The Botswana Housing Corporation (BHC) has put out an invite to Korean companies to consider increasing their participation in the local construction industry.BHC Chief Executive Officer, Reginald Motswaiso told Korean investors recently at the Botswana Global Expo that the local construction industry is not yet mature.
“Not many citizen-owned firms are at grade E and technological development in the construction is generally low, creating more opportunities in this sector,” said Motswaiso. According to the country’s procurement laws category E has no restrictions by nationality, therefore enabling 100 percent foreign owned companies to participate in the category.
“Grade E category is for projects whose contract value is over 40 million pula,” said Motswaiso, adding that entry of 100 percent foreign owned firms is still possible at categories reserved for citizen owned firms if citizen capacity is inadequate or not available. He said the 50 million pula or more tenders are open for local or foreign companies whether or not they are registered with PPADB.
Motswaiso said data indicates that lack of access to finance for small scale contractors due to insufficient collateral is one of the challenges faced by contractors, also coupled with skills shortage in areas such as engineering and architecture.Statistics highlights that Gross Domestic Product (GDP) from construction increased to 1821.20 million pula in the second quarter of 2018 from 1776.20 million pula in the first quarter of 2018.
Motswaiso said the sector is largely driven by the government’s investment in infrastructure and the mining sector, especially activities associated with direct development of mines and indirectly.He said the infrastructure related to mining is roads, utilities and residential houses, adding that trends on investment in the construction sector indicate that the share of foreign investment in the construction sector has been consistently less than one percent.
However, construction boom is expected following the anticipated China loan to Botswana.Some of the leading Korean companies that have already made inroads in the country include Doosan, Daewoo and POSCO engaged in large-scale projects in the fields of construction, energy and resources management.
Meanwhile, Korea’s export development arm KOTRA said Botswana’s ranking as Africa’s most politically stable nation is the main attraction for Korean companies.
Botswana Housing Corporation (BHC)tenants in Plot 5332, in the central area of Gaborone have expressed displeasure at their landlord, BHC, for not honouring its promise.
The government housing agency is busy developing existing estates with additional apartments as a way to meet the scarce accommodation in the capital city and providing affordable housing to Batswana. Plot 5332 is situated in Extension 11 where most senior government officials including the State House and embassies are located. The plot secures a block of 12 apartments and has seen BHC adding an additional block of 12 which started construction last April and is now complete.Last week, BHC delegation led by Property Manager, Kesebonye Khimbele arrived at the plot after working hours to address tenants. The construction of the new blocks is now complete, with only utilities left to be connected.
The tenants were hopeful that their landlord had come to inform them that they can now prepare themselves to buy the apartments through BHC’s tenant purchase scheme. The tenants were however told that the apartments are complete, but BHC has already found new tenants. In addition, the new development in the area comes with an additional cost to the existing tenants of the old block. The developments that have now added extra cost to the sitting tenants are the pavement, the guardhouse and the screen wall. These have come with an added P550 to the rental payments of P1500 of the old two bedroomed apartments monthly.
This according to BHC executives, will effect from June 1st 2017. Khimbele told tenants that, “the money we spend on maintenance isn't enough to meet our cost recoveries. We have been making losses as an entity over the years and on top of that, it's been 14 years without rental increase.” He added that, “unfortunately for these new blocks we have found tenants already and that is government. However, knowing that government has the financial muscle, he might want to take both the two blocks including that you are currently occupying. But, as BHC we will always be there for our clients to accommodate them, we will not abandon you.”
The rental for the said apartments he said is estimated to be between P6000-P7000 monthly. He could not disclose which government department will occupy the apartments. Furthermore, plans are underway to refurbish the old block and ma ake it look decent and that upon completion will also come with added costs to the tenants’ rental price. That was not an easy to digest delivery as tenants were filled with disappointments showing unhappiness with the decision that BHC has taken to give government the new apartments.In their response, the tenants complained that they had not been consulted.
“When BHC started this construction in April 2016, you came here to address us about the development and assured us that once the project is complete we would be given first priority in occupying the new apartments with an intent to buy under the sectional tittle deed. We stayed in these old flats with the hope that in the medium to long term we would be able to purchase the apartments. What you are doing is unfair to us as sitting tenants. Do you consider your tenants or you just take decisions,” asked one tenant. Some of the tenants have stayed in the apartments for over 15 years.
The tenants also complained of the company contracted by BHC to clean the compound saying, it is not doing its work adequately, despite the monthly service fees paid to BHC. Other areas that are currently being developed with additional apartments are the Phase 4 suites, Middle Star, Tshimotharo (Ext. 19) and Broadhurst Tsholofelo. Other reports that came from the Middle Star Estate which is also complete, are that the housing parastatal has also found tenants for the complete blocks, which the existing tenants are also not happy about. Botswana Guardian also understands that in a few weeks, the corporation would have demolished some of its ancient structures in Village and part of Extension 11 to put up completely new structures. Khimbele indicated that, “all our estates will be secured, we will engage security companies. “Our new developments will not be built using asbestos material. Asbestos causes lot of ailments. We continue to demolish all the structures that are built of asbestos. The other Extension 11, Village flats amongst others which we already awarded contract for construction, will be open for sale to Batswana. We will put up the adverts once they are complete.”
Botswana Housing Corporation has sprung back to profitability for the six-months results to September 2016 as a result of cost cutting measures and impressive performance from income received from joint ventures.
The state-owned BHC posted a marginal surplus of P2, 7 million during the period under review, a major improvement when compared to a loss of P7, 4 million. The above profit represents a growth of 137 percent when compared to the same period last month. The Reginald Motswaiso-led Corporation has not mentioned the joint venture properties or projects which boosted their bottom line.
The BHC Act allows the company to partner with local companies to develop new properties in whatever arrangements the parties deem fit. Meanwhile, the corporation has started the construction of more than 300 houses in Gaborone, Palapye, Jwaneng, and Phakalane. “These are areas where effective demand has been established and the houses are expected to attract huge interest from the market,” said BHC in a statement accompanying its financial results.
A decision has been taken to build and sell more houses instead of renting out. This is expected to prop-up BHC’s balance sheet which has assets of well over P3 billion. The parastatal has not adjusted its rates in the past ten years. Its application for rental increases has been rejected several times by the ministry responsible for housing. The company improving balance sheet and reduction in long term debt gives it an opportunity to borrow from the market to deliver more houses.
On other matters, BHC is currently restructuring its operations to align its staff needs to the new strategy. According to media reports, more than 100 jobs are on the line at the Gaborone based company, which has properties all over the country. Chief Executive of the company, Motswaiso has also written to the staff to inform them about the looming job losses. “The assessment process has resulted with some employees being redundant because they did not satisfy the assessment criteria and / or their jobs/ positions are redundant hence no longer in the establishment,” Motswaiso reportedly told employees in a memo last week.