Items filtered by date: Tuesday, 21 May 2019 - Botswana Guardian
Tuesday, 21 May 2019 12:32

Appearance fees... a damp squib

Botswana National Sport Commission (BNSC) is allegedly struggling to pay athletes their appearance fees and there is overwhelming fear that the payments meant to reward athletes might be halted in the near future.

The BNSC sometime last year announced that it had taken a decision to put an end to the national team monthly allowance that was given to Volleyball and Football players. It was alleged at the time that the money took a long time to reach athletes and other codes had started complaining of neglect. Currently and following a great showing in Seychelles this past weekend by the Zebras team, the mood in the camp is relatively low. BG Sport understands that the ugly monster of unpaid appearance fees is still haunting Botswana Football Association (BFA).

Some players managed to show a brave face, claiming all is well and that they are determined to bring positive results home however, the heat is becoming unbearable and might reach boiling point. The Zebras players are owed appearance fees dating back to the AFCON qualifier game against Mauritania played last year. To this end, the Zebras made three more national appearances suggesting that they are owed money amounting to P14 000 for each player. Meanwhile, the team is expected to compete at the upcoming 2019 COSAFA tournament to be staged in South Africa next week. However, one official at BFA mentioned that the BNSC is contemplating on paying players a once off appearance fee of P3 500 regardless of the number of games played by the Zebras at the tournament. The team was in the past paid P 3 500 for each national appearance they made.

In an interview  this  week, BFA spokesperson Tumo Mpatane confirmed that there has been delays in paying the athletes but pointed that the money is paid by government through Botswana National Sport Commission (BNSC). BFA, he explains, was responsible for the daily allowance of P100 per  day spent in camp.  Mpatane was quick to defend that even though the team travelled without the allowances to Seychelles, the money was deposited into their accounts upon return this past Monday. 

Majority if not all when approached by this publication after the Seychelles game refused to comment or react to the matter of their pending appearance fees, many of them simply said they do not want to be in the bad books of sport authorities. This publication would later gather through a few that preferred to speak on condition of anonymity that players fear being vocal, as they believe they will be victimized in future and dropped from the national team.

“We are expected to bring results but sometimes we are demoralized by such because if the debt keeps going higher chances of us ever being paid are getting slim,” one player explained. Another added that in fact there are some players who were not in the current squad and now playing internationally who are still owed their dues from as far as 2017.  A BFA official close to the matter noted that there have been instances where the technical team together with the coach finds it difficult to call players to camp as they keep asking about their dues.

“It’s a problematic scenery and fault on our part because they are assured that their needs will be a priority but owed huge sums,” the BFA official explained. Some time last year, the disgruntled players resorted to striking and threatening to boycott camp and it would be unfortunate should the ugly scenes resurface.  Nevertheless BNSC’s Development Officer Bobby Gaseitsiwe dismissed claims that there are plans to stop the appearance fees but said the allegations are false and misleading. If anything, they intend to review the incentive for the better.

Gaseitsiwe added that they actually paid all appearance fees debt this past Wednesday and the payment should reach athletes latest by today (Friday). “It is not only football but all other codes,” he assured. He explained that the process of paying athletes was long hence the delay saying there are many stages that the list submitted to them has to go through. Gaseisitswe advised players to exercise patience because regardless of the long process, they will always do right by players and pay them. 

Meanwhile as a way of motivating players, the BFA president Maclean Letshwiti this week announced that he raised P100 000 to be shared amongst players and the technical team. Letshwiti said the team did well by humiliating Seychelles with a 5-1 score on aggregate and proceeding to the second round of 2020 CHAN qualifiers.

Published in Sports
Tuesday, 21 May 2019 12:28

Technical bench shake up ahead

As the 2018/19 BTC premiership league winds up, there is a high possibility that coach transfer movement will be the highlight of the 2019/20-transfer window period and the pre season preparations.

Already three big names in the league of Jwaneng Galaxy, Gaborone United and Township Rollers are penetrating the market in search of new coaches for next season.  Coach Miguel Da Costa of Galaxy is allegedly eyeing a move to league giants Township Rollers at the end of the 2018/19 season. BG Sport was reliably informed by one of Rollers’s technical team members that Da Costa has explained that if he does not land a job at Rollers, then he is most likely to leave the country for greener pastures.

What the Portuguese coach is reported to be in need of is a chance to prove himself at a champions league stage. The gaffer won the Mascom Top 8 glory this season to register his first local success with Galaxy.Galaxy spokesperson, Tankiso Morake confirmed this week that the coach’s contract with the club will expire at the end of the season and they are still hopeful that they will convince the gaffer to stay. “We really enjoyed his services however, he has asked that contract talks be postponed until the very last league game,” Morake said.

He would however explain that Da Costa has not confirmed to them of any intentions of joining the Rollers side and always laughs off the matter when questioned. On the other side, Rollers coach Rodolfo Zapata whose contract also comes to an end this month is ready to pack his bags at the Rollers house. BG Sport gathered that no talks concerning contract extension with Zapata have taken place to this end. It is believed that Rollers is now looking for a replacement for the Argentine coach who only joined the club on a six months contract last year.

Zapata came in following the departure of former coach Nikola Kavazovic and the club president and financier Jagdish Shah allegedly spearheaded the Argentine’s appointment. The move left the Rollers technical department divided and there is no guarantee what is most likely to happen should Shah overrule and retain Zapata. On the other side of town, Philemon Makhwengwe who came to Gaborone United’s rescue last year to ensure they secure a top 8 spot might be shown the exit door when his contract comes to an end next month.

It is not clear where Makhwengwe went wrong however, it seems Gaborone United management is not convinced and happy with his capabilities. He too has no offer on the table from GU and in his latest interview with this publication, he explained that he is happy that he delivered on his assignments, which was among others to rise from the relegation spot and finish in the top 8 spot. An official at GU when explaining their reasons for doubting Da Phil said  it was worrisome that despite finishing in the top 8 category, the team struggled to collect maximum points even when playing low ranked teams.

Published in Sports

The 800m runner, Nigel Amos’ sterling performance over the years has inspired the not-so well- known Kgotso Mpenya to challenge the Botswana star to a race on the 25th of January 2020.

Mpenya tells BG Sport that the race will be dubbed, All Against One, which is his clothing brand under Lavendro.  “I proposed this race to Nijel Amos because he has inspired the brand’s founding. We grew up together but we have never been on the same race, and I believe that I can beat him at 800m,” said the confident Mpenya. “The reason I challenged him is because our brand deals with sportswear, particularly for athletics than any other genre,” he said. He adds that he is not only out there to run but also to prove a point about their company, as they will also be the host, amongst other companies. He says that if Amos beats him, he would get a cash prize of P500 000.00. “If he wins, he gets P500 000.00 within 48 hours but should I win, I want some message to be highlighted through him,” he said.

This race would be embraced by eight athletes, four of them from the public and the other two will be professional athletes, in addition to Amos and Mpenya. He however, says the number might also change to 14, based on certain effects that may transpire during planning. The actual set date for this race is January 25 2020, Mpenya says. Mpenya says that he has less than eight months to train and become mentally and physically fit for the race.

“I don’t need more than 14 months to train,” he said, adding that he is confident to beat Amos because he too participated in minor races during his school days just like Amos and hence he is not intimidated by him. “So far, I have been running from Oasis Motel to Tlokweng Border gate just for my endurance,” he said.  “We have however never run against each other and he has never seen me run 800m race but I am confident that I will win, based on the purpose I am running for,” he reiterated.

Amos has accepted the invitation and considers it a tough challenge. He emphasized that Mpenya’s confidence already gave him a chill in the spine but he is up for it. He teased that he has searched Mpenya on social platforms to find out if he has ever run but found nothing, which makes him wonder, if the ambitious fellow understands what it takes to cross the finish line. “He has never competed anywhere, but I take the challenge and I am not solely on about pocketing the cash prize but rather to promote a local brand and empower the youth,” he said.

The organiser of the event, Gilbert Seagile of Gilbert Promotions says that their main goal is to have this initiative on the history books, since it is the first of its kind. “Mpenya has been given six months of training where by we would be assisting him by organizing his training with experts like BDF. He would also go for 30 days training in CKGR,” said Seagile.  He also added that they aim at exposing the event. “We want to build this event to have value, whereby we can sell rights of the content to channels like Super Sport, Trace Channel, Netflix, MTV and Btv,” he said .

Published in Sports
Tuesday, 21 May 2019 11:59

Gunners navigate the storm

One of the country’s biggest football brands, Extension Gunners, has denied being in any sort of crisis despite their chairman Tariq Babitseng being suspended from any football activities by the Botswana Football Association (BFA), this week.

The embattled Babitseng has a long-standing battle with the BFA, stemming from alleged misappropriation of funds during his time as an administrator at the football mother body. This week, the BFA wrote to Gunners informing the BTC Premiership outfit of its (BFA) decision to suspend Babitseng.

However, the controversial chairman matter is just part of the Gunners bucket of issues as the team recently held a Special General Meeting (SGM) to address numerous issues that have been afflicting the Lobatse sleeping giants. In an interview this week, the Gunners Communication manager, Willoughby Kemoen said they did not address the suspension of their chairman as they received the letter from the BFA , which implicates the  teams of some  wrong doing only after their meeting.

However, Kemoen said they have acknowledged receiving the letter and will be waiting for further communications from the Association. Kemoen said it will be up to the Gunners acting president Jacob Sesinyi to call an Executive Committee meeting to address the issue of the Gunners chairman.  Meanwhile, Kemoen said the team will be under the guidance and direction of its board during such turbulent times.

“The president may later call a press conference to update the media on the state of the team,” Kemoen said. Some of the issues discussed at the Gunners SGM included co-opting the team membership to fill up positions that were vacant in the executive committee. The vacant positions that have since been filled include Team manager, Vice chairman, Marketing manager, treasurer and Club president. 

Top of the Gunners executive committee agenda includes that of the technical sponsor contract, which is expected to be reviewed before the team’s General Assembly in July.  The technical sponsor for Gunners is currently 90min plus, a local sports apparel company, which Kemoen explains has found a running contract with the technical sponsor when they took over. “We have engaged a local attorney, Ian Kebopetswe to amend the Gunners constitution to accommodate commercialisation.”

Furthermore, Gunners are seeking to drill their supporters against taking club matters to social media, which often decreases chances of securing sponsorship for the team. The SGM resolutions further address the debts that have been accumulated by the team recently. Kemoen explained that they will set up a sub-committee to lead with initiatives to fund raise for the club. This will help pay club debts including all former coaches and current players’ salaries.

Meanwhile, Kemoen said they are disappointed at the position the team currently occupies in the log standings with only one game left before the current season comes to a close. “We are currently in position nine with one game left against Sankoyo Bush Bucks in Maun. If we win this game, we might end up in the top eight brackets.”

Published in Sports

World Bank has challenged international investment portfolio managers to consider Africa as a fertile ground to plough equity. Jingdong Hua, Vice President and Treasurer at the bank said very few equity financing institutions are ready to invest in Africa due to perception gap that exist. “Change the perceptions; Africa is 54 distinctive countries than a single country Africa,” said Hua at the Brown Capital Management Africa Forum held in Gaborone last week.

The forum was held under the banner: ‘Sovereign Wealth Fund in Africa: Policies and Best Practices for the Future’ where in-depth discussion on sovereign wealth funds (SWFs) was discussed.“They are tremendous stories of growth hidden from many investors,” said Hua calling for the continent’s sovereign wealth fund to lead de-risking the perception about Africa.

Speaking at the same platform, President Mokgweetsi Masisi highlighted that financial institutions in Africa are among those severely affected by the impact of de-risking by counterparts in other supposedly more secure, jurisdictions.“This is the main source of concern about money laundering and financing of terrorism. Therefore it is incumbent upon national sovereign wealth funds to lead efforts to demonstrate that Africa is not chronically deficient in this regard,” said Masisi.

Masisi also challenged the sovereign wealth fund managers to evolve from being guardian of national wealth but actively participate in funding infrastructure, to achieve national objectives.“The funds operating in South East Asian countries are good examples in this respect,” said Masisi.

He said opportunities open to sovereign wealth funds have also increased tremendously in recent years, highlighting that the prospects include expanding range of asset classes, investment instruments, while markets provides a range of options for generating attractive financial returns.  Although Africa has more than 14 sovereign wealth funds, most of them invest their money outside the continent.

Published in Business

BancABC Botswana’s Managing Director, Kgotso Bannalotlhe is one of the few locals who are at the helm of major commercial banks. Running a commercial bank in Botswana is considered a plum yet challenging position. This perhaps explains why until recently, almost all the banks in the country were headed by foreigners who are considered ‘fit for purpose’. Whatever ‘fit for purpose’ means, it will appear the landscape is changing now that seasoned local bankers like Bannalotlhe and other locals are having a bite at the cherry.

After working for several banks, mostly in positions of influence, Bannalotlhe found the necessary courage to apply for a position of running BancABC Botswana. That was in 2017, some months after Kitto Kurian left the bank for undisclosed reasons. After all, he has acted as Managing Director for both Standard Chartered Bank Botswana and Barclays Bank Botswana on several occasions during his stay at the banking industry stalwarts. It was only natural that he wanted to step in the top post and see how he could perform. It has been nearly twenty months since he was appointed Managing Director of the bank, which is a unit of the Atlas Mara-backed African Banking Corporation (ABC) Limited, which has several operations in the SADC region.

“When I applied for the post, I believed I was ready,” he confidently confided to Botswana Guardian. We are in the first floor of BanABC Botswana’s head office in Gaborone. In this exclusive interview, we are joined by head of marketing, Polelo Kilner, and PR practitioner, Harriet Nkonjera. Having been at the bank for over a year, what has been some of Bannalotlhe’s major achievements and challenges? “We spent the better part of last year (2018) preparing the bank for future growth. This included raising capital and opening new service centres,” said Bannalotlhe.

Last year, BancABC Botswana floated shares on the Botswana Stock Exchange amid pomp and fanfare from local investors, who have longed for a differing banking stock. Being part of a senior team that has taken BancABC Botswana to the public, Bannalotlhe knows very well that, his job has been cut and with the addition of new investors, the job will even be more challenging. He told Botswana Guardian that, they have also spent part of the proceeds from the listing to improve their technological infrastructure which is important for the smooth delivery of services to customers, more especially in the digital space. “We have also refreshed our team,” he said, adding that, the bank needs highly talented bankers who have the necessary drive to pick the bank to another level. The lender is the fourth profitable bank in the country.

Bannalotlhe, who has a Bachelor of Commerce (Bcom) from University of Melbourne, said one other major action item that they have executed included improving on customer experience. “The number of people using our electronic channels has increased five folds,” he said with content. The bank has also put in place an exclusive online platform that targets the corporate sector. “We want to be a serious player in this space (corporate lending),” he said, adding that, collaborations with other key stakeholders will also be what the bank will continue to do. “We are a bank that is strong on partnerships,” he said as a matter of fact. The bank has cordial working agreements with government (for Pula Card), unions, private and public entities.

The banking sector in the country is faced with hurdles such as record low interest rates, fragile economy, and tight competition among others. Bannalotlhe disclosed, perhaps the bank’s biggest challenge today is the low interest regime. Bank of Botswana’s benchmark rate is 5 percent, the lowest in more than two decades. Low interest rate regime has affected all the banks,  especially given the fact that banks in Botswana have over the years relied heavily on interest income to drive profits. On the flipside, Bannalotlhe sees an opportunity in lower interest rates as they will now concentrate on coming with strategies that can pick non-interest revenue such as transaction banking. 

He was quick to brush aside the notion that low interest rates have exposed banks’ lack of innovation when it comes to non-interest services/products. “The industry has grown a lot over the years. Banks are no longer depending on interest income only. We have seen non-interest income increasing on a yearly basis,” he said. Millions of Pula spent on infrastructure development will also help BancABC to offer even improved services to customers which will be a plus to non-interest revenue. Related to this, the competition is brewing from unlikely contenders like mobile telecommunications companies. Mascom, BTC’s Be Mobile, Orange, Botswana Post have all debuted mobile money services, which offer exactly the same payment services which traditional banks are offering.

Mobile money platforms allow customers to transact, pay for utility services, wage/salary payments, airtime, services which under anordinary bank are classifiedunder non-interest bearing services/products.  “I don’t see these companies (telecos) being our competitors. I actually see them as offering complementary services to the banking industry,” reasoned Bannalotlhe, explaining they have alsopartnered with some of them.

BancABC is predominantly a retail bank, and it is rarely mentioned on major deals within the corporate/public sector. This explains why the corporate and investment banking division is contributing 15 percent to total profits, with retail at 70 percent, while treasury takes the rest. Nonetheless, Bannalotlhe stated that the corporate and investment banking division is performing above average. They have financed a number of projects across major sectors of the economy such as real estate, construction, non-banking financial institutions among others. The newly-launched online platform which targets corporates is off to a good start. The bank is also a notable player in the SMEs space. The bank’s target markets are those who are mostly sub-contracted by major companies across different sectors of the economy.

“The problem with SMEs is their balance sheets. However, we have found a way in which we are able to help them with funds without exposing ourselves to risks,” he stated. As part of its reforms of the policies governing the commercial banks, Bank of Botswana which is led by Moses Pelaelo, recently reduced the maturity of BoBCs from 14 days to 7 days. BoBCs are part of the tools which the central bank uses to mop excess liquidity in the money market. “This is a useful move,” said Bannalotlhe, adding they will always welcome any development that is meant to mop excess liquidity in the industry. In the past, some economists argued banks were using BoBCs, which are almost risks free savings to their advantage, while at the same time they will extend funds from these to customers at exorbitant fees in the form of loans and advances.

Bannalotlhe disagrees with the above perception, insisting that in the past there was too much excess liquidity in the market, and part of the problem was there were limited projects that banks could fund; hence the central was forced to use BoBCs to mop this glut. Bannalotlhe said there are more projects in commercial real estate, mining, services industries which are benefiting from commercial banks’ funding. The bank has just completed its opening of four service centres in Molepolole, Kanye, Jwaneng and Gantsi which are expected to bring even more convenience to these centres.

In the coming months, BancABC will focus on improving customer service, which will ensure they attract and retain existing customers.

Published in Business
Tuesday, 21 May 2019 11:50

Flo-Tek launches new plumbing solution

Flo-Tek Pipes and Irrigation has launched its latest plumbing solution, acquired from a US based company Lubrizol Corporation. According to the company, the product is easy to install, durable and an economic plumbing solution. The new Chlorinated Poly Vinly Chloride (CPVC) pipes dubbed Flo-Tek Flowguard is a plumbing solution that is used for both hot and cold water applications.

“The solution has been used in US for the past 50 years and 25 years in Asia and the Gulf countries,” said Vijay Naik, Flo-Tek Managing Director. He stated the solution is 25 to 30 percent cheaper than traditional plumbing solutions.“It is also corrosion resistant and has no theft value,” added Naik, citing that the innovation is billed to be ‘a game changer’ in plumbing and building industries.

Naik said Flo-Tek is constantly coming up with innovative solutions, as the company position itself as an innovative manufacturer. The company has also expanded its local footprint through opening another manufacturing plant in Ramotswa, adding to its Lobatse operations. With operations in Botswana, Angola and South Africa, Flo-Tek is the largest producer of plastic pipes in the region with a production capacity of 35 000 tonnes annually

Naik said over 50 percent of the production is done in Botswana, while 70 percent of that production is exported into the SADC region. The new Flo-Tek technology has been granted certification of BOS ISO 15877-2 for CPVC pipes by the Botswana Bureau of Standards (BOBS). Speaking at the award ceremony of certification to Flo Tek, BOBS Managing Director, Masego Marobela said the certification licence confers the company and indicates Flo-Tek compliance to requirements.

“This is an indicator and proof that the company manufacturers products that comply to standards and in a consistent manner, geared towards satisfying customers,” said Marobela. Marobela said BOBS will continue to monitor Flotek’s conformance to the requirements of the standard through surveillance inspections and product testing.Dilip Zawar, Flo-Tek quality manager said BOBS has been instrumental in assisting the company set up and maintain quality standards.

“We really want to see the growth of a quality orientated plastic industry in Botswana and we can only achieve that through combined efforts,” said Zawar.Quality issues have been part of Flo-Tek since inception, the company started operations in Lobatse around September 1998, and at the same time BOBS established technical committee.

Published in Business

Prime Time, one of the country’s largest property firm has bemoaned the negative impacts derived from Income Tax Amendment Act passed last year. Managing Director, Sandy Kelly said the new legislation combined with the proposed changes to Property Transfer Tax is likely to undermine foreign investor confidence.

“In the bigger picture, we cannot talk about the Group’s future prospects without highlighting the effect on our investors of the recently introduced Income Tax Amendment Act 2018.“As advised in the recent interest payment announcement made in February 2019, this Act limits the deduction of net interest expense in calculating taxable income and will result in the Company suffering income tax on its profits prior to their distribution as debenture interest,” said Kelly. He said the Act that was passed in December 2018, retrospectively affects PrimeTime’s current financial period commencing 1 September 2018, as no transitional provisions for its implementation have been imparted.

“We are working with our peers at the other listed property counters and organisations representing the business community to engage government in finding a long-term workable solution to the sudden implementation of the Income Tax Amendment Act 2018,” said Kelly, adding that his Board is currently assessing available options to protect the unitholders’ interests. Kelly said PrimeTime has recorded a positive first half to the company’s 2018/19 financial year as revenues increased, propped up by  income from projects delivered during the previous financial year.

“We opened two malls in Zambia in 2018, Chirundu on the border with Zimbabwe, and Munali Mall in Lusaka, as well as the Design Quarter at Setlhoa in Gaborone.  “The contribution from these properties to PrimeTime’s income line in the previous financial year was limited, with only Chirundu effectively income generating for a portion of the period,” said Kelly. 

He said the three properties are now getting close to full occupation and have contributed to the 19 percent increase in income recorded in the first half of the current financial year. In addition, the reduction in the vacancy rate across the portfolio from five percent to three percent also boosted income for the company.  “We had anticipated a fall in vacancies since so much new space was delivered close to the last year-end and new developments typically take a little time to begin running at full capacity.” PrimeTime expect the vacancy rate to reduce further in the coming months. 

Meanwhile, the company is taking steps to protect the value of its assets which comprise 22 properties in Botswana and six in Zambia.Kelly said this year’s major refurbishment and maintenance plans are completion of the Pilane Crossing extension which is well underway and 50 percent let.  The road widening project in Setlhoa is complete, improving the accessibility of both Sebele Centre and the Design Quarter. “Agreement has been reached at both Boiteko Junction in Serowe and our retail centre in Ghanzi for a ground lease extension and acquisition of the freehold respectively. Both are in the lawyers’ hands and are scheduled to complete in time,” said Kelly.

PrimeTime is also working to continue its upward growth trajectory.  “In Botswana the first phase of the Pinnacle Park Office development in Setlhoa is underway and will complete in March 2020. We continually assess investment opportunities within and outside our existing geographical bases and expect to make investments in the very near future as we strive to grow and diversify the portfolio to protect our unitholders’ interests and deliver long-term wealth creation.”

Published in Business

Sovereign wealth funds remain an integral part of any economy as they act as a fall back when revenue declines, but there is need to ensure their mandates are clearly defined, lest they become prone to abuse by those entrusted in managing them.  This is the message that came out clearly from different speakers at a recent high level conference meant to discuss sovereign wealth funds in Africa, policies that govern them and best practices that can ensure they are sustainable for future use.

Botswana, better known for its mineral resources, especially diamonds is one of the 14 African countries with a sovereign fund, known as Pula Fund. The Fund, which was established in 1994, is managed by Bank of Botswana (BoB), and is a long term fund which forms part of the foreign exchange reserves. The Fund is being used largely to fund some of the country’s budget constraints that include deficits, which have been recurring since the 2008/9 recession, which affected major consumers of the country’s biggest exports, diamonds.

In a briefing after the opening of the two day conference, BoB Governor, Moses Pelaelo told Botswana Guardian that, government has in the past tapped into the Pula Fund, to plug out budget deficits which have largely occurred due to fall in mineral revenue in recent years, which affected the national budget. He could not immediately provide the amount that government has withdrawn from the Fund. “I don’t have the numbers, but it is true government has used part of the Fund to fund budget deficits,” said the Governor. It is not clear if the expected budget deficit of P7,1 billion for the 2019/2020 national budget as announced by finance and economic development minister, Kenneth Matambo will be funded by tapping into the Pula Fund, which is managed 50 percent by the bank and the rest by independent asset managers.

As of February 2019, the Pula Fund was valued at P49, 9 billion, having dropped from P55, 5 billion the year before. Botswana, like most of her peers in Southern Africa is struggling to contain abject poverty, rising unemployment rates, HIV/AIDS, among others.
The question that came from the floor was whether the Pula Fund can be used to help in fighting these social challenges which can in the long term affect the country’s cohesion?

Pelaelo stated that, while he agrees that the country is struggling with some social and economic challenges, it must be understood that, ‘the Fund is for long term purposes’, arguing that the country also has other options either borrowing locally and internationally when the need arises to tackle pertinent problems such as the one mentioned above. “When managing the Pula Fund we are more concerned with its safety, liquidity and return on investments,” noted Pelaelo. World Bank Vice President and Treasurer, Jingdong Hua said sovereign wealth funds could also be important in funding Africa’s infrastructural problems, which in most cases curtail economic developments.

It is particularly critical for this funding, especially in Africa where infrastructure development is largely being done by governments. Botswana also lags behind when it comes to infrastructure development and its Private Public Partnerships (PPPs), which infrastructure was among sectors to benefit from, is experiencing teething problems. “They (Sovereign wealth funds) can also help with long term capital formations,” added Hua who is based in Washington, United States of America. In Africa, where corruption is rampant, various funds have not avoided those who want to enrich themselves at the expense of the larger population.

Pelaelo and Hua concur that, funds need to be carefully managed and protected for future generations, especially for countries like Botswana which depends on limited commodities. Botswana in particular needs to tighten its screws on the Fund especially that it is being funded by savings from revenues from minerals a finite resource which will get depleted and expose the country to shocks. The central bank in Botswana has made it clear, they review all policies and procedures governing reserve management, including the Pula Fund every five years, to ensure they are watertight.

When opening the meeting, which the central bank hosted jointly with The Brown Capital Management, President  Mokgweetsi Masisi also added that, the mandate of sovereign wealth funds have evolved over the years, and called on  regulators to keep pace with these developments. “At the same time, there is less emphasis on Sovereign Wealth Funds as guardians of the nation’s financial wealth, but rather a greater focus is on their active participation, including through funding of infrastructure, to achieve national development objectives,” said Masisi.

He added that governance is key in managing sovereign wealth funds to avoid situations where they are used for political agendas. The President added that accountability to citizens is important for those who manage these types of Funds.
At the end of the closed-door meetings, Pelaelo and other top officials told the press that, a lot has been learnt from the conference.

“Sovereign wealth funds differ in form and mandate, but they all support liquidity,” he said, adding that, proceeds from these funds need to be used for economic priorities of each country. “There is need to look at long term benefits. We also have to work closely with other institutions such as World Bank and IMF (International Monetary Fund,” said Botswana central bank chief. Hua said they are willing to assist any country with issues relating to sovereign wealth management.

Published in News
Tuesday, 21 May 2019 11:13

Choppies moment of truth beckons

The months of May and June present anxious moments for the operations of Botswana’s market leading grocery retailer –Choppies. That’s because it is expected that the findings of the company’s affairs - both financial and governance - will be released at that time.

Currently Choppies has three different types of audits conducted in three countries - Botswana, South Africa and Zimbabwe - being forensic, governance and financial where Choppies operates. Choppies shares remain suspended on both the Botswana Stock Exchange Limited (BSEL) and Johannesburg Stock Exchange (JSE) following the Group’s failure to publish their financial results ending June 2018. Reports reaching Botswana Guardian state that the real action by Choppies leadership is expected in the next 6 - 8 weeks.

It will be based on the outcome and recommendations of the two investigation reports on the financial flows following anomalies and certain discrepancies picked by Choppies Auditors as well as the governance investigation into certain transactions conducted in Botswana.  

Financial experts who talked to Botswana Guardian on condition of anonymity posited that the companies doing the forensic probe may make certain recommendations which will impact the current leadership structure of Choppies. This publication has learnt that after the previous audit by KPMG the new auditors PWC picked up anomalies and certain discrepancies which they needed to get investigated. This is what formed the basis of what internally is known as the audit raised concerns, the process of which will be completed by the end of June.

The second is the governance investigation into certain transactions conducted in Botswana. The investigation is done by the Desai group law firm headed by reputable lawyer, Rizwan Desai. It is likely to be completed either by end of May or early June.
While the third and most serious is a forensic investigation which relates to transactions which were conducted in South Africa and Zimbabwe. In Zimbabwe, there are allegations of money laundering and impropriety in relation to transactions conducted in South Africa by Choppies, South Africa.  

So far no one knows exactly what the position is but the investigation is being conducted by a South African law firm together with Ernst and Young South Africa, which is the main forensic investigator. Sources say the investigation is expected to be completed by the end of June. This means that Auditors cannot release the 2018 accounts until the three silos being audit, governance and forensic are dealt with all of which are expected to be completed by June. A financial expert told this publication that while the outcome cannot be pre-empted one thing which is certain is that the outcome could spell consequences for the current management and board.

He said there is uncertainty in the market and in relation to the shareholder base. The value of the shares climaxed even before the shares were suspended by BSEL to avoid speculative trading.

Delay
The position is very simple; the company has not published its accounts for the year ended June 2018. The reason is that auditors PriceWaterhouse Coopers (PWC) say BSE had raised certain queries and concerns around the state of the affairs of the company both financial and governance.

On the financial, up until last year, KPMG was handling the accounts, but PWC took over around February last year, the year ended 31st June. The regulation states that BSE listed companies have to post half year and full year results. The half year results for 31st December 2017 were supposed to come out by March 2018, but were delayed because of the change in Auditors. They came out later. PWC approved them, however those are unaudited accounts. The next big set of accounts was in June 2018, but the auditors raised issues, the set date came and passed.

Regulations demand that results must be released three months after the set date which in this case was end of September. Records show that an extra month given by the BSE extending the submission to 31st October, but still nothing happened. The failure led to BSEL suspending the trading of the shares as did Johannesburg Stock Exchange (JSE), the secondary listing entity.

Completion
Once the three elements are completed the findings will go to the board. The information may require disclosures to be made in the financial statements or adjustments of the financial statement included on the audit queries as per satisfaction of the auditors and this may lead to the lifting of the suspension. This publication has established that the current board remains as is with former president Festus Mogae being chairman. However, sources say as part of the increased governance requirement stated in the announcement by BSEL the board will have new members. The board will need to have some people with retail and financial experience and background.

Choppies Group operates 107 retail outlets in Southern Africa, comprising 68 stores in Botswana, 26 stores in South Africa and 13 stores in Zimbabwe.  Records show that last year, Choppies lost 76.3 percent of its value when the share price plummeted from P1.69 to P0.40 in a single day. Still on that day, its market capitalisation went down from P2.2 billion to P521.5 million. The Domestic Consumer Index (DCI) , which shows aggregate changes in market value on the basis of share prices declined by 11.4 percent for the year 2018 compared to a decline of 5.8 percent in 2017.

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