Malebogo Kote Manager Investment Promotion Kebaswele Business Analyst
Malebogo Kote : Manager – Investment Promotion Kebaswele – Business Analyst 14 th November 2017
Botswana : at a glance Population 2, 2 Million Borders S. A, Zimbabwe, Namibia, Zambia Land 582 000 km² GDP (4. 3% 2016) BWP 170 billion (2016) USD 15. 6 billion Real GDP per Capita BWP 76, 446 (2016) USD 7018 Inflation (2. 8% Av 2016), 3. 5 % June 2017 Interest Rates Bank rate 5. 5%: Prime rate 7. 5% 2017 2 Source: Statistics Botswana
Principal import commodity groups 2016 (BWP Millions) • • • Import Bill in 2016 reached BWP 66. 84 billion Diamond constituted 28% of total imported products (BWP 18. 9 bn) Followed by Machinery & Electrical equipment – 14% (BWP 9. 2 bn) Fuel– 13% (BWP 8. 6 bn) Food beverages & tobacco – 11% (BWP 7. 5 bn) etc Chemical & Rubber products-10% (BWP 6. 6 bn) Vehicles & Textiles & Transport Footwear Equipment 3% 8% Salt Ores & Related Products 2% Wood & Paper Other Products Goods 2% 3% Chemicals & Rubber Products 10% Diamonds 28% Metals & Metal Products 5% Machinery & Electrical Furniture Equipment 14% 1% Fuel 13% Food Beverages & Tobacco 11% Source: Statistics Botswana
Botswana's Global Glance Least corrupt country in Africa; ranks 35 out of 176 in the world in 2017 Is the 3 rd most profitable country in the world (BPI 2015) Botswana’s competitiveness rises for second consecutive year to 64 th out of 138 and is the fourth most competitive economy in Africa. With strong macroeconomic environment in 2017 Africa’s second most peaceful country; ranks 28 out of 163 in 2016 Africa’s second most free economy; ranks 28 out of 180 in the world in 2017, with regulatory frameworks that encourages growth
Pertinent business environment strengths • • • Zero tolerance to corruption – Transparency International Ranking Sound legal system and adherence to the rule of law Political stability Sustained periods of economic growth, and sound macro-economic discipline Labour market stability, predictable, with an 87. 3% (stastics Botswana) literacy rate Highest investment grade sovereign credit rating in Africa, • • • A- by Standard & Poor's and A 2 by Moody’s No foreign exchange controls; full remittances & repatriation of profits and dividends No restrictions on business ownership; can be 100% foreign owned
Competitive tax framework; 22% vs 23. 5% global average 15% Corporate Tax Manufacturing, IFSC, BIH 22% Corporate Tax Non incentivised rate 25% Max Income Tax 12% VAT Tax holiday 200% Tax rebate Personal income National Rate 0 to 10 year tax break Training costs Duty exemption on importation of plant & machinery No Foreign Ownership Restrictions Expanding Double Taxation Treaty Network Facilitation of Access to Land
Key sector opportunities Commercialization of the agriculture & Agribusiness sector • Leather • Beef • Primary Production • Agro Processing • Feeds • Ostrich Farming Mining & Resource Beneficiation Manufacturing; import bill substitution • Soda Ash • Coal • Diamonds • Base Metals • High Import Bill • Automotive Components • General manufacturing; almost all products consumed Services • ICT • Financial & business • BPO Premised on accelerating economic diversification
Key Sector Opportunities Infrastructure & Property Development • National Infrastructure; roads, bridges, water pipelines • Residential & Commercial Property Development Energy • Solar • Coal-bed methane (CBM) • Biogas and biodiesel • Coal to liquids Transport and Logistics § o o o § Rail Projects: Trans Kalahari Railway Mosetse – Kazungula Botswana – Mozambique Aviation Tourism & Hospitality • Hotels & Lodges • Tented Camps • Air Charter Services • Medical Tourism Premised on accelerating economic diversification
Financial & Business Services IFSC Framework (Private Equity funds, Regional Banking Groups, Head Office, Reinsurance, BPO) • 15% corporate tax, Zero Rating for VAT, • Exemption from Withholding Tax(WHT) when distributing to Non Residents (RSA-20%) • Exemption from Capital Gains Tax (CGT) on assert disposal • Up to 15% tax credit for taxes suffered in jurisdictions where no DTA is in place, • 200% tax rebate for training costs, ICT (7000 km of competitive cost fibre network at basements of most building is urban and town centres) • • Services & Applications Providers Content Services providers Board Casting Services Mobile Money BPO/Contact Center) - Conducive environment under IFSC framework • • fibre network at competitive cost, literate workforce & neutral accent high employment (labour intensive), high service standards,
Special Economic Zones in Botswana • • Primary aim of SEZs (Incentives) will overcome barriers to trade, investment & the attraction of FDI Address (ie) restrictive policies, excessive bureaucracy and limited access to serviced land o Create a more competitive or conducive business environment for the attraction investors o Increase and diversify our export, increase our foreign earnings o Create substantial employment The new benefits/incentives will lie specifically in: • Creation of competitive, investor friendly business environment to attract both domestic & foreign investors • Fast tracking of all authorizations to start & operate a business within the zone (achieve business efficiencies): - • (Company formation, licensing & permitting, incl. work & Res. permits) Provide simplified/ streamlined regulatory compliance procedures – require minimum documentation & quality SEZ infrastructure • MFG industries. Business Services, Agri-Business/Agro-Processing, Energy, Minerals/Resource Beneficiation, Mining Services & Logistic
SEZs Locations and Focus
Market Access § Southern African Customs Union (SACU) • Duty free and quota free market access - 61 million consumers (Botswana, South Africa, Namibia, Lesotho and Swaziland) § Southern African Development Community (SADC) Trade Protocol • Preferential market access to more than 293 million consumers in the SADC region § African Growth and Opportunity Act (AGOA) • Duty free and quota free market access to the USA § Economic Partnership Agreement between SADC and the European Union (EU) • Duty free and quota free market access to the European Union
BITC investor value added services § Business linkages / facilitate engagements / company visits § One-Stop-Shop; business facilitation services • Factory space & land allocation • Work & residence permits, business visas • Company registration & other government authorizations • Incentives; IFSC, manufacturing tax holidays (DAO) • Tax certification § Aftercare services; monitoring, renewals, expansions etc.
BOTSWANA’S READINESS TO SHIFT TO AN ENERGY EFFICIENT COUNTRY • Relatively good infrastructure & familiarity with technology &Stability and good governance • Shift in focus to include green technology & Recent EOI released for 100 MW interest • Rural areas still not connected to the grid & Public facility electrification is a focus • Plans to increase electricity tariffs to become more cost reflective of generation • Private sector participation expected to rise. Target 15% emission reduction by 2030 driving focus on renewable
STATUS QUO OF THE ENERGY SUPPLY CHAIN • The current national demand for power is 681 MW with an installed generating capacity of 892 MW, of which 132 MW is produced by Morupule A (coal power plant). • The current available capacity is estimated at 460 MW. • Botswana Power Corporation (BPC) has installed a 1. 3 MW grid connected PV power plant at Phakalane, Gaborone with the aid of the Japanese government. • There was a recent EOI to build 2 x 50 MW solar power plants
STATUS QUO OF THE ENERGY SUPPLY CHAIN
INVESTMENT OPPORTUNITIES RENEWABLE ENERGY VALUE CHAIN Value addition and investment opportunities exist in each step of the value chain. The economic potential of each step depends on the development status of the solar energy sector PROJECT RREALIZATION SUPPORTING PROCESSES Project Development Policy Making Manufacturing Financial Services Installation Education Grid Connection R & D O & M Consulting Recons /Rec
INVESTMENT OPPORTUNITIES RENEWABLE ENERGY SECTOR SMALL SOLAR SYSTEMS; including PV, CSP, Solar heating/cooling installations. Manufacturing or the assembly of components in Botswana to supply the SADC region. Installation can be done by local companies LARGE SOLAR SYSTEMS: offer varying opportunities for local value creation with details depending more strongly on the state of industry development. PROJECT DEVELOPMET PROCESSES: 1 – Project Contracting and prior studies (technical reliability, EIA, economic and feasibility studies). 2 – Engineering, site management, safety, health and quality systems. MANUFACTURING OR ASSEMBLY OF COMPONENTS FOR SOLAR PLANTS : For CPS/Solar plants the following components are needed; - SUPPORT FRAMES, TRACKERS, MIRRORS, TUBES, HEAT TRANSFER FLUID OIL - CONVENTIONAL PLANT COMPONENTS, STORAGE BATTERIES (CHLORIDE EXIDE) - SOLAR PANELS , SMART METERS 1 - POWER CONVERTERS , ENERGY EFFICIENCY PROJECTS (SMART BUILDINGS)
INVESTMENT OPPORTUNITIES RENEWABLE ENERGY SECTOR INSTALLATIONS : Household size PV and solar thermal systems can be installed by skilled local personal The value creation does not require highly advanced solar energy industry. Local companies have the capacity to carry out work intensive infrastructure work for the civil engineering work. GRID CONNECTION: The grid connection of CSP plants require the building of new electrical infrastructure such as power lines, substations. OPERATION AND MAINTANANCE: Jobs can be created during the lifetime of a plant SUPPORTING PROCESSES OF THE VALUE CHAIN Policy frameworks conditions prepare the ground for all renewable energy activities crucially influence the success of solar energy deployment and thus the potential for economic value creation. In the fields of education, added value follows from increased knowledge regarding the renewable energy sector. A well functioning financial market can work in conjunction with international DFI’s to create attractive investment opportunities.
IPP PROJECT SUMMARY • • • Off grid system solutions: Solar Home Systems -200 Wp; Solar Water Heaters -200 liters; Solar Water Pumping -150 m Total head; efficient wood stoves-2 plates To establish a management and support structure with many remote cooperation’s to lease solar power lighting and sealing phone charging units for offgrid rural communities. Life Support Container- Water Treatment and photovoltaic panels in container. Solar Systems for street lighting for Gaborone – Identification of companies interested to invest in a local production line budget for 2017 of the capital city- 1. 5 mill USD (15 mill BWP) Build, Own, Operate and Transfer a 1 MV Solar PV Plant Solar Testing - Building a solar PV panels testing and research laboratory for the campus of the Botswana International University of Science and Technology (BIUST) in Palapye Gaborone Transfer Station & Recycling Centre- Identify company that could provide an integrated solution in recycling and waste management. Synchrona: Technologies to produce waste to energy for a plant that will intake 430 tons per day to produce 15 MW of power Biogas- Identification of technologies and services from Agrowaste and Chicken and Cow Manure sources - UNDP GEF project that will benefit municipalities of Botswana (Gaborone and Kgtleng) Recycling- Tyre Recyling Plant
IPP PROJECTS – DEPT OF ENERGY • • The Department of Energy intends to establish a Joint Venture (“JV”) to roll-out Off-Grid Solutions (SHS, Solar water Heaters and Solar Water Pumping) involving both Government and the private sector while implementation of the mini-grids will be done through Independent Power Producers (IPPs). The total nominal production capacity is 200 W The roll-out of the Off-Grid solutions will make a significant contribution towards the set target in the Action Agenda. This is the approach that was recommended in the off-grid renewable energy strategy concluded in December 2016 funded by the World Bank. A feasibility study has been carries The JV approach is likely to be three legged approach with a finance vehicle, central services using the expertise of an established off-grid player, and local network able to service the local operations of the JV. The company seeks a JV partner that can provide; – Technical assistance – Management expertise – Technology transfer – Joint R & D – Training and capacity building Investment Level: 80 Million Euros Employment Level: TBC
IPP PROJECTS Synchrona Waste is a South African arm of an international consortium set up to own, operate and maintain waste to energy plants throughout the African continent. The company intends to set up a waste to energy plant that will intake 430 tons per day. Production: 15 MW of power through a partnership with the Katleng District Council. Investment Level: 15 Million Euros Employment : 50 operational , 250 construction , 200 -500 entrepreneurial Technology (Internationally patented) • Waste to energy (Incineration) • In feed systems • Recycling • Water purification Engineering • Design Engineering • Thermo Dynamics Engineering • Chemical Engineering
IPP PROJECTS Sotravic Ltée aims to propose a integrated waste management facility for Gaborone that will intake 50 tons of waste per year. This waste management facility will require the implementation of a suit of technologies to achieve a clean and green waste management system for the City of Gaborone which is capable of receiving and treating all municipal solid waste generated in the City and support inclusive growth. Investment Level : 4 million Euros Employment : 200 Construction, 80 -100 – Operational Production • 1 MW power plant Technology • Biological processes use the action of micro-organisms on the organic fraction of waste in order to derive useful outputs. A high proportion of waste in Gaborone is organic (nearly 70%). Anaerobic digestion (AD) occurs through the initial hydrolysis of the fermenticible organic fraction of solid waste followed by its acidification which converts organic compounds into fatty acids. • Methane produced by the anaerobic decomposition of the organic fraction waste in a bio-reactor, as per the same processes as in anaerobic digesters, can thus be extracted from the waste mass and used to power generators. • The company is proposing pyrolysis-gasification as treatment method for that part of the waste stream which has the highest calorific value, i. e. plastics with paper and cardboard.
IPP PROJECTS BUIST University intends to establish a 1 MW solar PV plant alongside a testing laboratory on the BUIST campus. The plant is to supply power to the BUIST campus, labs, research centers workshop and student accommodation. Any surplus power will be directed in to the regional electric grid. The project will directly reduce Botswana’s energy related CO 2 emissions by substituting coal-generated electricity with PV. • The plant will enhance Research and Innovation in national niche areas such as Energy and Green Technology which are embedded in the Strategic Plan of the University • A cluster of academics from different disciplines (i. e. Energy, Electrical Engineering, Materials Science & Engineering, Mechanical, Physics and, Control & Instrumentation) units will work collaboratively with plant owners and operators. Investment Level: TBC, Feasibility study is ongoing Employment Level: TBC The university seeks a JV partner that can provide; • Technical assistance both the PV solar plant and the testing laboratory • Equipment purchase • Joint R & D
IPP PROJECTS Impulse Energy – Life Support Container The Life support is an off grid concept that provides rural communities with electricity , clean water waster and wifi internet connectivity in a shipping container. The normal power generation capacity is 8 k. W. The company intends to assemble the Life Support System in Botswana, Gaborone to supply the SADC region. The company is looking for technical assistance and equipment suppliers; Investment Level: 330, 000 Euros per unit; total of 1. 14 Million Euros for 10 containers Employment Level: 20 -50 Technology Needed: • Equipment purchase • Storage batteries • Solar Panels
IPP PROJECTS Micyron intends to establish a tyre recycling plant. The company will provide tyre recycling services, producing crumb rubber, steel and nylon/fibre. Our raw material (worn out tyres) is readily available at a very low cost and our market for these looks into neighbouring countries, mines, waste dumping areas and homesteads. Employment Level : (15) or more workers will be employed in this plant. Investment Level: 1. 5 Euros The company seeks a technical partner that can provide; • A turn key plant for the tyre recycling • JV partnership • Training • Funding
IPP PROJECTS Project Empower To establish a management and support structure with many remote cooperation's to lease solar power lighting and cell phone charging units for off grid rural communities. The business model will roll out equipment through local Co-ops in the SADC region to ensure community empowerment by training the locals and creating a revenue stream for up to 6, 500 members. Up to 2, 000 households will have access to power within 10 years of the operation. Investment Level: 43 Million Euros Employment Level TBC The company seeks; • A JV partner • Equipment Purchase
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