respective fideicommissa. As such Jonique was entitled to inherit thereunder, accordingly per stirpes.


PROFESSIONAL PRACTICE P12

BOIDUS FOCUS FEBRUARY 2016

Securing Your Advance Payment Bond And Tender Bond/Guarantee How a contractor prepares for the roll out of backlog eradication construction projects (ESP) The National Budget speech recently read in the National Assembly by the Minister of Finance and Development Planning, Mr Kenneth Matambo, has outlined emphasis on the completion of the NDP 10 Projects Backlog created by the past 5 years austerity measures as response to the global recession. These so called Economic Stimulus Programme (ESP) projects have some 1.5 billion Pula funds allocated to mostly construction projects. Construction projects are risky endeavors that require thorough risk management and adequate pre-project planning. Some of the key issues that contractors need to prepare for include the following two key aspects on construction and risk insurance; ADVANCE PAYMENT BOND; Initiating construction projects can be a costly process that requires upfront capital to secure among other things construction machinery

and therefore securing an Advance payment bond is a prerequisite to construction; What Is Advance Payment Bond? Also known as an advance payment guarantee, an advance payment bond is a type of business arrangement between a business and a service provider that any advance payments for pending services will be returned if that provider does not fulfill his or her obligations to the client. The exact amount of the bond of guarantee will vary, based on the total amount that is provided to the provider on the front end before any services are undertaken. This type of guarantee on the advance payment protects the client from losing the investment in the provider should unforeseen factors prevent the provider from completing the agreed-upon tasks. One common situation that involves the use of an advance payment bond is when a customer

engages a contractor for the execution of some sort of construction project. The contractor may request that the customer provide some type of payment in advance to aid in covering the expenses associated with securing the equipment and materials that will be used in the construction. In return, the contractor agrees that in the event he or she ultimately does not use the funds for the purposes stated in the bond terms, the advance payment will be returned to the customer. TENDER BOND/ GUARANTEE A Tender Bond is also known as Bid Bond or Tender Guarantee. This is an undertaking issued by a Credit Insurer for its client to bid a tender in favour of buyer/developer to secure financial risk in case the successful bidder fails to enter into the contract. In general, when bidding for an export contract, the potential buyer may require the supplier/exporter to

By Boidus Admin

provide a tender bond along with their tender submission. If and when a supplier is awarded the tender but fails to formalize the export contract or doesn’t issue supplementary guarantees (usually a performance bond) to the buyer when required, then the buyer has the right to call the tender bond which means that they may demand payment of the bond amount from the bond issuer to minimize their losses. As well, whenever a job, trade or project is announced for bid, a company who is a supplier or a contractor who wants to enter in a bid must get a Tender Bond Guarantee provider such as banks or insurance company to issue a Tender or Bid Bond Guarantee on behalf of their company. This bond guarantees that the bidder is financially capable to embark on the project or trade and will respect and honor the terms as summarized in the tender. The amount of a Tender Bond Guarantee is typically a certain percentage of the export or project contract amount. The buyer or developer is called the beneficiary of the bond. Prior to issuing the bid bond guarantee, the provider bank or insurance company normally assesses the supplier or contractor’s commitment and capability to undertake the export contract or construction project before issuing the tender bond. Typically, they will also ask security from the supplier or contractor in case the buyer or developer calls the bond. A Tender Bond Guarantee is usually issued when you lodge your tender. It remains in force for the term required by the buyer or developer’s tender process. If they fail to get the tender, the buyer or developer returns the bond. On the other hand, if the supplier or contractor wins the tender the buyer or developer will return the bond after the supplier or contractor formalized the export contract or project in terms of Performance Guarantee.

TBG is a vital document to avail a contract of supplying commodities or to get a successful bid in the construction business or industry. It can facilitate the process of selecting a project or contract to run quickly and smoothly. Without bonds, project developers and owners would have very little assurance that the selected bidder is capable to properly finish their project without experiencing difficulties such as problems in their cash flow & that their project is not beyond their means. Moreover, almost every project developer or owner calls for a bond from the contractor before they’ll be able to bid on any of their projects. If a seller/contractor wants to get hold of valuable contracts from buyer/developer, then it is imperative that they secure TBG in their favor so they can get their full trust to obtain such contracts. A Tender Bond Guarantee can be: Conditional: The beneficiary can only call the bond when certain conditions are met as mentioned in the bid bond. Unconditional: The beneficiary can call the bond at any time without providing any cause.


guest columnist & news P13

BOIDUS FOCUS FEBRUARY 2016

Landmarks and Arts (2) By Jan Warreus, Architect / Town Planner

In our earlier presentation of a few landmarks created by outsiders and today places of pilgrimage for art lovers and tourists, we mentioned postman Ferdinand Cheval’s “Palais Ideale” in Hauterives, France, Simon Rodia’s “Watts Towers” in Los Angeles, California and Clarence Schmidt’s “House of Mirrors” outside New York (although this last one only exist on photos a model and drawings, today). We have to mention briefly a few more creations of architectural interest prior to have a look at astonishing visual works and those kept in museums, also a kind of landmarks. Let us begin with: Karl Junker (1850–1912) - contrary to the others presented and a few more to come, had a solid academic education at the Art Academy in Munich (architecture, sculpture and painting). Not quite a common man, so to say. After a failed romance, he withdrew to his hometown Lemgo in northern Germany and to his Junkerhaus. During 32 years, he rebuilt and decorated it from inside out (in that order) according to his belief that he was creating a new art and architectural style. He was totally convinced that his singular amalgamate of painting, sculpture and architecture would be a solid start for future arts. Following pictures might give you an idea about his creation:

Das Junkerhaus, Lemgo by Karl Junker. Today it’s a landmark with a museum, dedicated to the creator. Hordes of visitors are there annually and many tourist accommodations, restaurants etc. have been built in the vicinity of it. Odd creations of outsiders have a positive impact on development of a country! Now over to a rather bizarre “landmark” once upon a time standing in southern Sweden and of interest as “Architecture without Architects” – often studied by young architects of my generation – “Villa Nature” by Jeppe Olsson (1877-1960). In the years 1938-1955 he built it from pieces of fishing-sheds, trolleys and trailers piled upon or near each others in all directions. Of course, he didn’t follow building regulations and never cared about building permission. He followed his impulses and inspiration “as I’m following a road” – as outsiders do. Consequently, sometimes in the 70’s the authorities had it burnt down and the site cleared – a very consistent action in a country built by rules and regulations, indeed. The few pictures I have are following here: I’m sure the local authority was taken aback by

Villa Nature in southern Sweden by Jeppe Olsson (now destroyed) – Jeppe on pics from late 50’s all the protests that followed the destruction – Jeppe’s creation had a lot of art pundits love (and students). Many books and articles followed but too late – even a movie based on a detailed model of Villa Nature! A parallel can be drawn to “House of Mirrors” by Clarence Schmidt, also destroyed. Landmarks take time to come but are easily destroyed – I wonder how many we here in Botswana have already obliterated. I’ve seen many local interesting buildings disappear in recent years as well as a unique “Garden City”! Adolphe-Julien Foure (1839-1910) – he lived on a steep, inaccessible spit in Bretagne. People called him “the Hermit” and over 25 years he immortalized his family fates by carving in it’s history into the rocks.

imposing in my opinion but, however, a well-known landmark. Now, when we soon have a cut up and severely wounded Kgale Hill left by the construction industry, why don’t we go the old Abbot Foure’s way – cutting history into the leftovers! We have the artists with dedication and skill. We see them often at Thapong Visual Arts Centre – give them the hacked parts of Kgale Hill to create a landmark! We are now about to move into so called pictorial arts where the outsiders have many interesting contributions, still with relevance to our artists. But we leave that for another essay!

Inside his house, he carved wooden sculptures on the family theme. I sincerely hope that my four pictures of this remarkable landmark will have space for presentation below – otherwise, find them on the internet: I’m admiring this kind of visual arts more than anything – history cut into and part of nature! There are many landmarks like this all over the world – an attempt is found in the Rocky Mountains of USA with gigantic former presidents. A bit too

Property investor sentiments in SA flip from bullish to bearish on Rand weakness by Kitso Dickson A South African property expert has warned that the unprecedented cabinet reshuffle of the key Treasury minister late 2015, which reportedly aggravated the South African Rand’s (ZAR) weakness shook investor confidence on President Jacob Zuma’s administration and property investors like Batswana are likely to vote with their feet. Kura Chihota, the Managing Director at Leapfrog Commercial Group says the ZAR’s free-fall to record and a slowing economy, allied to global impact of weak growth in China, incites uncertainty in the minds of the would-be-investor over the security of their money. He was responding to media questions over investor confidence, however saying the “immediate effect is not yet apparent”. South Africa as a primary resource exporter has been hit along with other resource based economies by the slowing uptake of commodities by China. “We are expecting a low 0.2%-1% GDP growth number and latest inflation came in at 5.2%. Real house growth is unlikely in 2016 and beyond. Due to the rise in inflation, the Reserve

Bank is likely to continue to hike interest rates, dampening the demand for credit like mortgages. In a thinner market, prices may not see the 6-8% growth exhibited in the past 2-3 years”, he said in an email to Boidus Media. A South African media company raised concerns over residential property market facing a price deflation in the coming twelve months, allied to the “rising or falling GDP numbers”, according to Chihota. With fear of accelerated disinvesting in South Africa, opportunities should be in the real estate market, Nametso Maikano, Director at Maison Properties, said over phone call, although cautioning against selling at the time of depreciating rand. She however says, more opportunities could be realised by the might of investment

researches to hedge against false signals. Against all odds, Chihota, echoing Maikano’s views, reckons that South African real estate offers Botswana investors different prospects beyond the benefits of diversification. “Residential investment by individuals could provide lucrative with non-residents who qualify for 50% mortgages on their purchases. A purchase of a “buy to let property” using mortgage finance would provide a positive rental cash flow in excess of the monthly levies and mortgage costs,” he stated. Secondly, investments into the SA listed Real Estate Investment Trusts provide access to international US$/GBP/Euro earnings, chihota, in his views. “The returns in foreign currency converted back into Pula’s would show both capital appreciation, strong rental flows, and growth in excess of 8% pa in the income” according to his understanding. Analysts were quick to forewarn of immediate factors to consider before ploughing money in an environment where value of currency is sliding. For instance, on equities, Tlotlo Ramalepa, a research analyst at Motswedi Securities, a brokering firm, holds that one would mainly scrutinize company prospects, sustainability of earnings going forward, relative value of a stock among others, and from a foreign investor perspective, the exchange rate movements could also affect potential investments. “Different assets or businesses would respond

Abbot Foure’s Landmark in Bretange, France differently to a weaker rand, for instance, a company based in SA and exporting to other countries could benefit from a tumbling rand in terms of price competitiveness though capital intensive companies whose major capex (capital expenditure) are mainly dollar based, could realize a rise in costs and ultimately affecting their earnings negatively,” he said by mail, responding to Boidus Media. “Also one needs to be in cognizance of the fact that the rand is a free floating currency, which can expose it to huge volatility, which can ultimately affect one’s investments in SA. Therefore, I would say a weaker rand (on its own) is not sufficient to make sound investments,” he says. Chihota argues that the listed property sector has been the best performing asset class on a 1, 3 and 5 year basis when compared to cash, bonds and equities. However, interest rates have been rising since 2015 and are expected to continue surge for most part of 2016, according to forecasters. “The affordability and demand for housing will moderate as households and banks find a level they are both comfortable trading at. The domestic commercial sector is facing costs rising faster than their incomes and increasing vacancies (voids). The capital markets have grown from R 12 billion market cap to over R 400 billion in 15 years,” according to Chihota. The SA residential property market is estimated to be worth R 4. 3 trillion. Outstanding mortgages are registered against the value of these properties.


EDIToR’s NoTE & BoIDUs FEaTURE P14

BOIDUS FOCUS FEBRUARY 2016

Editor’s Note:

Five Reasons why the

Economic Stimulus Programme construction projects will fail

by H. Killion Mokwete / RiBA Chartered Architect [1] Poor Project Implementation and management Track Record The past few years have provided a clear and present example of the failure of various government ministries and departments to implement, manage and deliver construction projects. These failures have repeatedly been admitted on record by various Minster’s, especially under the Mistry of Infrastructure Science and Technology ( MIST) and even the State President when he was for example quoted to have admitted that ‘re jelwe’ when referring to the failures of the Moruple Coal plants. Countless projects, ranging from stadiums, schools, roads and airports, costing billions of pula are available examples to indicate this failure in implementation. Various versions of why there are failure issues have been advanced by Ministries including; lack of skills and manpower in project management to corruption and yet to date, there hasn’t been any clear evidence that these have been addressed. It is therefore safe to say that with these systemic problems in place, then the ESP projects in the construction sector are bound to fail.

[2] Unregulated Construction Industry, and Tenderprenueers The Construction Industry Regulator although advanced in its inception through Business Botswana and Ministry of Infrastructure Science and Technology (MIST), is not yet a tool that can be used to regulate, monitor and police the industry professionals from rogue elements and outright vultures. With everyone and anyone able to register a construction company and become a ‘contractor’, the industry is vulnerable from predators and vultures that prey on any opportunity to make a quick buck relentlessly over the years without any care about the industry state. These so called tenderpreneurs will thrive and some are already far advanced in positioning themselves for the loot. Although specific professions such as architects through the Architects Registration Council (ARC), Real Estate Advisory Council (REAC) and Engineering Registration Board (ERB) have legal bodies to regulate their professions, much of the actual construction process is still reliant on anyone as long as they can qualify for the tenders as per PPADB qualification processes, which have proved be a failure to guard against these tenderpreneurs in the past. Therefore, with the gates still wide open for all to come get, we can be sure that most of these projects will end up in the wrongs hands and end up in failure.

[3] Flawed Procurement Processes; Botswana’s public project procurement is predominantly through a public tendering process which has numerous weaknesses especially where there are those prying in such weakness. Some of the prime weakness is that, wining a tender has nothing to do with proven track record or ability to deliver. The winning is mostly a subject of knowing how to play the game to win the tender. This includes doing

everything possible to qualify for whatever contractor category one wants to trade in under PPADB. This pre-qualification and registration is not based on hard evidence of project implementation merit as even companies that have long failed again and again to deliver public projects are still enrolled in the various categories they want under PPADB and continue to be awarded other projects. The other loophole in the tendering process includes the fixation with lowest bidder system of awarding tenders, which has seen many contractors undercut the real project costs in order to win projects only to fail when it comes to implementation. The third weakest link under our implementation systems is the so called rota system under MIST where projects are awarded to contractors on rotation or toss. This is seriously flawed system that has no place in modern project management and procurement. Its primary weakness is that apart from promoting dependency syndrome, this system continuously awards projects to contractors and consultants who produce poor quality public projects and often substandard work. Afterall excellence is not a perquisite in any other requirement.

[4] Lack of long-term sustainability strategy Questions over long term sustainability are important to ensure survival and sustenance of the industry beyond the ESP. The huge sums of public moneys earmarked for these projects, need to go beyond just creating projects, there needs to be a clear long term sustainability built into the strategy of the proposed programmes. This should include long term sustainable strategies for employment and skills development in the industry. The recession and austerity measures of the past 5 years have driven a lot of industry professional’s away. From all the existing texts and speeches on the ESP, there is no clarity or any indication that this has been considered. Without a long term sustainability, after all the funds have been finished and projects complete, the industry would be in a much worse place than it is currently in.

[5] Lack of Capacity with the Local Construction Industry The failure to develop and nurture home grown reputable and capable contractor means that most of the key so called mega projects will continue to be undertaken by international contractors. This issue of capacity has been worsened over the past years of austerity by lack of work which has seen local contractors abandoning the industry. The challenges facing many of the small contractors wishing to come back into the industry is not only capacity to scale up for the often bigger and lucrative projects, but also lack to liquidity to procure necessary machinery to stand a better chance at project bidding. Therefore, the ESP, if it ends up being an opportunity for the international firm with capacity would be an abject failure.

Vision 2016 and the Built Environment:

Achievements & Failures By Tlotlo Tsamaase

Continued from PAGE 6 challenges oF that perIod Were: • The country experienced “limited availability of electricity generation and transmission infrastructure.” Unfortunately, the North Western region most prominently suffered. • Escalated electricity connections were resultant from “infrastructure capacity limitations.” • Morupule A Power Plant sustained deteriorations to its facility. • Petroleum products faced a lack of storage and rail transports because of their limited capacities. • A rise in government subsidies were supplied to compensate for the ineffectual utility tariffs that failed to reflect their true production cost. • The economic meltdown in conjunction with underpricing energy supplies had an adverse effect on local funding for planned projects. • High capital investments were poured into renewable energy technologies.

The following is a holistic comment on Vision 2016 by Nametso Maikano, Property Consultant of Maison Properties: “The majority of the infrastructure that we need, that should be there will be there eventually. There are certain things that key stakeholders are trying to do in the private sector that will help. We need to start to looking for alternatives—Botswana is one of the hottest places in the world. Are we going to be able to tap into opportunities without necessarily going the one-route that we have at our disposal. Botswana was further off a couple of years ago, we’ve made progress. We would have loved to have been ten years ahead at this point in time, but we’re not. The ideal thing is not to then shun every single thing and say, ‘We’re terrible, we’re not moving forward, we’re not making any progress.’ Ideally, we want to make sure that every single person, every single stakeholder is able to say ‘I can do this to move the country forward,’ not

necessarily saying, ‘I need this to be done for me for us to move forward.There are things that still need to be done, that still need to be in touched. When you talk pillars, Vision 2016, timelines—you’re talking fixtures, ideals. Ideally, it should take about a year extra, but bureaucratically it doesn’t work like that. “People must understand 2016 is a year, if you haven’t managed to understand what’s going on especially in the real estate market, that’s fine. 2015 was a bit of an interesting experience for everybody in the real estate market whether a professional or someone related to the profession. 2016 definitely has a more positive outlook with the opportunities coming in, whether from government or our South African counterpart. The built environment, how is it looking in Vision 2016?—we need to tighten these measures, we need to tighten the measure of the properties that are going into the market. Let us be realistic in 2016 on the way going forward. Let us be able to not over invest because we want to get as much money out of the market. Batswana should start expanding or exploring new things in the built environment. It is hot in Botswana; there’s so many things we can do with our schools, hospitals, offices, homes—but there’s so little appetite from the market at large to experiment in that. “We need a more active youth—we’ll talk, talk, talk—we’ll not do. Every stakeholder has a role to play, if you’re going to say there are opportunities for Botswana youth, don’t restrain Botswana youth. We have to continue being active and pushing and not complaining—but pushing to see we make a difference. The stakeholders, or different government parties or different professionals in the industry should be also willing to mentor. Up to now the most important philosophy now has been ‘Where’s the money? How do I benefit from this?’ Benefiting is fine, but it doesn’t have to always be about money. Giving to society is a benefit.”

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BOIDUS FOCUS FEBRUARY 2016

Boidus Focus - Vol 6, Issue 1 [Jan-Feb 2016]  
Boidus Focus - Vol 6, Issue 1 [Jan-Feb 2016]  
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