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THE P114 MILLION DIRTY FOOD POLITICS STORY ON PAGES 06
MATSHEKA’S COMPANY SWIMMING IN BOB’S MULTIMILLION TENDER
Pic: Press Photo
STORY ON PAGES 07
DISS BOSS FACING MASISI'S AXE? STORY ON PAGES 05
INSIDE BOTSWANA BLACKLISTED BY EU FOR DIRTY MONEY
HOW COMPETENT IS THE COVID-19 TASK FORCE?
LUCARA BELIES MARKET CRISIS
Botswana is a haven for dirty money and has joined the list of countries considered a financial risk because they are a paradise for money launderers. In a statement last week, the European Commission named Botswana among a list of four new...PAGE 02
There are concerns over the competence of the Presidential Task Force for Cocid-19 regarding its response strategies, The Business Weekly & Review has gathered. According to observers, the team - which is made up of Coordinator Dr Kereng Masupu, Deputy Cordinator...PAGE 03
Lucara is an independent producer of large quality Type IIa diamonds from its 100 percent owned Karowe Mine in Botswana and owns a 100 percent interest in Clara Diamond Solutions, a secure digital sales platform positioned to modernise the existing...PAGE 11
DOMESTIC EXCHANGE RATES:
USD/BWP 0.0809
ZAR/BWP
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GBP/BWP 0.0656 YEN/BWP 8.7000
EURO/BWP
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...MARKET HIGHLIGHTS ON PAGE 09
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BOTSWANA BLACKLISTED BY EU FOR DIRTY MONEY • Botswana listed alongside Zimbabwe, Ghana and Mauritius • Remains on FATF greylist
DISCLAIMER Commentaries, letters and columns present are the views of the authors and not necessarily those of The Business Weekly & Review
PUBLISHED BY THE BUSINESS WEEKLY & REVIEW Post: Post Net Kgale View 449 ADD, Gaborone, Botswana TEL: (+267) 3170 615 Unit 16, Gaborone International Finance Park, Gaborone, Botswana info@businessweekly.co.bw www.businessweekly.co.bw CONNECT WITH US Follow: @TheBWRBotswana facebook.com/businessweeklyBW instagram.com/businessweekly_BW
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KABO RAMASIA Staff Writer
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otswana is a haven for dirty money and has joined the list of countries considered a financial risk because they are a paradise for money launderers. In a statement last week, the European Commission named Botswana among a list of four new countries that are a high financial risk to the European Union as a result of their antimoney laundering and financial terrorism deficiencies. The others were Zimbabwe, Ghana and Mauritius that joined the growing list of such countries which already numbered 22. The European Commission said the countries pose a risk to the financial system of the EU. “We need to put an end to dirty money infiltrating our financial system,” the Executive Vice President of the European Commission, Valdis Dombrovskis, said in the statement. “Today we are further
bolstering our defences to fight money laundering and terrorist financing with a comprehensive and far-reaching Action Plan.’’ Consequently, the blacklisting means no company will be able to receive funding from the EU under the punitive measure that will take effect from October 2020. The EU blacklisting comes at a time when Botswana is grappling with money laundering and illicit financial flows (IFFS) and already greylisted by the Financial Action Task Force (FATF) for its lack of robust anti-money laundering controls. According to FATF, Botswana’s financial system has rendered the country prone to money laundering and financial terrorism. As previously reported by The Business Weekly & Review, FATF first noted Botswana’s money laundering deficiencies in 2017, pointing to lack of synch between the country’s law enforcers. A FATF report at the time indicated that both the Directorate on
Corruption and Economic Crimes (DCEC) and the Financial Intelligence Agency (FIA) were not fully capacitated to carry out their mandates. On several occasions subsequently last year, FIA made assurances that it was working round the clock to remedy the situation. Its Director, Dr Abraham Sethibe, admitted to this publication his agency had been found wanting in law implementation of anti-money laundering and combating financial terrorism measures. “We are now dealing with the issues head on,” Sethibe said. “ “We are improving the effectiveness of the law.” Likewise, the Bank of Botswana (BoB) said it had stringent measures to ensure that commercial banks adhered to the anti-money laundering requirements. ‘‘The Bank of Botswana is the designated entity to ensure effective compliance with the FIA requirements and other banking laws relating to AML-CFT
in the banking sector,” said BoB spokesperson, Dr Seamogano Mosanako. “The Bank of Botswana (Bank) has an established supervisory framework of off-site surveillance and on-site examinations through which it monitors supervised entities (banks) for compliance with the Financial Intelligence Act (FI Act) and Regulations.” In 2018, more measures after FATF recommendations entailed passing 26 laws aimed at addressing financial terrorism and stemming the flow of dirty cash into the country. BOB has also said banks that fail to track and report suspicious transactions are liable to a penalty not exceeding P1.5 million. “Section 25(1) of the FI Act mandates supervised entities such as banks to monitor and report on complex, unusual and high risk transactions,” Mosanako said. ‘‘The central bank maintains that Section 33 of the same Act requires entities to report suspicious transactions to the FIA.’’
P93 M SPENT ON REFURBISHMENT OF SCHOOLS
Lo 12°C PLENTY OF SUNSHINE
3 DAY FORECAST SATURDAY
37°
Lo 12°C SUNNY AND NICE
SUNDAY
37°
Lo 15°C MOSTLY SUNNY
MONDAY
39°
Lo 13°C PARTLY SUNNY
Source: www.accuweather.com
Preparations for a phased re-opening of schools on June 2 moved a step higher on Monday this week when teachers arrived at their work stations to a small but significant facelift in the form of washbasins KABO RAMASIA Staff Writer
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he government has spent P93 million on the on-going refurbishment of schools, The Business Weekly & Review has established. In a televised press conference yesterday (Thursday), the Assistant Minister of Local Government and Rural Development, Kgotla Autwetse, said the government was working round the clock to ensure that maintenance of schools will be completed before 29 May
2020. ‘‘When this crisis (Covid-19) started, we saw it fit to close schools but now schools will be reopening soon,’’ he said. ‘‘We had to ensure that when schools resume, each school has handwashing basins.’’ The project covers all 755 primary schools in Botswana. Autwetse said his ministry had arranged to provide water to each and every school, including those that have problems of water supply. ‘‘We procured Jojo tanks and made an arrangement to have water supplied to schools,’’ he noted, adding that the project was reserved for local companies.
According to Autwetse, the ministry used P93 million in addition to the councils’ recurrent budgets. He disclosed that the government would use another P50 million to train 4 800 Ipelegeng workers under the Scorpions category to screen and sanitise pupils and students as they enter school premises and will ensure compliance with Covid-19 lockdown regulations, including the wearing of masks, throughout. A new and welcome development that Minister Autlwetse announced was that henceforward, ablution blocks
in schools will be cleaned after every two hours. This will lead to employment of an additional 2265 on the existing 1269. The Ministry of Basic Education (MoBE) recently announced that schools would be re-open on 2 June 2020. To that end, teachers were ordered to report to their work stations beginning on Monday this week. However, as a means of maintaining social-distancing, only Standard 7 pupils and Form 3 and Form 5 students will resume going to school in a phased programme that will eventually see all pupils and students back in school.
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HOW COMPETENT IS THE COVID-19 TASK FORCE?
A meeting of the central committee of the ruling Botswana Democratic Party will take place over the weekend, flying in the face of incredulity at a time when gatherings of more than 100 people remain outlawed. But some will say the constant snafus of the Covid-19 Task Force point to a bunch of bunglers who are too clumsy to catch an invisible virus. Staff Writer KABO RAMASIA takes a look at them
The soft spoken Director of Health Services Dr Malaki Tshipayagae (Pic: Press Photo)
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here are concerns over the competence of the Presidential Task Force for Cocid-19 regarding its response strategies, The Business Weekly & Review has gathered. According to observers, the team - which is made up of Coordinator Dr Kereng Masupu, Deputy Cordinator Professor Mosepele Mosepele, Dr Mogomotsi Matshaba and Director of Health Services Dr Malaki Tshipayagae - has offered more confusion than clarity in its management of information and dissemination. Since the appointment of the team, it
with a few independent investigations by the private press here and there. This has led to observers questioning the strategy and communication skills of the Covid-19 Task Force. In one instance, Dr Tshipayagae announced that there were three recoveries only to state in a different media interview soon afterwards that there were actually five recoveries. On Thursday morning this week, the director announced that there would be free movement within zones beginning today (Friday), news that spread by far faster than the dreaded disease because
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THE FUN PRESIDENT STORY ON PAGES 4 & 5
AS THE DETAILS ABOUT THE MONEY LAUNDERING CASE AGAINST ASSET MANAGER BAKANG SERETSE SLOWLY EBB OUT, THERE ARE EMERGING VARIOUS AREAS OF BATTLE BETWEEN PROSECUTION AND DEFENCE. THE TWO PARTIES SEEM SET TO FIGHT OVER THE ORIGINS OF THE COMPANY AT THE CENTRE OF THE TRANSACTIONS UNDER QUESTION, NAMELY KHULACO, THE ROLE OF THE DIRECTOR GENERAL OF INTELLIGENCE AND SECURITY ISAAC KGOSI, AND THE POSITION OF ADVOCATE SADIQUE KEBONANG, MINISTER MINERAL RESOURCES, GREEN TECHNOLOGY AND ENERGY SECURITY, AND HIS BUSINESS LINKS WITH SERETSE STORY ON PAGES 8
In one instance, Dr Tshipayagae announced that there were three recoveries only to state in a different media interview soon afterwards that there were actually five recoveries.
BIFM RESERVES 25.1% SHARES FOR employees STORY ON PAGES 2
INSIDE CRISIS AT BASIC EDUCATION
PENSION FUND CRISIS! NBFIRA SLEPT ON THE JOB
JOB LOSSES APPROACH 200 AT KBL
It is sadly ironic that for the 2017/18 fiscal period, Unity Dow, the Minister of Basic Education received the largest share, at 17.2 percent of the national budget, an equivalent of P6.80 billion...Pg 03
While in their deluxe offices, NBFIRA employees discuss financial safeguards and high standards of conduct for business in non-banking institutions, pension fund managers and asset managers to be more specific. Pg 03
Around 50 jobs at KBL, top brewing firm, are hanging by thread The sole brewery is at the extreme point of an ongoing retrenchment exercise orchestrated by Anheuser-Busch InBev...Pg 13
MAJOR MARKETS MOVERS:
LETLOLE
2.33
DOMESTIC EXCHANGE RATES: USD/BWP
0.0962
ZAR/BWP
1.3056
GBP/BWP
HOW SERETSE BLEW P200M IN FOUR WEEKS STORY ON PAGES 6 & 7
0.0733 ...MARKET HIGHLIGHTS ON PAGE 11
+0.01%
has given updates relating to Botswana’s Covid-19 situation and response on radio and television, but the audience has often been left confused. When the country went into a State of Public Emergency (SoE) that was sought by President Mokgweetsi Masisi, it was made clear to the media that information about CoVid-19 would have to be confirmed by the Director of Health Services, otherwise journalists risked a hefty P100 000 fine or five years imprisonment and or both. Following that announcement, information has been communicated through various government media platforms
the inertia and ennui of more than a month under lockdown must be getting to people. However, the joy was shortare available lived before it evenWe began in the because Dr Tshipiyagae was soonfollowing retracting the statement, sayingoutlets major nationwide he and his team had interpreted the law wrongly and that allowing free movement at this stage would contravene existing regulations. But the complaints that reverberate the loudest are those around issuance of permits, a situation that amounts to bedlam and mayhem. Seemingly bowing to public pressure, online permits
• • • • •
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COVID-19: IS MASISI’S CHALLENGE WORSE THAN MOGAE’S?
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pon assuming power in 1998, President Festus Mogae had to deal with increasing cases of HIV/AIDS after the first case was reported in Botswana in 1985. By 2003, the World Health Organisation (WHO) was reporting that a total of 350 000 people in Botswana were living with the virus, both the young and old, and there was a high prevalence rate. Two decades later, Mokgweetsi Masisi is on the scene with a similar situation. After serving for many years in the civil service as an educationist, Masisi joined politics. Mogae, an economist by training, maneuvered through an economy torn by HIV/AIDS. He
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President Festus Mogae ascended to power at the height of the deadly HIV/AIDS but he eventually weathered the storm. Twenty-two years later, President Mokgweetsi Masisi faces a similar situation with the Coronavirus that could render him more vulnerable than Mogae was. Staff Writer KABO RAMASIA reports
devised policies and committed resources to saving Batswana from potential extinction. Stretched to the limit, Mogae fought the virus with everything at his disposal. At the time, nobody understood the disease much, but the government’s response meant economic development being stalled as more and more resources focused on the disease. Around 2003, Botswana was rolling out free antiretroviral therapy (ARVs) and free HIV testing and counselling. In 2008, when Mogae left the highest office in the land a fairly happy man, at least on the HIV/AIDS front. He had gained recognition, won accolades and was hailed an international icon
in the war on HIV/AIDS. While HIV was not entirely defeated, a track record of containment of the virus was visible. Fast forward to 2020 and President Masisi. Just last year technocrats at the Ministry of Finance and Economic Development were painting a gloomy picture of an economy teetering on the brink of a deficit for the three years ahead, thanks mainly declining sales of diamonds on the international market. The bleak outlook was not helped by worsening trade tensions between China and the US, the world’s largest economies that also constitute the biggest market for Botswana’s diamonds.
The advent of Covid-19 in China towards the close of 2019 made worse an already dim situation for Botswana at a time when President Masisi was boldly seeking an all-embracing transformation for his country by means, among others, of radical changes in the education system towards a knowledge-based economy. There has been little economic diversification in Botswana since independence in 1966. At present, the economy is driven by two main sectors, namely mining and tourism. But the advent of the Coronavirus, which has compelled the entire world to a near-total cessation of economic activity, has impacted both these sectors seriously.
In addition to other measures that include drawing down on its foreign reserve to subsidise private sector salaries and wages, the government has reserved P10 million to bail out the informal sector that accounts massive numbers of Batswana. The salary and wage subsidy covers tourism where 25 000 jobs are on the line, according to a report in March by economist Keith Jefferis of E-Consult Laying bare the new reality for Botswana, finance minister Dr Thapelo Matsheka recently said the government had suspended important infrastructure projects under the National Development Plan 11 and in order to better tackle Covid-19.
FROM PAGE 03
HOW COMPETENT IS THE COVID-19 TASK FORCE? were introduced as a means of reducing overcrowding at the offices of District Commissioners. However, the response within two hours of applying that the team promised has in many instances stretched to days while in some there has been no response at all. The team’s ability to stick to its own word once again came under scrutiny early this week when a certain truck driver transporting goods from South Africa made his way into the country before knowing his
results after being tested for the Coronavirus. By the time the man knew that he had tested positive, he had made contact with more than 150 people. After the team ran pell-mell, the director said all 150 had been corralled and were safely quarantined. It suddenly seemed distant that the time was when people coming into Botswana - and almost by definition truckers, only under the circumstances - would be tested and straight away go into mandatory quarantine. And then there was the occasion when the team announced
imminent commencement of community testing in identified major villages across the country. However, a last-minute change of strategy saw the team reemphasise contact tracing in places which had positive cases. Because of this constant bungling by the Covid-19 Task Force, some health experts have told this publication that it could prove difficult to determine the extent of infection by the rampant virus when testing is ramped up. Interviewed on Btv recently, former health minister Joy Phumaphi argued for massive
community testing, preferably of the entire nation regardless of cost. However, just over 10 000 people out of a population of 2.3 million have so far been tested. This at a time when schools will resume - albeit in phased stages - in three weeks, raising fears of increased infections. The anxiety is not helped any that the central committee of the ruling Botswana Democratic Party will gather in a meeting over the weekend, a turn of events that flies in the face of the ban on gatherings of more than 100 people that restricts even the number of mourners at
funerals. ‘‘I won’t speak on political issues,’’ Dr Tshipayagae said when the Domkrag matter was put to him. ‘‘The law allows for law breakers to be reported to the police.’’ Indeed, several cases of offenders against Covid-19 regulations are currently under police investigation. But far from powerful politicians who hold decision-making positions in their parties and public office, many of them involve ordinary people, among them small fry out to
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DISS BOSS FACING MASISI'S AXE? • Masisi, Magosi relationship hit rock bottom • Magosi remains mum KABO RAMASIA Staff Writer
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here is a fallout between President Mokgweetsi Masisi and the Director of Intelligence and Security Services (DISS) Director General, Brigadier Peter Magosi. So serious is the fallout that Magosi is said to be leaving the DISS. According to sources, President Masisi is unhappy with the manner in which Magosi handled major cases. What broke the camel's back is the case in which DISS agent Wilhemina Maswabi code name "Butterfly" was alleged to have embezzled around P100 billion. When the Butterfly case erupted, this publication reported that there were concerns raised by senior government officials to the effect that the DISS was bungling the case. Apparently, the President expressed his disappointment over the handling of other cases such as the Sebina brothers case, where DISS failed to provide evidence in the court.
According to sources, President Masisi is unhappy with the manner in which Magosi handled major cases. What broke the camel's back is the case in which DISS agent Wilhemina Maswabi code name "Butterfly" was alleged to have embezzled around P100 billion. Further, DISS advised government to blacklist the Chinese owned construction company, China Jiansgu which Magosi claimed was engaged in corrupt practices. This cases form the list of many that are before the courts. However, Magosi was challenged to bring forth evidence, of which he did not. During the 2019 general elections, DISS was alleged to have interfered with the elections as per claims made by the Umbrella for Democratic Change (UDC) and South African based forensic investigator Paul O' Sullivan. Sullivan concluded that P15million from the DISS was used to buy votes, through front companies. Magosi has been missing in action lately, especially since reports of his suspension surfaced late last year. This publication efforts to solicit a comment from Magosi hit a snag as his mobile phone was
unanswered at press time. Magosi had not responded to a text sent to his phone. Further efforts to reach the Permanent Secretary to the President, Elias Magosi and Presidential Affairs Minister
• DISS head could be axed - sources
• DISS boss bungled cases
Kabo Morwaeng were unsuccessful. However, DISS Public relations officer denied the allegations. Edward Robert told this publication that these are nothing but allegations.
"We are not aware of any eminent departure of Rre (Peter) Magosi from DISS." Seemingly cagey with information, Robert added that, "If there has been any change, that would have been officially
communicated." Magosi was appointed by President Masisi in May 2018 after the dismissal of the former head of DISS Isaac Kgosi. Kgosi was the founding Spy Chief.
De Beers Group celebrates the dedication, hard work, sacrifice and resilience demonstrated by all COVID -19 frontline workers in Botswana. We recognise your commitment towards ensuring that the entire nation withstands and recovers from this global pandemic.
From the men and women in mines across the country, to health workers working hard to save lives, travel operators safely transporting goods and people, shop assistants who remain resilient to serve people daily, crop producers and farmers who put meals on tables, immigration and customs officials for their hard work, utility workers, bankers who serve with pride amidst the challenging conditions, house helpers who opted to continue working during this time, social workers, District Commissioners and Post Office officials who dispatch various grants and food parcels to those in need, the Church, business leaders, Dikgosi, Councillors and Parliamentarians for your leadership during this time, re a leboga. Thank You.
In line with our De Beers Group value ‘Put Safety First,’ we applaud you for continuing to work safely every single day to eliminate the risk of infection.
Thank you all! Re A Leboga! Bruce Cleaver CEO, De Beers Group
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INSIDE THE P114 MILLION DIRTY FOOD POLITICS It is an untidy scene of dishonest social workers, deceptive beneficiaries and meddlesome politicians in which some families receive the packages more than once while truly deserving destitute homesteads get omitted. Staff Writer KABO RAMASIA reports
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ll is not well at the Ministry of Local Government and Rural Development. Team leader Minister Eric Molale says the ‘Mmaboipelego food hampers,’ by which the government means stave off pangs of hunger brought on by people being separated from their livelihoods by staying in their homes as means of fighting Covid-19, is bringing out the worst in those responsible for distributing them. Some of them are hoarding the food for themselves, others are giving it to preferred relatives and friends, while politicians are meddling to dole the food out as vote-
catching largess. In the process, whole homesteads – some of them most deserving – are omitted partly because some have received the packages more than once. But the dole money allocated for the emergency relief programme is running out. When Minister Molale, accompanied by his two assistant ministers and the newlyappointed Coordinator of Social Protection, Gabriel Seeletso, addressed a press conference yesterday (Thursday), he admitted that dirty ‘politics of the stomach’ were giving a bad name to what is otherwise a noble effort. Seeletso set the tone when he told journalists that the number Batswana who have been assessed
by social workers now exceed the initial 476 000 and stands at 487 047. ‘‘At this time what I can say is that we have progressed from where we were (the) last time,’’ Seeletso said. ‘‘So far, 317 787 families have been assisted.’’ According to the Coordinator, some councils have completed assessment and were distributing the food hampers and that the ministry was assisting to help councils complete the task in some instances. Although the ministry intends to help affected households until June, Seeletso said the programme has run out of funds and has put in a requisition with the finance ministry. P114 million was the amount initially allocated for the food
hampers but there is a need for an additional P18 million to continue sourcing food from farmers. When it came to Minister Molale to speak, it became clear that the primordial instinct of greed has reared its ugly head over the government’s social protection packages. ‘‘When we talk of food, let us not be selfish,” he said. “In some instances, some people were not supposed to be assisted. I have received over 300 calls from Batswana throughout the country.” The minister depicted an untidy scene of dishonest social workers and deceptive recipients that calls for investigation and punishment to bring the fraud to an end. In response to a question,
Molale said no one should sign any forms from social workers if the packages were not complete and that this message would be broadcast further. He disclosed that the police were already investigating cases of suspicious conduct of social workers. When Parliament met last week, the minister found himself facing an indignant opposition making allegations of corrupt members of the ruling Botswana Democratic Party (BDP) benefiting from tenders to supply food baskets. In the end, Molale said councillors were legible for tendering, provided they let him know.
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Press Photo
MATSHEKA’S COMPANY STILL IN BOB’S MULTIMILLION TENDER • But BoB Governor Moses Pelaelo reports to Minister Matsheka
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company owned by the Minister of Finance and Economic Development, Dr Thapelo Matsheka, is still providing pension fund administration services to the Bank of Botswana (BoB), The Business Weekly & Review established. On the other hand, although it is semi-autonomous, BoB reports to Dr Matsheka as the custodian of the country's treasury. The company, Fiducia Advisory Services, is one of only four licensed fund administrators in Botswana, the others being Alexander Forbes Financial Services Botswana, AON Botswana and Mmila Fund Administrators. Fudicia is the only native-owned player in this arena of much money. Matsheka founded Fiducia in 2017 to provide fund administration services to retirement funds, becoming its Managing Director (MD) from the onset, after heading the Citizen Entrepreneurial Development Agency (CEDA) and AON Botswana. He is still listed as a director of the company, according to the Companies and Intellectual Property Authority (CIPA). Matsheka owns Fiducia with Odirile Merafhe. CIPA lists Matsheka and Merafhe as directors who own 1500 shares of Fiducia each. Although the Business Weekly & Review was unable to establish the value of the BoB tender, it found that Fiducia was awarded the tender to administer the BoB pension fund last year. Business Weekly also found that Matsheka was awarded the tender while he was still campaigning for elections. BoB staff pension fund is managed by professional asset managers in this instance, Fudicia - and overseen by trustees drawn from management and staff of BoB. The Bank of Botswana falls under the authority of the Ministry of Finance whose Permanent Secretary sits throughout meetings of the central bank. The Governor of the Bank of Botswana, Moses Pelaelo, reports to Minister Matsheka. As a fund administrator, Fiducia is regulated by the Non-Bank Financial Institutions Regulatory Authority (NBFIRA), which also falls under the broad authority of the finance ministry. A representative of the ministry sits on the board of the NBFIRA. Fiducia was given its operational licence by NBFIRA about three years ago. Fudicia is relatively new but it has participated in Botswana's high watermark financial developments. Parliament passed the Retirement Funds Act in 2014 (RFA Act), as well as subsidiary legislation to empower NBFIRA as the custodian of the RFA Act. This necessitated the pension fund administration and investment management to be conducted by licensed independent entities. Fiducia was among the respondents
7
INVITATION TO NATIONAL
SMME REGISTRATION
The Local Enterprise Authority (LEA) has embarked on a national initiative to register informal and formal SMMEs operating in Botswana. The main objective of the registration exercise is to develop a centralized database of all trading SMME businesses countrywide; which will inform the development of targeted support programmes and policies that will effectively benefit the SMME sector. Register your business online at: https://smeregistration.lea.co.bw OR simply dial *165# on your mobile phone and follow the instructions. In order to facilitate decision making on availing COVID-19 relief, informal sector businesses are required to have registered by 31st May 2020. In future, SMME business development support by Government will only be availed to those registered on the SMME database, therefore SMMEs are encouraged to continue registering beyond 31st May 2020. For any enquiries regarding SMME business registration, contact the following numbers: 71696870, 77423708, 75016935, 71667681 OR email Botsalea@lea.co.bw
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COMMENT BRAVO CEDA…. BUT CONVERT INFORMAL SECTOR LOAN INTO A GRANT
Tax Column
WRITE TO US AT The Business Weekly & Review P.O Box Post Net Kgale View 449 ADD, Gaborone www.businessweekly.com
Commentaries, letters and columns present here are the views of the authors and not necessarily those of The Business Weekly & Review
CAPITALISE ON TAX-FREE FARMING!
R
JONATHAN HORE Managing Consultant Aupracon Tax Specialists
Artem Beliaikin
ecently there has been concerns over rental payments in light of the COVID-19 pandemic. The issue on rental payments was rental at a household level and not necessarily corporate or industrial level. So burning was the issue that it even found its way to the floor of Parliament. To us the issue was secondary since rent is a household expenses and the move my government to subsidize incomes and provide other payment holidays was to ensure that households are able to meet immediate expenses such as rent and food. In our view parliament wasted a great deal of time that should have been devoted to addressing the plight of the only people who have been terribly exposed; and those are people in the informal sector. It is on this note that The Business Weekly & Review would like to commend the Citizen Entrepreneurial Development Agency (CEDA) for its latest initiative geared towards assisting the informal sector. The sector had otherwise been left in the lurch. From the commencement of the lockdown to date it had become very clear that they were not catered for in any of the economic responses to the outbreak. Sadly, this is the one sector in which citizen economic participation is centred and it would not hurt for government to admit that they errored by failing to come up with a specific response for the sector. The silence by government was however worrying and painted a picture of a government lacking confidence in its response to the Covid19 breakout. Its failure to respond to the queries left a lot to be desired. In simple terms government had failed to defend its actions despite the array of resources at its disposal. Be that as it may, our suggestion is that the loans by CEDA aimed at the informal sector should be converted into grants or in the alternative given at a 0% interest rate. As it stands players in the informal sector do not qualify for these loans and to expect them to service the loans in this trying times is an unreasonable expectation. We also call on CEDA to scrap off a requirement that those applying for the loans should demonstrate ability to pay and instead allow the stock to be used as collateral. This is so because most of the small businessmen and women that make up the informal sector are struggling financially and are going to struggle to demonstrate that they have ability to pay back the loan. We look forward to the implementation of the CEDA initiative and hope that it will resuscitate and help informal sector workers that have been hard hit by the Covid-19 pandemic.
Tax & your Pocket
T
he advent of COVID-19 calls for innovative survival ideas as the dynamics of our economy have started changing. We could see companies negotiating pay-cuts or staggered working weeks with employees as a survival strategy. Economists warn us that the world economy is already slipping into a recession. So, one needs to consider all possible survival tactics, as long as they are within the law. And if you didn’t know, there are certain farming activities you can embark on and pay no thebe in taxes. In other words, you can run such farming ventures, earn huge profits and never pay income taxes at all. I will expand on this intriguing issue below. In this article, words importing the masculine shall be deemed to include the feminine. LIVESTOCK FOR SLAUGHTER The first type of farming activity that is not subjected to income tax, as provided by section 30 of the Income Tax Act is the rearing of cattle, goats or sheep for slaughter by a Botswana-resident individual. The resident individual should rear not more than 300 cattle or 1800 goats/sheep in order to escape income tax. For the avoidance of doubt, one could have a combination of cattle and goats/sheep, provided that if aggregated, they don’t exceed the equivalence of 300 cattle or 1800 goats, on the basis that one head of cattle equals 6 goats or sheep. For example, one may have 200 cattle and 300 goats/ sheep (equivalent of 50 cattle) and still legally duck tax. Further, such person is not required to keep books of accounts or declare income from the farming activities to BURS. However, if he earns any other income such as rentals, that other income may be subject to income tax.
As stated above, the farmers should rear the stated livestock for slaughter. This simply means that the livestock must be reared for eventual slaughter or sold for slaughter. If the livestock is reared for any other purpose such as dairy, then the tax exemption falls away. It is also important to point out that this exemption applies to both citizens and non-citizens, as long as they are resident in Botswana. From a tax perspective, a person is considered resident when they spend at least 183 days in Botswana in a tax year or are permanently resident in Botswana during the tax period. For the tax-exemption to apply, the farming activities must not be conducted through a company or such other vehicle, but simply as an individual. They should do it in their individual name or as they technically put it, as a sole trader. Note that other livestock farming activities such as the rearing of donkeys, chickens and crocodiles is subject to tax, regardless of the number of the livestock reared. The only farming activity that is exempt from income tax, as stated above, is the rearing for slaughter of not more than 300 cattle or 1800 goats/sheep. This also means that if the livestock exceeds the stated numbers, then the farmer becomes subject to tax. For example, a resident individual who rears 400 cattle for slaughter is subject to income tax, i.e. he should keep books of accounts and file income tax returns for such business. Whilst I stated above that the livestock farmers do not suffer tax in terms of section 30 of the Income Tax Act, there is another section 58 which was put through in 2011 which imposes a 4% tax on the sale of the livestock to the likes of
BMC or butcheries. I know farmers have raised violent objections to this matter but unfortunately, its there in black and white in the Income Tax Act. CONSIDER DRYLAND FARMING An individual who conducts dryland farming on a farm not larger than 100 hectares is also not supposed to suffer income tax. As if you were not paying attention, let me remind you that this should be done as a sole trader, not any other form of business. Dryland farming includes crop farming where there is no irrigation and where the exposure of soil is avoided to reduce the loss of water through transpiration. Such farmers engage in a lot of mulching and related activities, to conserve moisture. ENTER VAT Despite the income tax exemptions, the above-mentioned farmers would still be required to comply with VAT obligations if they exceed P1m in annual turnover. In such cases, they would need to register for VAT and comply with VAT filing, from time to time. Well folks, I hope that was insightful. As Yours Truly says goodbye, remember to pay to Caesar what belongs to him. If you want to join our Tax Whatsapp group, send me a text on the cell number below. Jonathan Hore is a Managing Tax Consultant at Aupracon Tax Specialists and feedback on this article can be relayed to jhore@aupracontax.co.bw or 7181 5836.
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Companies & Markets MARKET HIGHLIGHTS MAJOR MARKET MOVERS (Thebe)
Counter
Share price
Change (%)
Source: BSE
DOMESTIC EXCHANGE RATES 24/04/2020 Rate EURO/BWP
0.0751
GBP /BWP
0.0656
USD /BWP
0.0809
ZAR/BWP
1.5490
YEN/BWP
8.7000
Source: BOB
WORLD MARKETS As at 08/05/2020 INDEX
VALUE
% CHANGE
24071.00
+0.96
S&P 500
2907.50
+0.95
NASDAQ
8979.66
+1.41
AMERICAS INDEXES Dow Jones Industrial Average
EUROPE, MIDDLE EAST & AFRICA INDEXES EURO STOXX 50 Price EUR
2906.79
+0.91
FTSE 100 Index
5935.98
+1.40
10899.23
+1.30
DAX
ASIA-PACIFIC INDEXES Nikkei
20179.09
+2.56
Hong Kong Hang Seng Index
24230.17
+1.01
1458.28
+2.21
TOPIX Source: Bloomberg
LETSHEGO: FACING THE COVID FALLOUT LETSHEGO’S SHORT-TERM OUTLOOK IS HIGHLY UNCERTAIN DUE TO MEASURES IMPLEMENTED BY GOVERNMENTS IN EIGHT OF THE 11 COUNTRIES GROUP’S FOOTPRINT
WRITE TO US AT P.O Box Post Net Kgale View 449 ADD, Gaborone
TO CURB THE SPREAD OF COVID-19 AND THE RESULTANT ECONOMIC IMPACT. BUT IT EXPECTS THE COST/INCOME RATIO TO TICK UP IN 2020. STORY ON PAGE 12 & 13
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ollowing the outbreak of Covid19 and subsequent shutdown of Education Service Providers (ETPs), institutions are preparing to resume classes while at the same time adhering to the set guidelines by the Ministry of Health and Wellness to curb the spread of the virus. During the national lock down, the Institute of Development Management (IDM) has been working round the clock to prepare for business continuity and ensure learners complete their studies. IDM Botswana Campus Director, Dr Onalenna Seitio-Kgokgwe, shares her plan on the Institute’s readiness to operate following the pandemic. EMPLOYEES GRADUAL RETURN TO WORK According to the guidelines from the Covid19 Response Team, organizations are expected to make a gradual return to work, with initial 25% of staff returning, followed by 50% and 100%. In preparation for the gradual opening, IDM began cleaning and fumigation of offices, classrooms and hostels in Gaborone and Francistown this week. Staff will start returning to work during the week of 18th May 2020. STUDENTS’ RETURN TO CAMPUS In view of the current health requirements, it will not be possible to bring all the students back to campus at the same time. We have therefore prioritized the following groups to start classes on June 8th, 2020: 1. All completing classes 2. All year 1 classes 3. All CIPS classes CONTINUATION OF TEACHING LEARNING IDM will facilitate and enhance infusion of information technologies in teaching/learning processes in order to improve quality and efficiency of program delivery. Prior to Covid19, platforms such as Moodle, Skype for Business and others were tested and successfully used by some of the classes. At the time, IDM was however very conservative because there was an opportunity and luxury to deliver programs face to face. Covid19 has thrown us into a completely different situation where we need now to enhance the use of technology for business continuity in the different scenarios that the disease presents i.e. during periods of lockdowns or in campus adhering to social distancing requirement. To that effect the Institution has enhanced IT educational technology platform and made significant investment in IT infrastructure including bandwidth. This should give us a competitive advantage as our students will be able to learn wherever they are, and our teaching staff will also be able to engage with the students as needed. We have done a survey to understand the technology needs of our students which clearly
shows that while some students have access to is maintained during this difficult time, we have • Bachelor of Accounting • MSc Project Management internet connectivity and are ready and willing to developed a strategy which will guide the process • Bachelor of Public Finance and Accounting • MSc Supply Chain Management • Bachelor of Education (Management) • Bachelor of Project Management start learning on the e-learning platforms, others of teaching and learning to ensure that learners • BA (Hons) Early Childhood Studies • Bachelor of Office Management on the other hand have connectivity issues and/or complete their studies in line with BQA guidelines. • Bachelor of Public Health • BSc Supply Chain Management lack of readiness to study through that mode. The • Bachelor of Archives and Records survey was further supported by a desk study to We are• Bachelor of Community Development aware that it is no longer business as usual, • Post Graduate Diploma In Monitoring And Management understand the physical locality of learners during while we strive to support all students to complete Evaluation the lockdown and internet connectivity in their their studies, we are cognizant of the fact that some different areas. The two surveys will help us to carry students may face adaptation challenges due to CLASSES CONTACT US out more engagements with relevant stakeholders many reasons. We have put measures in place to Our Gaborone Campus offers Block Release programmes Admissions Office to assist in helping delivery of online teaching. We support all our learners to complete their studies. to give convenience to those who are unable to attend Institute of Development Management full-time Block Release classes are usually Po Box 1357, Gaborone have made a our decision toclasses. start enhancing the use of We have made preparations to offer multiple conducted every 6 or 7 weeks from Thursday to Sunday, Plot 21222,21254, Mobuto Road Village Moodle and other platforms in our program delivery exams/or supplementary exams to assist students depending on the programme you are studying. Some Tel: (+267) 3612100/38/39 firstly to encourage our students to keep studying who may challenges of the programmes are conducted during weekends, Fax:face (+267) 3913296 in their studies in one way and be in a position to Sunday complete their studies in giving a or another. Saturday to from 0800hrs- 1630hrs, you Email:admissions@idmbls.com the liberty to learn while you earn. more cost effective way not only for themselves but for the country during these difficult economic Our strategy, which corresponds with the existing CLOSiNg dATE : 30 / APRiL / 2019 times, and secondly to prepare them for worst case requirements of BQA Registration and Accreditation scenarios brought by Covid19 uncertainties. includes risk management plans to proactively identify possibilities of business disruptions and To that effect we will resume all our classes online their mitigating factors. on Monday 18th May 2020. A revised time table Institute of Development Management www.idmbls.com will be facilitated by the Academic Services. The Additionally, we have developed a robust Crisis teaching staff will monitor class attendance and Communication plan to facilitate sharing of student engagement with the learning process. information about and during the crisis and adoption Plans will be made to support all students who of crisis intervention strategies. Some of the specific were not able to access the learning platform to objectives include providing support to students ensure that NO STUDENT is disadvantaged. These and staff to transition to new ways of operations students will be given priority once the physical such as e-Learning mode as a critical alternative to sessions are arranged. business continuity during the crisis; guide effective management of communication with students Part time students on the other hand, who are and key stakeholders; ascertain consistency in mostly frontline workers such as health workers, messaging, and clarity of information; minimize the police and members of the defence force already impact of the crisis on students and staff and also have access to the learning material on Moodle. allay fears and anxiety among students and other Special classes will be arranged when the situation stakeholders. returns to normal to enable them to complete their studies. NEW ENROLMENTS We are receiving new enrolments for 2020/2021. We To further support the online teaching process, are however looking to be guided by the Department we have established IT help desks for different of Tertiary Education Financing who is equally academic departments to support students affected by this pandemic. Currently, applications who need assistance during online delivery. The are received online through our website, which Institution has also established an Instructional has become instrumental in facilitating business Design committee to support teaching staff in continuity during this difficult time. transitions to e-Learning. Last but not least, IDM looks up to parents as a critical It is important to ensure that as teaching resumes, stakeholder to provide support to students during the needs of all students are taken on board, this pandemic. We believe that their contribution through the Student Welfare Office, students in providing a conducive learning environment with special needs have also been contacted to and encouraging learners to make their academic establish their needs and state of readiness during studies their priority is key. this special period. QUALITY OF PROGRAM DELIVERY In response to the Botswana Qualification Authority (BQA) call for ensuring that quality of programs
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LUCARA BELIES MARKET CRISIS Q1 results show an improvement on December 2019 while the company forges ahead with Louis Vuitton as a manufacturing partner in Sewelo TSHEPI GABOTLHOMOLWE Staff Writer
www.mining.com
L
ucara is an independent producer of large quality Type IIa diamonds from its 100 percent owned Karowe Mine in Botswana and owns a 100 percent interest in Clara Diamond Solutions, a secure digital sales platform positioned to modernise the existing diamond supply chain. Declared an essential service by the government on April 2, Karowe continues to operate safely and at full production. Chief Executive Officer (CEO) Eira Thomas says although they are faced with weak product demand, Lucara is focused on cost management and capital discipline through this period of uncertainty. According Lucara’s Q1 results, as at 31 March 2020, the company had cash and cash equivalents of $27.4 million, an increase of $16.2 million from 31 December 2019. The company maintained draws totaling to $19.0 million on its working capital facility from Q1 2020. According to Thomas, overall performance during the first quarter remains consistent with the strong operational results achieved over the past two years. Processing capacity was slightly lower in Q1 2020 compared to previous quarters due to a planned extended shutdown in early March for improvements to the XRT technology in the
In January 2020, Lucara entered into an unprecedented collaboration with Louis Vuitton, the famous luxury house, and HB Company, a diamond manufacturer from Antwerp, to manufacture its historic, record setting 1,758 carat Sewelô diamond recovered from the Karowe Mine in Botswana in April 2019. processing plant. According to the results, the company begins the second quarter with a strong cash position and available liquidity. In early February 2020, an unbroken 549 carat white diamond was recovered from direct milling of ore sourced from the EM/
PK(S) unit of the south lobe. This diamond was, however, not made available for sale in Q1. Thomas says a strong operating environment prevailed at Karowe Mine in Q1 and delivered results consistent with the company’s 2020 plan and budget. A total of 91,536 carats were recovered
during the three months ended 31 March 2020. The Company recorded a net loss of $3.2 million for Q1 2020, resulting in a $0.01 loss per share for the quarter. This compares to net income of $7.4 million for Q1 2019 and earnings per share of $0.02. A decrease in total revenue
had the most significant impact on the current quarter’s results. It is reported that the value of the rough diamonds transacted through the Clara platform in Q1 2020 was $3.0 million over six sales, which brings the total value transacted on the platform between December 2018 and March 2020 to $12.1 million. The operating cash cost per tonne processed in Q1 2020 was positively impacted by a favourable foreign exchange rates and the benefits of cost optimisation efforts undertaken in the second half of 2019, offset by a 16 percent decrease in tonnes processed as compared to Q1 2019. In January 2020, Lucara entered into an unprecedented collaboration with Louis Vuitton, the famous luxury house, and HB Company, a diamond manufacturer from Antwerp, to manufacture its historic, record setting 1,758 carat Sewelô diamond recovered from the Karowe Mine in Botswana in April 2019. Lucara will receive an upfront non-material payment for the Sewelô and retain a 50 percent interest in the individual polished diamonds that result. Lucara has reported that its capital spending programme for 2020 is now being rescoped to focus on critical path elements, largely in support of its ongoing underground expansion programme. Thomas says Lucara entered this crisis with a strong balance sheet and no debt.
UN, STANDARD BANK IN POWERFUL PARTNERSHIP FOR AFRICAN WOMEN The programme is in response to the AU Agenda 2063 and the UN’s Sustainable Development Goals 5 and 8 which target gender equality, decent work and economic growth STAFF WRITER
T
he United Nations Economic Commission for Africa (UNECA) and Standard Bank Group are calling on women fund managers across Africa to apply to join the African Women Leadership Fund initiative (AWLF), an innovative impact fund that will provide capital and expertise to successful candidates. Applicants must be female, reside in Africa or be willing to relocate to Africa and need to have proven fund- or assetmanagement experience. They will be subject to an investment and operational due-diligence process that will need to be completed by the end of August 2020, with the first
phase of the fund becoming fully operational in the fourth quarter of this year. While the fund is sectoragnostic, it is reported that it will have a preference towards high-impact sectors, including manufacturing, education, healthcare, renewable energy and technology. According to Dr. Vera Songwe, UN Under Secretary General and Executive Secretary of the UNECA, the AWLF initiative was established in response to the AU Agenda 2063 and the UN’s Sustainable Development Goals 5 and 8 which target gender equality, decent work and economic growth. “The fund is one of the most transformative financial instruments to be implemented across Africa in recent years,” said Songwe. “It aims to reshape the
chain of decision-making in the financing of women enterprises.” Songwe further says in a strong demonstration of support for the initiative, several pledges have already been made, including from African and international partners. The AWLF Initiative is inviting more applications from established women-owned or women-managed funds that participate in listed markets and short-term private debt. Under this first phase of the AWLF Initiative’s implementation, funding will be allocated to asset managers across North, East, Southern and West Africa. Allocations will be made with a view to achieving the best possible regional and geographic diversification. The AWLF Initiative has been established with the aim
of uplifting female-owned and managed asset management firms and providing a defined economic stimulus to achieve sustainable economic growth in Africa, she said. According to the organisers, the fund – which is the first of its kind, aims to raise up to $1 billion over 10 years for women fund managers who in turn will invest in high-impact businesses and projects across the continent, thus driving entrepreneurship. The second phase of the fund, which will be after the application process, will be announced at a later stage and investments will be made into women-owned or women-managed private equity funds. The third phase will target first-time women fund managers through an Emerging Manager Seed Capital Programme. Sola David-Borha, Chief Executive of Africa Regions at
Standard Bank Group, said they are proud to be part of establishing the AWLF Initiative as this aligns with their goal of creating a genderequal Africa. Borha added that this initiative is aimed at uplifting communities and achieving sustainable economic growth across Africa. To bring this partnership to life, MiDA Advisors facilitated the union between UNECA and Standard Bank and will serve as lead advisor in the management of the structure, operation and allocations to managers across the continent. MiDA Advisors has partnered with Standard Bank Group over the past three years to present a gateway into Africa for US institutional investors seeking opportunities on the continent.
12
THE BUSINESS WEEKLY & REVIEW Friday 15 May 2020 - 21 May 2020
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Companies & Markets
LETSHEGO:
FACING THE COVID FALLOUT Letshego’s short-term outlook is highly uncertain due to measures implemented by governments in eight of the 11 countries group’s footprint to curb the spread of COVID-19 and the resultant economic impact. But it expects the cost/income ratio to tick up in 2020.
S
tockbrokers Botswana has observed that the Letshego’s ability to grow new business through traditional channels, which involve contact with branches and direct sales agents, have been constrained by Covid-19 lockdowns. To gain new business, the company was prompted to accelerate investments in alternative digital channels. The length of lockdowns and other containment measures has been difficult to predict, although in Botswana business will resume in a period of at most a month, according to government
guidelines. Stockbrokers anticipates that these measures will largely be concentrated in Q2 with increased re-openings through to the second half of 2020. “Declines in consumer and business confidence will likely keep the potential growth of Letshego’s book muted for the year with stronger growth in 2021,” the broker said, adding that obtaining new funding may be constrained by the uncertainty presented by the pandemic. Analysts expect asset quality to be negatively affected,
especially in the Micro and Small Entrepreneurs (MSE) and informal segments while the deduct-at-source portfolio should remain relatively stable. Letshego has offered repayment holidays to its MSE and non-government deduction-at-source customers while support from special Covid-19 funds in some markets may also serve to ease pressure on individuals and businesses. Stockbrokers says Letshego faces this stress event well capitalised with a capital adequacy ratio of 36 percent as at the end of December 2019. “We expect profitability
to come under pressure in 2020 on the back of muted advances and income growth, continued growth in costs and deterioration in asset quality. We anticipate growth in profitability in 2021 as economic growth turns positive or stronger across the group’s footprint,” Stockbrokers said. In 2019, Letshego delivered strong growth in profits underpinned by improved asset quality and a sharp reduction in the effective tax rate. The company placed considerable focus on improving asset quality over the year which yielded a
significant reduction in cost of risk to 1.7 percent (2018: 4.1 percent). Non-Performing Loan ratio eased to 6.9 percent (2018: 7.1 percent) while coverage ratios were solid at 105 percent (2018: 115 percent). The riskier MSE and informal loan portfolios were reduced on the back of a reduction in risk appetite, hence revisions in affordability criteria. The group also emphasised collections and recoveries. The effective tax rate (ETR) fell to 39 percent (2018: 50 percent). This was a function of a one off tax provision in East
Companies & Markets Africa in 2018 and a reduction in inter-group tax costs. The group previously said it is looking at further initiatives to optimise its tax structure with the aim of attaining an ETR in the range of 30 – 35 percent in the medium to long-term. In 2019, net interest income saw a marginal decline of 1.0 percent to P2.04 billion (2018: P2.06 billion) on the back of a 42.4 percent increase in interest expense which offset the 9.4 percent increase in interest income. The sharp increase in borrowing costs was due to a notional IFRS adjustment for mobile loans, as well as timing issues from new debt being put onto the balance sheet in H2 2018 and some of the cheaper debt being repaid in early 2019. Stockbrokers Botswana observed that net interest margins (NIMs) have come under pressure on a trend basis. The firm anticipates that gross yields will come under further pressure due to changes in regulations and competitive factors. “However, we expect this to be offset by reduction in cost of funds due to the general reduction in key rates in a number of the group’s markets which should have a positive bearing on variable rate borrowings,” said Stockbrokers. According to the broker, further mobilisation of cheaper development finance institutional funding as Letshego leverages on its Environmental, Social and Governance (ESG) initiatives should have a gradual positive effect on cost of funds. “We anticipate NIMs will remain stable through 2020 followed by a slight compression in 2021.”
to be the new management appointments as well as accelerated digital investments as Letshego adapts to business under Covid-19 coupled with additional skills acquisition and training under digitisation. We forecast the cost/income ratio will tick up to 46.3 percent in 2020 before easing to 44.0 percent in 2021,” the broker noted. The group’s focus on improving asset quality led to a significant reduction in the cost of risk to 1.7 percent (2018: 4.1 percent). Due to the Covid-19 outbreakinduced lockdowns and resultant slowdown in economic activity in the majority of the group’s READ geographies, LetshegoA REFINED says there will be a negative effect on asset
quality, especially for the MSE and informal segments. “In line with management’s stress test results, we expect cost of risk to deteriorate to 2.4 percent in 2020. Economic activity is expected to recover in 2021, we hence expect an improvement in this metric to 2.0 percent,” says the company. Letshego’s net advances to customers increased 4.3 percent to P9.07 billion (2018: P8.70 billion) composed of 88 percent deduction-at-source (DAS) loans, 8.5 percent microfinance loans and 3.5 percent informal loans. Net advances were up 2 percent by Q1 2020. Due to the lockdowns and economic pressures on clients, Stockbrokers expects appetite
for loans will remain muted throughout Q2 2020. “Although we expect economic activity to improve in H2 2020 following the re-opening of economies, we forecast a conservative 4.0 percent growth in net advances for FY 2020,” is says, adding that they anticipate the book will grow by 9.1 percent in 2021 as economies return to stronger growth. With regards to funding, Letshego has made good progress diversifying its borrowings mix. Deposits remain low, albeit with an improved retail/institutional mix. Stockbrokers has observed that competition from the traditional banking sector where there are overlaps with Letshego’s
customer base on the higher end of loan size amounts, coupled with competition from other micro-lenders, can eat into the group’s market share and exert further pressure on margins. “Letshego continues to diversify and grow its MSE and informal portfolios. Deterioration in asset quality from increased credit risk will remain a prevalent threat,” the firm says, adding that regulatory reforms present another key risk factor as new regimes in the micro-lending space have impacted pricing. “Continued development of regulations can potentially put further pressure on pricing, negatively impacting profitability,” it says.
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EARLIER THIS yEAR PEEPA CEO EZEKIEL MOUMAKWA GAVE HIS NEPHEW HIS EXECUTIVE AUDI Q7 SUV. THE NEPHEW SMASHED IT INTO A HONDA FIT HATCHBACK. THE Q7 WAS WRITTEN OFF. IT WAS JUST ONE OF THOSE DAyS IN THE FABOLOUS LIFE OF THE PEEPA TOP DOG. A MONTH LATER MOUMAKWA WAS DRIVING A NEW PEEPA-ISSUED RANGE ROVER. INK CENTRE FOR INVESTIGATIVE JOURNALISM SENIOR REPORTER SONNY SERITE HAS UNCOVERED STACKS OF DOCUMENTED EVIDENCE, EMAIL CORRESPONDENCES AND AUDIO RECORDINGS THAT REVEAL HOW THE PEEPA CEO EZEKIEL MOUMAKWA IS LIVING LA BUENA VIDA (THE GOOD LIFE) AT THE TAXPAyERS EXPENSE WHILE HEADING AN ORGANISATION THAT DOES NOT GENERATE ANy INCOME BUT RUNS SOLELy ON GOVERNMENT SUBVENTIONS.
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AT P12 500 AN HOUR OR HALF A MILLION A WEEK, BCL LIQUIDATOR NIGEL DIXON-WARREN AND HIS TEAM ARE PERHAPS THE MOST HIGHLY PAID GROUP OF PEOPLE NOT RUNNING AN ACTUAL COMPANY. DIXON-WARREN MAKES SO MUCH MONEY HE COULD PAY RETAIL GIANT CHOPPIES sc.com/ bw MD RAMACHANDRAN OTTAPATHU TWICE MONTHLY. HE COULD BUY A HOUSE IN GABORONE THIS WEEK, AND BUY A TOP END RANGE ROVER SPORT NEXT. WITH ABOUT P50M ALREADY Terms and conditions apply. PAID, IF THE LIQUIDATOR’S PLANS ARE TO BE FOLLOWED, GOVERNMENT WOULD HAVE TO COUGH UP AROUND P100M TO PAY THE LIQUIDATOR FOR THE COMING FIVE YEARS, BUT THERE IS DISSENT WITHIN PRESIDENT MOKGWEETSI MASISI'S TEAM ABOUT THIS SPENDING WRITES TSHIRELETSO MOTLOGELWA.
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In 2019, Letshego’s employee costs ballooned 16.4 percent to P454.0 million (2018: P390.2 million) largely driven by the turnover of senior executives. Other operating expenses rose 5.5 percent to P622.7 million (2018: P590.2 million). A higher goodwill impairment charge was incurred and depreciation of right of use assets was recognised for the first time as the group implemented IFRS 16. Stockbrokers notes that the cost/income ratio has increased on a trend basis. “We expect the key drivers of further cost growth
13
Friday 15 May 2020 - 21 May 2020
DIGITAL ADVERTS RATES // 2020
• Full payment of the space booked will effect upon
Declines in consumer and business confidence will likely keep the potential growth of Letshego’s book muted for the year with stronger growth in 2021
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HOW THE PEEPA CEO IS BLOWING CASH
Palapye
EARLIER THIS yEAR PEEPA CEO EZEKIEL MOUMAKWA GAVE HIS NEPHEW HIS EXECUTIVE AUDI Q7 SUV. THE NEPHEW SMASHED IT INTO A HONDA FIT HATCHBACK. THE Q7 WAS WRITTEN OFF. IT WAS JUST ONE OF THOSE DAyS IN THE FABOLOUS LIFE OF THE PEEPA TOP DOG. A MONTH LATER MOUMAKWA WAS DRIVING A NEW PEEPA-ISSUED RANGE ROVER. INK CENTRE FOR INVESTIGATIVE JOURNALISM SENIOR REPORTER SONNY SERITE HAS UNCOVERED STACKS OF DOCUMENTED EVIDENCE, EMAIL CORRESPONDENCES AND AUDIO RECORDINGS THAT REVEAL HOW THE PEEPA CEO EZEKIEL MOUMAKWA IS LIVING LA BUENA VIDA (THE GOOD LIFE) AT THE TAXPAyERS EXPENSE WHILE HEADING AN ORGANISATION THAT DOES NOT GENERATE ANy INCOME BUT RUNS SOLELy ON GOVERNMENT SUBVENTIONS. STORy ON PAGES 7 & 9
Mahalapye Kang Jwaneng
Molepolole
Kanye Ramatlabama Tshabong
Mochudi
Thamaga Moshopa
Tlokweng Gaborone
AT P12 500 AN HOUR OR HALF A MILLION A WEEK, BCL LIQUIDATOR NIGEL DIXON-WARREN AND HIS TEAM ARE PERHAPS THE MOST HIGHLY PAID GROUP OF PEOPLE NOT RUNNING AN ACTUAL COMPANY. DIXON-WARREN MAKES SO MUCH MONEY HE COULD PAY RETAIL GIANT CHOPPIES MD RAMACHANDRAN OTTAPATHU TWICE MONTHLY. HE COULD BUY A HOUSE IN GABORONE THIS WEEK, AND BUY A TOP END RANGE ROVER SPORT NEXT. WITH ABOUT P50M ALREADY PAID, IF THE LIQUIDATOR’S PLANS ARE TO BE FOLLOWED, GOVERNMENT WOULD HAVE TO COUGH UP AROUND P100M TO PAY THE LIQUIDATOR FOR THE COMING FIVE YEARS, BUT THERE IS DISSENT WITHIN PRESIDENT MOKGWEETSI MASISI'S TEAM ABOUT THIS SPENDING WRITES TSHIRELETSO MOTLOGELWA.
STORY ON PAGES 3,4,6 & 7
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THE BUSINESS WEEKLY & REVIEW Friday 15 May 2020 - 21 May 2020
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Companies & Markets
FROM OUTSIDE BOTSWANA IS ADMIRABLE • A Ugandan journalist says Botswana’s Covid-19 response is exemplary
Soldiers distributing food hampers in Uganda (Pic: Nicholas Bamulanzeki)
TSHEPI GABOTLHOMOLWE Staff Writer
E
ven though Batswana tend to treat with levity disregard of the food parcels they receive as part of the government’s efforts to aid them during this pandemic, lockdown and State of Emergency (SOE), some countries have shown appreciation of these efforts. According to international news organisations, Covid-19 has disrupted trade, labour and food supply, hence there are registered cases of food insecurity in many countries. A report by the Mail Online states that unrest has spread across African countries over food shortages and that this has
seen many countries deploying armies to control the situation. It states that it is normal in certain countries to see armies being deployed to restore order but other countries have fallen prey to this. The Mail Online explains that protests recently erupted in Cape Town, South Africa while the military has been mobilised in Lesotho while the chief of staff to the Nigerian government died of the lethal bug. Daniel Lutaaya, a journalist in Uganda, has says as part of relief for people, the government in his country has allocated over USD15 million to stave off looming hunger. Even so, these food parcels are not distributed across the country. According to Lutaaya, the food will be distributed in
two districts only, Wakiso and the capital city Kampala. According to Worldometer, Uganda has a population of over 45 million with the capital city accounting for a little over 3 million of the total number. According to the government, only those in the slumps will be helped but this help comes in a 6kg bag of maize and flour accompanied by a 3kg bag of dry beans. But there is a protest in social media indicating that the beans being handed out are of low quality. Lutaaya says he and other Ugandan journalists were very impressed to see what the Botswana Government is doing to help people. Even though food might seem like an issue of concern, a report
by the Sivan Ya’ari - the founder and Chief Executive Officer (CEO) of Innovation Africa states that Covid-19 in Africa is worse than it seems. Ya’ari says even with food provisions, most countries account for millions of people who spend at least six hours each day collecting contaminated water. The report states that this on its own poses a risk that if the virus were to enter through those villages, especially in countries with poor infrastructures, the cases would tremendously increase. Ya’ari says the organisation operates in areas which governments of the countries do not reach, hence reports mostly cover places which are reachable, mostly on the
outskirts, where there is a greater need for governments to assist because if the virus attacks there the death toll would increase tremendously.
According to Worldometer, Uganda has a population of over 45 million with the capital city accounting for a little over 3 million of the total number. According to the government, only those in the slumps will be helped but this help comes in a 6kg bag of maize and flour accompanied by a 3kg bag of dry beans.
CRESTA COMPLETES FUMIGATION EXERCISE Staff Writer
C
resta Marakanelo Limited says it has completed a fumigation exercise for three of its properties which were used as quarantine centres - Cresta Lodge, Botsalo and Marang. Applied chemistry experts led and guided the exercise using strict guidelines, and exacting standards of safety, quality management for market-readiness. “Subject-matter expert scientists led this campaign using strict guidelines and chemicals recommended by
the World Health Organisation. The key ingredient in the cleaning process is DC 40, which is an eco-friendly bio enzyme degreaser. Disinfection is done with RBT which not only kills 99.99 percent of known pathogens, including the same types of enveloped virus we have in coronavirus; it also leaves a residual microscopic barrier that continues to protect for up to a week after it is dry. Having Applied Chemistry gurus guide this delicate process was vital for the quality management process and guaranteed best outcome of the fumigation,” says Cresta Marakanelo Limited Managing Director, Mokwena Morulane. This comes against the
backdrop of Government efforts to balance containment and economic recovery. “As different industries debate the broader economic recovery strategies for the revival of our economic fulcrum we want to create an environment which is safe for work and business. The health of our staff, clients and other business constituents is our utmost priority. Inside the properties we have conveniently placed dispensers of alcoholbased hand rub, handwashing supplies in each and every corner. We are in the process of developing a rigourous standard operating procedure, which will guide the new way of operating during this COVID-19 era.
This will be cascaded to all 12 of our properties,” emphasizes Morulane. Cresta Hotels is confident about the future despite the fear that has gripped the whole world. “We believe in the enduring human spirit. The scientists will eventually find a vaccine and possibly a cure. We will find ourselves again and yes we shall continue smiling in adversity and uplift each other. Batswana will see a brighter day soon. Godwilling it will be sooner rather than later,” he says. Recently Cresta Lodge staff in Gaborone underwent COVID19 tests under the supervision of MoHW. They all tested negative. The company believes the strict
adherence to relevant health protocols has aided in safety. Even before lockdown, Cresta was adhering to all the safety measures as outlined by the Ministry of Health & Wellness. It was one of the first hotel chains to put sanitizers throughout its properties and Head Office, having a medical doctor advise on all health protocols for safety and social distancing. Employees took other steps such as such handwashing with soap, spraying antiseptic solution in external areas and canon mobile antiseptic spraying on the exterior areas of the properties within the Cresta facilities.
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THE BUSINESS WEEKLY & REVIEW Friday 15 May 2020 - 21 May 2020
15
You can protect Yourself and help prevent spreading the virus, staY hoMe • • • •
Wash your hands regularly for 20 seconds, with soap and water Cover your nose and mouth with a disposable tissue when you cough or sneeze Avoid close contact (1 meter) with people who are unwell Stay home and self-isolate from others in the household if you feel unwell