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IIMA Empty text

 ALL ABOUT H2O

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SEPTEMBER 2019 ISSUE 2

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Page of Contents Introduction

2

The Booming H20 Market

3

Key Local Players

5

Regulation & Policy

8

Wastewater to Energy

11

ESG Insights

13

Data Protection & Privacy

17

Climate Change Champions

19

Outlook

21


Just Water

I n t r o d u c t i o n | Pa g e 2

On the September Issue of the Impact Investing Magazine Africa (IIMA) we delve into the local water business and draw attention to ancillary industries that are dependent on this natural resource. According to Statistics Botswana 96, 886,712 Kilolitres of water was consumed in Botswana in 2017. This represents a 44% growth in water sales compared to 2015 water sales. The question is what has contributed to the increase in water sales between 2014 and 2017? On this IIMA edition we zoom in on the cause and effect and the main drivers of the exponential growth in sales. We look into climate change and regulation policy shifts that aid and accelerate local business growth in the water industry.

Water Sales FY 2017/18 110,000,000 100,000,000 90,000,000 80,000,000 70,000,000 60,000,000 2014

2015

2016

2017

Water Sales (Kilolitres) Source: Statistics Botswana

All About Packaging

Infused Water

Recycling Water

Leading local water business brands understand the importance of packaging. For some it is just water but a little imagination can see your growth sky rocket.

Value addition is a competitive differentiator. A little dose of a local fruity flavour can set a brand apart from the pack. This is why water and agri-business are insperable.

Water is the source of life and bloodline of many industries. Due to the harsh climate conditions we have to look at ways of recycling water to mitigate against depletion and scarcity.



Th e Water B us iness

T h e B o o m i n g H 2 0 B u s i n ess | Pa g e 3

US$350B GLOBAL MARKET BY 2021

Lindiwe Mafavuneh Founder & CEO LCM Capital

10%

Growing up in the 1980s in Gaborone, water was free, of good quality and unlimited with no rationing. My father at the time was an employee of the Water Utilities Corporation (WUC) which was a monopoly in the water supply and waste water services. Occasionally he would take my sisters and I for a picnic at the Gaborone dam which was always full to the bream. A decade later in the late 1990s a 500ml water bottle found its way on the shopping isles of local retailers. At the time it was unheard of to sell nor buy water. I left Botswana in 1998 to study, live and work in United States of America and I was astonished at the high rate of penetration of the water bottled business after my 18 year stint in the USA and Ireland. Buying water is now the norm with many households spoiled for choice with local and international brands and discounts to refill at retail stores and water retail stores.

YEAR ON YEAR GROWTH

Source: The Business Research Company

Early entrance brands in the late 1990s have enjoyed a huge chunk of the market share. The most dominant players are from across the border with a few local brands operating in this space. High quality standards seem to be the most significant barriers to entry for most aspiring local water companies. Another key risk is the procurement of water bottles which are still sourced from outside the border. As the world gravitates towards eco-friendly material, plastic bottles will be phased out for a sustainable material. of local water bottle packaging

100%

material is made from plastic.

A substitute for a cost effective and environmentally friendly material has not been found or used in the local market. Recycling is finally receiving the attention that it deserves in Botswana as land fields become unmanageable.


Th e Water B us iness

T h e B o o m i n g H 2 0 B u s i n ess | Pa g e 4

Reduce, ReUse and Recycle The water business and waste management and sanitation go hand in hand. The consumption of bottled water result in another problem, the disposal of plastic bottles, which is another opportunity for entrepreneurs to tap into. Water Business

Bottled Water Bottling Plant Consumers Retailers Figure 2 Bottled Water Value Chain

Recycling Plant

According to WUC 2014/2015 audited financial statement the company customer base grew from 80,000 in 2009 to 355,000 in 2015, representing a phenomenal growth of 344% in six years. 344% increase in Customers in 6 years The growth of commuter towns in the northern part of Gaborone have also birthed independent waste water management services companies who compete for the piece of the pie that has been enjoyed by the main utility over the years. The beauty about waste water is that it can be collected, treated and resold to the same clients making it a very lucrative business. Garden water is also popular among residents who have back gardens. This is borehole water that is sold primarily for small scale gardening. On average households spend approximately P400 every two weeks for 2.5 liters of garden water. With the Gaborone Dam levels at 65% compared to 2017 levels at 99%, WUC will reinstate the water restrictions of portable water which will spur growth and demand for alternative sources of water from independent providers. PROFIT BWP Booming Sector looking at the climate conditions that have resulted in erratic rainfall.

P5 Billion


NATIVE FOODS


K e y L o c a l P l a y e rs | Pa g e 5

May t h e Re al King S t an d Up

Favourite Local Brands %

03

51%

The Source

37%

Aquafill

8%

Agua

4%

0

10

20

Source: The Local Slice BW

30

40

50

60

Market Share

According to a recent poll done by the Local Slice BW (Botswana No 1 digital Market Place), out of 136 online participants the most preferred local brand is O3.

The factors

driving demand and sales are; 1. Taste 2. Price 3. Packaging 4. Volume (500ml vs 750 ml) 5. Brand Loyalty 6. Supporting Local Brands 7. Company CSR activities 45% of the online participants cited taste as the main influencer for buying a product and repeat buys, followed by price at 29%. Brand and packaging were ranked the same at 13% showing that there were secondary considerations to taste and price.

Is Boxed Water the Future?

The price range of a 500 ml is P3.35 to P5.99. The most expensive brand in the 500ml range is Molemane Artesian a South African brand selling for P5.99 each. It is a startling statistic that 100% of local packaging is plastic. It seems cost is the main driver in the choice of material not sustainability.


May t h e Re al King S t an d Up

K e y L o c a l P l a y e rs | Pa g e 6

Kazungula Bridge Will

spur GROWTH IN FMCG SECTOR

Some hotels in Europe have started using glass water bottles instead of plastic water bottles in an effort to reduce plastic waste. Glass is a very economic choice in comparison to plastic and can be recycled without any hassle. On the other hand plastic will have to go through a pyrolysis process to transform it to another byproduct mostly oil. An import and price taker country like Botswana in oil byproducts, will benefit from producing its own oil products instead of buying from neighbouring countries to meet local demand. The completion of the Kazungula bridge which will link four countries and reduce border posts processing time will generate an increase in traffic of goods and services across different borders. This is great news for Botswana looking at the low population in comparison to her neighbouring countries. The completion of the bridge is an added advantage to a country that is yet to cement itself as a regional player in the Fast Moving Consumer Goods Sector (FMCG). With 90% of goods receiving a tax waver, local water bottled companies should be looking at ways to access markets in the region with a higher consumer base.

On the Botswana Stock Exchange Limited the FMCG sector represents only 1% of the overall market capitalization. The three FMCG players on the local bourse are Choppies, Sefalana Group and Ca Sales. Sefalana gave a stellar performance for the year ended 2018 financial results citing the best profit they ever made in the 44 years of operating. The FMCG company is one of the few local retailers embarking on a digital footprint with an online store and Sefalana Mobile Shopping Application. The company has been aggressively expanding in the Southern African region preparing for eCommerce with outlets in Zambia, Lesotho and Namibia since 2013. OVER THE PAST YEAR,

34% GROWTH IN PROFIT BEFORE TAX


K e y L o c a l P l a y e rs | Pa g e 7

Re gional Mar ke t Sefalana Group PBT 2018 Annual Report

Insurance Companies, Pension Funds and Nominee Companies held

240,000 220,000 200,000

91.3%

180,000 160,000

shares at 30 April 2018

140,000 2014

2015

2016

2017

2018

Profit Before Tax (P'000) Source: 2018 Annual Report

Using Sefalana as a case study it is evident that a regional expansion strategy always bears fruit and pays handsomely to shareholders. Africa is the last remaining continent to leverage e-Commerce in an effort to accelerate economic transformation and expansion. Key infrastructural developments in the Southern African region and the rest of Africa will boost the sale of made in Africa goods and logistics of bringing the goods to consumers. Many local water brands will have access to regional markets through the local FMCG regional expansion. Made in Botswana products will finally be sold outside our borders boosting local production and job creation. Local brands will also need to adopt digital strategies to promote their products. Out of the sample of local water brands only 1 was visible online and had a huge following of customers. We cannot ignore the eCommerce trend taking over the business as usual, therefore it is imperative for brands that want to have staying power to embrace the digital way of doing business and reach a bigger pool of the market.

Although great strides have been achieved in weaning water imports, more work still has to be done to catch up with other regional players. According to a Kenya Water Bottle Kit report by the United Nations, Kenya boasts about 60 local water bottled companies. This is an amazing feat for Kenya a country known for having a business friendly environment for SMMEs. Kenya Water Bottled Companies Great policies are a condition precedent to industries sustainability. The local water business industry will continue to grow if policies are conducive and if the local mindset shifts to support local brands. SMMEs in Botswana continue to operate under harsh economic conditions and a culture that is yet to move away from Government participation in the private arena. An export led economy will need the blurry lines of the role of Government in economic development cleared. The Government will have to be comfortable playing the facilitator role and empower the private sector to grow as they will also benefit from its win.

60


P R OTE C TIO NI S M L AW S F OR LO C AL G R OWT H

R e gu l a t i o n & P o l i c y | Pa g e 8

Picture Source: Columbia Business School

United States of America and China trade wars have taken the world by storm with everyone eager to see who will come out as the biggest winner or loser. The main incentive to the trade debacle is to renegotiate the trade terms and come with a fair and win-win solution for the trading partners. Some countries who have over the years relied heavily on imports are now desperately in I revitalizing their home soil industrialization need of are also adopting protectionism laws to boost local businesses and ignite job creation. In 2018 the Ministry of Investment, Trade and Industry issued a directive to ban the importation of bottled natural and mineral water into Botswana to boost local bottled water market and production.

Before the import ban there were less than 5 local players in the bottled water business due to the high barriers to entry and the economies of scale of bigger players mostly from across the border South Africa. The ban has paid dividends as now there are multiple local brands to choose from, the number of local players have more than doubled to 9 in 2019. Botswana local bottled water market has benefited from the protectionism law resulting in an emergence of a Billion Pula local industry, which will not only contribute significantly to the GDP but also create the many jobs that are needed to curb youth unemployment.


I S O 9 0 0 1 : 2 0 1 5 Q UA L I T Y M A N AG E M E N T S Y S TE M S

However, despite the concerted efforts by the Ministry of Investment, Trade and Industry, quality assurance is still a huge impediment for many companies. Early water bottled companies from across the border left big shoes to fill for aspiring companies to meet high quality standards. It has been reported that a few local companies are International Standardization Organization (ISO) certified and adhere to the highest quality management system standards. In order for this water industry to attract more local players and for these local players to have off take agreements with retailers a robust culture of excellence should be adopted and rigorous policies that are mandatory to the adherence of international standards should be reinforced looking at the export led agenda by the government.

R e gu l a t i o n & P o l i c y | Pa g e 9

Regulation Botswana Bureau of Standards (BOBS) organization offers standardization services to the establishment and implementation of national standards to improve the quality of products and services for the benefit of enterprises, consumers and the environment. BOBS has a online store for ISO and publications that business owners can purchase from anywhere around the country. The ISO that is relevant for the bottled water business is ISO 9001:2015 Quality Management Systems.

What is ISO 9001:2015? ISO 9001 is a standard that sets out the requirements for a quality management system. It helps businesses and organizations to be more efficient and improve customer satisfaction(ISO 2019).


I S O 9 0 0 1 : 2 0 1 5 Q UA L I T Y M A N AG E M E N T S Y S TE M S

According to the ISO 2019 report there are many benefits for a business that implements a quality management system.

Implementing a quality management system will help you: Assess the overall context of your organization to define who is affected by your work and what they expect from you. This will enable you to clearly state your objectives and identify new business opportunities. Put your customers first, making sure you consistently meet their needs and exceed their expectations. This can lead to repeat custom, new clients and increased business for your organization.

R e gu l a t i o n & P o l i c y | Pa g e 1 0

Work in a more efficient way as all your processes will be aligned and understood by everyone in the business or organization. This increases productivity and efficiency, bringing internal costs down. Meet the necessary statutory and regulatory requirements. Expand into new markets, as some sectors and clients require ISO 9001 before doing business. Identify and address the risks associated with your organization. These benefits will help the business retain and attract new customers improving profit margins and return on investment.



P ub lic P r i vate P ar t ner sh ips ( P P P s )

If you reside in the vicinity of Glenvalley wastewater treatment plant or happen to drive past the neighbourhood you will be met with a very distinctive whiff coming from the treatment plant. For some the smell is a nuisance and cause of concern. They either choose to suffer in silence and wait for the "Government" to come up with a solution of reducing the toxins to a considerable level. However, if you happen to belong to those with an entrepreneurial flair, many ideas of turning the nuisance and discomfort into a cash cow have already boggled your mind. Renewable energy is slowly making waves in Botswana as the country gears up efforts to meet United Nations Sustainable Development Goals by 2030. The enactment of the Botswana Energy Regulatory Authority in 2017 has also helped accelerate renewable energy efforts in a country that has over the years relied heavily on one source of energy, coal.

W a s t ew a t e r t o E n e r g y P r o j e c ts | Pa g e 1 1

With load shedding still a recurring event especially during winter months when demand for electricity is high, Glenvalley wastewater treatment plant could potentially power the whole of Gaborone North Community and neighbouring villages and provide clean water to solve water shortage problems. More than 230 cities worldwide had adopted targets for 100% renewables in at least one sector by the end of 2018. According to the Renewable Cities Global Status Report cities are taking a leading role in advancing renewable energy through their efforts to achieve a wide range of interlinked environmental, economic and social goals. By the end of 2018, more than 230 cities worldwide had adopted targets for 100% renewable energy in at least one sector, and more than 50 cities had set comprehensive renewables targets covering the power, heating and transport sectors (REC-GSR).


P ub lic P r i vate P ar t ner sh ips ( P P P s ) At the recently held Land and Water Symposium in Gaborone the Ministry of Land Management and Water Sanitation Services reported that the Greater Gaborone area will need 180 million litres of water in the next five years. Current Supply

80 Mega Litres

Current Demand

145 Mega Litres

W a s t e t o E n e r g y P r o j e c ts | Pa g e 1 2

Through Public Private Partnerships (PPPs) the Government and private investors can form partnerships to invest in high impact water projects that will transform waste water to portable water to close the 65 mega litres gap. The Glenvalley wastewater treatment which is currently undergoing refurbishment has a capacity of 40 mega litres which can be used to supply water to more than 2,000 households in the Gaborone North area and neighbouring villages. The community will also benefit from sufficient supply of electricity through Independent Power Producer programme.

North South Water Carrier Pipeline Greater Gaborone Area According to the Minister of Land Management and Water Sanitation Services, the North South Water Carrier Pipeline (NSWC) can only supply the greater Gaborone area with 80 mega litres resulting in a short fall of 65 mega litres to meet current demand. This short fall exerts pressure on the Ministry and the main utility to look for alternative sources that would alleviate the shortage of water. Ground water provides 60% of water in Botswana compared to resevoir water, river water and other sources. The recycling of waste water to portable water is a viable solution that will solve the water crisis in the greater Gaborone area.

The transactional value of water projects is in the Billion Pula range, therefore domestic capital raising and resource mobilization through institutional investors should be explored to close the infrastructure funding gap in Botswana. Investing capital for impact is high priority as more companies whether public or private are required to include an integrated report in their annual financial statements to show their contribution towards community development and environment stewardship.


Pensions & Investments

E n v i r o n m e n ta l , S o c i a l & G o v e r n a n c e I n s i g h ts | Pa g e 1 3

This article was written by Brad Foster, Global Head of Enterprise Data Content, and David Tabit, Global Head of Equity Data. It appeared first on the Pensions & Investments website.

Climate change has already begun to affect business, with extreme weather, flooding, wildfires and drought threatening company assets and supply chains. As the environment evolves, companies that improve their energy efficiency and create new products and services will survive and companies that are slow to change will struggle. The financial services community is keenly aware of this challenge, and many professional money managers are now looking for ways to integrate environmental, social and governance data into their investment approaches to better manage risk and find opportunities in a changing world.

Increased investor appetite and the potential for outsized riskadjusted returns has boosted total assets in sustainable investment strategies to $12 trillion in the United States, or one quarter of all professional assets under management, according to the US SIF 2018 Trends Report. The amount is up 38% from 2016, with more double-digit growth expected in the years ahead. OVER THE PAST YEAR,

$12T GROWTH IN SUSTAINABLE INVESTMENTS IN USA


Pensions & Investments

E n v i r o n m e n ta l , S o c i a l & G o v e r n a n c e I n s i g h ts | Pa g e 1 4

But while sustainable investing has become a more mainstream concept, investors in the sector face challenges. One of the most pressing issues is a lack of access to reliable and consistent ESG data. Investors rely on ESG data to identify which companies may be best positioned to succeed in a sustainable world. However, the lack of consistent reporting standards for ESG data presents a major barrier to the increased adoption of sustainable investing. This hurdle forces investors to expend an excessive amount of already limited resources trying to standardize and interpret unstructured data, slowing down experienced investors and inhibiting new entrants from joining the field. While it may be years before ESG data becomes fully standardized, the investment community can take steps now

to access more meaningful and

Investors now face the challenge of how to evaluate more company-generated data, including a wider array of sustainability reports, documents, filings and websites, further adding to the confusion and level of effort required to make sense of these new ways of evaluating how company management creates or destroys value.

actionable ESG data to make better informed investment decisions.

The case for standardization One of the main issues for ESG-oriented investors today is the lack of standardized data in Businesses reporting their own ESG performance metrics are trying to satisfy increasing investor and stakeholder demand for more and better data. Meeting this demand is especially challenging given the plethora of reporting platforms and requirements and lack of consistent reporting standards for sustainability performance. As a result, different data points may be reported across companies in the same sector. Similarly, different data points being could be reported by the same company from one year to the next.

Despite these inconsistencies in the data, organizations such as the Sustainability Accounting Standards Board (SASB) have made immense progress in creating reporting standards. SASB recently released 77 industry-specific accounting standards that help investors understand how material sustainability issues can impact a company’s financial performance. These standards have been publicly adopted by a dozen major international companies. And while SASB and organizations such as the Global Reporting Initiative — whose standards are utilized by 75% of the world’s 250 largest companies — enable real action and positive material benefits for all, they also create more information to sort through. This influx of unstructured data presents a need for a data provider to package and present this information in an easily consumable format.


E n v i r o n m e n ta l , S o c i a l & G o v e r n a n c e I n s i g h ts | Pa g e 1 5

Pensions & Investments

The data vendors, like Bloomberg, fill this gap by providing investors with access to high-quality ESG data in a format designed for easy integration into the investment process. This standardization process improves and expedites sustainable investors’ decisionmaking process.Another challenge with current ESG data sets is that some companies produce — and some data providers publish — ESG information that is only partially measured and accounted for. For instance, one company may report the carbon emissions of its entire business, while another firm may only report the carbon emissions for its headquarters but not for its other locations or operations.

Transparent Investing

Scoring

Equals

Smarter

As the sustainable investing movement has evolved, so too has the pervasiveness of ESG scores, which provide a single metric by which to evaluate companies on a range of ESG issues. These scores proved to be a useful metric for easily grading and evaluating investments. However, these scores are now falling out of favor with investors due to their lack of transparency, among other issues. Many institutional investors are expressing a desire to move beyond using third-party generated scores, which often reflect not only a company’s reported data, but also the opinion of the analyst creating the score.

Another issue with the scoring methodology is that ESG scores are often created using a one-size-fits-all approach that disproportionately weights certain factors toward a company’s overall ESG score. In fact, for nearly two-thirds of all securities in the Russell Global Large Cap index, fewer than 25% of the data items used to calculate their ESG scores are even considered material, according to a Russell Investments study that used SASB standards to determine materiality.

"25% of the data items used to calculate their ESG scores are even considered material" Russell Investments These inconsistent standards are why scores can vary wildly among well-known ESG rating platforms. Many of these discrepancies result from not just the specific scores awarded to each component (E, S or G), but also how each platform chooses to weight each score to determine the cumulative ESG ranking. Recognizing the shortcomings of this black-box approach, sophisticated investors today increasingly prefer raw ESG data to ESG scores because it allows them to customize the data sets for their needs. This is why asset managers are increasingly integrating individual ESG factors into their traditional credit and equity research and portfolio management processes. In particular, quants have shown a great interest in incorporating ESG data into their models since they commonly rely on historical data sets to back test their investment models, and an extended track record of dependable data will allow these firms to make betterinformed investment decisions.


Pensions & Investments

E n v i r o n m e n ta l , S o c i a l & G o v e r n a n c e I n s i g h ts | Pa g e 1 6

A better approach to this data challenge is one that allows investment management firms to assign their own scores to public companies. Working with ESG data directly reported by companies can help to meet this need, by allowing investors to weight factors based on their values and the issues they believe will have the greatest financial impact on a sector-, industry- or company-specific basis. For instance, a gender-focused fund can select firms with strong boardroom diversity, while a manager that feels strongly about social issues can apply greater weight to a company’s labor practices.

Data That Caters To All Investors A growing number of investors are coming to realize the positive correlation between sustainability and financial performance and want to get involved.

However, looking at current ESG data may only lead to more confusion. Either investors are overwhelmed by the mountain of unstructured data, or they are drawn to contradictory third-party ESG scores that make it difficult to decide where to invest. As the ESG marketplace grows and expands through the asset management industry, forward-thinking investors want to take a more sophisticated approach. Sustainability-focused investors no longer want to rely solely on outside recommendations and ESG “scores,” while those new to the space are wary of so-called greenwashing, where managers make unwarranted claims about ESG integration. For the sustainable investing movement to continue to grow, it’s critical that all parties work together on improvements in the quality, quantity and accessibility of ESG data.


Da ta P r o t e c t i o n & P r i v a c y | Pa g e 1 7

Unlike the previous regime, the road to GDPR implementation has been a global one due to the regulation’s extra-territoriality reach. An organization outside of the EU may be subject to GDPR even when it does not have a formal establishment in the EU. This applies when the organization(whether as

Andreattah Chuma CIPT, CISA, CFE Senior Advisor: Data Protection & IT Outsourcing G D P R : T h e E t h i c a l W a y t o D ea l w i t h P e rs o n a l Da ta An individual’s carbon footprint is defined as the amount of carbon dioxide released into the atmosphere due to an individual’s activities, such as travel, energy required to produce food, and purchases of consumable items. Similarly, in the digital space, an individual’s digital footprint is the virtual impression of the activities they are involved in, such as making purchases online, creating online content, as well as interactions with others online. The EU General Data Protection Regulation(GDPR) which came to into force in 2018, defines personal data as information relating to an identifiable individual. By having “indirect identification” in scope, it acknowledges that the traces that one leaves behind online are not always the obvious attributes such as names, surnames and addresses. In the digital space, individuals leave traces of themselves that they are often not aware of, such as IP addresses and online behavioural traits. Additionally, an individual who may not be identifiable from one perspective can be identifiable with a combination of other data held in another database or platform.

data controller or processor) offers goods or services (even if for free) to individuals situated in the EU. In this instance, the targeting towards EU customers must be explicit, such as through the specific mention of location of the customers. GDPR will also apply if an organization outside of the EU monitors the behaviour of individuals through tracking mechanism(cookies).

Other main changes include the strengthening of the rights of individuals; the emphasis on accountability, privacy by design obligation; mandatory data breach reporting and the increase in fines.


GDPR Has a Past: The Timeline

Da ta P r o t e c t i o n & P r i v a c y | Pa g e 1 8

Since the introduction of the regulation in 2012, there has been anxiety around GDPR being anti-innovation. On the contrary, the ambition for data protection laws in Europe have always been from the standpoint of facilitating economic activity. The technological advancements that came due to activity within the European Community in the 1980s enabled common market intra-trading, increasing the flow of data. With the liberalization of the telecommunication sector, it became evident that the freedoms of the European common market in a digital world required protections for personal data. The lack of harmonization and supervision of the Convention 108, as well as some patchwork of early data protection laws in Europe, led to the formulation of the European Data Protection Directive in 1995. The directive stayed with the spirit of the European project— facilitate the data flows in the common market while protecting personal data, a fundamental right in the EU. The inconsistencies in the translation of the directive, as well as its inadequacy in the backdrop of fast-changing, complex, and intrusive emerging technologies, led to the proposal by the European Commission in 2012 for a harmonized regulation now known as the General Data Protection Regulation. The pervasiveness of data as more people globally move to doing business online requires the same accountability as we are now waking up to regarding the environment. We have seen this through the enactment of data protection laws beyond Europe. In the quest of solving complex social problems, all technological developments require us to keep people and their dignity at the center.


Yo u t h A c t i v i s t s

Y o u t h C l i m a t e C ha n g e C ha m p i o n s | Pa g e 1 9

Climate Change – A New Dawn – The First Light Irrespective of what your business is, climate change will affect you. It poses unprecedented threats to our way of life – climate change effects are already observable in many parts of the world. There are green technologies at our disposal aimed at reducing the extent of this threat and protecting our success. These technologies are becoming cheaper, more dependable and accessible. However, a limited number of investors are convinced that there is return on investment in supporting green energy, smart buildings and agriculture, and modern transportation. There is a target to cut down global carbon emissions by 45% (base year 2010) by 2030; Botswana pledged to contribute by cutting down 15% by 2030. To achieve this goal there is need for millions of dollars in investments. Hence, governments cannot finance all these sustainable projects alone; banks, pension funds, (asset managers) and individual investors should all seize this multi-billion dollar opportunity. Investors can make a profit at a lower risk at the same time stimulating a low-carbon economy – talk about impact, guilt-free and fulfilling investments! Botswana pledged to cut down carbon emissions by 15% by 2030.

15%

What causes the skepticism? Lack of solid climate change response (adaptation) policy in place An adaptation policy is the groundwork to a country’s low carbon economy. It defines the overarching climate issues a country faces, the national climate adaptation plan and relative legislative changes.Most importantly it clears what needs to be done, how it needs to be done and who is responsible for doing it; it leads to smooth national climate response. Through all these, a climate change adaptation policy creates a conducive environment for these trans-formative investments.

Climate action is a political issue? As developing countries we might be supposedly illequipped to formulate climate adaptation/response policies autonomously but there might also be societal or political blockades to the successful implementation of climate adaptation policies. Despite our greater vulnerability to climate change, there seems to be an inadequate sense of urgency for climate change adaptation in the prevailing political landscape. Deficient climate change consciousness We have minimal understanding of how climate change affects us and what role we play in battling its impacts. This article refines the renowned:

“call to all for immediate climate action”. It highlights the significance of local communities in policy making. “The key step to successful climate action is a successfully implemented climate change response policy.” Topoyame Mabophiwa Founding Blogger–Your Green Conscience


Yo u t h A c t i v i s t s

Y o u t h C l i m a t e C ha n g e C ha m p i o n s | Pa g e 2 0

Climate Change – A New Dawn – The First Light

How it works? Local communities with the support of their local authorities drive the design and implementation of adaptation policies. The communities come up with ideas and the local authorities bring in technical and financial support with help of the national government. For example, in Botswana and most parts of Africa where we have traditional community structures in place; this can be done by way of collaboration between communitynominated ward representatives, local government and

Topoyame Mabophiwa, Founding Blogger – Your Green Conscience MEng in Chemical Engineering What needs to change – Decentralization of Policy Making What it means? Decentralized policy formulation and implementation is the antonym of the current top-down and bureaucratic models. Policies that are cascaded from government down to the local communities often seem like an imposition of the States’ views; even to the most vulnerable communities who would benefit from implementation of these policies.

national authorities. The collaboration is socially audited by the local communities ascertaining accountability and transparency.

What the benefits are? Circumvents doubt and opposition to adaptation policies thus improving success in enforcement. Yields empowered and educated communities – ensures that the voices of the people who matter the most are heard. Tied to/follows post awareness raising campaigns and education programs. Attracts Climate Finance (to be discussed further in my next post…Stay Tuned!)



Future Trends An export led government agenda will birth new businesses and result in the expansion of existing SMMEs in Botswana to access new markets. SMMEs seeking to enter new markets will undergo a makeover from business as usual and embrace a culture of excellence were high quality standards and good internal controls are prioritized in order to compete at regional or international level. We should expect to see a rise in SMMEs that are ISO certified to meet international standards of excellence. Sustainable Investing will motivate SMMEs to consider environmental, social and governance factors when developing products across their value chain. Many companies in the food & beverage sector are gradually phasing out plastic for packaging and using alternatives that are more ecofriendly. Boxed water has not come to our shore yet but that is an emerging trend in other parts of the world. Local retail stores have started to sell boxed fruit juices mainly imports from South Africa. I believe this trend will be adopted locally for companies that are green conscious and want to differentiate from competitors and appeal to the younger generation who are more environmentally conscious. Faster broadband is now giving rise to e-Commerce in Botswana. According to the latest internet users statistics for Africa the number of internet users in Botswana has increased from 15,000 in 2000 to 983,337 in 2019, representing a 6,455% growth. A few local retailers are now offering customers the luxury of online shopping and convenience of having their products delivered to their doorstep.

Ou t l o o k | Pa g e 2 1

Africa 2019 Internet Users Statistics 50 40 30 20 10 Botswana

Angola

Ethopia

Egypt

Penetration(% of Population)

The rise of e-Commerce means data protection and governance policies will have to be developed and implemented to protect consumers against unethical use of their personal information. Climate change policy is yet to see the light of day in Botswana. However, there is considerable buy-in from policy makers about the clear effects of adverse weather conditions with 2019 declared a drought year. Government is now talking and walking the talk in terms of coming up with tangible solutions that will mitigate climate change. The import ban of bottled water has grown the industry in a short period of time and erratic rainfall will continue the upward trajectory as water restrictions are implemented to curb the shortage of water in the greater Gaborone area. Alternative sources of water primarily recycling of wastewater have to be considered as a way of solving the water shortage.

Lindiwe Mafavuneh Founder & CEO LCM Capital Research & Analytics Unit


LCM Capital is looking for experienced Audit, Investment and Risk Professionals for our; Investment and Risk Committee Internal Audit Advisory Committee Please send your Expression of Interest to: enquiries@lcmcapital.co.bw

By 15 September 2019

LCM CAPITAL FINANCIAL SERVICES

Phone : (267) 77629055 e-mail:enquieries@lcmcapital.co.bw


LCM CAPITAL FINANCIAL SERVICES

Phone : (267) 77629055 e-mail:enquieries@lcmcapital.co.bw


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