By December last year, chairman of the board of directors at BPC, Sebetlela Sebetlela inked a contract that welcomed a new Chief Executive Officer (CEO) at the troubled corporation. It was not an ordinary contract but an unusual contract, within the borders of Botswana given the figures the financially ailing parastatal was willing to pay. The contract had one eye-catching special condition in it, a Sign-on-fee. The type best known to sports fanatics, where top-ranking strikers are paid millions as ‘sign-on-fees’ when joining a new team.

 
A whopping P1 million is to be given to Dr. Schwarzfischer in cash, just as a sign of gratitude by BPC after the Swiss national accepted a job offer by the power utility service provider. Dr. Schwarzfischer is perhaps the second person in the history of Botswana to be given an employment offer that has a sign-on fee. Less than ten months before Dr. Schwarzfischer signed to receive his P1 million, another man, who was the first to benefit from such an arrangement, received P500 000 more.

 
On the 1st January 2016 the South African former Chief Operating Officer (COO) of South African-based Wesizwe Platinum Limited Paul Smith became the first CEO of Botswana Government’s mineral investment platform, the Minerals Development Company Botswana (MDCB).

 
On putting his signature on the dotted line Smith, broke records, the figures tell the story. He agreed to approximately P1.5 million as a sign-on fee. He then became the highest paid parastatal CEO, at almost P300 000 per month, the money he has been relishing for more than a year now. This included more than 25 per cent gratuity of the basic salary, payable every year of the four year contract.

 
Dr. Schwarzfischer’s salary package bears the hallmarks of Smith’s. The new BPC CEO is also entitled to a third of his gratuity every year, on top of his annual P1 million plus, basic salary. In his first year of employment it appears Dr.Schwarztfischer will pocket P3.3 million. The following years will see him rake in a total of P3.06 million (second year), P3.05 million (third year), P3.1 million (fourth year) and another P3.1 million (fifth year). When his contract ends in the next five years, BPC will have spent a total of P15.8 million on him, and that is not including a 30 percent performance bonus that he will possibly get annually.

 
Interestingly, Sebetlela and the BPC board has never ever approved a salary so high for a civil servant in its lifetime, nor has the former board members before him. An exception, for reasons best known to Sebetlela and his board had to be made. The last CEO at BPC, Jacob Raleru, left the employ of the corporation in November last year when Dr. Schwarzfischer took over. Raleru’s basic salary was guided by the BPC pay structure which placed it at under half of what the new CEO gets. Raleru’s basic pay, without allowances was exactly P501 216 per annaum, compared to Dr. Schwarzfischer’s which is as high as P1.2 million. The BPC remuneration policy also does not cater for a ‘sign-on-fee, which has been made as an exceptional case in Dr. Schwarzchfischer’s situation.
The salary package of the current CEO is rather seen in extravagant institutions, not the ‘broke’ BPC which is dependent on state funding. While the current CEO takes home over P3 million annually (including allowances), Raleru was not even close half of that. BPC is a perennial loss making parastatal.

 
It incurred a loss of P2.60 billion in 2015 compared to P1, 37 billion in 2014 before a tariff subsidy grant of P2.33 billion. In the year under review, BPC recorded a loss of P274.91 million, compared to P61.5 million recorded in the previous year. The loss arose from the expense of P5.63 billion against the income of P5.36 billion. The income comprised revenue of P2.53 billion, other income of P79.26 billion, tariff subsidy and emergency power grant of P2.33 billion, interest income of P20.59 million and fair value gain on cross currency and interest rate swap of P398.32 million. The expenditure comprised of generation, transmission and other expenses of P380.27 million, finance costs of P170.82 million and net exchange losses of P863.70 million

While BPC has opened up its purse for the Swiss/German CEO, it is cutting down on its spending on ordinary Batswana employees. Almost two months into office, Dr. Schwarzfischer, who at some point was involved in restructuring Botswana Meat Commission (BMC), has begun a process to kick-out 30 percent of BPC total staff.
On Monday 23 January, the BPC new-broom hosted members of the media at Cresta Hotel and informed them that the troubled Corporation is looking into retrenching more than 200 employees by the end of April 2017. BPC, under Raleru has been contemplating the idea of retrenchments since 2015, but had been cautious to proceed to implement the sensitive matter.

 
The total head count at BPC currently stands at approximately 2400. Almost a thousand will face the axe, however 200 will already be gone by April according to the new boss. He said that all executive management positions will be advertised this week, which will see the utility services provider starting retrenchments from the top. Secretary General of Botswana Power Corporation Employees Union is aware of the matter. He said his union has discussed the matter with BPC management. “We are however still negotiating on retrenchment packages,” he advised.

 
Schwarzfischer is a qualified Engineer in Metallurgy and Materials holding qualifications which he obtained from the RhineWestphalia Technical University, Aachen. Upon completion of his qualifications whilst still pursuing his PhD he joined Kraftanlagen Heidelberg Inc. as a Project Manager; this was a company that was responsible for construction of nuclear, gas and thermal power plants.

 
Whilst employed by KPMG South Africa, Schwarzfischer had the opportunity to be involved in the restructuring exercise for Botswana Meat Commission (BMC).
While local expertise exist within the private sector, no Motswana has ever been offered such a lucrative opportunity.

In April 2018, President Ian Khama will be leaving office. The BDP in July 2016 pushed through parliament legislation specifically to cater for the current President to be availed a retirement house to be constructed at a place of his choosing, whether within or outside Gaborone.

 
The President is now trying to build his retirement home. With his taste for the finest things in life, it appears the President will only settle for a retirement home in extension 9, the posh neighborhood in Gaborone close to State House, where rich businessmen, top chief executives and the leading government executives reside. A very quiet neighborhood, where it is rare to see an ordinary man walking in the street.

 
Those in the know, inform that Khama has a plot in Extension 9, on which his retirement home is to be constructed. However, they say the adventurous ex-military man was not happy about the size of the plot. It was considered too small for the President’s dream home. Alongside his plot, BHC has various staff houses. It appears Khama’s solution to his ‘small’ plot was to acquire one of the BHC staff houses that adjoins his, join the plots, demolish the existing structures and construct the house of his dreams.

 
BHC as the procuring authority for the presidential retirement home sought to procure the house for him. However, it transpired that the plot did not belong to BHC but rather BPC. Forcing BHC to approach BPC to purchase the staff house, so as to satisfy Khama’s desires. Investigations reveal that BHC approached BPC and offered to purchase the house situated at plot 2425 at Extension 9 in Gaborone- Title Deed number 431/81 of 8th September 1981 on behalf of Botswana Government.

 
BPC then considered Lot 2425 to be a surplus asset in terms of Section 88 of the BPC Tender Regulations (Amended-June 2015) and treated the request by BHC as an unsolicited tender in terms of the BPC Tender Regulations (Amended-June 2015). Evidence reveals that the initial proposal from BHC was for BHC to swap their house on plot 5432 Gaborone Extension 28, Title Deed Number 543/1976 of 11th October 1976, and BHC offered P 529, 000.00 as the difference between BPC house and its own (BPC) house.

 
The offer from BHC was based on their internal valuation. BPC then engaged independent evaluator, Willy Kathurima Associates Pty Ltd to conduct an independent valuation. The house was valued at P3.800 000-00 (three million eight hundred thousand Pula) on the open market and with a forced sale value of P2, 800,000.00 (two million eight hundred thousand).

 
The BPC Board considered the matter on 26th October 2016 and resolved that BPC should sell the house at Plot 2425 to BHC at its Open Market value but BHC later approached BPC and negotiated the sale price at P3, 196,000.00 arguing that the existing house was “very old”, of which BPC acceded to, and subsequently made a sale agreement.
The Business Weekly & Review has established that a meeting was subsequently held at Office of the President (OP) on 14th December 2016 where both parastatal Chief Executive Officers (CEO)’s were present. BPC was represented by its new CEO. Several CEOs who are involved in the project of building a retirement home for the President are said to have been taking swipes at BPC at that meeting, accusing the utility service provider of delaying the release of the said Lot 2425 in Extension 9.

 
The meeting revealed that BHC could not legally purchase the plot for the President. It was explained at the meeting that BHC could not purchase and resell the property to the President because BHC policies provide for a one-man-one-purchase, and BHC has already sold a house to His Excellency before.

 
In order to circumvent the legal restrictions imposed on BHC, it was resolved at the meeting that the house be sold to Khama in his personal capacity by BPC and that BPC consider reducing the price to P2, 744,000 (two million seven hundred and forty four thousand), rather than the market value of P3.8 million.

 
On Tuesday 20th December last year, BPC Special Board Procurement and Tender Committee met on an impromptu meeting at1430 hours. There was only one agenda item. It was to discuss the Unsolicited Tender 1888/16-01 – The Sale of BPC Staff House at Plot Number 2425 in Gaborone to the 1st citizen.

 
At that meeting, the BPC Special Board Procurement and Tender Committee members enquired whether the same opportunity (unsolicited house purchase from BPC) is accorded to ordinary members of the public. However, the BPC executive management explained that it would depend on the circumstances presented on a case by case and explained further that the current scenario is a national priority resulting in BPC’s consideration to the unsolicited tender.

 
The committee members also queried on the price reduction from the open market value of P3, 8 million to the requested P2, 744 million to which BPC executive Management explained that P2, 7 million is the value of the land alone without consideration of the structure on the land, taking into account that the President proposes to demolish the structure as it is old.

 
The committee members however disagreed with executive management arguing that whatever plans were envisaged for the plot should not be of concern to BPC. They argued that the sole consideration should be to ensure that internal procedures are followed and due diligence done throughout the transaction, and not make favours for the President.
The committee members were also unhappy because Ministry of Land Management, Water & Sanitation Services was not the procuring entity for the said Lot 2425. BPC management however responded by stating that there has been a change in the law guiding the retirement of Presidents of Botswana, which makes it procedural for the President to purchase a lot for his retirement home to be built on.

 
The Business Weekly & Review has it on good authority that the board has requested for a resubmission of the paper as an unsolicited bid and to also redo the due diligence process and ensure that the Presidents (Pensions and Retirement Benefits) (Amendment), Act No. 22 of 2016, together with all regulations, policies and any such changes in law are referred and adhered to.

 
The board has also resolved to dispose Lot 2425 of at the amount of P2.8 million (from P3.8 million) being the Forced Sale value amount as defined in the valuation report from Willy Kathurima. There is no indication in the documents that consideration was given to whether or not this transaction was based on circumstances amounting to a forced sale and that neither the President’s aspirations nor the labelling of the circumstance of the sale as a “national priority” would amount to grounds for such.

 
The board however wanted the sale to be conditional upon receipt of a written consent by the Minister of Mineral Resources, Green Technology & Energy Security as well as the Minister of Finance and Economic Development; and that the valuation report from Willy Kathurima and as well as the minutes of the meeting of 20th December be circulated to the Main Board of Directors. At the time of going to press it has not been ascertained whether the due diligence has been completed.

Capital market investors were rather stingy in 2016, trading fewer shares on the Botswana Stock Exchange (BSE) than they did in 2015, leading to a decline in the BSE’s turnover.

 
At least 778 million shares were exchanged at the hands of investors during the 12 month period ending 31st December 2015, but the shares were fewer than the 803.1 million, that were traded by investors on the BSE during the previous corresponding period.
After trading 803.1 million shares in 2015, the BSE at the time recorded a record breaking turnover of P3 billion, though the turnover declined to P2.5billion in 2016. The BSE said the average daily turnover for 2016 amounted to P10.2 million relative to P12.2 million per day in 2015.

 
Chief Executive Officer (CEO) Thapelo Tsheole said that the decline in trading activity could be partly attributable to the adjustment of the brokerage commission structure in April 2016 that introduced a floor of 0.60 percent on commission charged by Brokers.
“The BSE will continue to observe the extent to which the change in brokerage commission will affect trading activity going forward, but it is thus far of the view that this is not a prominent factor.” The Central Securities Depository Company Botswana (CSDB), a fully-owned subsidiary of the BSE decided to increase the Minimum Levy on listed companies from the current P5 000 annually to P10 000, while maintaining the current cap of P15 000 annually around April last year. Transaction fees have been kept at P5. Further, the CSDB, which was established in 2008 to make trading at the BSE efficient, said it had also resolved to increase CSD Transaction Fees, which affects stock brokers and individual investors, from the current 0.10 percent to 0.12 percent, all of which would come into effect on April 1 this year.

 
The performance of the Domestic Companies Index (DCI) declined by 11.3 percent in 2016. The decline was attributable to the negative performance of the Retail & Wholesaling and the Banking sectors as well as the Financial Services & Insurance and the Information & Communications Technology (ICT) sectors. In aggregate, the BSE said the four sectors contributed 15.8 percentage points to the depreciation of the DCI.
On the other hand, sectors that contributed positively to the DCI performance were the Property & Property Trust, Energy, Security and Tourism sectors with an aggregate contribution of 4.5 percentage points.

 
Historically, the DCI has been heavily influenced by the Banking sector. Tsheole said the market capitalisation of the Banking sector relative to total domestic market capitalisation has declined from 46.9 percent as at 2012 to 30.5 percent in 2016 primarily due to additional listings in other sectors such as Retail & Wholesaling and ICT over the years.
“This has helped to reduce the reliance of the DCI on the Banking sector performance which is ideal given that the index should to a larger extent be representative of the overall performance of all companies listed on the Exchange.”

 
Blue-chip microfinance firm, Letshego Holdings Limited continued to dominate the liquidity on the BSE as its contribution to overall volume of shares traded (domestic companies) increased from 34.4 percent in 2015 to 42.3 percent in 2016. Other liquid stocks included New African Properties and Choppies which accounted for 20.8% and 12.7 percent of volume traded respectively.

Excelling at school has always been tied to the future prosperity of Botswana. Recently education has taken a back seat, politics for the sake of politics is now the fashion. Botswana’s “parents” are failing their children and jeopardizing the country’s future. Policy makers should not shoot themselves in the foot and think that by watching the state of decay within the education that they are devoid of responsibility and that it is not their problem. Our education is the reflection of our society; a broken education system equals to broken society. Everyone in this country should be saddened, angered and frustrated that we are throwing away our future. Botswana is not a dull nation and will never be.

 
Churches, trade unions, political parties, government and all Batswana should strive to help our children succeed at school. The church has responsibility to impact good morality on our children not to watch them spend every night on all night prayers, and being used as prayer warriors. Political parties too should know that they can’t govern this country with illiterate people and making sure that our children excel at school should be their priority instead of ferrying them around to political rallies. We all know that trade unions fight for better wages but they should also know that the future of our country is at stake if they neglect to fight for our children.

 
Of all these spheres of society government plays the critical role, it can bring society in line with what the country wants to achieve. We cannot have a government that pays teachers badly but spends more on weapons and security gadgets. It is not justifiable for government to watch schools go for months without basic materials such as textbooks all whilst children are being taught under trees and yet the country’s armed security forces enjoy unlimited budget. The Minister concerned for Basic Education should stop shaming teachers on television because we the concerned members of society, and the teacher’s ultimate employers don’t shame them in public. Ministers are not perfect, and actually they are the major cause of the situation we find ourselves in.

 
In its war with teachers, government should realize that its primary goal is the empowerment/education of our children. Fighting with teacher’s defeats the government mandate to build a prosperous future. Teachers are also not doing themselves any favour by not fully executing their duties and in the process the unfortunate children are caught in the cross fire and no one is standing up for them. Parents have long separated themselves from their children studies due to burdensome life commitments, adding more pressure to poorly paid teachers. As a parent you should ask yourself when was the last time you sat down with your child and assisted them their homework, when was the last time you visited their school to appreciate from their educators the challenges and opportunities that only together can be explored and understood?

 
The state of education needs proper assessment not empty political rhetoric. There are no easy short cuts in solving this mess, but government should immediately stop its obsession with the military and channel more resources towards education. Besides diamonds our competitive edge is education. Let us not destroy our future because of our political differences; Botswana belongs to us all at the end of the day.

International credit rating firm, Standard & Poor (S&P) warned this month that Botswana faces a “deteriorating outlook” in 2017, a move that suggests the dreaded downgrade from A-/A-2 sovereign credit rating could be on the horizon.

 
S&P issued a ‘Sovereign Rating Snapshot 2017’ in the first week of January on its website warning that Botswana alongside Zimbabwe, South Africa, Mozambique, DRC and Zambia face a negative outlook. The snapshot, a brief summary of how the global economies will fare in 2017 did not provide details and reasons for a possible downgrade.

 
However, a senior government official shrugged off S&P’s concerning expressing confidence that the poorly diversified mineral led economy will not be affected by the possible downgrade and that Botswana will recover along with the global environment.
“I am not concerned,” Dr. Taufila Nyamadzabo, Secretary for Economic and Financial Policy in the Ministry of Finance and Development Planning said this week purring at S&P’s concerns about a flagging economy.

 
“We just need to improve our budget deficit by diversifying products of the economy which results in increased revenue streams.” Mining, especially diamond contributes a third to the GDP in Botswana.

 
Diamond beneficiation – a process by which Botswana extracts more value from each diamond mined on its territory as well as from some diamonds mined elsewhere in the De Beers empire – has not helped diversify economy. More than four De Beers accredited diamond polishers have closed down due to poor cash flow, suggesting that beneficiation has not been a solution to economic diversification. Diamonds continue to be the number one revenue earner for Botswana, contributing around 80 percent of export revenues.
De Beers and Botswana’s Okavango Diamond Company (ODC) sales began falling by over 20 percent in the first half of 2015, after ODC cancelled atleast two sight sales, while De Beers sales declined as well.

 
Government pins its hope on the fact that the global economy is forecast to improve growing by 2.8 percent in 2017. “It will benefit our economy which will rebound,” an optimistic Nyamadzabo said.

 
Weighing on the matter, analysts interviewed by The Business Weekly and Review linked the possible downgrade to a subdued economic environment and said investors – anxious at the direction of the mineral led economy – will lose confidence in such an economy. Another analyst added that a downgrade may impact the ability of the country to lend from domestic and international institutions such as the World Bank and International Monetary Fund (IMF).

 
“We will be looked differently by the lenders,” notes Ishmael Radikoko, finance lecturer at the University of Botswana (UB).

First National Bank Botswana (FNBB) Economic Research Manager, Moatlhodi Sebabole said rating agencies could be concerned about the vulnerabilities presented by reliance on mining and negative sentiments presented by the Southern African Customs Union (SACU) receipts from the Common Revenue Pool (CRP).

 
Latest available data shows that the SACU CRP registered a surplus with respect to the 2012/13 and 2013/14 financial years respectively, following its annual audit. The surplus in these years supplemented the 2014/15 deficit, which is why member states shares were on an upward trend. However, the Secretariat warned that global economic growth will be subdued and that SACU trading partners will also experience a slowdown in total trade. Data also shows that trade will also affect the revenue pool in the negative, which means that Botswana will probably get a smaller share out the SACU CRP and consequently diminishing state revenue.

 
SACU receipts account for over 25 percent of state revenues which increases the vulnerability of Botswana’s fiscal position. However, Sebabole said that while the country is at the risk of being rated negatively, this will not affect the cost of credit that Botswana will incur in assessing external debt for project funding. He said if it happens, it will be a negative signal.

 
For his part, Moemedi Mosele, a market watcher at Motswedi Securities, echoed Sebabole’s sentiments, adding that a downgrade – though unlikely – will “increase our cost of sovereign debt” and spike interest rates, currently at 6 percent
The World Bank estimates Botswana’s sovereign debt to be at around 21.6 percent of its total Gross Domestic Product (GDP), a significant increase when compared to the time took office in 2008.

 
The economy shrunk by 0.3 percent in 2015, according to figures from the central bank as output dropped in the mining sector alongside persistent power cuts and water rationing which impeded factory production as well as a chronically high unemployment.
In an economy of 2.2 million, only 407 482 people were formally employed as at June 2016, according to the national accounts office, Statistics Botswana (SB), which translates to a small fraction of the economy. Formal unemployment rate is however at 20 percent. Efforts to create jobs by President Ian Khama’s administration have been less than successful, with the best being Ipelegeng, a social welfare programme that pays less than P500 per month.

 
Late last year, President Ian Khama injected P3.5 billion as an Economic Stimulus Programme (ESP) with the hope of propping up a flagging economy, but there has been marginal evidence of the ESP and its effects on the economy. As at September 2016, Bank of Botswana balance sheet shows that there was P79.9 billion in Botswana’s foreign reserves. Most of this money belongs to the private sector, government has only about P33 billion. However, the P79.9 billion in foreign reserves was almost P7 billion lower than the amount recorded during the previous corresponding period.

 
Last year the state tapped into foreign reserves, and the nation was told that the ESP was being initiated to jump-start the ailing economy. Available statistics shows that government may have drawn down a total of P3 billion from the foreign exchange reserves in a period between December 2015 and March 2016, which led to a decline in the total reserves. A 2016 quarterly economic review by independent economic consulting firm, Econsult Botswana, reveals that Foreign Exchange Reserves decreased by 3.5 percent from P84.9 billion in December 2015 to P81.9 billion in March 2016, which could only suggest a draw down by the current penniless government. However six months later, the foreign reserves further declined to P79 billion. It is only safe to say that the reserves are on a downward trajectory, which if maintained would be disadvantageous to Batswana.

 
The projected deficit of around P7 billion, will also be financed either from the foreign reserves or by debt.

 
S&P’s concerns about a low growth outlook comes on the backdrop of a previous warning in December last year that diamond mining has lost its shine in 2015 and 2016 following a slump in prices. Other minerals such as copper have also been affected by a global slump in prices. Data from Statistics Botswana shows that copper prices have not recovered since touching an all-time low of P374 million in the third quarter of 2015 of weak demand.

 
INK Centre for Investigative Journalism contributed to the production of this story. Go to our website www.inkjournalism.org to see more stories

This week, Letshego’s Managing Director (MD) Christopher Low guaranteed that the company will hunt for opportunities away from their current markets. This comes a week after the blue chip-micro finance firm announced a surprise $9 million (approximately around P90 million) acquisition of afb Ghana Plc (“afb”), a financial services company providing innovative credit products to consumers in Ghana.

 
The acquisition of afb adds to Letshego’s expansion of its West Africa geographic footprint, preceded by a 100% acquisition of Letshego Nigeria MFB (formerly FBN Microfinance Bank) in 2015. The company, worth P5 billion in market capitalisation, now enjoys market turf across 11 countries, 2 in West Africa. It is the largest foot print and the most exposed to different currencies of any domestic counter on the Botswana Stock Exchange (BSE). Analysts are worried that it may have a bearing on the company’s bottom line influenced by currency volatility in emerging markets.

 
Low says confidently that foreign exchange risks, geopolitical risks and currency risks are all part of business if they are going to become big players in these emerging market. They might as well face these risks. Each time Letshego enters into a new country it’s exposed to its currency risks. The company has subsidiaries in Kenya, Lesotho, Mozambique, Nigeria, Rwanda, Swaziland, Tanzania and Uganda.

 
The Business Weekly and Review asked the MD how the company minimises exposure to currency fluctuation in the markets it in. “We have now invested in risk management practices given that we cannot avoid exposures but minimise them,” Low responded. The boss of Letshego further says they have formal assets and liability management functions that looks at currency rate, liquidity risk, and interest rate risk. Further, he says they are pushing to find local currency finance to reduce volatility in income statements.

 
The company has been subjected to depreciating exchange rates against the Botswana Pula (BWP) in most of the markets the company operates from for the six months ended 30 September. The depreciation of local currencies continued to have an impact on the translated results with a further P297 million reduction in Shareholders’ equity for that period. Nonetheless, the Group remains well capitalised and profitable posting revenue exceeding P1 billion for the same reporting period from its subsidiaries across Africa. The company gets about two thirds of its profits from outside Botswana. Botswana has lost its dominance for profitability for the African company, contributing about 30 percent of profit before tax according to company estimates.

 
Outside Botswana, Low says Letshego strives to grow businesses faster (from a post-tax perspective) rather than from the currency depreciation and a centralised ALM to ensure that our income statement is growing. “I can’t change the fact that each year there is depreciation against pula. What I can change is to ensure that the growth of that business far exceeds the depreciation,” he says responding to a question from the Business Weekly and Review.

 
The latest transaction should boost income streams. The deal was negotiated last year but was never communicated, because Low says they had reached a conclusion with BSE that it will not have material impact on the company share on the domestic bourse. Low said they have complete management control over afb and it will contribute to the bottom-line for the financial year 2017.

 
“It’s in line with what Letshego is doing. Ghana is stable, its currency is also good,” Moemedi Mosele, a stock analyst at Motswedi Securities says. The company makes about $20 million in profit before tax. afb has grown to service over 60,000 customers through a country-wide network of more than 25 branch and customer access points and an end-to-end automated service delivery model. It’s strategy: to deliver responsible lending services by leveraging technology to drive access, simplicity and customer satisfaction – fully aligns to Letshego’s own inclusive finance agenda. As with Letshego, it has an established product offering that includes deduction-at-source loans for government employees and direct loans to private sector employees as well as loans to micro and small enterpreneurs (MSEs). “We are number 2/3 deduction at source there,” Low points out. ‘We looked at the size of Ghana’s population, its distribution and geopolitical stability and the country ticked the boxes,” he says admitting that some acquisitions may destroy value but that they will continue to look for opportunities.

Walking into a design hub, going in with nothing but the idea you built in your head about a design house. Going into the design room without any expectations but to see the magic a designer’s touch can do to simple cloth. With the white painted room adorning not one but many pictures of her worldwide showcases. Her very own version of Paris and fashion painted on the other side of the room makes fashion lovers relate to the happenings of the biggest runway stage in the world. This was indeed an explosion of fusion in fashion. From silk to cotton, German print to chiffon one is guaranteed a meltdown moment in the field of fashion.

 
At the end of the day image is what everyone one goes by. Having showcased on the world stage, Botho Chalebgwa a fashion designer with a BA honors in Fashion, is the Vice president of Botswana Textile and clothing Society and is the brain behind BOTOCY fashion labels and brand.

 
Botho is quick to note that currently she is trading in two brands under her mother brand “Botocy.” She says that BOTOCY is the main Brand and BOTOCY Bridal couture is the other. These two brands according to her enable her to be able to provide different services depending on what the client wants. At BOTOCY, she focuses on ready to wear ladies wear garments and corporate wear. BOTOCY Bridal on the other hand is currently creating bespoke wedding attire but also with plans to develop her own bridal product line.

 
Chalebgwa says that her clientele are predominantly women due to the brand specifically catering for them. These women range from all walks of life and they vary in age. She considers that we are living in the age where women’s wear in particular is very diverse and that she as a designer considers their preferences whether guided by age, tribe, morals beliefs and culture. The defining factor though is based on income brackets. Chalebgwa cites that although she no longer wants to deal with custom designing she values her customers worldwide.

 
Although BOTOCY is at the preliminary stages of interaction with the global market this is proving to be an exciting time for the Brand. Her global interest is growing and she and her team are currently putting in place measures to take full advantage of this interest. She says they are still looking at a variety of ways to reach her target market which has motivated her venture into trading on the internet with both BOTOCY and BOTOCY bridal designs.

 
She has already showcased in various countries including South Africa, Nigeria, Tanzania, Ethiopia, France (Paris), England (London) and off course Botswana. “I am very grateful to God, Ministry of Youth Sport and culture and various sponsors for the opportunities and I look forward to many more.” she says.

 
Having studied in South Africa Botho prides herself in her way of having studied Fashion from both a commercial and bespoke perspective. She says this has made her have an understanding of how to adapt to the challenges of having to exist and thrive in a not so established industry. Botho cites her training in South Africa as her most real experience on having to persevere through these challenges.

 
Although she has her name on the map, she still believes the limited opportunities in the country challenges one in an established work environment. This is because more respect is given to designers who are not Batswana, a discouraging factor because some of these designers were part of her educational circle.

 
She believes that as her own boss and having worked for herself most of her professional life she has never came across any major hurdles. “There was a time when I halted and worked for a tertiary education establishment for almost 2 years and I cannot recall any serious challenges of note. I would say the challenge is not actually having an established fashion industry this creates a number of hurdles.”

 
Chalebgwa states that having to exist in this kind of industry requires one to throw away the box entirely to avoid having to “think outside the box” noting that “the sad reality of our education structure is that when you finish tertiary education especially having trained in a design field there is a limitation in job opportunities. The higher your qualification the less opportunities you will find, that is why most young designers resort to business owning a risk that sometimes is not beneficial especially when you lack business skills.” Botho says she strives to create opportunities for other people. She says although she runs a small operation she has big expansion plans. She currently has one location and is making full use of the internet in order capitalize on the various opportunities currently available.

 
Being a Creative Designer of her own company allows her to have creative control on all the products that her brand produces, it gives her an opportunity to push herself constantly harder to achieve her most creative statue. Her biggest challenge though she says comes when she has to fit in more places than one. Botho says young entrepreneur can relate to the experience of wearing the highest hat in their own establishment to the very lowest. She says it keeps one motivated and humble. Botho says she finds this experience to be most extraordinary when relating it to the outside perceptions people may have equipped their strategic thinking with.

 
“I am a true creative in the sense that I am a sensual being and creative. I am inspired by what I see, hear, touch and smell. I love to travel in order to expand my outlook on life. I have a deep love for art, culture, history, architecture and music and often find inspiration from those sources. I also have a deep love for women, form, physique and characteristics. I look at women as gifts from God and therefore my clothing is a celebration of WOMAN in her beauty, intricacies and simplicity.” the talented fashion designer says.

 
She advises those with dreams of owning a business to avoid the deadly mentality of having dreams to start too big. She urges young entrepreneurs to keep their dreams realistic and that that is the most important step to be considered in gaining a true understanding of a business owner’s mentality. Also she notes, one should look for an alternative solution in the interim and reduce dependence. “Let the funding find you with all your wheels in motion.” she adds.

The Competition Authority (CA) has barred South African owned Transport Holdings (TH), and its subsidiaries from competing for any tender that might arise from a split between Kgalagadi Breweries Limited (KBL) and 4Ms Group Holdings (Pty) Ltd.

 
4Ms, which was established as a Citizen/ Driver Empowerment Scheme by KBL has until October before its agreement with its main contractor elapses. The company has been enjoying a lucrative contract, constituting 19 percent of its revenue, alongside TH’s subsidiary: Mulbridge Transport Holdings, whose term has an additional 3 years before it ends. Since 2004, the sole listed brewer has been renewing 4Ms contract every 5 years.
However, following SAB miller acquisition by Anheuser-Busch InBev (which indirectly owns the KBL), KBL announced in 2015 that when the contract expires it will introduce a tender procurement process.

 
CA Acting Chief Executive Gideon Nkala says Transport Holdings/Mulbridge Transport or any other entity related in anyway with the companies are restrained from participating in this tender to be issued by KBL upon the expiry of the existing 4Ms contract with KBL. Given the competition and public interest concerns identified by CA, Nkala has banned TH Holdings for the entire period leading up to the end of the Transport Holdings /Mulbridge Transport contract in January 2020, including any extension period that may be granted thereafter.

 
Transport Holdings and Mulbridge Transport are the only other entity apart from 4Ms having a contract with KBL.

 
Transport Holdings acquired the business of Mulbridge Transport early in 2015 which was approved by the authority. Its latest bid for the acquisition of assets and cession of the main contract belonging to 4Ms, its competitor, hit a snag.

 
Last week the authority determined not to approve the transaction after facts, analysis and conclusions of the assessment found that there are competition and public interest concerns that arise in the line haul transportation services market in Botswana.

 
The CA found that the proposed transaction was likely to result in reduced competition due to the removal of a competitor in the line haul transportation services market. 4MS is in the businesses of ad hoc line haul transport to the general market and line haul transport services. Further, Transport Holdings wholly owns Express Cartage (Pty) Ltd which is engaged in general consolidation transportation and provides line haul for some contract customers. The company also has a 70 percent stake in Imperilog Botswana, an agent for global freight forwarders and engaged in customs clearing services. It owns subsidiaries that have been carrying out large scale transportation in Botswana since the 1970s. TH, together with its subsidiaries is operational in Botswana, South Africa, Mozambique and Namibia.

 
Nkala was therefore worried that the implementation of the proposed merger was expected to result in the merged entity attaining a dominant position; and the proposed transaction was expected to result in retrenchments and citizen disempowerment. “Therefore, pursuant to the provisions of section 60 of the Competition Act, the Authority does not approve the proposed acquisition.”

 
Transport Holdings is incorporated in Botswana, and is owned 80 percent by Imperial Holding Group which is incorporated in South Africa. The remaining 20 percent is held by Anthony Lee, the incumbent Managing Director (MD) of the company.

Not so many years ago, our Court of Appeal bench was dominated by white male foreign judges. Whilst this affair may have been acceptable or tolerable in those years with time the notion of a Republic with its highest court dominated by white foreign judges became troublesome and unacceptable. It was not troublesome and unacceptable that the judges were per se foreigners – it was troublesome that the judges were all foreigners; it was not troublesome and unacceptable because the foreign judges were white per se; it was unacceptable and troublesome that black judges were few (just two in my recollection – Justice Twum and Justice Ramodibedi (Lesotho/Swaziland).

 
It was troublesome and unacceptable because that affair implicitly accused the many local senior attorneys and High Court judges of incompetence to sit and adjudicate the laws of their country – troublesome and unacceptable because the perpetuation of such a policy contradicted the notion of an independent Republic that was not under the garb of colonialism – troublesome and unacceptable for it opened the door to corruption and judicial manipulation – we could not know the activities of these judges when in their own countries. The Court of Appeal was in essence a foreign court in the apparel of a domestic one – not very different from when the Judicial Committee of the Privy Council in the United Kingdom, its successor.

 
In 2010, two years in his office, President Ian Khama appointed Ian Kirby the Judge President of the Court of Appeal, making him the first citizen to be appointed a judge and a judge President of the Court of Appeal. It had taken Botswana 44 years to appoint one citizen to its Court of Appeal. This was then followed by the appointment of Justice Lesetedi, Justice Gaongalelwe and the late Justice Legwaila – death was unfair to cut his time short – having intelligently adjudicated under “equity” at the Industrial Court – his expertise was evidently a necessity at the Court of Appeal. For these appointments, President Ian Khama must be applauded.

 
With local judges on the bench one is assured that the judgments will reflect the local conditions and ethos of Batswana – one was never at peace that all foreign judges knew and understood such aspects. In one case, a local attorney who was handling a threat to kill appeal was worried that the judges would not quite understand and appreciate the very many senses that Batswana use the phrase “ke tla go bolaya.” The day was saved by the fact that the Judge President was part of the bench. The Court of Appeal’s decision in State v. Kanane, where the majority was foreign judges, and the decision was that Batswana were not ready to accept homosexuals in their society is laughable and will anger me for the remaining days of my life. In human affairs, the feeling of hatred towards others is dangerous –I do not know it means to hate an inanimate in the magnitude that I hate the decision in Kanane.

 
One never knows if and when there is a vacancy at the Court of Appeal – the vacancies are not advertised and the appointments are done in secrecy with the members of the public never knowing who the candidates are – like the illuminati – a situation that all men of good senses will know is wrong. But with the passing of Justice Legwaila – and it is unfortunate that we must learn of vacancies through death – one can be certain that there is, officially, a vacancy.

 
If President Khama appoints a female judge to the Court of Appeal, he will have added a credit to his legacy bank. Justice Dow ( as she then was) is the first female to be appointed a judge in Botswana. There are now about six judges at the High Court and about two at the Industrial Court. Botswana has never had a female judge at the Court of Appeal. It is not appropriate that the bench should be reduced into an exclusive arrangement for males. It has been six years since a citizen male judge was appointed to the bench, it is now time to appoint a female judge to the Court of Appeal. There are competent senior females that qualify for the job.

 
The life of Lady Ruth Khama, President Ian Khama’s mother, is enough proof that women can also competently do trades which men can do. During the Second World War, she left Eltham high school to join the Women’s Auxiliary Air Force, served as an ambulance driver and work at an emergency landing station at Beachy Head. If this cannot convince President Ian Khama to appoint a female judge to the Court of Appeal, there is nothing that will.

The Minister of Presidential Affairs, Governance and Public Administration, Eric Molale says the Directorate on Intelligence and Security (DIS) will get the largest requested share of the Ministry’s development budget.  Out of the requested total amount of Six Hundred and Seventy Million, Eight Hundred and Twenty-Six Thousand, Three Hundred Pula (P670,826,300) for the 2017/18 financial year, Two Hundred and Sixty-One Million, Sixty Thousand, Nine Hundred and Fourteen Pula (P261,060,914 will go to DIS.  The envisaged allocation to DIS represents 38.9 per cent of the Ministry’s development budget that has increased 11.8 percent from the 2016/2017 budget of P600, 084,150.

According to Molale the funds allocated to DIS will enable the institution to implement various development project under its wing.  Molale says the projects, include various infrastructure developments, improvements in communication network and acquisition of mobile platforms.

“Chairperson, continuous improvements in organizational infrastructure and operational tools/ instruments is vital in the integration and coordination of initiatives aimed at safeguarding national security. As such it is critical to continue improvements and investment in capital projects in this area. It is in that regard that I request P261, 060,914 for the implementation of various development projects during the 2016/17 financial year.”

Rejecting the proposed allocation of P261 million to DIS, opposition MP’s said the allocation could not be justified. “I mean, I cannot just bring myself to accept that this Parliament passed a budget that gives it about P130 million and this Parliament is going to pass a budget of P261 million to the Directorate of Intelligence and Security (DIS) and then you tell me you have got your priorities right,” MP for Gaborone Central Phenyo Butale said. Pius Mokgware also decried the secretive procurement of DIS, citing that there are reports that things are not being doing properly and parliament cannot continue to approve its budget without dealing with the challenges at the institution.
“We should, as parliament make sure that DIS procurement becomes a little bit transparent, a little bit open so that it cannot be open to abuse as it is been suspected by most right now,” challenged Mokgware.

Molale stated that DIS procurement goes through a procurement system that is within the law. “There is a committee that deals with special tender considerations for agencies like the Botswana Defence Force (BDF), the DIS and others, which cannot be in the public domain, but there is a record of procurement that can with time be made open for people to see that there was nothing to hide.”

Hot on DIS heels in the Ministry’s allocation of Development Budget is the Poverty Eradication Programme at One Hundred and Eighty-Eight Million, Four Hundred and Seventy Thousand Pula (P188, 470,000) or 28.1 per cent, followed by MOPAGPA Infrastructure at One Hundred Million, Five Hundred and Eight Thousand, Three Hundred and Eighty – Six Pula (P100, 508,386) or 15.0 per cent and Improvements to Broadcasting Services at Eighty-Two Million, Three Hundred and Forty Four Thousand Pula (P82, 344,000) or 12.2 per cent.

Molale says the remaining 5.7 percent of the budget is shared among the rest of the projects in the Departments of; MOPAGPA Consultancies, Computerisation, Botswana Public Service College, Directorate of Public Service Management (DPSM) and Directorate on Corruption and Economic Crime (DCEC).

For the Ministry, Molale requested One Billion, Two Hundred and Eight Million, and Ninety-Seven Thousand, Four Hundred Pula (P1,208,097,400) for the Recurrent Budget as well as Six Hundred and Seventy Million, Eight Hundred and Twenty-Six Thousand, Three Hundred Pula (P670,826,300) for the Development Budget be approved and stand part of the Estimates for the 2017/18 financial year.

Botswana Public Officers Pension Fund (BPOPF) has landed a final blow on the already limping Fleming Asset Management company, by terminating a P300 million contract for the construction of a hotel in the Central Business District (CBD), which it had with Fleming.

By the 1st of March, Fleming was expected to have transferred anything to do with the construction of four star Hilton Hotel to Messidor Asset Management, a company that now manages BPOPF’s entire property fund.

 
Chief Executive Officer (CEO) of the BPOPF, Boitumelo Molefe announced this week that her fund has cut all ties completely with Fleming, a company that used to be amongst those that managed most of the money belonging to the BPOPF.

“As you are all aware, the Fund has been working with Fleming on transitioning the development of the Hilton Hotel Project to our Property Manager Messidor. This is a critical and large project and it was critical that the transition is as smooth as possible,” she said.

 
In her views, when the filthy-rich pension fund decided to terminate its mandates with Fleming sometime last year, the intention was to also terminate the Hilton Project contract, however it could not just be terminate immediately because being a complex project of such a magnitude,  she said a smooth transition was needed to ensure that everything falls into place.

 
Before BPOPF could take the Hilton project to Messidor, Molefe said first a due diligence had to be done for the BPOPF to satisfy itself that there were no irregularities in the project. “Also we had to first do a financial audit, to ensure that management of the project finances was prudent under Fleming’s management before the project could be transferred to Messidor,” she said.

 
The decision now leaves Fleming with not even a cent to manage on behalf of BPOPF. Just last year, Fleming managed over P4 billion on behalf of the BPOPF, the money of which was invested in South African bonds, some in equity while others are invested in property here in Botswana. The mandates were terminated after the then Fleming CEO was involved in financial irregularities.

 
Previously both Messidor and Fleming managed BPOPF’s property mandate. Since the termination of Flemings portfolio however Messidor now manages the entire property mandate after it assumed the extra P1.5 billion worth of assets, plus the additional P300 million for the Hilton Hotel Project.

 
Last year the construction of the P300 million five star Hilton Hotel, which is due for completion in January 2018, was also put to halt by the Environmental Impact Assessment (EIA).

 
The 153-roomed hotel which is being built on Plot 54366 in the new CBD opposite i-Towers will also have offices, restaurants, gym, pool and conference rooms.
Botswana’s Hilton Garden Inn will be the 12th one in the sub-Saharan Africa while the 11th one is in Swaziland.

 
Currently Hilton Hotels, which have been operating for 90 years in 94 countries in six continents, have 4,300 hotels over different flags.

 
However, Fleming has of recent been acquired for P22 million by Capital Management Botswana (CMB), a company owned by Tim Marsland and Rapula Okaile. The Business Weekly & Review asked the two directors whether they thought it was a wise decision to acquire a company that lost business worth over P4 billion and a negative reputation in the industry. Marsland said that the intention was to re-build Fleming into a behemoth asset management company it used to be.

 
“ Fleming is the first citizen owned fund manager to operate in Botswana, and its legacy cannot be forgotten,” said Marsland.

 
He said it will be great again, and emerge once-again a giant asset management firm and this time around with solid presence in countries like South Africa, Mozambique and others. “We know it will take a bit of time, but it is worth it,” added
Marsland acknowledged that having lost so much business, the company is currently just on break-even, after it has done so much cost-cutting to remain afloat.

Carter Morupisi’s five (5) year reign as Mascom Chairman has ended. According to two (2) different sources, the Permanent Secretary to the President (PSP) handed his resignation recently almost a year since some members of the  Botswana Public Officers Pension Fund (BPOPF) board of trustees wanted him out.

 
Morupisi assumed the chairmanship of Mascom by virtue of his position as chairman of the BPOPF board of trustees, which has a significant shareholding in Mascom with 40 percent indirect shareholding, while South Africa’s mobile network operator, MTN holds 53 percent indirectly.

 
As has been the norm, when appointed PSP in 2015 expectations were that Morupisi would relinquish his seat at BPOPF and hand it to the in-coming Directorate of Public Service Management  (DPSM) Director Ruth Maphorisa, which would consequently see him cease to represent the fund at MASCOM, Morupisi however stood firm and refused to vacate the office citing that he had unfinished business at the multibillion Pula communications giant, where he said he was serving interests of BPOPF. Morupisi then, also said that hic contract was yet to come to an end, saying that he will step down when his term expires.

 
BPOPF Board of trustees last year submitted three names, Brigadier Charles Nkele of the Botswana Defence Force (BDF), Ishmael Selebogo from Botswana Pensioners’ Association and Boitumelo Molefe (CEO) as new representatives of the fund at Mascom. The three however were unable assume their positions at the telecommunications giant because Morupisi refused to vacate his position.  The fund was driven to remove Morupisi as it preferred a chairman of the investment committee within the BPOPF board to assume chairmanship of Mascom.

 
Though not public information, Mascom under Morupisi’s leadership has managed to remain the leading mobile company in the country and contributed handsomely to BPOPF purse. Further, inside sources said that Morupisi has done a good job in preventing South Africa’s MTN to further acquisition of Mascom.

 
According to the 2015 telecom statistics by BOCRA for quarters ending June and September 2016, Mascom market share, by number of subscriptions was 53 percent, followed by Orange and Be Mobile at 32 and 15 percent respectively. In terms of broadband market share, Mascom enjoys a commanding 60 percent, followed by Orange and Be Mobile at 33 and 7 percent respectively.

 
Morupisi’s tenure as the chairman of Mascom was not all bed of roses as trade unions who are part of the board of trustees had a love/ hate relationship with him. Unions viewed Morupisi as enemy of the workers, and remained wary that as long as Morupisi remained part of BPOPF government had effectively hijacked the richest pensions fund in the country.

 
Last year a letter addressed to Mascom Board Chairman from Botswana Federation of Public Sector Unions (BOFEPUSU) cited that there is ample evidence of victimization, persecution and discrimination of employees who have unionised at Mascom. The federation said “these circumstances have led to the unprocedural and unlawful dismissal of the Secretary General of the Union, the pending dismissal of the President of the Union and left the rest of membership petrified. Further to harassment of Union leaders and members, the Company is vigorously refusing to establish bargaining structures in the workplace for social dialogue to prevail.”

 
The federation also threatened that public servants whom they also represent cannot have their funds at BPOPF (majority shareholder at Mascom) being used to finance unethical trading and pay salaries of management who is undermining workers.
The letter further stated that it had become clear that the current Chief Executive Officer (CEO) was failing to manage Mascom and the realisation was that the Company was poised for failure under his stewardship. “Under his leadership Mascom will be shamed in public for its poor labour practices and this will regrettably blemish the Company’s image and hurt its sales. The Company needs a leader who will be able to turn around its image and instil good labour relations for sustainability of the Company,” Bofepusu said.

Despite having exhausted its subvention fund, and consequently forcing government to drawdown foreign reserves to fund the importation of electricity, Botswana Power Corporation (BPC) actually recorded increased power generation during the 2016 fourth quarter (q4).

 
The national accounts office says that Morupule B, BPC’s 600 Mega Watts power plant which has never worked efficiently since construction, has escalated power production during the last three months of 2016 , leading to less imports from South Africa’s ESKOM.
Headed by Statistician General Annah Majelantle, Statistics Botswana noted in its report, published this week that the physical volume of electricity generation during the fourth quarter of 2016 stood at 783, 141 MWH, giving an increase of 11.1 percent (77, 940 MWH) as compared to generation of 705, 201 MWH during the fourth quarter of the previous year (2015).

 
Comparison of the physical volume of electricity generated during the third and fourth quarters of 2016 gives an increase of 18.4 percent (121, 896 MWH) from 661, 245 MWH during the third quarter of 2016 to 783, 141 MWH during 2016 fourth quarter.
“These increases were largely due to the on-going remedial works of the Morupule B Power Station, with the intension of meeting the nation`s electricity demand,” said Dr Burton Mguni, who was acting on behalf of Majelantle.

 
Statistics Botswana says that that electricity generated locally during the 2016 q4 contributed 77.4 percent to electricity distributed during the fourth quarter of 2016, as compared to 67.7 percent during the corresponding quarter in 2015, and 66.5 percent during the third quarter in 2016.

 
Year-on-Year comparison of distributed electricity during the fourth quarter of 2016 and the same quarter in 2015 depicts a decrease of 2.8 percent (29, 448 MWH), from 1,041,132 MWH during the fourth quarter of 2015 to 1,011,684 MWH distributed during the last quarter of 2016. The quarter-on-quarter comparison of electricity distribution shows an increase of 1.7 percent (17, 084 MWH), from 994, 600 MWH during the third quarter of 2016 to 1, 011, 684 MWH during the quarter under review.

 
Interestingly, imported electricity declined by 32 percent (107, 388 MWH) from 335, 931 MWH imported during the fourth quarter of 2015 to 228, 543 MWH imported during the quarter under review, which means that BPC may have spent 32 percent less, importing from ESKOM.

 
“This decrease was attributable to Botswana Power Corporation’s focused efforts on the improvement of domestic electricity generation,” Dr Mguni noted. However, despite BPC having reduced importing from ESKOM, it actually spent a lot of money, which may yet contradict expectations. Despite having been one of the beneficiaries of the largest budget allocation last year, BPC exhausted its allocation and benefitted from foreign reserves, which are normally cashed under conditions of exigency. In 2016, BPC was one of the beneficiaries of the largest share of the national development budget.

 
The major energy infrastructure projects which benefitted include; Morupule A Power Station rehabilitation at P135 million, NorthWest Electricity Transmission Grid at P225 million and Rakola sub-station at P257 million. In addition, the Botswana Power Corporation received a cash injection of P1.35 billion to cater for emergency power supply and P257 million under ESP for rural electrification. However, it seems BPC utilised its funds and remained with a shortfall, to the extent as to prompt Finance and Development Planning Minister Kenneth Matambo to draw down from the foreign reserves, specifically to fund BPC.

 
As at December 2016, foreign exchange reserves stood at P76.8 billion, compared to P84.9 billion in December 2015, representing a decline of 9.5 percent.
The foreign reserves however do not only belong to government, most of the money belongs to the private sector, and only the Government Investment Account (GIA) holds money belonging to government.

 
The state investment account declined from P35.5 billion in December 2015 to P33.3 billion in November 2016, due to increased payments for imports relative to exports receipts during the period. The implication being that P2.2 billion was withdrawn, and this is the money that may have been used to fund the broke power utility provider.
“A fall in reserves is primarily as a result of an increase in demand for foreign exchange to pay for imports, notably for imported electricity by Botswana Power Corporation (BPC),” Matambo said during his budget speech, insinuating that a significant portion of the billions of Pula was used on importing power by BPC. However, the minister did not elaborate further on what else the money was spent on. Botswana imports most of its power from South African power producer ESKOM.

 
Government has been spending billions annually on BPC, which has for years been failing to meet the national power demand requiring it to purchase power and thus paying ESKOM ‘in gold’ on power imports. Government has never revealed how much they spend on ESKOM annually. The corporation itself is one of the worst performers in quasi-government institutions. It incurred a loss of P2.60 billion in 2015 as compared to P1, 37 billion in 2014 before a tariff subsidy grant of P2.33 billion. In the year under review, BPC recorded a loss of P274.91 million, compared to P61.5 million recorded in the previous year.

The loss arose from the expense of P5.63 billion against the income of P5.36 billion. The income comprised revenue of P2.53 billion, other income of P79.26 billion, tariff subsidy and emergency power grant of P2.33 billion, interest income of P20.59 million and fair value gain on cross currency and interest rate swap of P398.32 million. The expenditure comprised of generation, transmission and other expenses of P380.27 million, finance costs of P170.82 million and net exchange losses of P863.70 million.

 
The generation of electricity in Botswana started in 1985 with a coal fired thermal power station at Morupule operating at a capacity of 132 MWH. Prior to this period, most of Botswana’s electricity was imported from South Africa’s power utility, Eskom. In 2008 South Africa’s electricity demand started to exceed its supply, resulting in the South African government restricting power exports. As a result and to avert its own power shortages, the Government opted for alternative ways of sourcing electricity for the country; hence the plan to increase local generation of electricity at Morupule Power Station. The Morupule Power A plant of capacity 132 MWH was augmented with Morupule Power B which was to have a capacity of 600 MWH upon completion. Botswana and the entire Southern African region experienced massive power shortages because of the reduced electricity exports from South Africa

The BCL is set to lose a lion’s share of its stake in the troubled outfit Pula Steel after the mining company was controversially diluted by its partner in the subdiary Citizen Entrepreneurial Development Agency. This is after a resolution was passed for a capital call of P29m due Pula Steel from the shareholders. BCL, insiders, failed to inject its part of the required cash injection.

 
Already, Citizen Entrepreneurial Development Agency (CEDA) – the state owned development finance institute – has claimed 49 percent shareholding in the SelibePhikwe based steel manufacturing plant, making it the single largest shareholder, a position previously held by BCL, only that CEDA has rather became a major shareholder for close to nothing.  When the liquidation process commenced, CEDA held 5.5 percent, according to CEO Thabo Thamane, but after contributing P22 million in a capital call by the shareholders, the development finance institution’s stake shot up to 49 percent.

It emerges that P7 million was a collective contribution from the remaining two shareholders, save for BCL, whose stake in Pula Steel is now 22.3 percent for the Vermas and 5 percent for Wealth Generation. BCL stake has shrunk to 22.7 percent. BCL provisional liquidator Nigel Dixon-Warren, who is also the custodian of all BCL assets indicated that he was aware of a board meeting, where a capital call was made. However, he said that if the board of Pula Steel required a shareholders’ contribution, as a provisional liquidator he was unable to commit such funding. “The result, if the capital call had been made, would have resulted in BCL being diluted. However as at the date of the appointment of Judicial Manager, the capital call process had not been completed,” Dixon-Waren said.

 
When BCL Investments – an investment arm of BCL Limited co-founded Pula Steel with partners Citizen Entrepreneurial Development Agency (CEDA), MphoBalopi’s Wealth Generation and the Verma family, all it did was to single-handedly throw millions at Pula Steel, asking for nothing in return. Now the same BCL has lost its 43 percent shareholding, because it could not answera P29 million capital call.

 
In a normal business set-up, the understanding is that shareholders should as per their shareholding structure, contribute to the all costs in a business, fairly, and one that fails should give up equity.

 
Initially, BCL Limited started-off with a 50.5 percent equity in Pula Steel, and that was after all partners had signed a shareholders’ agreement.  Then, BCL had paid P20.2 million to acquire the 50.5 percent stake Pula Steel, becoming partner to Balopi’s company which owned 6.5 percent, CEDA owned 5.5 percent while the remaining stake was held by the Vermas – Ranvir, Deepak and Disha. Just after BCL acquired that stake, it then began pouring in money, and it seemed that only BCL was actually doing that.
Under Daniel Mahupela, then Managing Director (MD) and his then board chairman Dr. AkolangTombale, BCL paid for the construction of the Pula Steel Plant, after BCLpumped in approximately |P100 million.

BCL then paid for a media tour, where reporters were shown a plot, where the plant was tobe constructed.When BCL, parted with P100 in taxpayers’ money, Mahupela and his board chose not to demand any equity in exchange of their funding.  Around July 2015, approximately 10 months after ground breaking, Pula Steel, which was then headed by CEO RanvirVerma haddissipatedthe P100 million and needed additionalcash injections to proceed. BCL, became the rescuer once again, pumping in an additional P53 million. At the time a press conference was called, where The Business Weekly & Review asked Mahupela if BCL will be upping its stake in exchange for the funding, of which he said BCL will not.

 
BCL would only increase its stake from 50.5 percent to 65 percent in 2016, after it pumped in even more additional funding. However, BCL had spent over P150 million of the taxpayer’s money in Pula Steel single-handedly and had seen no need to benefit by increasing its shareholding or being provided with security, while other shareholders benefitted from the taxpayers’ money.

 
BCL is now down and out, and is undergoing liquidation. It held 65 percent in Pula Steel atthe time BCL Limited and its assets were placed under provisional liquidation. Pula Steel at the same time, which had been feeding from BCL was also broke and on care and maintenance. Shareholders met and a decision was taken to collectively fund Pula Steel to the tune of P29 million, because BCL could not heed that capital call – being insolvent –the remaining shareholders have benefitted from over P150 million injected by BCL, decided to dilute BCL shareholding.

 
The copper mining outfit is on the verge of losing its stake in the steel casting firm, even before the completion of the liquidation.

 
The BCL liquidation process has been paused to make way for the an interested buyer, Emirates Investment Group, who have been given a favor to do their own due diligence before giving an offer to acquire BCL, Nkomati Mine and all its assets and a cheap US300 million, 92 percent of which will pay the Norilsk Nickel for BCL’s commitment to buy half of Nkomati Mine is South Africa.

 
Asked what will happen to the BCL stake in Pula Steelwhen the Dubai based investors acquire BCL, Dixon-Warren said if the Dubai investors buy BCL, then all assets of BCL will go to them, including BCL’s shares in Pula Steel.

 
CEDA now calls the shots at BCL. Thamane confirmed that CEDA was also unhappy with management of Pula Steel and has since removed RanvirVerma and Deepak Verma, a father and son tag-team of CEO and CFO, who were believed to be the root cause of Pula Steel’s troubles. CEDA also roped in a judicial manager until a right executive management team is secured.

Thamane’s dominance could be felt in the mini-boardroom, where he sits facing the boardroom door, with his back against a giant window, designed to expose the activities of Gaborone’s Central Business District (CBD).  A sight to behold on the third floor of the CEDA executive offices in the heart of the CBD, where one overlooks engrossed taxi drivers, contractors perched dangerously mid-air, balanced on a crane, and of course the exuberant vendors, hassling for their cash. Thamane is not interested in all that hustle and bustle; he gets straight to business.

 
“Please sit on the side of the door and face that window, my boss hates looking behind his shoulder, when the door keeps on opening,” Anno Tshipa says, when she ushers this publication into the boardroom. She is Thamane’s Head of Marketing and Communications, one of the key executive managers, trusted by the CEO.  On his entrance, he oozes confidence, quick pacing, like a man in a rush.  He easily takes over, leaving no room for his spokesperson to formally introduce him. His authority, gives an impression that he is a doer, a go-getter. This is a man who took over CEDA captainship in January 2011, and after his five year contract, he managed to secure another five year contract by January last year, a sign that his masters want him to keep doing what he is doing and can actually trust him with around P300 million in subvention funds CEDA receives annually.

 
Thamane believes more could be done at CEDA to develop the lives of Batswana. He is of the view that while funding large scale business is good for the economy, those large businesses should be built from a micro level. A belief he put into practice shortly after he secured a new five year contract in 2016. Thamane immediately introduced a micro-finance product, and set aside a P20 million fund for the product. Dubbed ‘Mabogo Dinku’, the product allows micro-entrepreneurs to apply for loans of up to P150, 000 payable in three to 12 months to fund working capital and asset purchases. He says it is a project spear-headed by his Chief Operations Officer (COO), Andrew Madeswi, who enters the boardroom on cue, to join the conversation.

 
The purpose of Mabogo-Dinku is to provide Batswana with subsidized loans for various micro-enterprises to enable citizen participation in enterprise development. The product is issued through a group methodology of a minimum of five and maximum of 15 people. It has easy application procedures, no collateral required, shorter turnaround time, and flexible repayments according to the CEDA boss. He said it is a product geared to assist with poverty alleviation, financial inclusion, economic empowerment, job creation as well as women and youth Empowerment.

Government, says only 389 665 people are formerly employed in Botswana, however through the national accounts office, Statistics Botswana, only 19 percent of Botswana’s 2.2 million people are unemployed. Thamane says a capital investment loan of P20 000 could develop socio-economic lives, and these are the people who may one day grow into larger businesses. While Mabogo Dinku was launched towards the end of last year, its demand has been overwhelming, according to the CEDA boss.

 
In a short space of time, CEDA has already financed 214 people as a collective to the tune of P2.4 million. “More will be funded, because we have so far received lots of applications for Mabogo Dinku,” Madeswi chips in. The chief of operations said that before the process of funding, interested applicants are first trained for a period of 3 to 6 weeks before their applications can be processed and funds released. He advised that, a throng of applicants are currently undergoing training. Thamane further added that CEDA may need to increase the Mabogo Dinku fund, depending on the demand for funding.

 
What excites Madeswi the most in that the product is being utilized primarily by women, who are economically marginalized. To him, CEDA in this way is contributing to the empowerment of women in Botswana. Of the P2.4 million approved, Madeswi said that 88 percent of the money availed so far was used towards financing women.

 
Further, 35 percent of people who have been financed are youth, which Madeswi said will come a long way in addressing youth unemployment. A considerable portion of the 19 percent of unemployed Batswana are young people. Interestingly, in spite of the demographics and market  the rate of repayments on the micro-finance loans  has been pleasing, “We have a 112 percent collection rate, arrears are only at 3 percent,” he said.
The agency is not only doing well in its latest product according to Thamane but generally too, even where CEDA finances large scale enterprises, he said a 73 percent success rate has been maintained for the past five years. “This means that 73 percent of all businesses we financed are able to sustain themselves within the first three years, the most critical stage in any business,” added Thamane.

 
As at January 2017, CEDA had approved P420.6 million, on over 633 projects.
The agency as at January 2017 had received 1123 applications across all the branches (excluding Mabogo Dinku), meaning 490 were either rejected or applicants are still being considered.

 
“In percentage terms 56 percent of projects submitted are approved here in CEDA, against an approval rate of 24 percent for Banks and commercial entities,” Thamane noted.

 
Government in the last financial year gave CEDA a subvention of P280 million, the money which the agency was to use to fund entrepreneurs in 2016/17 financial year. Thamane is amused by the fact that CEDA, under his stewardship has managed to fund businesses to the tune of P420.6 million, which means that on top of the P280 million government grant, the agency independently raised P140 million.

 
“This is the money we make as collections on loan repayments,” Thamane posits. To him, CEDA was established as a development fund, of which profitability was not within its mandate. An important stance given the shift by government from other social safety net parastatals.

 
“However, our profits are judged by the socio-economic trail, which our financing leaves. The CEDA captain emphasises that it is CEDA which funded all Wimpy fast food outlets in Botswana as well as the likes of The Braai Place, which are entities that not only pay tax but also employ Batswana.

 
He has been with CEDA since 2003 and has progressed over time in different Management roles in the Operations Unit.

 
Amongst his various roles, Thamane was integral in the formation of the Young Farmers Fund in 2007 where he staffed and trained the team in the department, set up procedures and processes and subsequently appointed to head the Agribusiness sector in early 2009.

•    TK, BTO roll carpet in Berlin
•    Taps and phone lines cut at indebted Dept of Tourism
•     ‘Ministry living beyond means’
•    Dept of Wildlife favoured, claim

As the Minister of Environment, Natural Resources, Conservation and Tourism Tshekedi Khama and his brother the President Ian Khama enjoyed red carpet treatment at the recent ITB 2017 tourism fest, offices of his ministry went without water and phone connections due to unpaid bills. Department of Tourism office lines were cut off and water shut down after the ministry failed to settle bills with service providers.  Tshekedi Khama’s ministry paid P21.2 million for the right to partner in and displaying at the expensive tourism trade fair in Berlin(Internationale Tourismus-BörseBerlin) putting into question the ministry’s ability to manage its financial commitments and priorities.

 
President Ian Khama officiated at the ITB 2017, a global tourism indaba, a red carpet event, which attracted 39 tourism companies from Botswana. ITB 2017 attracted over 11 000 exhibitors in the tourism industry to share ideas and discuss the future of the industry.   Big league tourism companies in Botswana such as John Chase, Wilderness Safaris and Ker and Downey graced the event.

 
The ministry could not settle a P100 000 telephone bill for Department of Tourism, resulting in a nationwide disconnection of telephone services in the department, according to sources within the ministry.

 
INK Centre for Investigative Journalism established that district tourism offices had their telephone lines disconnected after accruing arrears in excess of P100 000. Further, the Water Utilities Corporation (WUC) and Botswana Post are said to have issued strongly worded letters to the department threatening to terminate their services if the department does not honour its obligation.  INK Centre could not establish the total amount owed to WUC and Botswana Post. By press time Botswana Telecommunication Corporations (BTCL) had not responded to questions sent to them.

 
Three sources within the ministry independently confirmed that the Department of Tourism is cash strapped because the ministry does not give it the necessary support.
“Morale is low at that Department… one day we will go without salaries,” an officer at the Department of Corporate Services said on grounds of anonymity, for fear of reprisals.
Another added that scores of desperate investors in the hospitality industry are left without services because the Department is not “functioning properly” referring to lack of telephone connectivity.

 
The third source who also did not want to be identified because of the sensitivity surrounding the matter disclosed that the departments are generally not treated equally, citing the Department of Wildlife and National Parks, which he disclosed had received the largest share of the budget but “fails to compensate farmers” to the tune of P12 million. On the other hand, he said, the Department of Tourism – which provides policy direction and licenses lodges and hotels – is key in the Ministry of Environment, Natural Resources, Conservation and Tourism. It collects over P30 million in levies, penalties and annual license fees from payments it charges lodges and campsites. At 12 percent, the tourism sector is the second largest contributor to the Gross Domestic Product.

 
INK Centre’s numerous attempts to call the Gaborone Tourism Office on its landline drew blanks as the line did not go through, including the direct line to the Director and his deputy. Four District Tourism Offices; in Maun, Ghanzi, Tsabong, and Kasane had their lines disconnected on Wednesday. The only landline that appeared to work was that of the District Tourism Office in Francistown, but an officer who picked up the phone admitted that they are in arrears and can only receive calls. “We cant call, ask them,” he said.
While it is not clear how the ministry raised the P21.2 million to sponsor the red carpet event, INK Centre can disclose that part of the money was controversially withdrawn from the Tourism Industry Levy Management Fund through BTO. The Fund is used to develop the hospitality industry but the withdrawal of P10 million to part-fund the Berlin extravagance has raised eyebrows in the ministry.

 
Publicly available information shows that the ministry spent about P633, 000 for the floor space at Hall 20 and stand construction as part of the strategy to market Botswana’s tourism products.  BTO also hosted a dinner event for the guests exceeding 11300 from 180 countries. It was the first time government invested such considerable amounts in hosting such an extravagant show outside the country. Permanent Secretary to the Ministry, Jimmy Opelo directed INK Centre to public relations office whose phone also rang unanswered.

 
Tshekedi Khama was defiant when contacted by this reporter yesterday, blaming the collapse in bill payment to a shortfall in the Ministry’s allocated annual budget.  He says this financial year the Ministry has been allocated P619m, a “mere P2m addition” to the last financial year’s allocation. He says financial problems at the ministry run deep. “About five weeks ago the Wildlife Department ran out of petrol because there was no money for petrol” he explained. Tshekedi says the ministry faces budgetary challenges due to climate change and increased tourist traffic, although he did not comment on the spending at the Berlin gathering.

 
Wasteful expenditure
Khama is no stranger to controversial spending. He has been at the centre of a scandal after purchasing a luxurious jet worth P50 million at the taxpayers’ expense, wrongfully claiming it was for anti-poaching missions – despite objections by an aviation expert who said anonymously that the aircraft was not designed for such a purpose.  Newspaper reports show that last year alone, BTO spent about P6 million in one of the biggest aviation shows in the country. He also controversially,facilitated the signature of BTO on a P17 million contract with a Dubai tourism firm and was later forced to apologize and cancel the deal.

Barclays Bank of Botswana provided positive gains to Botswana Insurance Fund Management’s (BIFM) local equities, picking up the shortfall in earnings from Choppies Holdings Limited and Sechaba Breweries Limited over the fourth quarter of 2016.
As at 31 December 2016, BIFM’s local equity components of the Balanced Prudent Fund reported a return of -1.71 percent against a benchmark return of -4.04 percent over the quarter, resulting in an outperformance of 2.03 percent.

 
The fund manager’s boss, Neo Bogatsu says the fund’s relative outperformance was driven by stock selection in the consumer and banking sectors. “Our underweight exposure to Choppies and Sechaba as well as our overweight exposure to Barclays Bank contributed positively to the fund’s relative performance.” During the last quarter of 2016, Choppies and Sechaba’s share prices declined by 31.43 percent and 8.47 percent respectively. The shares came under immense pressure subjected to pallid financial performances. Barclays share price appreciated by 3.70 percent, against the background of rosy financial results. It is currently the best performing bank on the Botswana Stock Exchange.

 
The appreciation buoyed BIFM Balanced Prudent Fund which returned 1. 21 percent outperforming the benchmark return of -0.50 percent by 1. 71 percent. “Our fund relative outperformance was driven by both asset allocation and stock selection”, states Bogatsu adding that “Stock selection was positive across all asset classes while there were marginal detraction on the asset allocation. Our overweight to offshore equities contributed positively as the asset class rallied over the quarter.”

 
The world equity allocation of the fund returned 3.87 percent compared to benchmark return of 3.73 percent in Pula terms, outperforming the benchmark return by 0.14 percent while the financial sector continued to contribute positively to the fund’s performance. The fund manager says focus remained in picking fundamentally strong companies over the quarter, “From a regional perspective, our overweight exposure continues to contribute positively to the fund performance.”

 
Local bond portion of the fund returned 1.32 percent, outperforming the benchmark return of 1.14 percent. The outperformance over the period was driven by stock selection in the corporate sector and the parastatal sector, according to the company. Global bond allocation of the fund returned -4.13 percent over the fourth quarter of 2016, outperforming the benchmark decline of 5.36 percent by 1.23 percent.

 
The CEO says they anticipate continued volatility driven by elections in European Monetary Union countries such as Germany, Holland and France which will test the bonds of the union given anti-European Union sentiments expressed by the far right populists.
Globally, given the growing protectionism rhetoric, they worry, will likely affect global trade and be reflationary. Following a strong bull market post the global financial crisis, global equities are believed to no longer offer wholesale value. Some sectors of the market are overly expensive, whilst others remain cheap. BIFM says they continue to see selective opportunities in the developed markets and emerging markets from a bottom up perspective, “On the local holdings, we continue to see more in those counters that are expanding their operations regionally across the various sectors.”

 
Meanwhile, back home the fund manager recently introduced a new product targeting retail investors who seek to invest on domestic counter. Through this product, BIFM on behalf of their client, says it is appetized by counters with high regional expansion and investments. In the two months from the official launch, BIFM is already invested in Letshego Holdings, Botswana Insurance Holdings, Sefalana and the First National Bank of Botswana. The initiative comes on the background of high demand despite lower than expected uptake, influenced by limited education, Bogatsu laments. Retail investors are deemed to be highly cautious, wary of once off losses, so says market capitalist.

With staggering growth in South Africa at the height of towering competition and economic headwinds, one can only say, ‘the struggle continues’ for Choppies Enterprises Limited. Staff Writer KITSO DICKSON reports.

There is a general consensus by pundits that investors of the dual-retailer Choppies Holding Limited are at liberty to fuss over return on investments in neighboring South Africa (SA). They say it’s a common concern, more so when the fast moving consumer goods outlet has been digging its teeth in the overly competitive market of Africa’s superpower.

 
The company’s presence in South Africa dates back 2008 after breaking through in Zeerust in the North West province. Almost a decade down the line, the P3.2 billion value retailer operates 68 stores (as at December 31) nestled across Southern Africa’s landscape. Choppies, had never made profits in SA until the latter part of 2016 when the business achieved an Earnings before interest, tax, depreciation and amortization (EBITDA) profit, as outlined in the group financial results for the six months ended 31 December 2016, however profits after tax (PAT) are in the negative, which means that eventually, the company made a loss in SA.

 
The achievement in EBITDA is perhaps as a consequence of sales which the result statement says grew strongly in last quarter of calendar year 2016, thanks to “change in senior management and executive team”.

 
Now the retailer expects the continuation of this trend will result in South Africa breaking even, a point at which cost or expenses and revenue are equal.  An upturn from the year ended June 2016 in which South Africa had over 64 stores that suffered P68 million in losses.

 
The Business Weekly and Review this week asked Chief Executive officer (CEO) and largest single shareholder Ramachandran Ottapathu when he expected significant profits after penetrating through the Africa’s second biggest economy. He responded “In SA market, our investment is long term and we were waiting to achieve scale and once we got the scale it will be profitable straight away”. Seeking to allay fears of competition by investors, Ottapathu says ‘SA got big 4 players” when responding to media questions from this publication.

 
Compared with the rest of Africa, South Africa’s retail market is already considered a juggernaut with Johannesburg Stock Exchange (JSE) listed Pick n Pay Holdings, Spar, Shoprite, Massmart almost at par with international retail brands.

 
Choppies is substantially smaller than the comparable SA companies, inevitably generating less cash, Andrew Cuff head of Fundamental Research at Consilium Capital South Africa (Pty) Ltd said in an engagement with this publication, “In food retail, scale is generally a benefit and the SA companies benefit from their scale to show a better return on assets, return on equity and, on average, a better net profit margin than Choppies.”
Pick n Pay Holdings Ltd, with Mass Grocery Retail (MGR) companies in Africa enjoy in excess 30 percent of the market pie on SA soil, according to SA researches. The group operates more than 794 outlets made up of hypermarkets, supermarkets and family stores. Shoprite Holdings Ltd also one of Africa’s largest food retailers, also occupying market share of 30 percent in MGR.

Some of its store formats and retail brands include Shoprite supermarkets, Checkers supermarkets, Usave stores, MediRite pharmacy, House & Home and the OK Franchise division. Spar Group Ltd, is the third largest MGR by market share, owning market turf of approximately 26 percent. It operates six distribution centers, supplies goods and services to approximately 800 stores in the country. 9 Stores that are under the Spar group include; Build It, Pharmacy at Spar, Tops, Kwikspar and Superspar. Woolworths Holdings Ltd is the fourth largest MGR, with 11 percent market share. Woolworths owns 295 stores and has 145 franchised stores and offers its own product brand of clothing, food, home and beauty. Massmart consists of nine wholesale & retail chains with 265 stores in South Africa and 13 in other countries, has about 1 percent market share of the MGR. Brands under the Massmart umbrella include, amongst others Game, Dion, Makro, Builders Warehouse, Dion Wired, Builders Express, Builders Trade Depot, Jumbo Cash and Carry and Cambridge Food.

 
Moemedi Mosele an analyst at Motswedi Securities intimates that big players undercut to protect their market share. Competition would obviously be much higher than locally, where Choppies have bragging rights, he argues, “In SA they started in a small town and as they expand to urban areas there will be huge competition.”

 
Choppies introduced its footprint in South Africa by opening a store in Zeerust, North West provence. Last year significant expansion saw the acquisition of the 21 profitable Jwayelani stores in KwaZulu-Natal and Eastern Cape supported by a Durban-based distribution centre. As in all industries, Tshegofatso Tlhong, an Investment Analyst at Afena Capital says, competition is something that all businesses must contend with and Choppies is no exception, “How they compete to ensure that they remain competitive is what will make the difference going forward.” “Previously, Choppies was also concentrated in mining areas of South Africa hence the pull back in performance that we saw, when the mining sector experienced challenges.”

The stores are located in once hard hit ‘mining towns’, which have seen significant declines in footfall due to falling levels of employment. She also points to the previous strikes in the platinum belt in South Africa which coupled with downturn in commodity prices had an impact on disposable income of residents within that area, thus impacting Choppies performance. “It is common knowledge that globally, regionally and within Botswana, economic growth has been anaemic and that has impacted the performance of businesses.”

Choppies Holding Limited stores in Zimbabwe snapped back in the last half of 2016 amidst the furor over shortage of cash. For the six month ended 31 December 2016, profits increased substantially on the backdrop of a 19 percent jump in revenue.

 
In Zimbabwe, the company saw an Earnings Before Depreciation, Interest, Taxes and Amortization (EBITDA) growth of 114 percent over the same period for the previous year. The Retailer’s Group Chief Executive Officer (CEO) Ramachandran Ottapathu says “Zimbabwe is already profitable” chiefly because “we improved our margins”.

 
As at 31 December 2016, Choppies retained 31 stores in Zimbabwe, 10 of which were added the same year the embattled country introduced the controversial bond notes, now dubbed ‘bollars’ to ease out the cash crisis prevailing in the economy. Between 2015 and 2016 profits were estimated to have fallen from P8.2 million to P6.8 million. Shortage of cash in circulation, which at one point was characterized by rationing, caused customer purchases per transaction to drop markedly. Most precisely, for Choppies, the period of February to May 2016 was marked by challenging conditions that saw both basket size and footfall reduce. Political unrests were also a bullish factor.

When the situation stabilised, Choppies says trade returned to normal levels on the back of the introduction of the ‘bollar’. The impact of the latter is yet to be realized. Ottapathu says “Bond notes are treated like other notes, it’s not affecting us”.

 
In Zambia, Kenya and Tanzania the group says embryonic operations are gaining momentum with the opening of new stores which are progressing well. But these regions are not profitable and they contributed 20 percent to revenue, according to Ottapathu, affectionately known as Ram. Botswana contributed 49 percent to Group revenues, “Trading conditions remained difficult due to the subdued economic conditions in the country. Profits in Botswana were materially impacted by the strengthening of the South African Rand against the Botswana Pula that resulted in a foreign exchange transaction gain lower than expected compared to 31 Dec 2015.”

 
Overall Group Revenue was up by 34 percent to P 4.7 billion. Going forward, Tshegofatso Tlhong, an Investment Analyst at Afena Capital argues that the proportion contributed by Botswana will be determined by how fast the other operations ramp up and the level of investment made in these geographies. “Botswana is the largest operation therefore it is only normal to see that operation contributing the bulk of revenues to the business.”
Choppies owns 119 stores outside Botswana which are in the red.  It appears Choppies generates money through Botswana the cash cow, which is also running dry, to fund expansions which are almost worthless in terms of return, “Expansion activities in Zambia, Kenya, Zimbabwe and South Africa have dragged down performance over the past year,” Andrew Cuff Head of Fundamental Research at Consilium Capital South Africa says. “With the group’s expansion into Mozambique and Tanzania we think it will continue to show depressed earnings related to these expansion activities.” By December 31 2016 Choppies had established 1 store in Tanzania.

 
The Business Weekly and Review asked the CEO if they do diligence before penetrating the market, and when operations are usually expected to be profitable after setting foot. While he wasn’t specific on details he says the group collects retail/economic statistics and make informed decision on the markets, “We look at the retail penetration in each country and decide to choose a place. We do have our threshold for each country, based on this we move.”

Ian Kirby’s accent, stuck between the distance shores of the proverbial English Lord of the Manor and Afrikaner intonations prevalent among those Africans of European origin permeates the nuanced corridors of the judiciary, causing reverberations across the social, economic and political spheres with the impact of his judgements.

 
Soft spoken, his judgements have loud effects, he speaks slowly, almost monotone. But a man of Kirby’s profile needs not speak either fast or loudly. Court of Appeal President Kirby has been close to the ruling family for almost half a century, and his sheer influence is coming into sharp relief as his bosom friend and strategic partner comes towards the twilight of his presidency. Khama and Kirby have a symbiotic relationship, the former exercises his presidential powers to protect the interests of the latter and the latter in exchange uses his judicial powers to protect and help project the presidential powers of the former.

Throughout the history of this relationship one can see example upon example where Ian made good on Ian’s interests. The man from South Rhodesia does have judgments that matter. Take the LGBT one. But Kirby’s critics say seldom does Kirby make judgments in cases that really matter in the realm of legal political philosophy. It is said what Kirby does is scratch the soft fur of the elite expertly, just right, hard enough to give that pleasurable pain, but never so hard as to hurt.

 
This week Defence Minister Kgathi wrestled into parliament a small but humongous document called the Court of Appeal (Amendment) Bill 2017. There are various schools of thought as to what Kgathi is attempting to achieve. There are those who argue that Kgathi is attempting to align laws with the recent judgment by Justice Abednico Tafa. The other school of thought is that he is merely trying to outmanoeuvre the judiciary, by giving legitimacy to the Executive’s move to regain control of the judiciary. The more extreme position holds that Kgathi is but an instrument, a willing accomplice, in the execution of something more sinister, the attempt by President Khama to protect a man seen as one of his closest allies Kirby, by increasing the retirement age of judges so that the aging Kirby can stay in his position.

 
The utility of Kirby lies in his superior position in the judicial structure and his willingness to assert the primacy of the executive generally, the presidency specifically when it is challenged in a manner that to pass judgement otherwise would undermine executive authority; as exemplified by such major cases from the Motswaledi case to the Public Strike of 2011 to the Public Sector Bargaining Council.

 
Seen through this prism then the appointment of Kirby to Judge President was a stroke of genius from the military man. To understand the strategic importance of Kirby one has to look at the most important cases he has had to preside over and how his judgments ultimately worked for Khama. But of course before you get to that, you have to explore the historical relationship between both Ians, after all Khama’s leadership is based on loyalty to those with whom he has a historical personal relationship. Media reports have maintained that Kirby is a friend of Khama’s and this has never been denied by either. In fact Kirby’s involvement with the Khama family comes from way back.

 
In the 1980s, Kirby was a senior partner in Kirby, Helfer and Khama law firm, alongside Doreen Khama nee Mmusi. Doreen was married to the late Mphoeng Khama, the youngest son of Tshekedi Khama, an uncle to Ian Khama’s father, Seretse Khama. Thus the late Mphoeng was Seretse’s cousin.

 
The law firm was engaged in major work representing “the who is who” of the post-colonial Botswana.  The law firm represented founding president and Ian Khama’s father Seretse Khama. This became the foundation for future work with major businesses and individuals in the modern era.  Personally Ian Khama and Kirby share similar passions, among them love for wildlife.   Kirby owns Mokolodi. Both Kirby and Ian Khama are on the board of trustees of Mokolodi Nature Reserve. The President is a patron, while Kirby is deputy chairperson of the board.

 
In 2010 Khama sought to localise the Court of Appeal. The strategic position in the highest court in the land could not be overestimated. The Court of Appeal had been in existence since 1966, as established by the Constitution but Khama sought something more formal, rather than ad hoc Court, and answered the growing calls for localisation with a crucial citizen appointment, the Constitution and the Court of Appeal Act established a powerful institution and at its head Khama installed Kirby.

 
Being president of the Court of Appeal meant Kirby would be the most powerful man in the judiciary alongside the Chief Justice (CJ). Where the CJ would be senior in administrative authority, Kirby would be senior where it matters, when it comes to the cases coming through from down below. Kirby as Court of Appeal President could insert himself on any case, at the final stages of any judicial process where his say would be final. Both the Chief Justice and Court of Appeal President are appointed by the President of the Republic. Historically the constitution puts the Chief Justice as the head of the judiciary.

The Chief Justice convenes the body that proposes the appointment of judges to the President, the Judicial Services Commission. As can be seen in the recent cases of the procedure for the appointment and suspension of judges, the process of their appointment of judges is hardly opaque. In practice, if a case goes through the lower courts and does not find a proper solution or closure, Kirby ultimately has the final say. At the time when Khama appointed Kirby to the highest position in the judicial structure there were judges in the judiciary such as Dibotelo who were senior to Kirby but Khama overlooked them.

 
Kirby is the only Judicial Officer to ever jump from Executive (Deputy AG) to judiciary (High Court), to Executive (AG) and then back to Judiciary as a judge of Appeal and becoming the President of the Court of Appeal in 2010. Kirby was deputy Attorney General under then AG Phandu Skelemani. He was appointed to the High Court as a judge, pulled back from his High Court position to become Attorney General at a time when The Attorney Generals Chambers was in need of drastic reformation. He returned to judiciary as a judge before being promoted to his current position in 2010
The movement between the office of the Attorney General and the High Court and back again drew criticism at the time from the legal fraternity who queried the overlap between the executive and the judiciary, likening it to a cross wire between the two organs, a transgression of the hallowed separation of powers.

 
Kirby’s ascension to the bench was not without its own drama. He is said to have negotiated special terms for himself, which incensed other members of the judiciary. For example, Kirby according to his contract, could not be transferred from Lobatse unlike other High Court judges. Furthermore his conditions of service were superior. Other high court judges took exception to Kirby’s special terms and sought to have their own conditions adjusted. Faced with a court case, the executive decided to make out-of-court settlements with Unity Dow and Dibotelo.

 
Tafa in his judgement last week stated that contractual issues between Judges and the Executive could be perceived as “benefits” which would undermine public confidence in the judiciary.  This does not augur well for the independence of the court from executive influence.

 
Perhaps the most important case in the entire Khama presidency would have to be the Motswaledi saga. When the case reached the High Court, a panel of three judges among them Kirby was appointed to hear the case after another High Court Justice Key Dingake was mysteriously removed from hearing the case. Dingake had been allocated the case per the court system. Motswaledi lawyers moved to have Kirby recuse himself pointing to the personal relationship between Kirby and Khama. Kirby refused.  The judgment by Kirby with Julian Nganunu and Isaac Lesetedi concluded that Motswaledi could not challenge Khama’s decision making within the Botswana Democratic Party, arguing that Khama as president enjoyed blanket immunity from any legal challenge.

“In summary therefore, the constitution has granted to a sitting President of the Republic of Botswana immunity against criminal prosecution for all activities done both in his private and official capacities. The same, provision, in the second part also grants him total immunity against civil suits in his private capacity. Such immunity is total and not relative. It is granted in the form of prohibition-in a mandatory fashion-not to allow prosecution and suits covered by immunity” they concluded in a case that led ultimately to the departure of a substantial portion of the ruling party to found the opposition Botswana Movement for Democracy.

 
Kirby has heard and influenced the hearing of a number of cases that have had major implications for Khama. Kirby’s legal philosophy on matters that seek to shake the power structure of the ruling elite seems to be one that enforces and promotes a lack of separation of power. That the ruling elite are entitled to exercise power and that a challenge to such power is synonymous with disturbing the very foundation of the society.

 
Legal minds have criticized this philosophy as geared to protect and project Executive power as represented by the presidency. Kirby’s interpretation of the constitution places the primacy of the executive at the centre of national existence. In his latest speech during the opening of the legal year Kirby castigated those who sought to challenge the power of the Executive, including the trade unions and opposition parties.

Kirby’s speech was widely criticized for what members of the public saw as an attempt to protect the Executive, and assert its authority over both the judiciary and Parliament. “Justice Kirby is wrong to say in Botswana there is no separation of power as if to imply that in South Africa the Constitution has a provision labelled separation of power.  Separation of power is a common law principle distilled from the fact that there are three [3] branches of government being the Judiciary, Legislature and Executive.  In Botswana like in America or South Africa, there is Judiciary, Legislature and Executive.  In South Africa and Botswana, unlike in America, Ministers are members of the National Assembly” argued BOFEPUSU Secretary General Ketlhalefile Motshegwa in an opinion published in the daily Mmegi.

 
The judgment by Tafa puts further relief the special position Kirby occupies. According to the constitution, and indeed the legal position of the applicants in the case, the Manual Workers Union, is that a judge on a fixed contract cannot be reappointed. Tafa upheld this position as well others with consequences for both Khama and Kirby.  Tafa declared that the appointment of Isaac Lesetedi, Monametsi Gaongalelwe, John Foxcroft, John Cameron, Arthur Hamilton and Craig Howie were invalid in that the President had no right to reappoint them to the bench, “The applicants have locus standi to bring this application before court.

The constitution does not permit the President to exercise discretion as to whether or not to reappoint a Justice of Appeal,” he said. The judgement follows a challenge by the National Amalgamated Local and Central Government and Parastatal Workers’ Union (NALCGPWU) against President Ian Khama on his appointment of the CoA Judges.  The Union argued that no Judge should be reappointed on a fixed term contract after the expiry of the first. The Union had taken Khama to court challenging the appointment of the initially seven CoA Judges.  At the time, the now late Elijah Legwaila was one of the appointees before he resigned from the bench.

 
Additionally the Union was also challenging the constitutional validity of Section 4 of the CoA Act in so far as it delegates, to the President, Parliament’s constitutional powers to determine the number of Justices. Tafa explained that the appointment of the Judges by the Executive was unconstitutional, maintaining that Section 4 of the CoA Act was constitutionally invalid due to the abrogation of parliament’s responsibility to set the number of judges. Tafa therefore struck down section 4 of the Court of Appeal Act. He said he was in agreement with the manual workers union’s contention that a Judicial independence and impartiality were deeply held values entrenched in the Constitution. Khama urgently sought to stay the Order issued as a result of the judgment, but Tafa turned that down as well.

 
As a result of the Judgement, Minister of Defence Justice and Security on Friday gazetted a draft of the Court of Appeal (Amendment) Bill, 2017 which he said was tailored to specifically address Tafa’s judgment and act in compliance with it. The problem is that Kgathi’s Bill attempts to do more than just comply with the Order, and in a way serves undermine the impact of Tafa’s judgment rather than give it effect. Kgathi wants to change the retirement age of judges in order to avoid the prohibited renewal of contracts.  Kgathi offers no rationale for this new move to increase the retirement age, leaving those armed with a historical context to read through his decision-making.

Tafa’s judgment has the impact of precluding Kirby from ever getting another contract from Khama, both from the point of ruling out renewal of contract and from an age limitation point of view. Only the change of retirement age would enable Khama to save Kirby.

 
This Wednesday afternoon the leader of opposition Duma Boko gathered a group of lawyers to brief opposition MPs on the implications of the Tafa judgment and consequently, Kgathi’s proposed Bill. Lawyers Tshiamo Rantao, Mboki Chilisa and Osego Garebamono raised concerns about the Bill, but even in his absence Kirby was present. To Boko it is clear what this is about. “This is for Kirby” opined Boko. The inadvertent genius of Tafa’s judgment is that it provides a special problem for both Khama and Kirby in a way neither Ian can assist his namesake.