Boidus Focus - Vol 3, Issue 6 [Sep 2013] by Boidus Botswana

OIDUS FOCUS Registered at GPO as a Newspaper | Volume 3, Issue #6

Botswana’s Architecture Design and Urban Landscape Newspaper | S E P T 2 0 1 3

www.boidus.co.bw

NEWS | page 02

EDITORIAL | page 05

PROF PRACTICE | pages 16

FINANCING | page 18

Global Design Giant, AECOM Completes Takeover of DAVIS Langdon Botswana

Are Property Valuers influenced by Borrowers and Lenders?

It’s Time to Envision A Better Built Detroit. Are Architects Ready?

Barclays Bond Switching Campaign: Boidus Speaks to Barclays Home Loans Manager

P8.00 (Including VAT) BOIDUS EXCLUSIVE FEATURE >

Botswana’s Property Outperforms Equity (DCI), Bonds (BBI) - IPD 2012

The IPD Botswana Property Consultative Index 2012 Indicates Decline in Total Returns by HK Mokwete

BOIDUS EXCLUSIVE >

Kazungula Bridge - The Gateway To African Mainland The final piece of the ‘trans-Kalahari’ corridor by Boidus Admin Underlying all of the engineering ingenuity, bridges play a critical role in bringing trade hubs, communities and other trade benefits to communities. In Kazungula, the Ferry, which used to play the mobile bridging element, might be seeing the last of its heroic days. Plagued with problems such as delays of up to days especially in rainy season, accidents and others, the bridging of

Stan Garrun: Executive Director & Head of South Africa, IPD

Othata Batsetswe: FinMark

Dr Keith Jefferis: EConsult Botswana

Botswana

South Africa

Australia

Total Return % 12 months

17.9%

10.4%

6.2%

Capital All Property

2,850.2 (BWP million)

204,844 (ZARmillion) 1BWP : 1.18ZAR

7,164.8 (€m) 1BWP : 7.75€

Botswana’s Property Index for year 2012 released by IPD indicate a slight fall in total return but still returned a healthy 17.9% The figures is a fall from last year’s return of 20.9%. Botswana recently joined the only other country

in Africa region (South Africa) in collating of a Property Index by IPD, the leading provider of worldwide critical business intelligence, including analytical services, indices and market information, to the real estate industry.

IPD produces more than 120 indices, as well as almost 600 portfolio benchmarks, across 32 countries enabling real estate market transparency and performance comparisons. >>> CONTINUED PAGE 04

the mighty Chobe River’s 400m width will soon be an issue of the past. The new proposed bridge will not only connect communities on both side of the Chobe and Botswana and Zambia but also open a corridor of trade and goods services to the heart of Africa. The bridge will complete the missing part in the so called ‘trans-Kalahari’ corridor. >>> CONTINUED PAGE 07

Government & Private Sector Sorting Out Construction

MIST, BOCCIM & Industry Professional Task Force by Kibo Ngowi After more than four reports and numerous attempts by international consultants to formulate and implement regulatory standards for our ailing construction industry over the space of 20 years, the drive to put real action into solving the industry’s underlying problems be gaining momentum. A task force headed by MIST, through Deputy PSP, Ulf Sodderstrom, BOCCIM, Profes-

sional Associations such as AAB, ABCON, BIDP, BIE, TBBA, and other stakeholders are laying out the foundation to what will be Botswana’s CI Regulator. The all powerful body will have authority and overreaching powers over all that is construction across both government and private construction activities. >>> CONTINUED PAGES 08,13

Local News Page 2

BOIDUS FOCUS September 2013

FNBB Celebrates First Place Launch by Kibo Ngowi

LOCAL NEWS FEATURES

Time Plaza Captures another Blue Chip Tenant as Barclays Signs to Move to CBD by Boidus Admin

The construction of the building was completed within the planned duration of 18 months (as of December 2012) and on budget. The new building boasts over 10 000sqm of floor space, about 100 above ground customer parking bays and over 300 FNBB staff basement parking bays. Moreover, it boasts cafe-styled ‘pause areas’ on each floor as well as a staff gym and a staff cafeteria. First National Bank of Botswana (FNBB) celebrated the launch of its newly built headquarters, First Place, located in Gaborone’s upcoming Central Business District (CBD), on Monday the 5th of August. Guest of Honour Vice President Ponatshego Kedikilwe took the opportunity to air some of his concerns on the inefficiencies of banks operating within the country but commended FNB staff on how far the company has come from when it first entered the Botswana market in 1991. FNBB CEO Lorato Boakgomo-Ntakhwana and FNB CEO Jacques Celliers were also on hand to reflect on the progress FNBB has made and its role in the Botswana economy.

Prime Time has recently added Barclays to a list of their prestigious tenants at their CBD’s Prime Plaza development. Taking up 6000sqm of the soon to be completed Prime Plaza –Mopani, Barclays will add to a list that includes blue chip tenants such as CEDA, Kenya Airways to name but a few. For Barclays, this brings a 15 year search of new suitable home according to Barclays Interim Managing Director Mr Aupa Monyatsi who was

needed to find a new home as their current headquarters building at what is referred as ‘Old CBD’ was old, tired and had many shortfalls including parking problems.

speaking at the signing ceremony held recently. Barclays Board Chairmen Mr Rizwan Desai indicated that Barclays

ects has made a habit of delivering the right quality to satisfy the demands of high level tenants.

Time Projects has again demonstrated their ability to build buildings that attract blue chip tenants whom the CBD badly need to attract. In Botswana’s limited environment where grade A buildings are far and few, Time Proj-

Vice President Dr PH Kedikilwe trying out some of FNBB’s staff heath and fitness equipment. He is shown the rropes by FNBB CEO, Lorato Boakgomo-Ntakhwana

Consumer Lending and Loan Schemes in Retail Banking Spur BancABC Holdings Global Design Giant, AECOM Profits Completes Takeover of DAVIS Langdon Botswana by Boidus Admin

sults. The vastly improved performance was essentially driven and bolstered by BancABC Botswana, BancABC Zambia and BancABC Zimbabwe, which have achieved critical mass in Retail banking and hence the three operations posted strong set of results.

by Boidus Admin

The world’s largest design Firm, AECOM, has completed its takeover of Davis Langdon Botswana with Botswana branch now re-branded, AECOM Africa Botswana (Pty). In a recent announcement, AECOM’s Africa Region Executive Director, Fred Selowane, previously Botswana Managing Director announced that Davis Langdon Botswana has joined the rest of AECOM in Africa in re-branding to AECOM Africa Botswana (Pty) Ltd with effect from 1 August 2013. ‘With their strong established presence in Africa and diversified expertise in various markets, we can further combine AECOM’s global knowledge with our local understanding of cultures, practices and market needs. This allows us to enhance our delivery of holistic so-

lutions for your projects — anywhere in the world’, said Mr Selolwane. As the No.1 global design firm according to Engineering News-Record’s 2013 rankings, AECOM has approximately 45,000 employees around the world, serving clients in more than 140 countries. AECOM’s operations in Africa are led by Indresen Pillay, Chief Executive, and AECOM’s Africa leadership team. Some of the services offered by AECOM globally include Architecture, Building Engineering, Construction services, Design and Planning, Economics, Energy, Environment, Government, Mining, Oil and Gas, Program, Cost, Consultancy, Project Management, Transportation and Water.

BancABC today announced a phenomenal set of results for the half year ended 30 June 2013. The results were largely driven by the substantial growth in Retail banking during the period under review. Group pre-tax profits grew to BWP169 million, 77% up on the BWP96 million achieved in the prior year comparative period. Attributable profits of BWP143 million was 157% higher than BWP56 million achieved in 2012. Total income for the period increased by 47% to BWP701 million from BWP476 million with growth being recorded in all major income lines. The Retail banking business provided the major impetus for the re-

Announcing the results, BancABC Group CEO, Douglas T Munatsi said “We are extremely pleased with an outstanding set of results. They accurately reflect the increasing strength of the Group’s operations. The good performance affirms the strategy that was taken a few years ago to convert the business from a purely wholesale bank to a universal bank.” The Group has expanded its branch network to 64 branches compared to 55 in the prior year.

BancABC Outline Figures Total Assets

13,738

27%

Loans and Advancements

9,854

26%

Deposits

10,940

25%

Total Equity

1,422

119%

BOIDUS FOCUS September 2013

International News Page 3

International Municipal City Company Feature- City of Johannesburg Property Company by Boidus Admin / Source: jhbproperty.co.za

We also partner with other municipal owned entities such as the Johannesburg Development Agency and Joburg City Parks as well as relevant private sectors to ensure efficiency and delivery, for maximum commercial returns without losing our social focus. Overview The Joburg Property Company manages and develops the City of Johannesburg’s property portfolio valued at some R8.6-billion (US$1.2billion).

Stakeholder Management Unit:

This function is two folded and involves addressing the needs of external as well as internal stakeholders; there is an in-house support team dedicated to queries and enquiries. The Client Servicing unit assists the public with “tender procedures” and “expression of interest” applications. Our external unit focuses on communicating and engaging with external stakeholders such as; regional directors, ward councillors and communities where land related developments/ sales affect them. The Stakeholder Management Department will process, plan, guide and control the organization by the following underlying Principles. • Stakeholder Identification – of all interested parties, either internal or external to organi-

zation or core business. • Stakeholder Analysis - Recognize and acknowledge stakeholder’s needs, concerns, wants, authority, common relationships, interfaces and align this information within the Stakeholder Matrix. • Stakeholder Matrix - Positioning stakeholders according to the level of influence, impact or enhancement they may provide to the business or its projects. • Stakeholder Engagement - It is primarily focused at getting to know and understand each component, at the Executive level. Engagement is the opportunity to discuss and agree expectations of PR and communication. Agree a set of Values and Principles that all stakeholders will abide by.

Our portfolio is diverse, with approximately 64 000 properties under management, covering 39 000 hectares across seven municipal regions. Our aim is to maximise social and commercial opportunities now and in the long term. We specialise in packaging exciting and lucrative property developments in some of the most vibrant and fast-growing hot spots in Johannesburg, including Newtown, Soweto and Sandton, creating excellent opportunities for both local and foreign investors. However, we are equally determined to bring about social transformation. We are dedicated to finding solutions to the developmental challenges facing the City of Johannesburg. The JPC utilises council-owned land assets to leverage private sector investment in public infrastructure. The JPC provides: • Property Development, actively engaging with the property development value chain; • Property Management Services, obtaining and maintaining value from the property portfolio by administering and leasing, acquiring and selling, and ensuring maintenance of the property; and • Property Asset Management Services, playing a strategic advisory role relating to activities of capital investment, portfolio planning, disposal of single asset and/or entire portfolios and identification of possible scenarios for the positioning of the portfolio. Our business is aligned to Joburg 2040, the City of Johannesburg’s growth and development strategy as well as the Mayoral strategic priorities aimed at making Johannesburg a “Worldclass African City”. We are determined to ensure that economic growth and job creation happen in the city, addressing socio-economic disparities and legacies of discrimination and i equality. Our role is to: • Realise value (social and economic) for the City of Johannesburg through the management and development of Council-owned properties; • Maximise the social and economic development of the Council-owned properties and mobilise private and public capital to increase their value and long-term returns; • Support economic development and align the City’s property portfolio with the City of Johannesburg’s priorities; • Increase the effectiveness of economically viable municipal and social use of properties; and • Manage risk and return with respect to the property portfolio and property transactions for the City of Johannesburg.

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Boidus Exclusive Feature Page 4

BOIDUS FOCUS September 2013

Botswana’s Property Outperforms Equity (DCI), Bonds (BBI) - IPD 2012

Results Review: Dr Keith Jefferis- Economist at ECONSULT “A major concern is that property markets are especially susceptible to speculative bubbles. The continued yield of high returns on property, despite the oversupply of offices, is a bubble characteristic. It is especially a concern when prices get out of line with underlying values, and eventually an adjustment will take place, leading to negative returns.”

by HK Mokwete

>>> FROM PAGE 01 According to the IPD Botswana Annual Property Consultative Index, released today, the total return for all property was 17.9% for the year to December 2012, compared with 20.9% for 2011. This figure represents the un-geared total return to directly held standing property investments, from one open market valuation to the next. The return on Botswana property comprises 11.0% income return coupled with 6.3% capital growth over the year. The underlying rental growth of 8.6% outstripped Botswana’s headline inflation rate of 7.4%, underpinning both the capital growth and income return. Industrial property outperformed other sectors with a total return of 28.4%, closely followed by residential at 24.4%. Retail property’s performance was more conservative with a return of 16.6%. The office return trailed at 15.2% as recent development activity placed pressure on rental levels. Property as an asset class was also a stronger performer than both bonds, which returned 6.3% (BSE Bond Index), and equities at 7.7% (BSE All Share).

It is the second year IPD has reported on the Botswana property market. This means IPD is now tracking the sector’s performance with a fullyfledged indicator. The index shines a light on the Botswana property investment sector for new investors and provides an important tool for local players. A growing sample of 103 individual properties with a total value of nearly BWP3 billion will underpin research based on the IPD Botswana Annual Property Consultative Index. The figures represent the combined holdings of seven leading Botswana property investment portfolios. For 2012, Wharic Construction (Pty) Limited joined Botswana Insurance Fund Management Property Portfolio, Debswana Pension Fund, Letlole La Rona Limited, Motor Vehicle Accident Fund, Primetime Property Holdings Limited, and Turnstar Holdings Limited in the index. The index is the result of collaboration between IPD and its key Botswana partner and the index sponsor, Botswana Insurance Fund Management (BIFM). Botswana is the second African country in the stable of over 30 countries across the globe with an IPD index. South Africa was the first IPD reporting country on the continent, launching its index in the mid-nineties.

Dr Keith Jefferis

1. Owing to the continued uncertainty over the debt crisis in the EU and a weakening of international demand for diamonds, Botswana’s GDP growth slowed down from 6.1% in 2011 to 4.2% in 2012. In 2012, compared to 2011, the business confidence of local businesses declined, and the rate of growth of bank lending slowed. Hence it was not surprising that returns on all asset classes - including property - decreased. The IPD Botswana Property Consultative Index for the property sector showed that the total annual returns for property in Botswana fell from 20.9% in 2011 to 17.9% in 2012. Despite this fall in returns, property generally outperformed other asset classes (see table below). Annual returns for different assets classes in Botswana • • • •

Source: IPD Botswana Annual Property Consultative Index

Total Return % 12 months

Income Return % 12 months

Capital Return % 12 months

All Property

17.9

11.0

6.3

Retail

16.6

10.6

5.5

Office

15.2

11.7

3.2

Industrial

28.4

12.5

14.3

Residential

24.4

0.0

14.4

Other

not published for confidentiality reasons

Asset Class Property (PCI) Equity (DCI) Bonds (BBI)

2012 17.9% 7.7% 6.3%

2. Of the several property sub-sectors, the Industrial and residential subsectors realised the highest total returns for the year 2012 at 28.4% and 24.4%, respectively. These returns are driven by capital appreciation of 14.3% and 14.4% for Industrial property and residential property, respectively. This, therefore, means that the value of industrial and residential property grew rapidly during 2012. This is largely due to the excess demand for these assets, especially in Gaborone, caused by the limited availability of land in the greater Gaborone area. Consequently, there was too much money chasing limited industrial and residential properties thus pushing up the price. These two property subsectors are expected to yield high returns to investors who can obtain assets, because of limited supply. This unavailability is perpetuated by the fact that the supply response of property is slow. However, there is a danger that prices may become excessivly high (realtive to underlying value), which increases investment risks. Owing to the oversupply of offices (notably in the CBD) in Gaborone, the office subsec-

3. A major concern is that property markets are especially susceptible to speculative bubbles. The continued yield of high returns on property, despite the oversupply of offices, is a bubble characteristic. It is especially a concern when prices get out of line with underlying values, and eventually an adjustment will take place, leading to negative returns. However, this may take time, especially if there is a fundamental supply shortage. Although returns appear to be attractive to investors, the property market is not as liquid as the bond and equity market, therefore property investors need to be in it for the long term. In a bid to minimize risk, it is advisable to invest in a portfolio of property, bonds and equity. A further risk is the level of bank lending for property investment. Concerns have already been raised that this is a source of risk for Botswana’s banks. For instance, investors who have borrowed heavily for investment in office property and who are highly leveraged may find that, with oversupply, anticiapted rentals are not achievable and they struggle to service bank loans – although the current relatively low level of interest rates will help. Nevertheless, the banks need to be very cautious with regard to further property lending. Practices such as lending close to (or even over) 100% of the value of residential property are extremely risky. 4. During the current period of sluggish economic growth, the property sector has been a source of some growth for the greater economy. Owing its high returns the property sector has attracted substantial investment. Consequently, for the 12 months ending March 2013 construction was the third fastest growing sector in Botswana. This is attributable to the ongoing construction of office property, especially in the CBD.

Botswana Insurance Fund Management Property Portfolio

Source: IPD Botswana Annual Property Consultative Index

Capital BWP (m)

Capital %

Number of Properties

Number of Funds

All Property

2,850.2

100.0

103

Retail

1,463.0

51.3

Office

661.7

23.2

Industrial

279.4

9.8

Residential

157.9

5.5

Other

288.3

10.1

Source: IPD Botswana Annual Property Consultative Index

2011 20.9% 8.7% 12.9%

tor was the worst performing property subsector during 2012; yielding total returns of 15.2%. Interestingly, despite its seemingly poor performance in 2012, office property outperformed equity and bonds which realised total returns of 7.7% and 6.3%, respectively.

Othata Batsetswe

“What’s interesting though is that this is not derived from a rental stream as much as it is from the capital value of the stock itself - which means that while rents may be low, the property value is appreciating over time. An investment in property is therefore a long-term, not a short term investment. All property appears to be ahead of equities, bonds and inflation - so this is a good investment sector at the moment. When you compare residential in terms of capital value and number of properties, it is very small - suggesting room for growth. This then means there is still a demand for property both industrial and residential in Botswana.”

20 10

% of Respondents

and turn-around time.

% of Respondents

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Only 2 respon60 60 Figure 6: Bo duced for Borrower Borrower duced f for Borrower for Borrower ALWAYS 40duced for ALWAYS SOMETIMES SOMETIMES RARELY/NEVER for Borrower ALWAYS 50 50 50 On40 the question of bases ofRARELY/NEVER valuation used, the vast majordents expressed unfettered choice of valuer by the borrowFigure 40 6: Borrower involvement in selection of Valuer Figure406: Borrower involvement in selection of Valuer Figure 40 ALWAYS SOMETIMES RARELY/NEVER ALWAYS SOMETIMES RARELY/NEVER ALWAYS SOMETIMES ity of respondents replied that they always request Market 45% 50 50 er and that they did not operate a panel system. 30 Figure 40 6: Borrower Figure 6: Borrower involvement in selection of Valuer Figure 6: Borrower 30 involvement in selection of Valuer 40 Lenders invo wer Value as basis of value. Mortgage Lending Value and40Pro30 30were asked to list three most important factors 30 were asked to list three most important factors Lenders Lenders Lender theyin consid Figure 40 6: Borrower involvement jected in selection of Valuer Figure40 6: majority Borrowerof involvement in selection of Valuer Figure 6: Borrower involvement selecti market Value are not used by lenders. Figure 5 illustrates the responses of lenders in relation to 20 they consider when choosing an external valuer for the 20 they consider when choosing an external valuer for 30 the they c 30 30 panel. Figur Lenders asked to list three most important were asked to20list three most important factors Lenders were asked to 20 bases of valuation used arefactors Forced Sale Lenders Value and accepting20a full valuation report from borrower under thewere Other panel. Figure 7 illustrates the results. Membership of Real panel. Figure 7 illustrates the results. Membership of Real Estatepanel. 33% Instit they consider when choosing an external valuer for the they consider when choosing an external valuer for the they consider when ch 30 30 different circumstances of whether valuerwere is onasked panel to or not. Lenders list20threeInsurance most factors Value. Lenders were asked to list most important factors Lenders were asked to list three most im Replacement 10 important 20 20 three 10 Estate Institute (REIB) of Botswana and registration with Estate Institute (REIB) of Botswana and registration with Estate Real Estate A Figurean7 external illustrates10 the results. Real Figurean7 external illustrates the results. of Real whenpanel. Figure illustrate 10 10valuer they consider whenpanel. choosing valuer for theMembership they of consider whenpanel. choosing for theMembership they consider choosing an7 external Real Estate Advisory Council (REAC) 20 is clearly a very imporReal Estate Advisory Council (REAC) is clearly a very imporReal Es 20 Estate Institute (REIB) of Botswana and registration with Estate Institute (REIB) of Botswana and registration with 7 illustrates Estate the Institute (REIB) tant factor, panel. Figure 7 illustrates the Membership of Real panel. Figure 7 illustrates10the results. Membership of Real panel. Figure results. Memao 70 0 10 10 results. 0tant factor, as well as experience and qualifications. Out of 9 tant factor, as well as experience and qualifications. Out of 9 tant fa 0 0 ofof 0 of (REAC) Realof Estate Advisory Council (REAC) is clearly a Estate veryUse imporRealof Estate Advisory is clearly aEstate very Realof Estate Advisory respondents Useimporof Non - Panel Use Panel Valuer's Non –- Panel Panel Use Panel Valuer's Use Panelwith Valuer of Non Estate Institute (REIB) Botswana and registration Institute (REIB) Botswana andCouncil registration with Institute (REIB) Botswana andCou re 5.5respondents, Information Flow 3Use indicated that they emphasise professional respondents, 3produced indicated that they emphasise professional respon 10 Use of Non - Panel 10 of Non - Panel Use of Non - Panel Use of Panel Valuer's ofBorPanel Valuer's of Panel Valuer's Valuer’s Valuation proValuationUse Valuer’s Valuation proValuation produced suggested by Valuer suggested bytant tant factor, as well as experience and qualifications. Out of 9Use factor, as wellisas experience and qualifications. Out Valuer’s of 9 tant factor, as wellisas exp indemnity in 60 Real Estate Advisory Council very imporReal Estate Advisory Council (REAC) clearly a very imporReal Estate Advisory Council (REAC) clear 0 0 (REAC) is clearly afor 0 Valuer’s Valuation proValuer’s Valuation proValuation proValuation produced Valuation produced Valuation produced duced for Borrower forinsurance Borrower and independence. ducedBorrower for The Borrower Borrower rower indemnity insurance and independence. results show indemnity The results show indem for Borrower for Borrower for Borrower for Borrower for Borrower for Borrower 3Use indicated that they professional 3 indicated that they professional 3 indicated Use of Non Panel duced Panel duced -factor, Panel duced Use of Panel Valuer's of Panel Valuer's Use of Panel Valuer's converg tant-factor, as well asrespondents, experience and qualifications. Out emphasise of 9 Use of Non tant-factor, as well asrespondents, experience and qualifications. Out emphasise of 9Use of Non tant as well asrespondents, experienceless and qualific 0 0 less convergence on factors such as reputation in market less convergence on factors such as reputation in market less co Valuer’s Valuation proValuer’s Valuation proValuer’s Valuation proValuation produced Valuation produced Valuation produced Lenders were questioned on results disclosure of information reALWAYS SOMETIMES RARELY/NEVER ALWAYS SOMETIMES RARELY/NEVER ALWAYS SOMETIMES RARELY/NEVER indemnity and independence. The show indemnity and independence. Thefor results show indemnity an and turn-aro 50Borrower ALWAYS RARELY/NEVER ALWAYS ALWAYS RARELY/NEVER respondents, 3Use indicated that insurance they emphasise professional respondents, 3 indicated that insurance they emphasise professional respondents, 3 indicated that insurance they emphas for Borrower ducedSOMETIMES for Borrower ducedSOMETIMES Borrower for for Borrower for Borrower Use of Non - Panel ducedSOMETIMES of Non - Panel Use of Non - Panel Use of Panel Valuer's of Panel Valuer's Use ofRARELY/NEVER Panel Valuer's andUse turn-around and turn-around time. and tu lating to terms of time. loan, identityinofmarket borrower and purchase Valuer’s Valuation proValuer’s Valuation proValuer’s Valuation proValuation produced Valuation produced Valuation produced less convergence on factors such as reputation less convergence on factors such as reputation inby market less convergence on fac Figure 5: Use of existing valuations lender indemnity insurance and independence. The results show indemnity insurance and independence. The results show indemnity insurance and independence. Th duced for duced duced for for Borrower ALWAYS for Borrower ALWAYS for Borrower ALWAYS SOMETIMES RARELY/NEVER SOMETIMES RARELY/NEVER SOMETIMES Figure 5:Borrower Use of existing valuations by lender Figure 5:Borrower Use of valuations lender Figure 5:Borrower Use of existing RARELY/NEVER valuations by lender price to thefor valuer. It existing was alsoless put to thebyof lenders whether Figure 6: Borrower involvement in selection Valuer and turn-around and turn-around and turn-around Figure408: Direct instructions byless Lender convergence on factors such astime. reputation in market convergence on factors such astime. reputation in market less convergence on factors such astime. reput ALWAYS SOMETIMES RARELY/NEVER ALWAYS SOMETIMES RARELY/NEVER ALWAYS SOMETIMES RARELY/NEVER Figure 5: Use of existing valuations by lender Figure 5: Use of existing valuations by lender Figure 5: Use of existing valuations by lender 0

60 55% of the lenders or of never Panelchosen Valuer's 22%said the valuer is rarelyUse

% of Respondents

by Boidus Admin

% of Respondents

‘VALUATIONS FOR SECURED LENDING AND LENDERS’ PERSPECTIVES IN BOTSWANA, By Valuation Edge RESEARCH REPORT LAUNCHED (Published by Boidus Media)

% of Respondents

Are Property Valuers influenced by Borrowers and Lenders?

% of Respondents

BOIDUS FOCUS September 2013

never As regards the question use of panel never As regards the that question of use of panel never be approved. As regards the question out of 9 respondents indicated that written reports are aloutbeofapproved. 9 respondents indicated that written reports are alout be of approved. 9 respondents indicated written reports are alNOof selection process astheir 33% said likely they rarely selection process as 33% said they and never selecti never 2insist on their said forms. This means lenders stan-Valuer never insist on forms. Thiswould that and lenders stannever insist on very their forms. This would means rarely that lenders stanaffirmative. respondents they would notthat pay lenders for high-still isRESPONDENTS notforms inmeasure the panel tomeans be rejected. It never is still On forms are accepted by few want to who retain some control of the lenders want to retain some of lenders. control of the lenders stillapprove. want to reta be on their standard whilst (23%) bethe on their standard whilst theis remainder (23%) ports be on their standard forms whilst remainder (23%) by Valuer suggested by borrower results reveal some Valuer suggested by the results reveal thatmeasure some Valuer suggested borrower the results re ways given). 77% ofports lenders prescribe that all forms valuation re-the remainder ways given). 77% ofports lenders prescribe that allthat valuation re-of ways given). 77% ofborrower lenders prescribe that all valuation re-the accept theforms/formats request and 22% that sometimes they accept request and are 22%common indicatedwhilst that sometimes they occur accept dard as forms/formats are norm common Valuers standard dard are indicated common whilst Valuers standard dard the forms/formats Valuers standard er quality it should be the and whilst fees have to be af- process important to note thatwould all respondents who indicated that and th selection as 33% said they rarely and never selection process as 33% said they would rarely and never selection process as 33% never insist on their forms. This means that lenders stannever insist on their forms. This means that lenders stannever insist on their forms. This means that lenders stanFigure 7: Selection criteria of external Valuer lenders to retain some measure of the lenders want tostandard retain some measure of remainder control of the lenders still want to retain some measure o ports be on their standard forms whilst the remainder (23%) portsstill be want on their standard forms whilst of thecontrol remainder (23%) ports still be on their forms whilst the (23%) Only one said thefrom situation does not approve. Only one respondent said the situation does not not operate approv forms are accepted by very few lenders. forms are accepted by very few lenders. forms are accepted by very few lenders. fordable to borrowers. they approve. would always use respondent athat valuation report non-panel accept the request and 22% indicated sometimes they accept the request and 22% indicated that sometimes they accept the request and dard forms/formats are common whilst Valuers standard dard forms/formats are common whilst Valuers standard dard forms/formats are common whilst Valuers standard selection 33%forms. said they never selection process 33% said they and never selection process as 33% said they would r2 never insist on their forms. This means that lenders stannever process insist onastheir Thiswould meansrarely that and lenders stannever insist on as their forms. This would means rarely that lenders stanoccur andoperate this maya be linked with its statement that it does 5.3 Selection occur and this mayinstruction be linked with its statement that it does alwaysoccur a valuer do not panel system. appr and of Valuer approve. Only one that respondent said the situation doesthe notrequest and approve. Only onewhilst respondent said the situation does approve. Only one that resps are accepted by Valuers very fewstandard lenders. forms are accepted by very few lenders. forms are accepted bysometimes very few lenders. accept request and 22% sometimes they accept 22%common indicated that they accept thenot request and 22% indicated dard forms/formatsforms are common whilst dardtheforms/formats are indicated common whilst Valuers standard dard forms/formats are Valuers standard not operate a panel system. 33% of lenders said they will not operate a panel system. 33% of lenders said they will rower.not op Nearly all lenders (89%) answered in theOnly affirmative when writing and an overwhelming majority ofaccepted lenders occur and may linked with itsnot statement approve. that it does occur and this may linked with itsnot statementapprove. that it does occur and this may lin approve. one respondent said thebesituation does Only one respondent said thebesituation does OnlyMarkets one respondent said thebesitu forms are accepted by very few lenders. forms are accepted by verythis few lenders. forms are bycontrol very few lenders. always approve uselenders’ of panel valuer suggested by a bor- The lenders always approve useand of panel valuer by a boralways 5.3 Selection and instruction of Valuer 5.3 Selection and instruction ofrequested Valuer 5.3 Selection instruction of Page Valuer 5.2whether Form of Reports 6system. illustrates the when were asked often the valuer issuggested chosen by a boroperate panel 33% lenders responses said they will not operate a its panel system. 33%it how of lenders said not a its panel sys 5operate asked they consider membership of may REIBnot and reg-withaFigure the content of instructions (78%) and never Valuers’ occur and this be linked its statement that it of does occur and this mayuse be linked with statement that does occurthey andwill this may be linked with statem rower. a panel valuer and non panel valuer suggested rower. rower. to appoint rower and given a set of scenario which related to submission always approve use of panel valuer suggested by a boralways approve use of panel valuer suggested by a boralways approve use of 5.3 Selection instruction of Valuer 5.3 Selection and instruction of Valuer 5.3 Selection and instruction of Valuer istration and by REAC as very important factors in choosing an instructions (80%). The 2 respondents who indicated that not operate a panel system. 33% of lenders said they will not operate a panel system. 33% of lenders said they will not operate a panel system. 33% of lender The lenders were asked how often the valuer is chosen by a borThe lenders were asked how often the valuer is chosen by a borThe lenders were asked how often the valuer is chosen by a borOn the question of form of reports, the vast majority of by borrower. 67% of lenders said that a request by rower. a bor70 rower. of completed full valuation and requests to use appoint a external valuer for the panel. always theysuggested never usebytheir own instructions may beuse linked toinstruction thevaluer approve userower. of panel valuer a boralways approve of panel suggested by a bor-reportsalways approve of panel valuer sugge 5.3 Selection and instruction of Valuer 5.3 Selection and instruction of Valuer 5.3 Selection and of Valuer rower and that givenwritten a set of scenarioare which related to submission rower and given a of scenario whichwill related to and submission rower and given a set of scenario which related to submission lenders stated rower appointment ofset non-panel valuer The lenders were asked how often the valuerreports is rower. chosen byalways a bor- provided The(8 lenders were for asked how often the valuer chosen by a bor-rarely The lenders were asked howto often the valuer chosen byThis a borparticular valuer indicate likelyisoutcome. was intended rower. rower. fact that they do not have aispanel system. 55% of 70 70 of9completed full indicated valuation reports and requests appoint ofapproved. completed valuation andofrequests to lenders appoint a of70completed full valuation reports and requests to appoint a 60 out of respondents written reportsto are al- andanever be Asfull regards thereports question use of panel rower given a set of scenario relatedthat toThe submission rower given a set of to rower a setthe of submission togiven examine role of the the selection process. The lenders were asked howand often the valuer isthe chosen bywhich a borlenders were asked how often the valuer is scenario chosen bywhich a bor-related Thesubmission lenders were asked howand often the valuer is scenario chosen bywhich aborrower bor-relatedinto In respect of question which sought to investigate the indicated that instructions are not subject of negotiations particular valuer to indicate likely outcome. This was70intended particular valuer to indicate likely outcome. This was intended particular valuer to indicate likely outcome. This was70intended 70 ways given). 77% of lenders prescribe that all valuation reValuer suggested by borrower the results reveal that some ofof completed full valuation reports and requests to appoint a ofof completed full valuation reports and requestsrower to appoint a a set ofof completed full valuation reports and requests to appoint a 60 60 60 rower and given a set scenario which related submission and 45% given set scenario which related submission and given scenario which related to submission relationship withtovaluer arower service, ofa lenders whilst 33% didtonot give a the response. to examine the roletoofprovide the borrower in selection process. to examine role of borrower inofthe selection process. to examine the role of the borrower in the selection process. 50 ports on their standard forms thethe remainder (23%) lenders want tothe retain someThis measure control of particular the particular valuer tobe indicate likely outcome. Thiswhilst was intended particular valuerand tostill indicate outcome. was intended valuerof tothe indicate likely outcome. intended 70 70completed 70 55% lenders the valuer rarely or never chosen of completed full valuation reports and requests to appoint a instructions. of completed full valuation reports requestslikely to appoint a of full valuation reports and requests tosaid appoint a Thisiswas 60 60 60 said they always issue direct Figure 8 illustrates never on their forms. This means that lenders to stanselection process as 33%insaid they would rarely and never to examine role insist of the borrower in the selection process. examine role50of the borrower the selection process. to examine role of the borrower in the selection process. 50 50 bythe the borrower and intended 22% said sometimes. Only 2 responparticular valuer to indicate likelythe outcome. This was intended particular valuer to indicate likelythe outcome. This was intended particular valuer to indicate likely outcome. This was 55% of the lenders the valuer is or standard never 55% of the and lenders said the valuer rarely or questioned never 55% of the lenders said the valuer is rarely or never chosen 40 thedard results. An interesting observation is rarely that over halfchosen of accept Figurethe 9 illustrates the22% responses of60lenders when 60 60 forms/formats are said common whilst Valuers request indicated thatissometimes they chosen dentsinexpressed unfettered to examine the role of the borrower in the selection process. to examine the role of the borrower in the selection process. to examine the role of50 the borrower the selection process. choice of valuer by the borrow50 50 by the borrower and 22% said sometimes. Only 2 respon-approve. by the one borrower and 22% said sometimes. Only 2 results responby the borrower and 22% said sometimes. Only 2 responthelenders respondent valuation reports through borrowon the40 payment and negotiation valuation The forms are accepted by is very feworlenders. Only respondent the situation does not 55% of the said thereceive valuer rarely never chosen 55% of the lenders said the valuer is rarelysaid or of never chosenfees. 55% of the said thedid valuer is rarely or neversystem. chosen 40 40 er lenders and that they not operate a panel dentssituation expressedthere unfettered choice ofcontract valuer bybetween the borrow-occur dents expressed unfettered of valuer the borrowdents expressed unfettered choice of valuer by the borrow- 30 50 2 respon50to 50 2 responers. In this is noOnly written showand that borrowers are more likely pay valuation fees and this may besometimes. linked itschoice statement thatby it does by the said sometimes. by the and 22% said 2 of responby the said sometimes. Only 55% of the lenders said theborrower valuer is and rarely22% or never chosen 55% of the lenders 40 said theborrower valuer is rarely or never chosenwith Only 55% the lenders said theborrower valuer is and rarely22% or never chosen 40 40 er and that they did not operate a panel system. er and that they did not operate a panel system. er and that they did not operate a panel system. thesometimes. valuer andOnly lender inofrespect of the thethe instruction 22% of always pay directly tothe the valuer. not operate a panel 33% ofby lenders said they will dents unfettered choice valuer by borrowdents unfettered choice of valuer by the borrowdents unfettered choice of valuer by the borrow30lenders 30 by the borrower and 22%expressed said 2 responby borrower emanatand 22%expressed said sometimes. Only 2system. responborrower and 22%expressed said sometimes. Only 2 responFigure 5 30 illustrates the responses of lenders in relation to 20 40 er and that notborrower. operate a panel system.40 er and that theyofdid not operate apanel panel valuer system. er and that theyofdid not operate a panel system.40 5.3 Selection instruction ofexpressed Valuer unfettered always approve use of suggested by unfettered a boringthey from the dents expressed unfettered choice ofdid valuer by theand borrowdents choice valuer by the borrowdents expressed choice valuer byvaluation the borrow30 30 30 accepting a full5 report from borrower under the Figure 5 illustrates the responses of lenders in relation to Figure 5 illustrates the responses of lenders in relation to Figure illustrates the responses of lenders in relation to 20 20 20 rower. Over 50% of lenders never and er rarely negotiate er and that they did not operate a panel system. er and that they did not operate a panel system. and that they didvaluation not operate a panel system. different circumstances whetherreport valuerfrom is onborrower panel or not. accepting a full valuation report from borrower under the accepting a full valuation report accepting a full of valuation under the 10 30 from borrower under the Figure 5 Where illustrates responses of in30 toit is always Figure responses lenders relation tofees are Figure 5 illustrates the responses of lenders in30relation to The lenders were asked how often the valuer is chosen by a20 bor-in 5 illustrates 20always 20 an the appointment is lenders made by arelation lender fees withthevaluers andof33% saidinvaluation different circumstances of whether valuer is on panel or not. different circumstances of whether valuer is on panel or not. different circumstances of whether valuer is on panel or not. 10 10 10 a rower fullofvaluation report under accepting a fullofvaluation report fromtoborrower under illustrates the accepting a fullofvaluation report fromtoborrower under the and given arelation set from of scenario which related to submission Figure 5 illustrates accepting the responses lenders in toborrower Figure 5 the illustrates the responses lenders in relation Figure the responses lenders in relation negotiated directly between valuers Lenders 20 20 and5 borrowers. 20 70 0 70 different circumstances of full whether is on and panel or not. different circumstances of whether is onaccepting panel or not. different circumstances of whether 10 10 10 of from completed valuation requests to appoint a report accepting a full valuation report borrower undervaluer thereports accepting a full valuation from borrower undervaluer the a full valuation report from borrower undervaluer the is on panel or not. are unlikely to negotiate fees. U 70 0 70 0 70 0V particular to indicate This was intended different circumstances of whether valuer valuer is on panel or not.likely outcome. different circumstances of whether valuer is on or not. different circumstances panel or not. 10 10 Use of 10 Use of Non - Panel Non - Panel of whether Usepanel of Panel Valuer's of Panel Valuer's 60 valuer is onUse 60 70 to examine the role of the borrower in the selection process. 0 70 0 70 0 Valuer’s Valuation proValuer’s Valuation proValuation produced Valuation produced

and turn-around time.

12 VALUATIONS FOR SECURED LENDING AND LENDERS’ PERSPECTIVE IN BOTSWANA 30 by lender Figure 5: Use of existing valuations FigureAND 5: Use of existing valuations by VALUATIONS lender Figure 5: Use offactors existing valuations by VALUATIONS lender Lenders were asked toFOR listSECURED three most important 12 VALUATIONS FOR SECURED LENDING LENDERS’ PERSPECTIVE IN BOTSWANA 12 LENDING AND LENDERS’ PERSPECTIVE IN BOTSWANA 12 FOR SECURED LENDING AND LENDERS’ PERSPECTIVE IN BOTSW Full Report 13 Figure 5: Use of existing valuations by lender Figure 8: Direct instructions by Lender Figure 6: Borrower involvement in selection of Valuer they consider when choosing an external valuer for the 12 VALUATIONS FOR 12 VALUATIONS FOR SECURED LENDING AND LENDERS’ PERSPECTIVE IN BOTSWANA 12 VALUATIONS FOR SECURED LENDING AND LENDERS’ PERSPECTIVE IN BOTSWANA 20 SECURED LENDING AND LENDERS’ PERSPECTIVE IN BOTSWANA

panel. Figure 7 illustrates the results. Membership of Real

12 VALUATIONS FOR SECURED LENDING AND LENDERS’ PERSPECTIVE IN BOTSWANA 12 VALUATIONS FOR SECURED LENDING AND LENDERS’ PERSPECTIVE IN BOTSWANA 12 VALUATIONS FOR SECURED LENDING AND LENDERS’ PERSPECTIVE IN BOTSWANA Estate Institute (REIB) of Botswana and registration with 10

Use of Panel Valuer's Valuation produced for Borrower ALWAYS

Use of Non - Panel Valuer’s Valuation produced for Borrower

SOMETIMES

RARELY/NEVER

Real Estate Advisory Council (REAC) is clearly a very important factor, as well as experience and qualifications. Out of 9 respondents, 3 indicated that they emphasise professional indemnity insurance and independence. The results show less convergence on factors such as reputation in market and turn-around time.

Taking Botswana Innovation Hub to the people...

Stakeholder Engagement Seminar – Marang Gardens, Francistown

Figure 5: Use of existing valuations by lender

Co-sponsored by Botswana Investment and Trade Centre

12 VALUATIONS FOR SECURED LENDING AND LENDERS’ PERSPECTIVE IN BOTSWANA

A research paper on mortgage valuations in Botswana has unveiled that there are areas within the valuation process which may be a threat to independence and objectivity. This study was based responses by state-owned financial institutions and lenders licensed in accordance with the Banking Act to self – administered structured questionnaires which sought to elicit their views and experiences in the valuation process. According to the paper accurate and independent property valuations are crucial to the integrity of the mortgage system and are essential component of credit risk management to facilitate banking stability. The report notes that banking and financial crises led to increasing concerns about valuation accuracy and reliability, particularly in countries such as the United States and United Kingdom, which led to proliferation of research on the valuation process to improve standards. This work is particularly welcome in the context of Botswana ad will help provoke debate considering that there is aura of public discontent about property pricing and valuers inflating house prices. The report suggest among other things that the prevailing circumstances where borrowers have direct contact with valuers and are able to appoint valuers and pay valuation fees, present opportunities for moral hazards and conflict of interests to arise which may compromise objectivity and independence. It recommends that the regulatory system ought to improve through building capacity within the regulatory body, Real Estate Advisory Council (REAC) and professional body Real Estate Institute of Botswana(REIB) to ensure proper supervision of valuers and developing valuation standards for application in Botswana consistent with International Valuations Standards in order to build public confidence. It also suggest constant dialogue between stakeholders like Bank of Botswana, Bankers’ Association, REIB and REAC to agree on a robust valuation process. The paper was authored by Donald Mengwe and a copy may be obtained from Boidus Media. Contact Killion on +267 75505291 or killion@boidus.co.bw.

1. Botswana Innovation Hub CEO Alan Boshwaen 2. SAiS Country Cordinator Ambrose Makgonatsotlhe with SAiS Project Management Officer - Namibia Sharon Kasanda 3. BOCCIM’s Zoe Matenge with Kago Kgosietsile 4. Tefo Phatshwane and Thanolo Lekobu of the BITC with the Director of Cluster Development Dr. Budzanani Tacheba 5. Guests

6. Ngwao Puswa, poets entertaining guests 7. Deputy Mayor of Francistown Ms Joyce Ndove with Botswana Innovation Hub’s Director of Corporate Services Tendani Holonga-Wotho 8. Council Chairman, Botswana National Vision 2016 Council, Martin Mokgatlhe, Guest Speaker Dr. Mark Gordon, SAiS Project Management Officer - Namibia Sharon Kasanda and CEO Chamber of Mines, Charles Siwawa

Innovation Day Exhibition – Gallo Mall, Francistown Co-sponsored by Botswana Investment and Trade Centre

1. Global Expo Coordinator-BITC Tefo Phatshwane, with Business Analyst Thanolo Lekobu (Right) and a visitor to their stall (Middle) 2. Botswana Innovation Hub CEO Alan Boshwaen (Black suit) with staff and participants at the exhibition 3. Kago Kgosietsile, Ambrose Makgonatsotlhe and Patel Barwabatsile manning the Botswana Innovation Hub stall

4. Kelebogile Paulo of the Peekay Building, Carpentry and Upholstery fielding questions from the BTV crew 5. Exhibitions attendants 6. Director of Steam and Energy Systems Jerry Du Preez with Inspector of the Mines Phillip Radithupa

Guest Column / Sustainability Page 6

SUSTAINABLE EDUCATION Can Sustainability Be Taught? Should it be? [Source: archdaily.com]

Knox Innovation Opportunity and Sustainability Centre [Image © Peter Bennetts]

The Architects’ Journal recently published an article pitting five competing views of teaching sustainability against one another. The opinions come from a range of backgrounds, including engineers, tutors and landscape architects, and discuss how architecture students should be taught to design in a sustainable way – or if they should be taught this at all. The competing opinions are telling in the issues that they highlight, demonstrating how complex the issue of sustainability has become, and how it fits into the wider context ofarchitectural education. Austin Williams, director of the Future Cities Project and a lecturer at Xi’an Jiaotong-Liverpool University in Suzhou begins the discussion with the controversial view that sustainable design should not be taught in universities. According to Williams, the topic of sustainability is becoming accepted as a mantra which “undermines critical engagement and replaces it with blind loyalty”. He highlights the number of diverse institutions which are embedding the sustainability ‘mantra’ into their courses, and asks “are students being educated, or indoctrinated?” Next up, director of RESET development Blanche Cameron provides the polar opposite view: “If we want livable 21st century towns and cities, we need to train our future built environment professionals to integrate soil and vegetation into every site”, she says. Cameron’s view is one rooted in urgency, caused by the rapid decline of the natural environment. She warns that “unless we adopt a deeply rooted restorative approach, we may just end up fiddling while Rome burns.” It is unfortunate that there is no further discussion between these two contributors, as they seem to ignore the grounds for each other’s opinions. How would Williams dismiss the urgency with which Cameron believes we need to act? Conversely, how would Cameron respond to the accusation that her ideal for education is a form of indoctrination? The next three contributors all share a common theme: that to achieve truly sustainable design, we need holistic thinking and collaboration across disciplines. Doug King, an engineer specializing in building performance argues that ”today’s students, architects and engineers alike, must be challenged to apply their creativity to jointly solving real-life problems.” This opinion is then echoed by Sergio Altomonte, associate professor and course director at the University of Nottingham, who says that “education for sustainability must facilitate multidisciplinary dialogue between different professions”, and landscape architect Tim Waterman who believes ”every architecture programme should be paired with its landscape architecture complement.” This reflects a growing concern that architectural education in the UK is too rigid to allow architecture students to work in a cross-disciplinary way. Earlier this year, a report found that architectural education forces students to be ‘generalists’ rather than allowing specialization. This in turn has lead to the Architects’ Registration Board (ARB) in the UK to promise a review of the effectiveness of architectural education.

BOIDUS FOCUS September 2013

SUSTAINABILITY TODAY

Water Conservation Strategies Key to Sustainable Development by Phenyo Motlhagodi

The United Nations Framework Convention on Climate Change (UNFCCC) is an international environmental treaty which was produced at the United Nations Conference on Environmental and Development (UNCED), informally known as the Earth Summit, held in Rio de Janeiro in June 1992. The objective of the treaty was and still is to stabilize greenhouse gas concentrations in the atmosphere at the level that would prevent dangerous anthropogenic interference with the climate system. The treaty set no mandatory limits on greenhouse gas emissions for individual countries and contains no enforcement mechanisms. In that sense, the treaty is considered non-binding. Instead the treaty provides for “updates” called “protocols” that would set, mandatory emission limits. The principal update is the Kyoto Protocol, which has become much better known than the UNFCCC. Since UNFCCC entered into force in 1995, the Conference of Parties (COP) to the Convention have been meeting annually to assess progress in dealing with climate change. COP adopts decisions and resolutions. Successive decisions taken by the COP make up a detailed set of rules for practical and effective implementation of the Convention. The COP serves as the meeting of the parties to the Kyoto Protocol and the annual get together is referred to as the Conference of Parties serving as a meeting of Parties to the Kyoto Protocol (CMP). Further to this, Parties to the convention that are not parties to the Protocol are able to participate in the CMP as observers and without the right to take decisions. Botswana in this regard is a party to the Protocol. For the next conference, COP 19, Poland will be the host country towards the end of November 2013 and “COP19/ CMP9 affords an opportunity to consolidate responses to climate change and to showcase the many ambitious adaptation and mitigation initiatives being implemented around the world. By scaling and speeding up action we prepare for a universal global agreement and move toward a safer future.” Says Christiana Figueres, Executive Secretary UNFCCC. H.E. Mr. Marcin Korolec, Minister of the Environment of Poland and President-Designate of COP 19 and CMP 9 on his thoughts with regard to Climate Change feels “We need to be prepared for nine billion people on this planet, as we all deserve a decent and secure life. By being creative, the world can reduce greenhouse gas emissions while creating jobs, promoting economic growth and ensuring better living standards. Where there is a will, there is a way!” At the core of all of these thoughts is Development, Sustainable Development and Water is central to that Development. The last decade saw the highest increase in global average temperatures and the highest food prices in history. As temperatures rise due to increased concentration of greenhouse gases, world leaders express consternation when they see the destruction and economic loss that results from flood, droughts, typhoons and hurricanes. This has been the pillar of the Executive Secretary, The Global Water Partnership (GWP), Dr Ania Grobicki’s argument and that further to this; Climate Change will be felt largely through its impact on water resources. Rising temperatures bring increased risks of both floods and droughts, threatening lives and national development. When water is in short supply or its availability unpredictable, development is disrupted. In many countries in the developing world, GDP fluctuates with the annual wa-

ter availability. The World Bank estimates the flood damage to be about USD 10 billion in Pakistan, while in Australia the estimated cost of rebuilding Queensland State alone stood at AUS$ 9.8 billion. Floods in Mozambique in early 2000 slowed down GDP growth to 2.1 per cent. The key issue here brought forward by those who have clearly analyzed the relationship between Climate Change and Water and particularly deal with water i.e. The Global Water Partnership is that despite overwhelming evidence of the link between water, climate and development, negotiations in the UNFCCC have side lined water management. This brings up a recent local story about a construction firm, and the water appropriation board in the construction of a road. Improved water resource management should be seen as part of the solution for both adaptation and mitigation. While water is recognized in article 4.1 (e) of the Convention, the international discourse on climate change has not provided dedicated space for discussions on integrated water resource management as a solution to the impacts of climate change. The UNFCCC’s response to climate change is to deal with causes (mitigation) and impacts (adaptation). Unfortunately, this approach has resulted in a divide between those working on mitigation and those working on adaptation. In the process, cross-cutting issues such as water resource s have been marginalized in the global negotiations architecture. That then said the water challenge does not just sit at an international level where the right hand is not aware of what the left hand is up to or trying to achieve. This could also be a simple issue of pure disinterest and lack of acknowledgement of other disciplines and their contribution to solving the challenge. The challenge really, as it has become clearer, emanates right from countries, especially the developing countries that then form blocks of Country Positions to present to UNFCCC. With that in mind, as the Botswana develops the Climate Change Policy, Strategy and Action Plan, Clivil Society and professionals setting up the Green Building Council, the existence of the Water utilities and Water Appropriation Board, Water related NGOs such as Tlhare Segolo up in Ngamiland and many other various entities, there needs to have solid communication channels and a way in which all concerned are aware and working together to insure creative ways around water resource management

tel: 3922795 | fax: 3924923 | email: info@solahart.co.bw

BOIDUS FOCUS September 2013

Kazungula Bridge - Gateway To The African Mainland by Boidus Admin

>>> FROM PAGE 01

Kazungula Bridge Gets Underway The construction of the US$ 248 million (BWP 2.1 billion) Kazungula Bridge will infinitely improve the quality of life for the thousands of people who are currently reliant on a ferry to travel to and from Zambia and Botswana. “Schoolchildren and breadwinners are forced to wait a minimum of four hours to get across the bridge, but with the new bridge being developed, this would drastically improve access to and from both countries,” said GIBB’s Director: Electrical Engineering, Dr Willem Sprong. The Kazungula Bridge is a pact between Botswana and Zambia, a bilateral trade tie. The bridge would be instrumental in aiding Botswana and Zambia to work together, increase trade and assist citizens’ work in either country without work permits. The project will see leading South African consulting engineering company, GIBB earn at least R40 million through a joint venture with Nippon Koei, managing the review of the pre-construction phase and detailed designs, and ultimately, the construction. According to Dr Sprong, the Kazungula Bridge is a 960m bridge to be built over the next five years. Construction is envisioned to begin in March 2014 with completion expected for early 2018. This new bridge will accommodate both road and rail. “We are responsible for the design review, tender documentation and supervision of the construction of the Kazungula Bridge project,” said Sprong. He added that the bridge will be unique in that it would consist of two one-stop border posts on either side of the bridge, which will prevent queues by motorists on the bridge itself. Other players in the JV working on the project include Bothagka Burrow Botswana, CPP Botswana and Zulu Burrow Development Consultants. “One of the challenges on this project is that there is an annual three month flooding season on the area and this will potentially hinder the construction during this period. The team would have to ensure that they maximise the period before flooding season starts to meet the appropriate deadlines,” added Sprong.

PONT DU GARD [whc.unesco.org] The creation of bridges is a practice dating back as far back as the Roman ages. The Roman bridges, which formed a strategic part of the expansion of the Roman Empire across the rivers of Europe, can still be today found forming a critical part of European heritage. The bridges allowed the Romans to move goods and solders into new conquered territories. One might also say bridges enabled ultimately the development of means and know-how to conquer the seas and discover new territories. For the Romans, the design of these bridges was not just an act of bridging the river; it was an engineering discovery and ingenuity that required pushing of the engineering boundaries beyond the norm. This was the time that the arch bridges were perfected and celebrated as much as landmark.

CLIFTON SUSPENSION BRIDGE [cliftonbridge.org.uk] During the 1800’s the design of bridges again turned a new chapter with the invention of the suspension bridge and the pioneering of use of wrought Iron by Isambard Kingdom Brunel. Developed to link Clifton in Bristol to Leigh Woods in North Somerset, England the Clifton Suspension bridge allowed bridging of long spans with less material and easy of construction never seen before at the time. This was to be the first of many heroic feats of bridge engineering with the USA’s Humber Bridge and followed by many others across the world beating the record of the longest bridges.

MILLAU VIADUCT [fosterandpartners.com]

Project Feature Page 7

Boidus Feature Page 8

BOIDUS FOCUS September 2013

Government & Private Sector Sorting Out Construction

MIST, BOCCIM and Industry Professionals Task Force by Kibo Ngowi

BOCCIM’s Long Fight For Construction Industry Regulation Bearing Fruit by Kibo Ngowi

because there is no work going. So they are using every waking moment to find work.

BOTSWANA CONFEDERATION OF COM

AND MANPOWER BF: The regulation of professionals can be done either through government or self Head Office regulation. What structure is being applied in the new regulator? BOCCIM House Old Lobatse Road MM: and other organisations have P.O.BOCCIM Box 432 aGaborone code of conduct that we’d like members 3953459 toPhone: sign, whether you’re a tourist operator or Fax: 3973142 a construction company. But there’s a limit to Email:publicrelations@boccim.co.bw

Boidus Focus (BF) sat down for an exclusive Your Ref: interview with BOCCIM head of construction sector Markos Markides (MM) to discuss BOCOur Ref: CIM’s role and views on the developing construction industry regulator.

>>> FROM PAGE 01 At the 2013 Construction Pitso, hosted by the Ministry of Infrastructure, Science and Technology (MIST) in collaboration with other government departments and organisations on the 6th of August at Boipuso Hall, the MIST Deputy Permanent Secretary Ulf Soderstrom delivered a presentation on the status of efforts to create a construction industry regulator. He began by highlighting that these current efforts emerged from two separate studies – one conducted by the UB in collaboration with BOCCIM and the other conducted by BIDPA – which drew the same recommendations: the establishment of a construction industry authority with a contractors’ registration board.

st BF: 1 Please explain BOCCIM’s role in the August 2013 ongoing formation of the construction industry regulator that the Ministry of Infrastructure, Science and Technology is in the process of establishing.

It was in this vein that MIST proceeded to establish a team of private sector volunteers representing the various construction industry organisations to work with the team the ministry had established from its own personnel. Invitations were sent out in March 2013 and the team commenced work in July.

tion Board, being ahead of the other Registration Bodies, to assist them by sharing what they have learned and their registration software.

The significant achievements that the team has made to date have been to accept the consolidated mandates from the two studies and to establish three sub-teams: one to compose the preambles for an Act; another to develop a content list for the proposed authority to meet agreed objectives; and a final team to compile a summary of related sections from multiple national Acts from across the globe.

Building Control Regulations Soderstrom also spoke about the status of the ongoing revisions of the Building Control Act stating that a Cab Memo was prepared requesting permission to review the Building Control Act to cover the new issues raised in the revised Regulations, among which is the use of Private Sector Professionals to approve Applications and Inspect & Certify on-going works.

Soderstrom said that the team would finalise and agree the preambles and content list on the 15th of August and that the next step would be for a number of task groups to compose the contents for a few sections each based on appropriate text from existing Acts with the aim of developing an initial layman’s draft for an Act by October 2013.

The key purposes of the regulations revisions are to: 1. Separate Regulations from Standards. 2. Referral to Standards instead of stating “to the satisfaction of specific officers.” 3. Include use of private sector professionals to handle applications and inspections. 4. Cover areas not previously covered.

Following this the team will need to circulate the AG Chambers draft Bill/s among all Ministries and independent departments; respond to any queries raised and modify the Cab Memo; submit the Cabinet Memorandum with the Proposed Bill/s to Cabinet for approval; gazette the approved Bill/s and finally, present the Bill/s to Parliament for enactment. Soderstrom noted the progress that has been

We have set ourselves targets; we want to get the basic structure and outline of the organisation with MIST. They have allocated resources to this in the form of people dedicated to this animal that we’re trying to build. So we have set ourselves a target to formulate the basic structure of the organisation which we will then pass on to government.

Statement From BOCCIM Council

made by construction industry professionals to establish regulatory bodies covering individual professions including The Engineers’ Registration Board, The Architects’ Registration Council and The Quantity Surveyors Act. These bodies are all at different stages of development but Soderstrom encouraged The Engineers’ Registra-

The required actions are to decide on the optimal inter-relationship between the Authority and the Contractors’ Registration Board; to develop a cabinet memorandum for the establishment of the body or bodies when a solution is agreed upon and finally, to draft instructions to the Attorney General’s Chambers.

self regulation you need the weight of the law behind you. And then that law needs to be enforced. Self regulation is important but the laws need to be put in place.

REVISIONS include: a. Fire regulations – including some mandatory; b. Accessibility code – to cater for people living with disabilities, including the elderly; c. Green code – for sustainability of developments d. Energy and Water – efficiency and saving. e. Allow the use of alternative technologies – for BOBS approved materials and elements. Soderstrom concluded by stating that MIST is working on improving Planning by establishing Long Term Infrastructure National Development Planning, of 12 to 25years, with Gateway Approvals at 3 stages for inclusion in the NDPs with fixed time schedules and separate more accurate budgets per development stage.

BF: Challenges associated with the global recession and lack of skills also affect the MM: BOCCIM has been asked by MIST to be industry. How will the regulator work with part of the team (government and private secgovernment to resolve some of these chaltor) that is involved in the formation of the lenges? regulator/authority for the construction sector. recognises and acknowledges the recent internal challenges fac The BOCCIM idea of a construction regulator/authorMM: The regulator is not a silver bullet that ity/Council is not new and can be traced back which is now visible through the media publicity. can solve all the problems. It is up to the clito the early 2000 and even before the advent ent in every case to pick the right contractor of PPADB. BOCCIM has even commissioned based on budget and skills or capabilities. studies that have recommended the establishof suchfor unfortunate reporting the not happenings at BOCCIM, C mentRegardless of a regulator/authority the construcThose clients on are often discerning enough tion sector. for our liking. In the past we have seen con-

assure our valued members and tractors stakeholders that BOCCIM as an organisat with very limited capability and no

The idea therefore originates the privateThegood reputationCEO being (Maria given jobs. We hope united to serve its from members. BOCCIM Machailo-Ellis) is a sector and Government has now taken aboard that the regulator will go some way to help stopped coming continues to up ensure that the BOC the initiative. Between 2008 to andwork. 2010 theThe BOC-CEO sortas thisusual out. But in the end it’s to the client. If the client wants to hire someone with CIM studies consulted widely with the stakeleadership is on top of the BOCCIM mandate. no reputation or a bad reputation, that’s what holders. Between 2011 and 2012 when govthey’re going to get. However when it comes ernment reviewed BOCCIM’s studies through to standards of buildings, we will rely on buildBIDPA, stakeholders were also involved and inspectorsthat and the lawsheld of Botswana. consulted widely. Presently, the private sector The Special General meeting of ing members was on Tuesday, 30th Ju team involved is open to all private sector asguidance on the way forward regarding AGM.will The will BF: Whatthe measures the AGM regulator puttake sociations of the construction sector. in place to make sure that only reputable 2013. professional organisations are operating in BF: Considering that this idea has long the country? been in the offing what are the challenges

place o

that have been holding it back?

The BOCCIM mandate has over Firstly, 40 years to be the mainhasvoice each been construction company to of busine be registered. Secondly, the company has to MM: Well firstly it cannot be established as a business climate. We acted as a leading advocate for private sector interests a have directors who have not been involved in private sector initiative alone. It can only operproblem projects. not sure of thedevelopmen ate ifthat. the government sees fit to puthas together The organisation had a any fundamental roleWe’re to play in the exact mechanism but already PPADB is talklaws from our recommendations and their ing about listing non-performing own achieved input. That isathe major challenge: positive impactif you economically, socially and hascontractors. protected the econ One of the things government is already doing don’t have your government buying into the community country through its philosophy offorconstructive pol is drawing up end-of-activity reports each fact business that you need such a body then it won’twide project undertaken. happen because it’s got to go through Parliawon the confidence and respect of government & that of other stakeholders in

ment.

What we’re working on with this Act is that it will be another layer to the heavy bureaucracy The other challenge is that right now in the that is already in place in Botswana. But there state that the construction industry is in, here BOCCIM Officers:A.L. Monchusi (President), K.K. Molosiwa (Vice Pres.), J.S. Wellio (Vice Pres.), B.D.Phirie, (Treasur is no way of avoiding it. There is no easy fix in Botswana there is a lack of input from proto the industry’s problems. This exercise is a fessionals. You can talk about organisations result of various studies, and replicating best and associations but people need to invest practices from around the world so this has to their time for this to become a reality. And happen and we will push for it to happen. in this situation many people aren’t able to invest their time and attend these meetings

BOIDUS FOCUS Classifieds WELCOME

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Welcome | 2013/14 Calendar Events | Tenders/Awards| September 2013

2013/14 CALENDAR EVENTS

TENDERS/AWARDS

AFRICAN PROPERTY INVESTMENT SUMMIT 2013 Plot 8913 Maakgadigau Road Tel: (+267) 360 2000 or 390 6853 Gaborone West Industrial Site Fax: (+267) 390 6822 Private Bag 0058, Gaborone TOLL FREE: 0800 600 751

The Public Procurement and Asset Disposal Board (PPADB) was established by and Act of Parliament as an independent parastatal authority, under the Ministry of Finance & Development Planning responsible for the coordination and management of prudent procurement of works, supplies and services for Government, and the disposal of public assets. VISION: To be the centre of excellence in public procurement and asset disposal by 2018. MISSION: To lead the effective implementation of a devolved, efficient, cost effective and transparent public procurement and asset disposal system through and appropriate regulatory environment.

TENDERS JOBS EVENTS List/Find the latest Tender and Jobs In Construction Stay updated with current Industry Events and activities

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BOIDUS PROPERTY FORUMS September 2013, week of the 23rd

Botswana’s property market is one of the highest earners ahead of SA, UK, Japan by IPD Index, a global research agency, how can you be part of this lucrative market? Come join us over three Breakfast forums and find out. Television Documentary: The Event will be part of a CNBC Africa Documentary Film Boidus Media is exclusive agent for CNBC Africa Who can attend? The forums are an invite only, targeting key property investors and decision makers; 50 attendants are expected each day with a total of 150 expected over the three days. • Property Investors and Homebuyers and builders • Developing Companies Executives • Property Financing Institutions (Executives) • Investment Managers • Real Estate Executives

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BOIDUS FOCUS ROADSHOW OCTOBER 2013

BOIDUS FOCUS ROADSHOW The road show’s will take Boidus media platforms to its readers and building consumers across the country through an interactive mix of media engagement that will involve face to face interaction, live radio broadcast, education functions and seminar discussions.

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VALUES: 1. Fairness and Equity 2. Integrity 3. Customer Service 4. Partnerships 5. communication 6. Tranparency

Critical Factors of Tender adjudication 1. Capacity 2. Capability 3. Value for Money 4. Delivery Period 5. Price

Decision Criteria of Tender Adjudication 1. Highest Technical Score 2. Highest Technical & Financial Scores (Combined) 3. Compliant & Loset in price

In Accordance with Clause 86 and 87 of the PPADB Act, the Board shall advertise: (a) All applications by contractors for registration and thereafter the decisions on the grades and codes accorded to applicants; (b) All tenders being invited; bids received and award decisions and prices. The board is also required to publicize the decisions arising from complaints and challenges dealt with by the Board or the Independent Complaints Review Committee.

Board Adjudication Decisions for the 15th August 2013 Board Sitting

MINISTRY OF STATE PRESIDENT Tender No: PR 9/3/92/2000-2001 Tender Title: Botswana Public Service College’s (BPSC) recommendation to award the tender for the Supply and installation of Aluminium Doors to Alucraft (Pty) Ltd at a fixed price of BWP 688 755.20 inclusive of VAT Adjudication Decision: Approved Submission Date: 19.07.2013

MINISTRY OF INFRASTRUCTURE, SCIENCE & TECHNOLOGY Tender No: PR 9/3/3/12-4 Tender Title: Department of Building & Engineering Services’ request for a waiver to short-list the below listed contractors for the Integrated Sports Facilities at Francistown - Procurement of Design and Build & re-construction of the Soccer Pitch, Running Track and Associated Infrastructure. • The Turf Specialist(Pty) Ltd • Servest Landscaping(Pty) Ltd Adjudication Decision: Approved Submission Date: 02.08.2013 Tender No: PR 9/3/3/7-67 Tender Title: Department of Building & Engineering Services’ retroactive request to increase consultancy fees from BWP2. 041, 890.50 to BWP7, 285, 834.49 for the tender of Proposed Police staff housing at Letlhakane. Adjudication Decision: Did Not Approve Submission Date:

Board Adjudication Decisions for the 08th August 2013 Board Sitting

MINISTRY OF TRANSPORT AND COMMUNICATIONS Tender No: PR 9/5/3/8-71 Tender Title: Roads Department’s recommendation to award the tender for the Construction of Bridge across Ntshe River under the Completion of Upgrading of Kgari & Jackalas No1 Access Roads to CDK (Pty) Ltd at an amount of BWP 14,034,702.92 Adjudication Decision: Approved Submission Date: 29.07.2013 Tender No: PR 9/5/3/12-13 Tender Title: Roads Department’s request to award the tender for Consultancy Services for Detailed Design, Update of Traffic Study, Materials Investigations, Preparation of Bidding Documents and Construction Supervision of Grade Separated Intersection at Thapama Roundabout in Francistown to Pula Consultants (Pty) Ltd at an amount of BWP7, 856, 293.71 Adjudication Decision: Approved Submission Date: 29.07.2013

Board Adjudication Decisions for the 25th July 2013 Board Sitting

MINISTRY OF EDUCATION & SKILLS DEVELOPMENT Tender No: PR 6/1/1/11-1 Tender Title: Ministry of Education and Skills Development’s (MOESD) request to use the Direct Procurement Method to procure One hundred and Forty -Two (142) residential houses from Botswana Housing Corporation (BHC) Adjudication Decision: Approved Submission Date: 18.07.2013

MINISTRY OF TRANSPORT & COMMUNICATIONS Tender No: PR 9/5/3/12-18 Tender Title: Roads Department’s recommendation that the tender for Shoulder, Resealing, Drainage & Road marking of Maun – Sehithwa Road (94 Km) be awarded to LVC Botswana (Pty) Ltd at an amount of BWP115 765 472.90 inclusive of VAT. Adjudication Decision: Did Not Approve Submission Date: 18.07.2013

MINISTRY OF LOCAL GOVERNMENT & TECHNICAL SERVICES Tender No: PR 9/3/105/1999-2000 Tender Title: Department of Building & Engineering Services’ (DBES) request for the Direct Appointment of Independent Claims Consultant, SM Project Management Consultancy to assist the PE in defending the matter between Tuwana Construction and MIST, at the contract amount of P2, 377, 344.00 and contract period of Eight (8) months. Adjudication Decision: Did Not Approve Submission Date: 18.07.2013 COMMITTEE DECISIONS: Adjudication decisions on Ministerial Tender Committee decisions are available on the PPADB website: www.ppadb.co.bw

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BOIDUS FOCUS September 2013

Boidus Feature Page 13

Three Lessons from National Stadium Procurement & Delivery Debacle by HK Mokwete

‘What started as an ambitious project to reinvigorate and remake the National Stadium, ended up being reduced to a squalid and feeble exercise of adding a few new seats, pink paint, grass and still some two years since this project started, the stadium is still shut for national events’, Boidus, Focus 13 Dec 2011

>>> FROM PAGE 01 The Renovation of the National stadium is now complete. This was marked by the formal handing over to the Sports Council recently by the Minster of Infrastructure and Technology, Mr Jonnie Swartz. This is years after an improvement exercise to attract world cup teams to come to Botswana and train here was started. The final project cost in the region of P67 million, hence the reminiscent look back of what Boidus Focus has commented on this sorry state over the years above.

therefore not possible to have a relatively accurate project construction cost which most of professional fees are based on. Based on the schematic given information, it will always be the case that the construction cost might go up as the project is developed and so will the professional fees and the overall development fees.

What started as a simple job, obvious in nature and with little complexity fell right into what has become the enigma of the nations complete lack of control when it comes to public projects procurement. The Stadium fiasco should not be seen as an isolated case, but rather as a classic example of what is a fundamental weakness to our public projects procurement systems. It is a perfect exhibition of just how ineffective and/or non existent our procurement systems are, especially those involving public works. The lack of our own home made contract systems, arbitration systems and public procurement protections has created a big loophole for both consultants and government procuring entities to effectively abuse the public’s good will.

the case of the National Stadium, the consultants however maintain that they delivered the stadium and the pitch at the right cost. But the challenges of predetermined project procurement also have challenges in what forms the terms of specifications. Because the project is procured at the schematic stages, often there are no design specifications, which in standard form of contracts form part of the legal terms of agreement. For example, if you are contracted to design and layout playing filed turf, the specifications of the turf and how it should perform upon completion form part of the contract agreement. In the absence of those specifications, a consultant can deliver a filed turf with none standard performance and would deem themselves to have fulfilled their end, because there was never any agreement on the performance of the field. This sits at the heart of most the projects that are now being deemed none performing, the challenge is ascertaining whether performance was predefined and agreed on contract through specifications or just assumed to so called ‘international standards’.

To name but a few other inflicted projects; the Francistown Stadium, The Serowe stadium, SSKI Airport, Maun Airport, the National Theatre, The Shakawe Secondary School and a whole host of other schools and police stations across the country. These few projects all have/are suffering from our flawed procurement system. What then can be learnt from the Stadium’s stand off that can a basis for overhauling our systems. Below are three of some of the many systemic problems at the heart of the matter: Procurement methods The local project procurement processes based on some form of price bidding are fundamental ingredient to problems on our public projects. Usually these biddings such as those used in procuring the national stadium, the Francistown stadium and SSKI airport are done at outline feasibility stages of the projects. This is a stage in the design process where a project is still in outline and does not have all building elements defined. It is

This practice of bidding for projects on fees or so called ‘financial Tenders’ for consultants when projects are not yet fully designed and detailed sits at the heart of projects cost escalation. In

Dispute resolution

Design and Build The current Project Management styled procurement of public projects, with Government through DEBS acting as the overall project manager is going against international trends which favour the process of Design and Build procurement methods. This design and build procurement puts the responsibility of both design and building the project with the responsibility of the Lead Contractor. The Contractor here can refer other contracting parties including development companies. This method has been proven to result in cost effective and timely delivery of projects. The basis of it is that contractors agree on standard fees for

The National stadium stand off between government and the Consultant over the quality of the delivered pitch presents yet again a key lesson to learn from our current procurement shortfalls. The Consultant in many cases is often quoted highlighting that they delivered a good project on

holistic project delivery. This way costs are fixed and time is penalised where the project goes over the scheduled agreed period. The delivery of the stadium and many other public works projects can benefit through the proper implementation of a Design and Build procurement system.

Consultant. This practice is fundamental flawed in that it creates an unnecessary duplication of roles and in the process create voids in responsibilities. For example where there are cases of alterations and other details are involved, often the lead constant has little say meaning that even though they have overall responsibility to deliver on time and budget, their efforts can be frustrated by decisions taken by the clients project managers who would be acting on behalf of themselves as a client.

Francistown Stadium

Project Management and Project Monitoring Project management is a crucial part of project delivery. Although not a traditional standalone profession, it has in the recent years grown to close a gap left by architects in ability to perform and deliver projects timely and on budget. Clients are increasingly turning to ‘Project Mangers’ to ensure projects are implemented to agreed terms and timelines. The problem with public projects and the DEBS arrangement is often the duplication of roles brought about by a client (DEBS) who also in turn want to see themselves as project manager, clerk of works of their own projects. This is often with project management also expected from the Lead

budget, while MIST on the other hand contest that the pitch did not meet international standards. As mentioned above, the source of this despairing views on what was to be expected is lack of definition of the performance expectations from the inception. But what follows when a dispute is declared is a critical part of project implementation. Disputes are common and part of project life. It is how they are handled and resolved which is important. Building contracts provide many options for resolving disputes with the best interest of the project other than court litigations. The standard forms of contract dispute resolution often start with, arbitration, reconciliations and adjudication. These are usually enshrined in the contract from the start, including who or how to determine an arbitrator and or adjudicator. The judgement from arbitration is usually deemed final and binding to both parties. It does not however preclude aggrieved parties to take up the case with the courts upon project completion. This structure ensures that you don’t have a stand off, where one party can hold a project to ransom while pursuing court process. In Botswana’s public procurement, more needs to be done to develop appropriate dispute resolution procedures and also developing local competently licensed arbitrators.

Sir Seretse Khama International Airport

Professional Association Page 14

BOIDUS FOCUS September 2013

Professional Engineering Associations in Botswana by Boidus Admin

The Botswana Institution of Engineers (BIE)

Association of Consulting Engineers Botswana

www.bie.org.bw

www.aceb.org.bw

The Botswana Institution of Engineers (BIE), is a professional institution consisting of engineers from all engineering disciplines. It was formed in 1983 by a group of engineers concerned about the development, practice and status of engineering in the country, particularly with regard to the importance of its contribution in national development.

Since Botswana independence in 1966 the establishment of consulting engineering firms was a process which gathered momentum during the 1970’s to the present day where over 45 firms now maintain permanent offices mainly in Gaborone.

It was previously known as the Botswana Engineers Society but was changed in 1995 to Botswana Institution of Engineers, following a major review of its constitution. The BIE is a rapidly growing institution and has great potential. One of the greatest achievements of the institution has been the Engineers Registration Act (ERA) enacted by the parliament by parliament. In December 2008, the amended ERA was approved by Parliament – a move that would ensure full regulation of the engineering profession and require every practicing Engineer in Botswana to register with BIE. The Registration Act would be implemented by the Engineers Registration Board (ERB) which will initially be funded by The Botswana Government, until such time that both BIE and ERB are self-sustaining. The administrative and operational structures of ERB are being established with the support of the Ministry of Works and Transport. At long last, the long-awaited era of engineering regulation has arrived, and the BIE urges all engineers to immediately register with the BIE. The institution has established a Memorandum of Understanding with the UK Institution of Civil Engineers. It is also a member of the Commonwealth Engineers’ Council and the Botswana National Construction Industry Council. The institution also maintains close collaboration with a number of institutions or organizations involved in engineering in Botswana. These include the University of Botswana, Association of Consulting Engineers, Botswana Technology Centre and the Association of Building Contractors. The institution continues to seek relations with other international institutions. There has been communication with the Zimbabwe Institution of Engineers for an agreement. This is still under consideration.

In 1984 representatives of interesting firms suggested the formation of an association and membership criteria was established, constitutional matters were addressed and membership was expanded. A core of dedicated firms and members preserved through periods of mixed interest and fluctuating membership until mid 1993 when formal registration was approved and the association was finally born after a long period of gestation. The key objects for which the Association is established are: • To promote the advancement of the profession of consulting engineers. • To participate in the national and international affairs which affect the profession • To enhance the collective reputation and economic vitality of the Members of the Association • To provide Government, public bodies and others with facilities for conferring with and ascertaining the collective views of consulting engineers. • To improve the quality of life for all by the promotion of superior engineering knowledge and skills and their application to projects with professionalism, integrity, independence of judgement and sympathetic consideration of the environment. • confer with associations representing fellow professions, manufacturers, contractors and other persons engaged in engineering works on matters of common interest Contact Details Administration Secretary P.O. Box 502354 Gaborone Tel: (+267) 319 1297 Fax: (+267) 319 1297

Contact Details Plot 10231, Mokolwane Rd., Broadhurst P.O. Box 40535, Gaborone Tel: (267) 357 665 Fax: (267) 357 665

Association of Consulting Engineers Botswana

ON GOING PROJECTS Gaborone North - Infrastructure projects including sewage water and road works

CIVIL WORKS INCLUDING WATER AND SEWERAGE RETICULATIONS & ROAD CONSTRUCTION, REPAIRS GRAVEL ROADS MAINTENANCE AND DUST CONTROL PLOT No. 182 Unit 6 Gaborone Intl Commerce Park (GICP) P O Box 45721 RIVERWALK, GABORONE TEL/FAX: 395 4047 Liftoffinvestments@yahoo.com

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BOIDUS FOCUS September 2013

Education Page 15

Education of an Engineer: UB’s Faculty of ENGINEERING & TECHNOLOGY by Boidus Admin

The Faculty of Engineering and Technology (FET) is dedicated to the following aims: • To produce high quality engineering graduates who can adapt to the work environment and discharge their duties to the satisfaction of their employers; • To be responsive to the needs of the industry in all sectors of the Botswana economy. This will be accomplished mainly by providing study programmes designed to meet the need for highly trained manpower in required areas of technology and the environment; • To respond to the needs of industry through research, consultancy, advisory and related services; • To maintain a continuous dialogue with industry and other relevant bodies to determine and fulfil any needs which may be raised by industry from time to time; • To provide access, with proper theoretical and practical backing, to recent developments in the technology sector and to prepare graduates for professional responsibilities; • To prepare FET graduates to pursue further studies in their relevant Engineering and Technology disciplines.

FacUlTy OF

enGineerinG and TecHnOlOGy arcHiTecTUre and PlanninG ciVil enGineerinG elecTrical and elecTrOnic enGineerinG indUSTrial deSiGn and TecHnOlOGy mecHanical enGineerinG

DEAN (ACTING) J. M. Chuma, BEng (Nottingham), M.Sc, (Essex) PhD (Essex) IEEE, IEE, BIE

DEPUTY DEAN (ACTING) O. J. Kanyeto, B.A.Sc. Civil Eng. (UBC, Canada), M.Sc. (UMIST, UK), Ph.D.(Kingston, UK), MBIE, MIMS

FACULTY ADMINISTRATOR

ACADEMIC DEPARTMENTS AND PROGRAMMES The Faculty of Engineering and Technology consists of five Departments: • Department of Architecture and Planning • Department of Civil Engineering • Department of Electrical Engineering • Department of Industrial Design and Technology • Department of Mechanical Engineering The Faculty of Engineering and Technology offers MPhil/PhD programmes which are interdisciplinary. The Faculty also offers undergraduate programmes as follows: The Departments of Civil Engineering, Electrical Engineering, and Mechanical Engineering offer Bachelor of Engineering Degree programmes in Civil Engineering, Construction Engineering and Management, Geomatics, Land Management, Mining Engineering, Electrical and Electronic Engineering, Mechanical Engineering and Industrial Engineering. The Department of Industrial Design and Technology offers Bachelor of Design Degree programmes in Industrial Design, and Design and Technology Education. The Department of Architecture offers Bachelor of Architecture Degree programme in Architecture, BSc/MA professional degree in Urban and Regional Planning and a BSc in Real Estate. Details of the requirements for admission into the various programmes are outlined in the following pages under each relevant Department.

L. B. J. Dingalo, BA (UB) MA, (Sussex)

HUMAN RESOURCES MANAGER L B Molokomme BCom, MBA (UB)

DEPARTMENT OF CIVIL ENGINEERING

INDUSTRIAL TRAINING COORDINATOR J.N. Tau, BSc. (Florida A&M), PGD (UMIST)

The Department of Civil Engineering offers the following programmes: • Bachelor of Engineering (Civil) • Bachelor of Engineering (Construction Engineering and Management) • Bachelor of Engineering (Mineral Engineering) • Bachelor of Science (Mining Engineering) • Bachelor of Geomatics • Bachelor of Land Management • Diploma in Land Management • Certificate in Land Administration • Diploma in MiningDiploma in Mineral Engineering

DEPARTMENT OF ELECTRICAL ENGINEERING • Bachelor of Electrical and Electronic Engineering Entrance Requirements Admission to the B.Eng. (Electrical and Electronic) shall be as stipulated in Faculty Special Regulations 21.20. Applicants in possession of a Diploma in Electrical and Electronic Engineering, or its equivalent, with a minimum of Credit including a Credit in Mathematics, may be admitted directly into Level 200. Applicants in possession of a Higher Diploma in Electrical and Electronic Engineering, or its equivalent, with a minimum of Credit including a Credit in Mathematics, may be admitted directly into Level 300.

DEPARTMENT OF MECHANICAL ENGINEERING Introduction The Department of Mechanical Engineering offers the following programmes: • Bachelor of Engineering (Mechanical) • Combined Degree (Major in Mechanical Engineering) • Combined Degree (Minor in Mechanical Engineering) • Bachelor of Industrial Engineering • MSc in Mechanical Engineering Departmental Regulations for the Bachelor of Engineering (Mechanical) Degree Subject to General Regulations 000 and 200 and the Faculty Special Regulations 210, the following Departmental Regulations for the Bachelor of Engineering (Mechanical) Degree (BEng) shall apply.

DEAN Prof. J. M. Chuma, BEng (Nottingham), M.Sc, (Essex) PhD (Essex) IEEE, IEE, BIE DEPUTY DEAN O. J. Kanyeto, B.A.Sc. Civil Eng. (UBC, Canada), M.Sc. (UMIST, UK), Ph.D.(Kingston, UK), MBIE, MIMS FACULTY ADMINISTRATOR L. B. J. Dingalo, BA (UB) MA, (Sussex) HUMAN RESOURCES MANAGER L B Molokomme BCom, MBA (UB) INDUSTRIAL TRAINING COORDINATOR J.N. Tau, BSc. (Florida A&M), PGD (UMIST)

Professional Practice Page 16

BOIDUS FOCUS September 2013

It’s Time to Envision A Better Built Detroit. Are Architects Ready? by Boidus Admin / Source: archdaily.com

planned and designed segregated communities outside and inside of Detroit’s limits. They have built gated housing communities, distant suburban single family housing developments, they have built office and industrial parks with warehouse like work space detached from any other amenity, they have built shopping malls surrounded by a sea of parking separate from the homes of the shoppers that drive there. The innate fear of the other, the desire to protect and separate ourselves from difference, the mere convenience and simplicity of developing on unspoiled land, has created a development model where one class, whether poor, rich or middle, have been isolated in one place, separate from the other. It was a profitable model for some but detrimental to our overall culture and economy. Railroad Track in Detroit. Image Courtesy of Shutterstock.com

There is an intimate connection between people, power, poverty and place and there is no better city in the world to see this than Detroit. With the impending bankruptcy we cannot lose sight of the human issues that face our city. For decades money and power have moved away from Detroit’s center. The complex reasons for this are well known so there is no need to rehash them here. Even in the face of city government’s failure to manage its assets properly, this is changing. There is slow and halting movement back to the center.The movement back to the center is a good thing for many reasons. It will help bolster the tax base and that is the basic financial problem the city faces. But more importantly it will create a stronger spatial connection between power and poverty that we haven’t had in this region for a century. Power will see poverty and poverty power. They

will feel each other’s existence. They will see the humanity of each side and be nudged to recognize the shared responsibility caring for this shared place. This is how successful vital, dense urban cities operate. There is an acceptance of diversity on all levels. Barriers are reduced and human interaction encouraged. This is how creativity is bred. Exposure to diverse people, places and ideas excite and promote the imagination and a sense of the common good that includes everyone. Of course, there are no illusions here. The rich and powerful are not likely to hang out on the street corner. That would push human nature beyond its current state. But, like New York City and other dense urban places, there will at least be a shared common place that people, whether powerful or impoverished, can work to improve. For so long developers and their architects have

In much of this country and in Detroit specifically, we have lacked the option of a vital dense and diverse urban life. Many of us see and hope for a safe city that we can walk and live in with diverse people and places to enjoy. We long for the benefits of living in a socially and economically diverse place. This desire is now being recognized. Developers are seeing the demand for urban living in Detroit, but the change is slow. Hopefully bankruptcy does not dampen this progress. Kurt Metzger of Data Driven Detroit points out that the “Greater Downtown housing stock is full. Employment (Downtown) is increasing but the population will need to await new housing. The trend has begun and the momentum is definitely there. Rental rates will need to rise a little more to convince banks and developers, and appraisers, that the market is ready.” I think there is no doubt. The market is ready. We are ready. Architects are working with developers and the community to help bring this about. The first job

of an architect is to envision a better built world. Beyond the details of construction or any specific building style or type we work with our clients and the community to bring about a shared vision of how we want to live. Then we provide the technical and artistic skill to make that vision a reality. The signs are there to make this happen. Recently architects and other designers contributed almost 200 entries to the Hudson’s Site competition sponsored by Opportunity Detroit; over 200 (also not all architects) entries in the Hart Plaza International design competition sponsored by AIA Detroit; AIA and other architects like Dan Kincaid and Dan Pitera of U of D Mercy are participating in and leading the Detroit Works Project; AIA Detroit’s urban priorities committee organized young architects and others building pop-up retail for the “Jazzin on Jefferson” event in June; and, of course, architects are working with private clients on large and small projects that will ultimately fill in and make Detroit a wonderful urban place. The great bones of this city, the soul and creativity of its citizens, whether living in Detroit proper or the surrounding communities make it possible to rebuild this place in an authentic way. From the beauty of the Detroit River to the Woodward city plan established in 1805, with its quirky hybrid spoke street grid combination, to the wonderful iconic historical buildings that fill our skyline, we have the makings of a great place here. For citizens, community leaders and architects alike there is a critical ingredient that we cannot forget. This is a shared adventure. It’s not a private enterprise. Whether poor or powerful we are the people, together, recreating this place and we can only be successful if everyone is included in its vision and encouraged to participate in its construction.

Envisaging an Urban Regeneration Strategy for Gaborone City by H. Killion Mokwete / Originally printed in the Botswana Guardian, March 2011 The re-building of the City of Gaborone needs some vision. This City needs to think big, not in a literal sense, but in ambition. It needs courageous professionals in the built environment both in the private sector, but more importantly at the Government parameters. It needs people who can make a case for it to be better. The Gaborone City Council’s envisioned ‘redevelopment of extension 2’ as currently discussed provides such a golden opportunity, but not in its current form, certainly not in the manner in which it is being undertaken, and not by the people currently attempting it. This city’s problems, most notably in the main mall, encompass infrastructural, operational and social issues. The centre city needs real streets, it needs functioning vibrant squares and public places, it needs night life, it needs a face, and one could say this city needs a ‘soul’. Solving Infrastructural problems alone is a technical issue which in itself is a small part of the bigger component of what should be a bold ‘Urban Regeneration/Renewal program’. Therefore as I outlined last week, the GCC’s approach will fall far too short of getting anywhere near resolving the above. An Urban Regeneration/Renewal Strategy: A holistic urban regeneration strategy needs to be developed for the city in general, from which special attention would be put on the renewal of Gaborone’s urban inner core, Main Mall. The development guidelines for such a renewal have already been suggested on current Revised Gaborone City Development Plan (1997-2021). Who Needs to Undertake this Regeneration? Throughout history, cities have gone under similar processes we are in now. By nature cities, especially city centres have always gone under regeneration or renewal process at some point, and it would do us good to study how others have undergone such developments before. As far back as 1852 when Georges-Eugène Haussmann was commissioned by Napoleon III to "modernize" Paris it was hoped that in hiring Haussmann, Paris could be moulded into a city with safer streets, better housing, more sanitary, hospitable, shopper-

friendly communities, better traffic flow…and of course there were other ultra military motives as well. But what is clear is that Haussmann was hired with a clear political commitment to implementation. Therefore we need a deliberately setup a task force or a ‘Commission for the Urban Renewal of Gaborone City’ to oversee a regeneration strategy of Gaborone, its implementation, monitoring, timeline and post implementation review.

ment. This is for the simple reason that no one person is in charge of city control any more. No single authority has one logic voice, or time to decree or coordinate comprehensive changes. Therefore a modern urban renewal strategy will need to be based on pragmatism anchored on continuous long term vision for sustainable urban development and shared responsibility between private, public and other city stakeholders.

This ‘Commission’ will be empowered and mandated to undertake the regeneration by law if necessary. In other cities such as New York City and the City of Canberra, legislation was provided to enable a comprehensive regeneration process. This empowerment was backed by political leadership and which was crucial to underscore the boldness of the process.

Funding and Urban Regeneration: As it is the GCC does not have the funding profile nor would it be able to put one together with the current scope of this redevelopment exercise. The financial resources for funding the urban regeneration programme must be central to the discussion as a factor that will contribute to the viability of programmes and their effectiveness. Producing guideline strategic documents alone would be an expensive process that needs the ‘Commission’ to have established resources to ensure its success. In other cities such regeneration processes are funded from various Urban Development Funds (UDFs);

This commission will have to be of a complex make up as well, encompassing partnerships from public apparatus, the private sector, NGO’s, academic institutions and local communities who would be principle stakeholders. The commission would, amongst other things, develop an urban regeneration governance strategy. Basis of this renewal strategy will need to critically address the following; Redefining the Concept of What our City of Gaborone is/ should be: It is clear by now that the original remnants of the Ebenezer Howard’s Garden City concept which the original Gaborone Plan failed, not only here but even in the UK where it was extensively tested (one thinks of Welwyn Garden City), and in other countries such as Australia. Therefore a revisit of what the renewed Gaborone City should be needs to be debated and investigated. It is not enough to just implement mixed use and densification of land habitation if there is no underlying theme of what we intend to create by doing such. Pragmatic Approach to a Renewal Strategy: Urbanists are increasingly agreeing that the role of the MASTERPLAN is no longer effective on its own as a development guiding docu-

For example, in the UK the lottery funds are apportioned to assist in regenerating inner city spaces, and in Spain, Regional Control government agencies provide sponsors to local authorities to support inner city regeneration. In fact, the European Union provides funding to EU cities for regeneration through its Cultural Capital fund. In Botswana, there is a need to establish an Urban Development Fund to help our cities and towns as they undergo an inevitable process of change and this could also be SADC supported initiative too. In conclusion it seems clear that Botswana quite urgently needs to establish an independent local development agency to implement specific urban projects. This will includes all key stakeholders as outlined above and will be responsible for project management and delivery, inward investment, funding and project financing, and most importantly, an overriding vision for its cities and towns. Until then, ambitions such as that currently being undertaken by the GCC will always fall short of a truly successful urban redevelopment.

BOIDUS FOCUS September 2013

Comments Page 17

EDITOR’S NOTE

Its ‘Construction Regulator’ or Bust

Comments & Letters

CONCRETE: Projects that inspire [archdaily.com] Centro Integral Territorial De La Mancomunidad De Olivenza Daniel Jiménez + Jaime Olivera

by H. Killion Mokwete, RIBA Chartered Architect

The state of our construction industry, especially its professional integrity and outlook needs action from all its stakeholders now. Many report, consultancies, recommendations and aborted attempts at forming professional regulatory framework means the current attempt led by MIST, BOCCIM, and Industry professionals and other stakeholders must bear fruit. In this last gasp attempt to form an industry regulator, stakes are high and yet the momentum building and will being demonstrated by government especially is very encouraging. Firstly, it is commendable that government has now realised that this can be done by the local knowledge without a need to appoint an all expensive foreign consultant to tell the industry what it should do The current will power and determination demonstrated especially by the Chair of the task force needs to be commended and encouraged. This is no task for those that do not believe in it and are in it just for the financial reward. It takes tremendous determination to forge ahead with such a difficult task where others before have failed without a budget. BOCCIM’s construction sector over the years has been the other consistent voice of courage from private sector agitating for the regularization of the construction industry. Some of the veteran fighters for this cause come from professional associations, who have for the past 15 to twenty years fought tooth and nail to save the industry from mediocrity. The efforts of all of the above should not go unnoticed and unfulfilled. The Construction players needs to all come together on this last push and get the industry sorted. It is only when the industry can regulate itself, make its own determination and preserve its integrity that we can truly talk about the construction industry economy. Boidus would like to encourage every stakeholder who practices in the industry to support and contribute to the formation of the regulator. For the regulator to reflect the whole of the industry, a wide debate about its nature, its role and its make up needs to be partaken by everyone who practices in it. Boidus will certainly do its part in informing and creating a platform on which such discussions can be nurtured.

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Abitazione Privata Urgnano Matteo Casari Architetti

Chapel in Villeaceron S.M.A.O.

Vodafone Baumschlager Eberle Tama Art University Library Toyo Ito

Boidus Team EDITOR H. Killion Mokwete COPY EDITOR Peta McAdam DESIGN Bridget T. MacKean

JOURNALISM Kibo Ngowi SALES H. Killion Mokwete Thabo Sarona DISTRIBUTION Roy Selebalakhai

GUEST COLUMNISTS Phenyo Motlhagodi PHOTOGRAPHY Mokgweetsi Phetabosigo

City Library in Seinäjoki JKMM Architects

Public Folly – Water Tower Renovation / META – Project [archdaily.com] Architects: META – Project Location: Shenyang, Liaoning, China META-Project, a Beijing based researchdesign studio has recently completed a renovation for VANKE in Shenyang, China that infused new life into the dilapidated water tower in an exquisite manner.

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In a story about the CBD Seminar (May 20, 2013) that was published in Mmegi on Tuesday May 28, 2013, I delved briefly on “bankable projects” and proposed the covering of the railway and station area as one potential such project. [Jan Wareus]

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Mmegi Online: Student Housing - Possible bankable project?

Boidus Botswana: This should be a no brainer issue... but then again why take risks if money is still to be made without any effort. Onkabetse Lesego: Botswana government has for the past 7 years invested billions in tertiary education, sponsoring hundreds of thousands of students every year which the schools dnt have enough resources to house,

puzzles me how the real estate market has managed to turn a blind eye to such a lucrative market... Dineo John-Mosarwa: Isnt that right? They lack vision.. Jan Wareus: The Mmegi article missed the layout of the student house “Nyponet” - I’ll mail it to you if you want. JW

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Property / Financing Page 18

Barclays Bond Switching Campaign

Boidus Speaks to Barclays Home Loans Manager Ms. Boineelo Kwelagobe by Boidus Admin Boidus Focus (BF) sat down for an exclusive interview with Barclays Homeloans Manager Ms. Boineelo Kwelagobe (BK)to learn about the financial institution’s exciting new property loan campaign.

BF: Barclays recently launched a new

Barclays Bond Switching Campaign. Please explain to our readers what this campaign offers. Also explain why Barclays saw it necessary to introduce this campaign.

BK: For a long time we have had this

fantastic product offering but it was more like our best kept secret. As part of our strategic intent of being the ‘Go - To Bank’ in Botswana and in Africa, we also want to be the ‘Go – To’ even in mortgage financing. The bond switching campaign is one of the initiatives we are bringing to the to the market in 2013 and beyond.

BF: How long will the loan facility remain available for your customers?

BK: The actual campaign runs until the 31st October 2013 but the low interest rates will continue for a lot longer.

BF: Please also explain how one can qualify for the campaign; Salary thresholds requirements and any other requirements

BK: Our minimum mortgage amount is P100, 000.00; therefore the minimum salary threshold translates to P3000.

REQUIREMENTS FOR A MORTGAGE LOAN • Identity document • Most Recent salary slip • Marriage Certificate • Spouse ID and Spouse Consent • Settlement balances of existing loans to be cleared • Copy of Title-deed • Valuation Report • Confirmation of Employment • 6 months bank statements (Non-BBB customers) • Plans of property to be financed (construction) • Fixed Price Contract (construction) • Bill of Quantities (construction)

BF: How different is this campaign from all the other property financing campaigns? BK: We pay the valuation fees as well as conveyancing fees. This is a 1st in BBB. The fees are not built onto the loan; we pay on the client’s behalf. Also the campaign takes advantage of the low interest rate, currently at 9.5 % or lower for amounts above a P1 million

BF: What is the time and turnaround time ? BK: 4 working days from the time everything is submitted, including the valuation report. BF: Please outline fee charges and other bank charges which should be expected on this campaign.

BK: The only charge that is applicable is the arrangement fee at 1.12% of the value of the loan, kept at P7700 .

BF: Which properties types would this campaign best suit, family, multiresidential or mixed use?, please explain why?

BK: This is meant primarily for family residential however, it includes all the other types except multiresidentials.

BF: Which areas across Botswana does this campaign be applicable? BK: Areas we finance: Gaborone and surrounding areas – All Gaborone including Phakalane and Gaborone North, Tlokweng Area, Mogoditshane Area, Gabane, Kumakwane, Moshupa, Thamaga, Metsimotlhabe, Kopong, Gakuto, Gaphatshwa, Molepolole, Mmopane, Ramotswa, Boatle, Taung, mmokolodi, Notwane, Mochudi, Bokaa, Morwa, Pilane, Rasesa, Oodi, Ruretse and Modipane. Southern region – Lobatse, Otse, Mogobane, Kanye, Jwaneng, Gantsi, Kang, Tasbong, Good Hope, Pitsane and Hukuntsi North & Central – Mahalapye, Shoshong, Palapye, Serowe, Selebi Phikwe, Mmadinare, Tonota, Bobonong, Tati Siding, Ftown, Masunga, Tutume, Mathwangwane, Maun, Letlhakane la Orapa, Kasane & Kazungula

BF: Where can one find more information about this campaign and which Barclay’s branches can one apply for this it?

BK: For more

information Clients can go to any Barclays branch across the country or call: 3953893 / 3159230, Call Centre number is: 3159575

BOIDUS FOCUS September 2013

Bank of Botswana drop in Interest rate: Should You Refinance Your Mortgage?

Article Courtesy of: http://www.investopedia.com It’s not a bad idea to consider refinancing your mortgage when interest rates are low. Since the interest paid on a mortgage is one of a homeowner’s biggest expenses, it makes sense to look for ways to reduce it. But there are some ups and downs to refinancing a mortgage in a low-interest climate, and even some special refinancing programs that can be particularly beneficial for those who qualify. Should You Consider It? Low interest rates can create a refinancing frenzy in the marketplace, but consider the details of your unique situation to determine if a refinance makes sense for you. How much have rates dropped? Instead of listening to “rules” about how much of a percentage change in interest rates you should look for before you refinance, look at how much money you’ll stand to save. A 1% rate reduction is a lot more meaningful if you have a P500,000 mortgage rather than one that’s P100,000. How long do you plan to keep the mortgage? Just like when you purchased your home, you will have to pay closing costs on your refinance. If you’re planning on selling your house in a few years, you may barely break even (or come out behind) by refinancing, if the monthly savings for the remainder of your mortgage are not greater than the closing costs associated with the refinance. If you roll the closing costs into your mortgage instead of paying them up front, you’re paying interest on them, so you’ll need to factor this expense into your break-even calculation. Can you refinance into a shorter term? If you have 20 years left on your mortgage and you refinance into a new 30-year mortgage, you may not save money over the long run, even with a lower rate. However, if you can afford to refinance that 20-year mortgage into a 15-year mortgage, the combination of a lower interest rate and a shorter term will substantially reduce the total amount of interest you’ll pay before you own the house free and clear. What You Stand To Gain? Done properly, a refinance can have both immediate and lasting benefits. Get a better loan. Refinancing can provide an opportunity to correct a mistake you made in taking out your existing mortgage or simply make a good mortgage even better. Either way, you’ll increase your short- and longterm financial security and increase the odds that hard times won’t put you at risk of losing your home. Increase your long-term net worth. With the savings from refinancing your mortgage, you’ll be spending less on interest. That’s money you can put away for retirement or use toward another long-term financial goal. (For more on crunching the numbers when considering a refinance, read The True Economics Of Refinancing A Mortgage on investopedia). Increase short-term cash flow. If your refi-

nance lowers your monthly payment, you’ll have more money to work with on a monthto-month basis. This can reduce the day-today financial pressure on your household and create opportunities to invest elsewhere. Dangers of Refinancing Refinancing a mortgage introduces new elements into your financial situation. The risks from your original mortgage are still present, and a few new ones come to the surface. Overpaying on closing costs. Unscrupulous lenders can tack a number of unnecessary and/or inflated fees onto the cost of your mortgage, some of which they may not disclose up front, in the hopes that you will feel too invested in the process to back out. Overpaying on interest because you want no closing costs. A refinance commonly does not require any cash to close, but one way lenders make up for this is to give you a higher interest rate. Let’s say you have two options: a P200,000 refinance with zero closing costs and a 6.25% fixed interest rate for 30 years, or a P200,000 refinance with P6,000 in closing costs and a 6% fixed interest rate for 30 years. Assuming you keep the loan for its entire term, in scenario A, you’ll pay a total of P443,316. In scenario B, you’ll pay P437,676. Having “no closing costs” ends up costing you P5,638.80. Can you think of something else you’d rather do with almost P6,000 than give it to the bank? Losing equity. The part of the mortgage that you’ve paid off, or your equity in the home, is the only part of the house that’s really yours. This amount grows little by little with each monthly mortgage payment until, one day, you own the entire house and can claim every penny of the proceeds if you choose to sell it. By doing a cash-out refinance, rolling closing costs into the new loan, or extending the term of your loan, you chip away at the percentage of your home that you actually own. Even if you stay in the same home your whole life, you might be making mortgage payments on it for 50 years if you make poor refinancing decisions. You can end up wasting a lot of money this way, not to mention never truly owning your home. Negatively impacting your long-term net worth. Refinancing can lower your monthly payment, but will often make the loan more expensive in the end if you’re adding years to your mortgage. If you need to refinance to avoid losing your house, paying more over the long run might be worth it, but if your primary goal is to save money, realize that a smaller monthly payment doesn’t necessarily translate to long-term savings. Conclusion Any good refinance should benefit borrowers by lowering their monthly housing payments and/or shortening the term of their mortgage. Unfortunately, as with any major financial transaction, there are complexities that can trip up the unwary buyer and result in a bum deal. Being informed about the process, however, will help you choose a lender and a refinancing program that offer the best value for your situation.

BOIDUS FOCUS September 2013

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