OIDUS FOCUS Registered at GPO as a Newspaper | Volume 3, Issue #8
Botswana’s Architecture Design and Urban Landscape Newspaper | DECEMBER 2013
www.boidus.co.bw
NEWS | page 02
SUSTAINABILITY | page 04
CLASSIFIEDS | page 11
PROF. PRACTICE | pages 18
Icowork officially opens; a new concept for workspace in Botswana
Government to Promote Introduction of Residential Development into the CBD
Profile: Botswana’s Leading Building Material Suppliers
Defective Materials and Workmanship in Construction Projects - How to protect yourself?
P8.00 (Including VAT) BOIDUS EXCLUSIVE FEATURE >
2013 End of Year Review - Botswana Property and Construction Industry
BOIDUS EXCLUSIVE >
A review of key year industry highlights that mark the success, challenges and future opportunities of the Botswana Property and Construction Industry.
by Boidus Admin
Affordable Housing MarketUnchartered Territory
by H. Killion Mokwete
FNB Botswana takes the lead and brings together industry stakeholders to a desktop discussion to explore opportunities of unlocking the affordVictor Senye
Property Market remains a good investment but weakness beginning to appear • Positive real returns • Especially attractive in an en¬vironment of low interest rates (negative real rates) • An important asset for both institutions and individuals • Still a large amount of invest¬ment in property
Imbalances are appearing, markets are distorted
• Danger of over investment • Leads to falling rental yields and poor returns for investors • Knock on impact on banks • Inadequate supply of affordable housing • unbalanced lending - too much lending for retail and commercial property, not enough for residential
able housing market which remains unexplored. Boidus Media participated in the event as a facilitator. >>> CONTINUED PAGE 04
Stan Garrun
Towards a Regulated and Professional Construction Industry
Infrastructure Development Opportunities in the Construction Industry Still Unexplored
Plans are advanced for the setting up of an Industry Construction Regulator spearheaded by BOCCIM, MIST and Local Professionals Associations. The long awaited Botswana Construction Industry Act (BICA) will user amongst other things: ‘Registration and regulation of all Contractors operating in Botswana’s Construction Industry’
Botswana’s Institutional Investors Called to Invest Capital in Local Infrastructure Development • Infrastructure in Road Networks • Energy - Coal power plants Alternative energy systems • Water - Dredging Existing Damns • Housing - Affordable housing infrastructure and research >>> CONTINUED PAGE 08
The New Revised Development Control Code 2013 by Boidus Admin
Finally, the long awaited Development Control Code 2013 [DCC] has come into effect as of November 2013. In development terms this is a big leap in advancing the terms that guide every development in the country. The DCC is the guiding document that regulates, land use activity, planning and planning applications. It is a critical
element that has a binding effect on all development environments in all planning gazette areas. Boidus Focus will serialize and discuss the new Code in the next three issues to make it more accessible and appreciated by the building industry. >>> CONTINUED PAGE 15
Local and Regional News Page 2
BOIDUS FOCUS December 2013
Massive Chaos and a Tussle LOCAL NEWS FEATURE Icowork officially opens; a new concept for Land in Ramotswa for workspace in Botswana
by Keeletsang P. Dipheko
While people are still waiting to see how the 285 residential plots in Tlokweng will be allocated to Batlokwa, residents of Ramotswa have recently been faced with the same incident of residential plots allocations. It’s almost a year since the Batlokwa land tussle case has been traced with the Land Tribunal. The Malete Land Board authority recently advertised 385 residential plots, and the land board has received the overwhelming response of thousands of applications. The night before the date of application, people had already set up camp outside the Land Board premises. During the day of collection of applications the police had to be called to rescue the situation as chaos broke out and people thronged the Malete Land Board to apply for residential plots. In an unexpected turn, most of the people who spent the night at the land board waiting to be given application forms, testified that they are not from Ramotswa. This made many of Balete furious with the land board authority, their concern being that people come to work at the Malete Land Board and then invite their relatives and friends to allocate them plots in Ramotswa.
Balete have now raised the concern that their parents’ fields are being taken due to shortage of land, yet the same
land board still fails to provide them with residential plots. Instead, people from other villages are given plots from their fields. Furthermore, the number of applications for plots is exacerbated by outsiders who are looking for a second or third plot in Ramotswa to sell or develop for rent.
When asked how they are dealing with these issues, a Malete Land Board employee said the problem that they are facing is that they are very close to Gaborone. People are now leaving Gaborone to surrounding areas for residential plots, and this is why Ramotswa ended up having a massive number of outsiders. Furthermore people strongly believe that the amended Tribal Land Act, which states that every Motswana has the right to acquire tribal land anywhere in the country, unlike previously, is no longer relevant, as there is greed and selfishness that drives this alleged unfair allocation of land. Meanwhile Kgosi Mosadi Seboko has pleaded with the land board authorities to give residents of Ramotswa plots as most are in need of plots. As per the two cases of Tlokweng and Ramotswa, Batswana are concerned with the way the government, through the institution of the land boards, approaches access to tribal land/ownership, especially in urban centers.
What Will Be Mandela’s Spatial Legacy?
by Boidus Admin / [Source: archdaily.com] Extract from Vanessa Quirk’s essay ‘what will be Mandela’s Spatial Legacy?’ Vanessa Quirk is the manager of editorial content at ArchDaily, where she writes about architecture, design, and urban planning. There are few systems of government that relied so heavily upon the delineations of space than the Apartheid government of South Africa (19481994). Aggressively wielding theories of Modernism and racial superiority, South Africa’s urban planners didn’t just enforce Apartheid, they embedded it into every city – making it a daily, degrading experience for South Africa’s marginalized citizens.
Inspired by writings like Le Corbusier’s 1922 Ville Contemporaine, which outlined the concept of housing for temporary labor, as well as Ebenezer Howard’s Garden Cities, Apartheid planners relied heavily upon existing Modernist models of suburbia. According to author David Kay, they believed that by using these Modernist principles, they could actually mold the native population in their image:
When Nelson Mandela and his party, the African National Congress, were democratically elected to power in 1994, they recognized that one of the most important ways of diminishing Apartheid’s legacy would be spatial: to integrate the white towns and the black townships, and revive those “shriveled twin[s].”
“…‘all reference to older modes of life, to history, to the sedimented place of memory, and to sociability had been eliminated’. This was the Apartheid state’s attempt to mold and reform the African society into a more modern, orderly underclass in spaces that were sterilized of all remnants of older African cultures and beliefs.”
As we remember Mandela – undoubtedly the most important man in South Africa’s history – and ponder his legacy, we must also consider his spatial legacy. It is in the physical, spatial dimensions of South Africa’s towns and cities that we can truly see Apartheid’s endurance, and consider: to what extent have Mandela’s words of reconciliation and righteous integration, truly been given form?
FIFA pressured city officials to consider building a stadium in the largely middle-upper class, white neighborhood close to the attractive V&A Waterfront. Green Point Stadium, FIFA suggested, would attract visitors and establish Cape Town as a world-class destination for major events, tourism, and investment.
by Boidus Admin
Today marks an important chapter in our effort to transform the concept of ‘office’ or ‘work’ in our city. It’s a journey that started 12 months ago with a bit of travel to more developed cities to benchmark and ensure that our product is to international standard. We are a coworking office space. The question then is what is coworking and why do we believe our city is ready for it? Coworking is an innovative office solution tailored for freelancers, small businesses and startups, to form a community of professionals that work from the same place with shared facilities. Their key objectives are to establish professional relationships, cut operating costs and broaden general business knowledge and skills. The result is a kind of work environment that is inspiring, collaborative with potential to grow one’s professional development. I have been a freelancer for the past twelve years. I know the advantages and disadvantages of being an independent professional. The fact that you don’t have a proper professional structure means you lose out on ever growing corporate trends. Icowork will therefore fill that gap as you continue to work for yourself but not by yourself. One of our services is that we will have monthly business talks where we network in a casual setting and discuss various core issues that affect small business such as tax, financial planning, and business development. The world is collaborating more than ever before. America, Europe, and Asia are big on coworking spaces. Africa has been slow but there has been an upsurge in recent years in South Africa, East and North African countries. This is due to the increasing complexity of city economies and the recent economic downturn which led to more innovation and creativity to remain relevant. The knowledge economy and smart cities that we all wish to attain do not just come about because of fancy buildings and infrastructure, but rather by creative and innovative city residents who choose to push boundaries and solve the ever complex challenges of the city. Management of Icowork has decided to go where the world is going and we believe our city is ready given the good number of qualified independent professionals and small businesses who wish to work at the best location in town. We chose the CBD because it offers a convenient location for professional consultancy firms. We also reject the trend where CBD is dominated by government ministries and big corporations. We should balance the
tenancy mix of the CBD to avoid class segregation and elitist impressions. Small business can be creative and run their businesses from here and not be intimidated by it. The freelance professional who cycles to work or walks to work with a backpack should know that Icowork gives him an office at the best location in town and he doesn’t have to change who he is to belong. That’s how we will attain the best vibe and energy of the CBD streets. The capacity of our space is twenty stations. We are currently half full and processing the other batch of applications. We do not have a website running yet but we can be contacted at our facebook page or Icowork 72114393. HOW WE BUILT IT We started from an honest and clear premise: we had a tight budget, therefore our implementation path had to rely on other people pitching in money, labour and skills to make it a reality. I have a background of creativity and DIY in building projects therefore I was at the forefront from design, project planning and construction. We could not afford professional designers or contractors, so it was always myself and an assistant or a technician from conception to construction. We did not get any funding from a bank so initial capital was from family and friends and over time, potential members advanced their membership fees in order to make the project a reality. Coworking is different from office sharing, desk sharing or an executive temporary office suites solution. It is about people doing it for themselves. It is built from the bottom up. I knew that I had skills in design but had limitations in IT solutions and marketing. Therefore the approach was that we will build the infrastructural framework and have faith that we get members who will fill other gaps. The result is exactly as we imagined it and the group is getting better even before our official opening. The other critical thing is that the design seems complete but it is actually an incomplete canvas, waiting for members to personalize the space with other creative and practical ideas that will make it feel lived in and relevant to the nature of their businesses. So it will be an ever changing office atmosphere showcasing our member’s profiles, inspiration walls, and project displays. Finally, when I get asked how much we charge per square metre, my response is that we do not sell space. We sell relationships and membership to a great community of professionals. There is soul and personality in our model and you can’t get that any where else in this city.
BOIDUS FOCUS December 2013
Advertorial Page 3
FNB ROUNDTABLE Stakeholder Discussion
FNB ROUNDTABLE FNB ROUNDTABLE Stakeholder Stakeholder Discussion Discussion
Unlocking the Affordable Housing Market Opportunities 04.12.2013
UnlockingUnlocking the Affordable the Affordable Housing Housing Market Opportunities Market Opportunities
[Left and Centre Image] Attendees at the FNB event, [Right Image] FNB Botswana CEO, Lorato Edith Boakgomo-Ntakhwana
FNB BOTSWANA HOSTS FIRST EVER AFFORDABLE HOUSING STAKEHOLDER ROUND TABLE FORUM TO EXPLORE AND UNLOCK OPPORTUNITIES WITHIN THE AFFORDABLE HOUSING MARKET. In his opening remarks, Mr Boiki Tema, Director of FNB Property Finance highlighted how FNB Botswana aims to become the Thought Leaders by developing awareness and fostering engagement and become ‘the go to’ bank on matters of affordable housing in Botswana. Themed, ‘Unlocking the Affordable Housing Market Opportunities’ the round table sought to take a lead in exploring the following key subject areas of Affordable Housing. Reviewing Botswana current housing profile and finding a common shared defining element of what is ‘Affordability in Housing in Botswana’. Representations were lead by speakers from:
07:30 - 08:00 07:30 - 08:00 Arrival
Arrival
08:05 – 08:30 08:05 – 08:30Remarks Welcome Welcome Remarks
LESSONS FROM SOUTH AFRICA’S AFFORDABLE HOUSING MODEL AND FNB SA DEVELOPMENT FINANCING PRODUCTS FNB Housing Financing, FNBSA Housing Finance Manager, Mr M. Marias
REAL ESTATE INSTITUTE OF BOTSWANA President Mr M. Maruping
08:30 – 09:00 08:30 – 09:00 FNBSA HousingFNBSA FinanceHousing Finance The property market is very thirsty for affordable housing. Prospective buyers are fatigued due to a sustained increase in property prices over the last few years. The market is ripe and only players need to come to the fore. Government, commercial banks, private developers and pension funds need to start talking because affordable housing can only be affordable in the real sense if all players participate.
The SA model encourages home ownership, with those earning 09:00 - 09:30 09:00 - 09:30National Botswana Botswana Housing National Strategy Housing Strategy below R3000 eligible for social housing under government assistance. Affordable Housing in South Africa defined through income earnings and thresholds of R3000 to R25000 earners and it is a Billion Rand market: Current FNBSA: • >100,000 homes financed • Loan book >R13bn
09:30 –10:00 09:30 –10:00 Affordable Botswana Botswana Housing Affordable MarketHousing Market
FNB ROUNDTABLE Stakeholder Discussion 10:00 – 10:30 10:00 – 10:30 Revised Development Revised Control Development Codes Control Codes MINISTRY OF LANDS AND HOUSING (Department Of Housing) Mr G. Rabalone
Some key observations and lessons: • Subsidy does have an impact (FLISP subsidy in SA where government provides financial assistance to first time home buyers) • Developments & retail business integrated in development has good impact on sales
Government challenges: • The provision of public officers housing remains a challenge due to government budgetary constraints • Demand for funding and plots exceed what government can afford
Residential development process:
• Experienced developer with capital essential Unlocking the Affordable Housing • Various finance parts to the project 10:30 – 11:00 10:30 – Break 11:00 Tea Tea• Break More than one financier will normally participate Market Opportunities • Specialised developers (land zoning, stands, top structures) Government proposed way forward: Government alone cannot resolve these challenges and would need to leverage on the strength of the Private Sector. Government therefore wishes to collaborate with the private sector on: 07:30 - 08:00 Arrival • the provision of housing for the un-served market • construction of public officers housing countrywide including remote areas
DEVELOPMENT REGULATORY FRAMEWORKS AND THEIR
IMPLICATIONS ON RESIDENTIAL DEVELOPMENTS 11:00 - 12:00 11:00 - 12:00 Local Authorities Local and Authorities Housing Supply and Housing Supply The Received Development Control Code – DTRP, Mr L. Ooke
08:05 – 08:30
WelcomeCategorization Remarks is aimed at making the DCC user friendly for
08:30 – 09:00
FNBSA Housing Finance
the individual developer or ease of reference. GABORONE– LOCAL AUTHORITIES & 12:00 12:25 12:00 – 12:25 Housing Affordable Affordable Developer Housing Experiences Developer Experiences > Individual Housing (Single Family Detached Dwelling Unit,
HOUSING SUPPLY [GCC] Chief Physical Planner, Mr L. Lesenyegile Challenges;
Single Family Semi-Attached Dwelling Unit, Duplex) > Multifamily Housing (Townhouses, Multifamily Dwellings/ BotswanaFlats, National Housing Strategy Apartments, Upper Story Residential, Live/Work Unit) > Mobile Housing (Manufactured (mobile) Home), Residential Mobile Home Park
09:00 - 09:30 • Lack of adequate housing creates marketAlternative for 12:25 – 12:45 12:25 – 12:45 Building Alternative Products Building Development/ Products Development/ informal housing growth in SHHA areas (back yard shacks / one roomed houses) 09:30 –10:00 Framework Botswana Housing Market InAffordable the new code planning decisions and reviews will done atPerformance Local Authority level and Planning Regulatory Regulatory and Framework Performance and • Informal multifamily housing Tribunals will consider appeals (once TCPB is rectified by Parliament and Cabinet) • Poor or inadequate housing sanitation services health risks
10:00 – 10:30
Revised Development Control Codes
GUEST ATTENDING STAKEHOLDERS FEED BACK:
12:45 – 1300 12:45 Feedback – 1300and Way Feedback Forward and Way Forward
Opportunities; • Gaborone Development Plan provides opportunity for vertical growth in the 10:30 – 11:00 Tea BreakMr G. Giachetti already developed areas Nigeria Experience - RDC Group experiences in Nigeria • CBD – opportunity for mixed land use development, High Density Development where Satellite Cities of a demand of 1 million and more • New Development Control Code provide relaxation which enables intensification 11:00 - 12:00 Local Authorities and Housing Supply housing units.
13:00 13:00 LUNCH ALTERNATIVE BUILDING MATERIAL
12:00 – 12:25
PRODUCT DEMONSTRATIONS Alternative building technologies that reduce, time, cost and manpower - Reliability, 12:25 – 12:45 Mr R. Simba
LUNCH
Affordable Housing Developer Experiences Former Hon. P. Balopi Government should take lead in engaging all relevant stakeholders government entities with private secAlternative Buildingacross Products Development/ tor to enable the opportunity.
Regulatory Framework and Performance
12:45 – 1300
Feedback and Way Forward
13:00
LUNCH
Boidus Feature Page 4
BOIDUS FOCUS December 2013
Affordable Housing Market- Unchartered Territory
by HK Mokwete
Affordability in Housing In broad terms affordability can be seen as a function of one’s personal situation, their assets, income, debt, commitments and others (Kecia Rust, 2013).
If, therefore, affordability in housing is measured as a function of the house price, land price or cost of the desired housing investment; then it is worth noting the following statistics at a national level to contextualise affordable terms with personal income situations in Botswana as part of seeking the median for defining ‘affordability’.
Personal Income Survey -2011 (Finscope-2011)
>>> FROM PAGE 01 Contextualising the subject of Housing and Affordability in Botswana What constitutes housing according to local and international standards and are our existing housing stocks living up to those standards? Housing as a Human right- UN Habitat Agenda The United Nations Article 25 of the Universal Declaration of Human Rights recognises the right to housing as part of the right to an adequate standard of living. The right to housing is codified as a human right in the Universal Declaration of Human Rights: “Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social
services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.” (article 25(1)) In Botswana, His Excellency President Ian Khama recognizes the role that housing plays in one’s dignity. His social housing scheme, ‘Presidential Housing Appeal,’ was launched in 2010 and to date has contributed 316 housing units to the most needy through private sector donations. The challenge at Policy level is that most of the existing housing strategies such as SHHA, BHC (SiHA) still do not address the increasing demand for ‘affordable housing’ in Botswana. According to recent data from Finscope some 60% (2011) of Botswana’s population has no access to quality housing.
In reference to the global context, the world is experiencing a global housing crisis. About 1.6 billion people live in substandard housing and 100 million are homeless. These people are increasingly urban residents, and every week more than a million people are born in, or move to, cities in the developing world (UN Habitat) Housing as an investment Of the 39% of investors in Botswana, 8% have been noted to invest in housing. According to results of the IPD Consultative Property Index 2012, the Residential Market Sector outperformed most sectors (second from Industrial) including bonds office, and retail by 7.8 % margins. This points to the potency of Housing not only as a right and prerequisite to dignity but also as a good source of investment with potential for bringing financial rewards.
Botswana Affordable Housing Market Overview-Real Estate Institute of Botswana (REIB) - Mr Modiredi Maruping
Income bracket
% number of people
>10,000
3.2 %
1,000 ≥10,000nc
26.3%
250 ≥1,000
35%
No income
27%
Average cost of houses in Botswana Average House Low Cost Houses
Average House Price
Gaborone Block 9 - Typical two bedrooms and half (2 ½), P 500,000.00 450 sqm plot size Serowe - BHC Low cost, 2 bedrooms, Floor area approximately P 408,128.00 50m² Francistown - Gerald Estate, 3 P 200,000.00 bed low cost + Title Deed
Typical Mortgage Facilities in Botswana Mortgage Value
Average Earning Rate per month over 25yrs
Minimum 50,000
P1,300 per month (no deposit)
Average 500,000
P4991.20 per month (no deposit)
With the key information above, see below what experts had to say about affordability in Botswana:
South Africa’s Affordable Housing Market Kecia Rust & Adelaide Steedley
Secondly, the processes must allow for affordable housing to be developed. The building code as it stands prescribes high building standards that are unaffordable to the low income population. We should go for the minimum needed to ensure satisfactory environment health and safety. Incidental costs such land surveys, bond registrations and transfers, loan arrangement fees, valuations and time (waiting for plans to be approved, waiting for water to be connected, waiting for power to be connected) also contribute to unaffordability.
Affordable housing is really only achievable if considered holistically. From the onset the planning (this determines future supply) and servicing of the land must conform to affordable housing standards. The relevant Ministry is presently looking at modalities of availing serviced land with private developers. They are looking at options where for instance a developer may get a piece of land from government for free or huge discount, service the land and give back to Government a portion of serviced land to be allocated on an affordable basis to deserving Batswana.
Thirdly, building materials suppliers continue to increase prices but lower the quality of building materials. A roofing sheet is leaner but more expensive! Fourth, consideration must be given to quality workmanship. The cost of maintenance over the life of the property must also be affordable. Fifth, the mortgage rates must be affordable. Sixth, there must be clinics and shops around to make living in the neighbourhood affordable and safe.
A R300 000 house is not “affordable” just by definition – the assessment is relative • Affordable market areas are more stable, they are active, and they are growing, providing a buffer to the more volatile high value market • Affordable areas hold considerable equity. Supply (new & resale) is insufficient – opportunity for growth • Lenders persist in the high value market. Why? »» A function of housing supply? A function of construction capital? »» A function of credit indebtedness? »» A function of information and risk perceptions?
Islamic banking
0.3%
Offshore investment
0.2%
BOIDUS FOCUS National savings certificate December 2013
Treasury bills/certificate
Small sample sizes (n<40)
0.1%
-
10%
15%
20%
25%
13%
Loans from credit unions
1%
Bank overdraft
1%
22%
0%
40% Markets
Loan from a Government Scheme to buy a house
45% Page
0% 0%
30%
42% 39%
Small sample sizes (n<40)
1%
Loan from Pawn shops
7% 7%
5%
1%
Loan from an employer/friend/family to buy a house
8%
0.1% 0%
Mortgage bond or housing loan from a bank
9%
0.6%
Money market account
2%
4% 6% Percentage
8%
10%
Bank credit products/services Non-bank formal Informal Source: FinScope Botswana 2009 Note: Question is“Personal experience with various products and services, that is, those owned in your name”: Bank, Other loans, Retail cards (Have now and use) Note: This analysis excludes store loyalty/club cards ** “What financial products in Botswana are you aware of?” (Multiple response, not a showcard)
Percentage Source: FinScope Botswana 2009 * This includes credit products from the bank (indicated on the next slide) ** “What financial products in Botswana are you aware of?” (Multiple response, not a showcard)
Available Market Data for Affordable Housing Market Opportunity
by Boidus Admin / An access frontier for housing finance in Botswana, A FinScope Overview Presentation extract, 2011 10
39% of adults make use of some kind of non-bank investment mechanism. Around 8% say they invest in their own homes Non-bank investment mechanisms: Have now
13% of adults have taken out a loan in the past 12 months. Of these borrowers, far more have borrowed to buy a car than to buy or renovate a house. Over a fifth say they borrowed to pay off other debts. Taken out a loan in the past 12 months
Purpose of taking the loan
(Adults 18+)
(Adults 18+, Taken out a loan in past 12 months)
(Adults 18+) 11.8%
Investment in cattle or livestock
6.5%
Investment in a village home/ home at the lands / home at the cattle post
5.4%
A fixed deposit account at the bank
Investment in a plot of vacant land
3.7%
Investment in another house/flat/property that you rent out
3.7% 0%
2%
4%
6%
8%
10%
12%
14%
Criteria that may also limit access to loan facilities Identification document • 16% of potential borrowers don’t have required ID Banking history: • Require any active bank account at least 3 months old (no proxy in the survey data) • Use instead that the applicant must currently be banked (with any institution for any length of time) • 44% of the potential market is unbanked Awareness of mortgage bond / housing loan • 57% of potential borrowers did not indicate any awareness of a mortgage bond or housing loan Age • Maximum age for product is 60 years - assume maximum loan term of 20 years therefore constraint is maximum age 40 • 51% of potential borrowers are too old (aged 41+)
Roundtable Presentation Images, FNB
Roundtable Presentation Images, FNB
Note: While 13% say they have taken out a loan in the past year, 24% currently have and use a credit product
3.3%
To start a business Do not have a loan
3.0%
Money to study
2.6% 2.6% 1.1%
To pay for water/ electricity/ telephone
1.0%
For medical expenses
0.7%
To purchase land
0.2% 0%
Source: FinScope Botswana 2009
5
Small sample sizes (n<40)
4.0%
For a burial/funeral
For travel or holiday
Source: FinScope Botswana 2009 Percentage Note: Several categories were excluded in the chart due to very small sample sizes * The exact question reads: “There are many ways to invest money other than putting it in the bank. Which of the following best describes your experience with the following ways of investing or ways to make additional money to what you normally earn.”
Available Data that makes a case for a radical approach to both financing and analyzing potential customer’s affordability situations in exploring the Affordable Housing Market:
4.7%
To buy a house
To expand business
3.9%
Lending money to other people (benefit from profit or earn interest)
Roundtable Presentation Images, FNB
Yes 130,711 13%
No 863,143 87%
6.6%
Investment in farm land
6.5%
To pay for children's school fees
6.9%
Investment in your own existing business
11.1% 7.4%
To buy food/clothing
7.1%
Voluntary contributions to a pension or provident fund
11.3%
For house renovation/extension
8.2%
Improving your home
22.3%
Other To buy furniture/electrical appliances
9.8%
Retirement annuities
22.4%
To pay off debts
10.8%
Endowments or life insurance with an insurance company
23.4%
To buy a car/vehicle
11.6%
Burial society
12
10%
20%
Percentage
30%
5
Sustatinability Page 6
BOIDUS FOCUS December 2013
ENERGY Could our homes soon be powered by the MOON? Engineers plan to cover satellite in solar panels and beam energy back to Earth [Source: www.shimz.co.jp]
SUSTAINABILITY TODAY
Sustainable Procurement by Phenyo Motlhagodi The positive evolution in society is not without negative impacts, including the exhaustion of natural resources and unrestricted growth in carbon emissions, leading to drastic changes in weather patterns and our environment otherwise generally described as Climate Change. These changes reach all faces of societies; men, women and children alike. With the complexities of the world laid out in front of us, how do we even begin to identify a solution? There are numerous stakeholders involved, each with a different standpoint. So, more than anything, the answer lies in achieving clarity. Sharing information amongst one another is crucial, especially when the issues involved are deep rooted throughout all of society.
• • • •
Shimizu Construction plans to fit solar panels around the moon’s equator Panels would be 250-mile wide and the ring would stretch 6,850 miles Power generated would be sent to Earth using microwaves and laser light The firm claims it would provide an ‘inexhaustible amount of energy’
The improved focus on sustainability has also forced organisations to adopt a new attitude to how they operate. The change is happening throughout the supply chain. Internationally, stakeholders agree that a sustainable purchasing approach can result in real opportunities for development, but only if sustainable activities are in line with the company strategy. Purchasing departments are becoming increasingly involved in steering innovation in their own organisations, as they are the first point of contact with suppliers. As such, this has seen the official launch of the international Sustainable Purchasing Leadership Council in July 2013. “The Council builds on two prior collaborations: The Keystone Center’s Green Products Roundtable and a pilot project conducted with the Association of the Advancement of Sustainability in the Higher Education. The Council seeks to continue its history of constructive partnership and coordination with initiatives, with the goal of accelerating the market’s adoption of the purchasing and tools they produce. The structure is a collaborative space in which many organisations and individuals come together to enhance clarity, consistency and coordination around sustainability in the institutional procurement marketplace.” This strategy, establishment of such Councils etc., if adopted early enough throughout Africa and most importantly in the less industrialised Botswana, would bring a world of good. The benefit is just not for the consumer but for the manufacturers and suppliers themselves. The reality is that we are living in the information age. Consumers have access to information about products and the manufacturing process. As such, strategic brand communication can result in a rise on new products. Much to the same effect, because of the consumer knowledge, bad publicity can ruin brand perception, market share and profits.
1. Lunar solar cells - To ensure continuous generation of power, an array of solar cells will extend like a belt along the entire 11,000km lunar equator. This belt will grow in width from a few kilometers to 400km. 2. Electric power cables - The cables will transfer the electric power from the lunar solar cells to the transmission facilities. 3. Microwave power transmission antennas - The 20km-diameter antennas will transmit power to the receiving rectennas. A guidance beacon (radio beacon) brought from the Earth will be used to ensure accurate transmission.
4. Laser power transmission facilities - Highenergy-density laser will be beamed to the receiving facilities. A guidance beacon (radio beacon) brought from the Earth will be used to ensure accurate transmission. 5. Transportation route along the lunar equator - Materials needed for the construction and maintenance of the Solar Belt will be transported along this route. Electric power cables will be installed under the transportation route. 6. Solar cell production plants - The plants will move automatically while producing solar cells from lunar resources and installing them. Source: www.proudlyafrican.info
Because of this new consumer behaviour, procurement heads are going through a shift to satisfy a consumer more aware of the social and environmental impact of the products they buy. “The way an organisation manufactures its products and sources its raw materials can not only affect the bottom line, but also make or break a brand. Protection of brand image is critically important for organisations fighting to maintain or grow their market share. Implementing good environmental protection practices is a key component to any Corporate Social Responsibility (CSR) policy and can be used to effectively to add value to a brand.” These are the core values of the consultants at the global Bearing Point, renowned for its principles in management and technology consultancy. Procurement today cannot focus on cost alone as it is no longer practical. Today, other dynamics come to play, at an equal if not greater footing. Most organisations realise the importance of implementing and communicating their CSR policies; the challenge locally is implementing sustainable purchasing. It is quite clear that organisations are aware of what they must do, and are aware of the importance of communicating their environmental practices to their consumers. However, implementing these changes has been slow as it is often seen as a cost. “To make sustainable purchasing a reality for a larger number of organisations, it is important to approach it as a value creation activity for both the organisation and its customers. Purchasing plays a critical role in delivering this value to the rest of the organisation.” It is worth noting that locally, Debswana, UNDP and Kgalagadi Breweries Limited have been at the forefront of policy formation, implementation and active communication of this practice, as evident in the various media platforms available. The sharing of those ideals is essential to the rest of the corporate community and most importantly, Government, who by far is leading the procurement pack. Perhaps it is unfair to ask corporate entities to share their strategies with competitors; maybe professionals in procurement industry should be looking at setting up a local and internationally recognised Sustainability Forum for their own professional relevance. Overall, entities should be looking at those at the forefront to learn from them and keep up with global trends, especially those key to sustainability for the brand and its consumers with all their differences. Phenyo Motlhagodi - Facebook @PhenyoOnRadio - Twitter
BOIDUS FOCUS December 2013
Guest Columnist Page 7
THEORY FEATURE
Building a Legacy: A Theory for Gaborone
clear that when the city planners of the ‘60s chose Ebenezer Howard’s Garden City model for Gaborone, they didn’t anticipate how large the city would grow.
by Ngozi Chukura “The prints traced by my shoes on the way from my house to the gallery are more important than the canvases on view there,” -Alberto Greco. Interaction with the city, emphasising a lived bodily experience, is like an organic intercourse with the buildings and their histories. Gaborone is poised on the precipice of another significant time in its history; its transformation into a Diamond City. How do we create a city that is world class but still appreciates the value of its history and respects the interactions of its people? In a series of articles, I would like to unpack some of these questions and propose that we look at our capital with more intimacy; that we appreciate the intangible ways that economics, politics, the needs of the people and the vision of the city planner and architect are all interlinked. I hope that it will give all of us the opportunity to appreciate our city more; to toy with the idea of Gaborone’s potential to be an exemplary city in the region and the world. Gaborone is growing fast. In 2001, the population of the city stood at 186 007. This number is predicted to increase to 443 647 by 2027. It is expanding perhaps as fast as it did, 49 years ago when the first citizens of the almost Republic of Botswana decided that it would be their capital city, and set about putting in place the infrastructure that would make it a functioning administrative capital. Back then, there were fewer than 18 000 people living in the capital. Now, there are close to 232 000. This means that every day, 232 000 people
wake up, go to work, worship, study, innovate, walk, cycle and drive; give birth, die and thrive, here. There is something magical in the fact that even though a city is made up of brick, tar, and stone, its essence, its soul, is made up of the people who inhabit it. The city is a testament to the lives they have led. Experiencing the city is very different, depending on whether you walk through it, take public transport or drive. Its character changes depending on whether or not it is morning or night: the Exponential Building in the CBD looks unimposing by day, but turns into an undulating beacon of light, after the sun goes down. Celebrated British architect of Ghanaian descent, David Adjaye, said in an interview with fashion designer and property developer, Ozwald Boateng: “I’ve been to 52 countries and 52 capital cities… As a person born on the continent but having left in my early teens, I wanted to see it again for myself… I wanted the experiences and the narrative of the continent to be my own, so the only way to do that was to explore it myself… I made a decision that taxi drivers are the most unbiased people… I would let them run me around the town for as long as they could… What I didn’t have were the narratives and insights into individual lives, but I made friends along those journeys, incredible things happened,” he said. In an interview with the Financial Times, former Mayor of Gaborone, Veronica Lesole said that the planners of Gaborone didn’t do a good job because they didn’t give the city enough room to expand. Whether or not it was wise, it was
When one walks through the Main Mall today, they might notice the crush of buildings; some older than others, jostling each other on either side of the central walkway. It is like a tree whose rings tell its age. Some who lived in the city when it was just a small cluster of government offices remember that back in the ‘60s, the Main Mall was the financial hub of Gaborone. Many people who lived in the capital at the time were civil servants, and worked in the government enclave. Then, the Main Mall and the African Mall were the centres where Gaborone’s small population would interact, and where people’s lives would intersect. Many people met at the bank, whenever they needed to transact. Whenever people needed to buy groceries on their way home, it was there that they would ‘bump into’ each other. These places were loci of activity and interconnectivity. Lekoma Mothibatsela spoke a little about how the city has grown and changed, over the years. “The four original buildings which housed the ministries are still there, but they are dwarfed by other buildings in the government enclave. I am glad that they have been preserved, because they are historical pieces.” He speaks fondly of the development of the Main Mall, in particular, naming some of the businesses that established themselves then and are still part of the mall, today. “President Hotel was there, but was much smaller at the time. It was, I think, the most modern hotel in the country. It was built in 1966. For Independence, there were really no other hotels that could accommodate visiting heads of state from other African countries. Government then rushed to build the hotel for the visiting dignitaries.” Civil servants, he said, would walk in from the government enclave for after- work drinks and to socialise.
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Mothibatsela is a member of the Smart Partnership, a consortium that has invested in property in the city for many years. He has seen it grow and change and mentions that now, the city is much bigger than it was in the ‘60s. There are also many more people who live here, now. It would seem as though the intimacy and sense of community isn’t the same as it was when the city was still a small cluster of government administration buildings and residences. The Main Mall and African Mall are no longer the economic hubs that they were, in yesteryear, even though some of the same businesses are thriving there, today. The Notwane Link Pharmacy, Gaborone Hardware and Botswana Book Centre are still operational there, today. The CBD was laid out in 1996 with the hopes that it would be the city’s new economic hub, and it is taking over as the site for the economic activity of the city. Gleaming beacons of progress began to push up out of the ground, changing the landscape of Gaborone. The Ministry of Health building, the Attorney General’s chambers and the CBD stood as symbols of the ever more cosmopolitan Gaborone, its aspirations to be a world class city, changing its landscape with world class buildings. Financial institution, First National Bank, has moved their offices there; Citizen Entrepreneurship Development Agency is based there and so is Botswana Export Development and Investment Authority. There is one thing that is important to remember as we continue on our journey to give Gaborone a ‘character’ through its architecture: A building’s purpose may be dictated by those who plan for its construction, but its story is made up of the characters and movements of the people that occupy it daily; those who live here, meander through its passages, do business, worship, raise their families here. As we stand on the edge of Gaborone’s tomorrow, it could be worthwhile to think about the possibility that the city doesn’t make the people; the people make the city and we can be visionary about how we develop ours.
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our CLIENTS Some of our key clients include: Jwaneng Mine / PPADB / Botswana National Productivity Centre / University of Botswana / DCEC / Ministry of Finance / CITF / Debswana Lodge (Gaborone) / Sebele Co-operative Centre
Boidus Feature Page 8
BOIDUS FOCUS December 2013
2013 End of Year Review - Botswana Property & Construction Industry
by Boidus Admin
>>> FROM PAGE 01
Property and Construction Activity in Decline
Massive Strides in Professionalizing and Regulation of Contractors in Botswana’s Construction Presenting at this year’s Construction Industry Pitso themed “Constructing the Economy: Consolidating Strategy Partnership”, Mr Ulf Soderstroom has embarked on establishment of a construction industry regulating authority and contractor registrations. Strides made to date include: ENGINEERS’ REGISTRATION BOARD • The Engineers’ Registration Board is formally constituted. • The Engineers’ Board has received financial assistance for Government to make it operational and self sustaining. • Amendments to Act enacted. A Registrar with a team has commenced work to enable registrations. REGISTRATION OF PROFESSIONALS • The Architects’ Registration Council • The Quantity Surveyors Act …White Elephant public project continue to blight the overall picture of construction industry in Botswana. A list of these projects includes:
The Investment Property Databank (IPD) results show continued turn down of the Botswana property market. The property market and the construction activity during the year 2013 were shown to be in slight decline.. The 2nd instalment of the IPD Property Consultative Index highlighted a decline in overall property return from 20.6 % in period 2011 to 17.8% in 2012. Presenting the Data at this year’s Botswana Breakfast Forum, IPD Executive Director and Head of South Africa branch, Mr Stan Garrun, highlighted the continued good performance of the property sector. Institutional Investors called to stage and invest in local infrastructure developments:
IPD Botswana Annual Property Consultative Project Index IPD Botswana Annual Property Consultative Results for the year to 31 December 2012 Index IPD Botswana Annual Property Consultative
Sir Seretse Khama International Airport
Initial date 2009 P175 postponed to million April 2010 March 2011 Last postponed to December 2012
June 10, 2008
The IPD Botswana Annual Property Consultative Index measures ungeared total returns to directly held standing property investments from one open market valuation to the next and in 2012 returned 17.9%
Total return %
Income return %
Capital return %
12 months
12 months
12 months
All Property
17.9
11.0
6.3
Retail
16.6
10.6
5.5
11.7
3.2
IPD Botswana Annual Property Consultative Index Office
15.2
Industrial
28.4
Residential
24.4 -
All Property Comparative Data Retail
12.5
Total return %
7.7
Office Bonds
6.3
15.2
Total return %
Capital value %
12 months
SOME KEY PROJECTSIncome return 11.7 10.6
-
-
-
%
-
Number of properties
12 months
Number of funds
All Property
2,850.2
100.0
103
7
Retail
1,463.0
51.3
18
5
Office
661.7
23.2
21
7
Industrial
279.4
9.8
26
4
Residential
157.9
5.5
27
4
Other
288.3
10.1
11
2
The figures above represent the full coverage of the IPD Botswana Annual Property database as at December 2012. The IPD Botswana Annual Property Consultative Index employs only fully revalued assets from that database.
Retail Equities
7.7
1,463.0
51.3
6.3 5.5
-
Data sources: BSE All Share, BSE Bond Index, CSO Botswana CPI National
Capital value BWP (m)
The Rise of two tallest skyscrapers redefining the capital city skyline and creating new points of focus and identities:
11.0
28.4 12.5 As at 31 December 2011 portfolio market Residential 24.4 12 months 8.8 value was P2.4 billion with an overall asset alOther* IPD Botswana Annual Property Consultative Index database profile All Property 17.9 location as follows: *No results published for confidentiality reasons. Retail 16.6 • Equities 55.7% • Fixed OfficeComparative 15.2 Data income 21.6% • Property Investments7.74.7% Equities Industrial 28.4 Bonds 6.3 • Cash & cash equivalents 18.0% Residential 24.4 Inflation Offshore investments 7.4 Other*Data sources: BSE All Share, BSE Bond Index, CSO Botswana CPI-National Assets placed with Blackrock Investment Man*No results published for confidentiality reasons. agement from P234.6 millionprofile ($37 IPD Botswana Annualincreased Property Consultative Index database million) in December million Number of properties Capital value2010 to P333.4 Capital value BWP (m) % ($45.3 December 2011. Comparative Data million) in All Property 2,850.2 100.0 103 7.4
P433 million
Capital return %
-
12 months
17.9
16.6 ESTIMATED NET WORTH
Estimated damaged cost P600 000
Changing Gaborone Skyline
14.3
-
IPD Botswana Annual Property Consultative Index Equities
Additional cost P60 million
total returns to directly held standing property investments from one open market valuation to the next and in 2012 returned 17.9%
Income return 14.4 %
8.8
12 months
May 11, 2010 July 12 2012 contract with Sinohydro terminated
Cost
The IPD Botswana Annual Property Consultative Index measures ungeared total returns to directly held standing property The valuation IPD Botswana Annual Property investments from one open market to Index measures ungeared the next and in 2012 returned Consultative 17.9%
IPD Botswana Annual Property Consultative Index
Inflation Industrial
Motor Vehicle Accident Fund
2007
Results for the year to 31 December 2012
*No results published for confidentiality reasons.
SHORT DESCRIPTION
Finish
Index Results for the year to 31 December 2012
Other*
FUND
Francistown Stadium
Start Date
18
Capital return %
3.2 14.3
12 months
14.4 -
11.0
6.3
10.6
5.5
11.7
3.2 -
12.5
14.3
-
8.8
14.4
-
-
-
Number of funds 7
-
-
5
Office 23.2 21 7 As at the 31st March Emerging Market661.7 Africa Bonds 6.3 Funds (Domestic 279.4 9.8 26 4 2012, the assets ofInflation thisIndustrial Equities, Asset Status) 0.73% 1. The iTowers first phase 7.4 - complete and operational. The Cheese grater Residential 157.9 5.5 27 4 portfolio were investedOther 20.18% Domestic10.1 Private shaped tallest building in Botswana has imposed its face to the CBD making 288.3Index, CSO Botswana 11 2 Data sources: BSE All Share, BSE Bond CPI National mainly in equalities/ The figures Offshore Hedge Funds Equity 5.34% above represent the full coverage of the IPD Botswana Annual Property database as at December 2012. The IPD Botswana Annual Property Consultative Indexmost recognizable reference point by miles. The iTowers have a total it the The Botswana employs only fully revalued assets from that database. shares with a lower allo2.11% Domestic Property of 174 units, 64 units in Tower 1 and 110 units in Tower 2. The Tower boosts Public OfIPD Botswana Annual Property Consultative cation to bonds and cash, Offshore Cash, 1,16% 0.39% Index database profile a ‘Sky Lounge’ the first of its kind in Botswana, private art gallery and also ficers Pension Number of properties Number of and alternative investOffshore Bonds Capital value Domestic Cash Capital 5.63%value high end restaurant, afunds taste of the arts Gym; numerous retail stores will Fund (BPOPF) BWP (m) % ments such as property. 8.53% Domestic Bonds 9.10% serve residents and A-Grade office space. All Property 103 7 Developed Market2,850.2 Domestic Equities 100.0 17 Retail 51.3 18 5 Equities 29.33% 1,463.0
Office
661.7
23.2
21
7
Botswana Insurance Holdings
26 4 Sanlam Limited, a Industrial multiThe Group has total279.4 assets of P12.2 billion. 9.8 - Ombudsman Residential 157.9 5.5 27 4 faceted financial services In 2010, Revenue: HQ-2008 288.3 11 2 group that is highlyOther re>Net premium income increased by 29% to10.1 - SADC Head spected across Africa, is above P1.6 billionthe full coverage of the IPD Botswana Annual Property database Quarters The figures represent as at December 2012. The IPD Botswana Annual Property Consultative Index employs only fully revalued assets increased from that database. the majority shareholder >Free income by 14% to P137 mil-2009 in the BIHL Group with a lion -Rail Park Mall 53% shareholding. >Value of new business increased by 16% to - 2010 P132.3 million
Debswana Pension Fund
The Fund is currently At 31 December 2010, the Fund value was (2010) invested 58% P3.2 billion, up by P200 million up from previBonds and Cash, 4% ous year’s valuation of P3 billion. Property. The fund portfolio investments were in line with the pre determined ranges of its strategic asset allocation and rebalancing limits at the end of 31 December 2011.
2. The Botswana Development Corporation, Fairscape Precinct place is slowly dominating the eastern sky, making it the best view to the east of the city with its gleaming honey comb structural lattice. The Precinct although still not complete, has now made a clear statement of its form and will see a high grade of tall office space and mixed use place enter the city’s property scape.
BOIDUS FOCUS Classifieds WELCOME
BOIDUS FOCUS CLASSIFIEDS
Welcome | 2014 Calendar Events | Tenders/Awards| December 2013
2014 CALENDAR EVENTS
TENDERS/AWARDS
UIA 2014 WORLD CONGRESS IN SOUTH AFRICA 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.
UIA Congress
3-7 AUGUST
UIA General Assembly
8-10 AUGUST
Durban International Convention Centre (ICC)
TENDERS JOBS EVENTS List/Find the latest Tender and Jobs In Construction Stay updated with current Industry Events and activities
PROPERTY LISTINGS
On the twentieth anniversary of South Africa’s re-birth, the UIA Congress will celebrate the African profession as a meaningful contributor to world architecture and thought leadership in city development; as well as the continent’s contribution in the affairs and evolution of architecture globally. Architects, engineers, designers, technologists, planners, thinkers and writers from all over the world will gather, with the public, for a week of lively and challenging talks, workshops, events and happenings.
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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 26th September 2013 Board Sitting Tender No: PR 9/3/105/1999-2000 Tender Title: Department of Building and Engineering Services’request to award the contract for direct appointment of Mr. Keith Rettig at BWP1, 911, 717.00 (VAT Inclusive) for Consultancy Services for the Construction of Integrated Sports Facilities at Francistown. Adjudication Decision: Approved Submission Date: 18.09.2013
EAST AFRICA PROPERTY INVESTMENT SUMMIT
Board Adjudication Decisions for the 10th October 2013 Board Sitting Tender No: PR 9/3/3/13-1 Tender Title: Department of Building and Engineering Services (DBES)‘s request for the Provision of Resident Staff for the Pre and Post Contract Consultancy Services for the Proposed Police Housing at Block 10 in Gaborone at an amount of BWP2,388,000.00. Adjudication Decision: Approved Submission Date: 04.10.2013
Board Adjudication Decisions for the 24th October 2013 Board Sitting Tender No: TB 9/3/188/2001-2002 Tender Title: Department of Building and Engineering Services (DBES)’s request to award the tender for the Completion of Snags at Tlokweng Braille Centre and Hydrotherapy Pool to Nkulo Enterprises (Pty) Ltd at an amount of BWP 369 488.00. Adjudication Decision: Did not Approve Submission Date: 21.10.2013
“The outlook for the sector is encouraging and there are a lot of unique and attractive opportunities in the East African Market.” Michael Turner - Managing Director Actis East Africa Attend the most noteworthy platform for learning about real estate development in East Africa with an agenda packed full of quality content and expert speakers. The East Africa Property Investment Summit will deliver a fresh and unique approach to the challenges and opportunities present in the region.
• • • • •
Annual GDP growth: 4.3% FDI Inflows forecasted to average US 1.3 Bn p.a Average Annual Growth Rate: 4.81% Projected Growth Rate of 5.2% in 2014 Population: 44 Million
• • •
Annual GDP growth : 5.7% Average Annual Growth Rate: 5.76% 46.4 Billion GDP FDI Inflow $792.3 Population: 34.7 Million
• • •
Annual GDP growth : 8.5% The second Largest Population in Africa One of the fastest growing economies in the world Average Annual Growth Rate: 5.1% Population 94.9 Million
South Sudan •
Average Annual Growth Rate: 11.4%
Burundi • • •
Annual GDP Growth: 4% Average Annual Growth Rate: 2.6% FDI Inflows at $1.7 Million
Tender No: PR 2/2/3/13-2 Tender Title: Office of the President’s retroactive request to engage Tajin Investment (Pty) Ltd T/A Mogote Electrical Installation for the Installation of Electrical and Mechanical Equipment at Office of the President at an amount of BWP 323 366.74 inclusive of 12% VAT. Adjudication Decision: Did not Approve Submission Date: 28.08.2013
Board Adjudication Decisions for the 24th October 2013 Board Sitting Tender No: PR 2/2/3/13-1 Tender Title: Office of the President’s retroactive request to pay Whyte & Plumbers (Pty) Ltd for the remedial works at the Office of the President at an amount of BWP 303 502.00 inclusive of VAT. Adjudication Decision: Approved Submission Date: 04.10.2013
Tender No: PR 10/1/1/13-1 Tender Title: Ministry of Minerals, Energy and Water Resources (MMEWR)’s request for direct appointment of Aurecon Consultants for the Consultancy Services for Morupule B, Unit 5-6 (Brownfield) and Mmamabule (Greenfield) Project. Adjudication Decision: Approved Submission Date: 25.10.2013
MINISTRY OF LOCAL GOVERNMENT
Ethiopia • •
Board Adjudication Decisions for the 17th October 2013 Board Sitting
Board Adjudication Decisions for the 7th November 2013 Board Sitting
Uganda • •
MINISTRY OF STATE PRESIDENT
MINISTRY OF MINERALS, ENERGY & WATER RESOURCES
Kenya
BUSINESS LISTINGS
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.
MINISTRY OF INFRASTRUCTURE, SCIENCE & TECHNOLOGY
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VISION: To be the centre of excellence in public procurement and asset disposal by 2018.
Board Adjudication Decisions for the 7th November 2013 Board Sitting Tanzania • • • • •
Annual GDP Growth 7.5% One of the fastest growing economies in Africa and the world Average Annual Growth Rate: 7% GDP: 13.7 Billion Population: 48.2 Million
Rwanda • • • •
Annual GDP Growth : 5.7 % Amongst the fasted reforming countries in the world Dubbed “Africa’s new Singapore” Average Annual Growth Rate: 8.0%
Tender No: PR 8/1/3/12-1 Tender Title: Department of Local Government( Technical Services)’s request to award the tender for the Construction of Boteti Northern Cluster Rural Villages (Khumaga, Moreomaoto, Motopi, Makalamabedi, Phuduhudu and Chanoga/Xhana) Water Supply Rehabilitation Project to Red East Construction at BWP 166,366,072.47. Adjudication Decision: Approved Submission Date: 24.10.2013
COMMITTEE DECISIONS: Adjudication decisions on Ministerial Tender Committee decisions are available on the PPADB website: www.ppadb.co.bw
PPADB Toll Free No. 0800 600 751
BOIDUS FOCUS Classifieds December 2013 | Home Improvement Ideas
DIY Projects - 6 Steps to the Perfect Inground Pool Source: popularmechanics.com able. And vinyl liners come in dozens of patterns and colors to satisfy anyone’s personal preference or poolscape design. Construction time for a vinyl-lined pool is generally one to three weeks.
Fiberglass pools are factory-molded into one giant bowlshaped piece, which is set into the excavated hole by a crane. As a result, fiberglass pools can be installed much faster than other pool types. In some cases, installation takes as little as three days.
There’s nothing like installing a concrete swimming pool to one-up your neighbor’s aboveground version. But planning your dream pool can be harder than it first seems. Consider your options and obligations before breaking ground, and inground pool construction will proceed swimmingly.
1. Pick a Pool
There are three main types of inground pools. In order of popularity they are: concrete, vinyl-lined and fiberglass.
Concrete pools are truly custom-built and can be formed to virtually any size or shape. Once the concrete cures, it’s either plastered smooth, painted, finished with a textured aggregate surface or tiled.
It typically takes longer to install a concrete pool than any other kind—generally between three and 12 weeks—but it’s considered the strongest, most durable type of pool. And, unlike any other type of inground pool, existing concrete pools can be remodeled, enlarged and updated.
Vinyl pools are made from a preformed flexible liner that fits into the hole and attaches to a reinforced wall frame made of steel, aluminum or non-corrosive polymer. Most vinyl pools are rectangular, but L-shaped and freeform liners are also avail-
Fiberglass pools have a supersmooth gel coat finish that’s extremely durable and stain resistant. Unlike concrete, fiberglass pools are nonporous, so they tend to use fewer chemicals and harbor less algae. However, fiberglass pools come in fewer sizes and shapes than concrete or vinyl pools. And the huge molded pools must be shipped via truck, which are often forced to take long, circuitous delivery routes.
2. Compare Pricing
Cost varies widely depending on the region of the country, type of pool, soil condition, circulation system, accessories and, of course, the size and shape of the pool. Even the time of year can influence the price; some contractors offer discounts for pools built during the off-season when business is slow.
Sponsored by 4. Site the Pool
* Let the Sun Shine In: Take advantage of free solar energy by picking a pool location that’s open to the sun and well away from any trees. * Block the Breeze: Building a pool in a windy location greatly increases water evaporation, which means you’ll constantly have to add pool water to maintain the proper level. * Stay High and Dry: Avoid building in a low-lying area, which could result in the pool flooding with mud and debris during periods of heavy rain. * All Clear Above and Below: The pool shouldn’t be located beneath overhead telephone or electrical wires, or directly over buried sewer lines, septic systems or electrical cables. * Keep Eye Contact: Whenever possible, build the pool within view of the house. That way, you can keep an eye on swimmers even while you’re indoors. * Accommodate Accessories: When determining pool placement, be sure there’s enough room for installing accessories, such as a whirlpool spa, slide, diving board, bench seats and utility shed.
5. Choose a Circulation System
3. Check With Zoning
The pool’s circulation system is designed to keep the water clean and crystal clear. To do this effectively, it uses both filtration and sanitization. The heart of the filtration system is the pump. This draws water from the pool’s bottom drains, sends the surface water through an automatic skimmer, and then passes everything through a filter before recirculating it to the pool. There are three types of filters commonly used: sand, cartridge and diatomaceous earth (DE).
Building and zoning rules differ from town to town, but ordinarily you must satisfy certain setback distances from the pool to property lines, septic tanks, wells, sewer lines, wetlands and the like. There are also codes concerning pool barriers and gate hardware. For an extra level of protection, especially if you’ve got young children or grandchildren, consider mounting alarms on all house doors and gates leading to the pool, and installing a power safety cover over the pool.
Here’s a list of items that aren’t typically included in the price of the pool: outdoor lighting, landscaping, pathways, decks, fencing, patios, privacy screens, whirlpool spas, outdoor sound system, water test kits, shade structure, patio furniture, equipment shed, storage cabinet, pool toys, additional outdoor electrical outlets and telephone line.
Generally speaking, concrete pools are the most expensive, followed closely by vinyl-lined pools, and then fiberglass. However, a high-end, tricked-out fiberglass pool could cost more than a barebones concrete pool.
Inground swimming pools are subject to building and zoning regulations just like any other home-improvement project.
6. Beware of Budget-Busters
The true price of an inground pool is often about twice the cost of the pool itself. That’s because there’s so much more to an inground pool than a hole filled with water: You need to enhance the landscape, buy accessories and invest in pool maintenance.
BOIDUS FOCUS Classifieds
Products | December 2013
PROFILE: Botswana’s Leading Building Material Suppliers Botswana’s Building material suppliers have come of age, from the days when consumers used to rely on ‘general dealers’ and local cooperatives for their assorted building materials and other equipment supplies. Today, a cut-throat, competitive building material suppliers industry is emerging, with the key players having to remain relevant in order to retain their customers.
Boidus Interview with Mr Shaikh- Builders World Operations Managing Director BF: What are your views on the lack of standards for building material products in Botswana being a challenge? • Builders World has to rely partly on SABS approved products as BOBS does not cover all products. • Builders World, through BOCCIM, is lobbying government and policy makers to impose quality tests on imports. • There is a need for the industry to come together and form an association that can engage policy makers and help develop and protect the industry from unscrupulous suppliers. BF: What do you think about challenges posed by Foreign Building material imports?
Boidus Media sought to build a picture and understand the evolution of this industry by speaking to some of the long established and leading material suppliers. Below are conversations with Mangers of Builders World, Haskins and Jamaal Trading Company:
The customer is the one who stands to lose most. The problems start after a few years when customers need to repair and maintain their houses with these foreign materials. Because there are no replacements materials, either people incur additional costs to buy replacement or then have to replace the whole project with what they should have invested in the first place.
• There is a need for consumer awareness and public education. Suppliers and product promoters should engage in educating consumers about the value and quality of their products. For example, of the many cement products that are available, there are some that have high quality and will give high quality results which in the long term returns value for money. • Builders World holds periodic demonstration and activation events which are aimed at education professionals and building materials consumers. BF: Why did you re-brand Builders World?
Builders World has re-branded its motto/logo to ‘Build For Life’ from ‘We Build with You’ in order to reassert our image as that of a long-term partnership with our customers. To this end, Builders World ensures quality products and customer industry, which is good for consumers, to give them a lot more choice. • For the past 10 years it has been Haskins, Jamaal, Builders World and Cash Build but now there are a lot of suppliers that have emerged, including the likes of Builders Warehouse. • Individuals and companies are buying from China. • Most companies buy from China through South African companies as well as Botswana-based ones.
Boidus Interview with George Haskins Haskins BF: What is the state of the building material suppliers in Botswana, in view of other foreign competing players such as Chinese imported material? • The market is becoming a lot more competitive • Choppies have entered the building material suppliers
BF: Tell us about the services and customer care at Builders World. We have various customer ancillary services such as:
• Our estimating department helps produce a bill of cost for our clients’ building plans from the architect • Free delivery within 30k radius of Gaborone • Free gift as a token of appreciation for every client no matter how small their purchase • Purchase Flexibility - We make sure clients have the flexibility to return, replace and swap goods as part of their buying process. Sometimes clients have excess products which they no longer need so we take back these goods in exchange for their money or swop. • Over and above this, Builders World strives for customer happiness. • Come to us for; »» Better pricing »» Improved service quality »» Sensitivity to customer feedback
BF: Are there buying/purchase plans or schemes, that differentiate Haskins from other leading building material suppliers?
BF: Ancillary services provided by building material suppliers can make competition tough;
• Haskins has become strong in the farming market. • We have open days; recently we invited 20 suppliers and attracted consumers; they also had an opportunity to win amazing prizes. • Interact with our consumers so that they are sure of the products they are purchasing.
• Haskins try to be little more specialized in certain areas • We are making an effort to differentiate ourselves from the mass market • We have established a relationship with Honda, a highquality product, and use their trailers for marketing their products • Haskins joined farming and are always exhibiting at agriculture shows
• Our consumer education drive started when we advertised with Boidus Focus. We did features to educate people about certain things in the building industry. • We have been involved in different expos, giving demonstrations to consumers and interacting with them directly. • We like to create the atmosphere of exchange with our customers. Instead of just showing the products with the price, we strive to facilitate understanding with our clients.
gain some insight on one of the country’s leading building material suppliers. He had this to share with us.
Boidus Focus sat down with the Head of Marketing, Estimations and Social Work for Jamal Trading, Mr. Didarul Islam Bhuiyan, to
satisfaction.
• For those customers who come to Jamal Trading with a plan, a full estimation of the cost of materials to build the house is done free of charge. • Free delivery of supplies for houses within Gaborone which is done step by step as the need arises for certain supplies so as to avoid risk of theft. • Customers can open a deposit account with the store into which they deposit and access money for purchasing goods anytime and this account comes with discounts on all products. • Branches within Gaborone can be found in Tlokweng,
ADVERTISE YOUR PRODUCTS HERE AND REACH YOUR
CUSTOMERS
BF: And what about consumer education?
Phakalane, and G-West Industrial. • Branches outside Gaborone can be found in Lobatse, Molepolole, and Thamaga. • We also plan to open branches in Mogoditshane, Francistown, Mahalapye and Maun starting with Mogoditshane in 2014. • Our prices and our products are our strengths. People love us because our materials last. • These days there’s a lot of overseas competition because some people like to go to China to buy materials because they’re very cheap there but people should be careful to buy quality products no matter where they purchase. • Mr. and Mrs. Ahmed are the founders and Mrs. Ahmed is the CEO of Jamal Trading Company as well as Nata Timber and Eezi Build.
Construction Industry Architecture Built Environment Arts & Culture Property Investment
GABORONE
KILLION T: +267 75505291 E: killion@boidus.co.bw FRANCISTOWN
WADA T: +267 71480679 E: mail@boidus.co.bw
WHY BOIDUS? • the consumer of the built environment needs to be in a position to access information regarding what the architectural industry is up to • a platform for discussion and discourse needs to be created where open, earnest discussions on important issues take place
BOIDUS FOCUS Classifieds June 2013 | Advertising
BOIDUS FOCUS December 2013
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BOIDUS FOCUS December 2013
Professional Practice Page 15
The New Revised Development Control Code 2013 by Boidus Admin
>>> FROM PAGE 01
directions in the contemporary planning system that is emerging globally. A land use management approach which seeks to put mechanisms in place to encourage and assure that the desired types of land developments satisfy the safety, liveability, health and general welfare criteria is now being favoured by most planning authorities around the world. In this regard, it becomes important that Botswana keeps abreast with such new directions through benchmarking, but of course adapting these to suit its peculiar physical, social, economic and cultural conditions and circumstances.
BACKGROUND TO THE REVIEW PROCESS The review of the Development Control Code (DCC) of 1995 has become necessary, given the fact that it was prepared 13 years ago. Evidently, with the passage of time, most of the conditions (physical, social, economic and environmental) under which it was prepared have changed and new and more complex forms of developments, and land uses are emerging. The need for the review of the Development Control Code of 1995 is a reflection of the development dynamics being experienced in the country. These dynamics are the results of a number of factors which include the Socio – economic profile of the population and the state of the economy which have both improved, as well as physical planning factors which are constantly changing. As noted, physical developments, particularly in our urban centres, are becoming more complex. It is therefore important that the DCC be reviewed such that it is aligned with current development realities. It will be out of place if the regulations and guidelines which are meant to facilitate orderly developments do not evolve with the changing times. A review of the DCC of 1995 has also become necessary if it is considered that the approach to the control of developments is taking new
The need for the review of the DCC of 1995 becomes more compelling when it is realised that: i. The current code does not offer enough flexibility in its application in terms of allowing adequate discretions to responsible Planning Authorities with regards to the granting of waivers on standards and requirements, however insignificant they are. For instance, applications for grant of waivers on set-backs have to be referred to the Town and Country Planning Board (TCPB). ii. New forms of developments and land uses not catered for by the 1995 code are now emerging, e.g. infrastructure developments such as dams, sanitary landfills, airports, gymnasiums, cemeteries, and historic sites. iii. The provisions of the 1995 code relate only to site specific developments (at the individual plot level), leaving out developments at a wider spatial area, e.g. neighbourhood level. There is a marked departure from the DCC OF 1995. These are informed by the following: a. The introduction of new regulatory concepts and ideas, so as to align the revised
Code with current development realities in the country and current international best practices which have been adopted and adapted to suit Botswana’s circumstances, through benchmarking. b. Botswana is one of the few countries with a single Development Code that is applied in the whole country. As presently constituted, the Development Control Code of 1995 is applicable to urban and rural settlements that are Declared Planning Areas. The issue with this arrangement is that the universality of application of one single code across Declared Planning Areas of the country does not make it responsive to the unique planning issues and challenges that should be addressed within the context of particular areas, given their differing levels of development, cultural characteristics and differences in economic status. To address this issue, the revised DCC has adopted a format that provides a general guiding regulatory framework for developments, with more detailed standards and regulations which can be easily applied in the more urbanised centres of the country. Furthermore, the revised DCC recommends that it becomes mandatory for all settlement development plans, as and when they are prepared, to have their own specific regulatory standards for developments. This would inform of land use zoning and land use activity regulations that address the peculiarities of their jurisdictional areas, based on the templates and regulatory framework provided by the revised national Development Control Code. Such area specific land use zoning and land use activity regulations shall be integral components of the development plans. Amongst the major highlights of the revised code are the following:
i. All – inclusiveness in terms of use categories and land use activities which have been added and for which provisions for their regulations have been made. This is in view of new and more complex forms of developments, as well as new land use activities that are emerging in Botswana, particularly in urban centres; ii. While allowing for the current levels of limited discretionary powers to responsible local planning authorities, the provisions of the revised code allows for total powers to responsible local planning authorities with regards to decisions on planning applications and permits. This accords with the current thinking on the revision of the Town and Country Planning Act (TCPA) of 1997; iii. Provision of a Matrix Table which indicates the principal uses within each use zone and which ancillary uses that go with each principal use. Furthermore, the revised code outlines permitted, conditional and prohibited uses within specific zones. This, it is believed would make things easier for developers when filing applications for planning permissions, in the sense that at a glance, they know what the requirements are. In addition, the Matrix Table is meant to serve as a template in the preparation of settlement Development Regulations, as part of Settlement Development Plans. This of course should be modified/adapted to satisfy and meet the development peculiarities of individual settlements; iv. Sight has not been lost of other development related legislations and regulations, such as the Building Control Code; Urban Development Standards (UDS) and the Town and Country Planning Act (under revision). Key and relevant provisions of these have been adopted and incorporated into the revised DCC as a means of addressing the issue of multiplicity of development related pieces of regulationsand their harmonization. v. Certain provisions of the 1995 DCC which are considered to still be valid and relevant are retained in the revised Code.
HOW TO USE THE CODE
LAND USE ACTIVITY TITLES
PRINCIPAL AND ANCILLARY USES
This section is meant to increase the ease of use of the Code and consequently enhance its user friendliness. It provides basic information to users on the basic organisation of the regulations and gives responses to a number of questions/ queries which might be frequently asked or raised.
The following Land Use Activity Titles are established under this Code:
For regulatory purpose the Detailed Classification of Land Use Activities set in Table 2.2 include the following:
i. Residential Land Use Activities ii. Civic & Community Land Use Activities iii. Commercial Land Use Activities iv. Industrial Land Use Activities v. Sport & Recreation Land Use Activities vi. Transportation Land Use Activities vii. Utilities & Utility Services viii. Open Land Use Activities (Agriculture, resource extraction)
i. Principal Use – the primary or predominant use of any piece of land (plot / property). The “Principal Use” portion of each land use activity title lists principal activities common to that title. The names of activities are generic and are based on common meanings, not on what a specific use may call itself.
Such questions/queries and responses are set forth as follows: Q. I WANT TO ESTABLISH A NEW USE IN AN EXISTING BUILDING Q. I WANT TO CHANGE THE USE OF MY PLOT Q. I WANT TO SUBDIVIDE MY LAND Q. I HAVE A USE, BUILDING OR SIGN THAT IS NON CONFORMING:
ii. Ancillary Uses - a use that is on the same plot/property as, and of a nature customarily incidental and subordinate to the principal use, structure, or building on the property. No ancillary use may be established on a site prior to the establishment of a permitted principal use, (unless it is a part of the sequencing process within the time allowed for property development.)
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The programme is designed to enhance the competencies and upgrade the knowledge of Property Managers, Owners, Consultants and Practitioners. At the end of this programme, participants will have an extensive overview of real estate industry and be knowledgeable in real estate laws and regulations.
CONTACT DETAILS OCAAT Plot 1055 Modipane Road Oodi Private Bag 041, Bontleng, Gaborone Tel: +267 3926909, Fax: +267 3926904 Email: info@biust.ac.bw Web: www.biust.ac.bw
CONTACT DETAILS: GABORONE CAMPUS Plot 54831, Block 7, Corner of Western Bypass (Motsete& Mogoditshane Road) Email: Jackson.nyangech@baisago.co.bw Tel: (+267) 3957744 Fax: (+267) 3957709
LIMKOKWING UNIVERSITY OF CREATIVE TECHNOLOGY
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Limkokwing is a private institution dedicated to the development of creativity and innovation. It creates flexible pathways creating the right environment for the building of skills, talents, and knowledge.
COURSES OFFERED • Bachelor of Architecture • Bachelor of Engineering (Mechanical Engineering) • Bachelor of Science (Real Estate) • Bachelor of Engineering (Civil Engineering) • Bachelor of Science (Urban and Regional Planning) • Bachelor of Land Management
COURSES OFFERED • Associate Degree in Architecture Technology • Bachelor of Arts in Interior Architecture • Associate Degree in Interior Design • Associate Degree in Retail Design & Management CONTACT DETAILS P.O. Box 294, Gaborone, Botswana Plot 59140, Block 7, Gaborone, Botswana Tel: +267 318 0135, Fax: +267 3922 356 Web: www.limkokwing.net
CONTACT DETAILS University of Botswana Admissions 4775 Notwane Rd Gaborone, Botswana Private Bag UB 0022 Tel: +(267) 355 0000 Gaborone, Botswana
Professional Practice Page 16
BOIDUS FOCUS December 2013
Performance and Retention Bonds: Avoiding Pitfalls by Boidus Admin / (Adapted from www.inhouselawyer.co.uk and www.hklegal.co.uk) AVOIDING PITFALLS ON CALLS ON PERFORMANCE BONDS: Calling on a performance bond should result in swift receipt of the bond amount by the beneficiary. However, there are risks involved in making calls on performance bonds, which can result in complex proceedings leading to delay and cost. UNDERSTANDING A PERFORMANCE BOND A performance guarantee assures payment to the employer in the event that the contractor does not fulfil his obligations in terms of the underlying contract. In other words, Performance bonds are a type of promise to pay or guarantee of payment provided by a third party (the surety or the guarantor) to an employer (the beneficiary) as security against the non-performance of a contractor (the principal). In the construction industry, the surety or guarantor is likely to be a financial institution, such as a bank or an insurance company and the amount of the security provided by a performance bond would
typically be between 10 and 20% of the underlying contract value. The advantage of performance bonds for employers is that, in the event that the non-performance of a contract is as a result of the insolvency of the contractor, or of their parent company, the employer retains some security by having the ability to call upon the third party to pay out on the bond. While most developers are advised to seek both performance bonds and parent company guarantees, precedent case law highlights the importance of paying careful attention to the drafting of performance bonds in order to avoid potential pitfalls when making a call on the bond. UNDERSTANDING TYPES OF BOND Performance bonds can generally be categorised into three types; conditional bonds, on-demand bonds and hybrid bonds. Conditional bonds; A conditional bond or a ‘see
to it’ bond is characterised by the requirement for the beneficiary, when making a call on the bond, to have a judgment or award evidencing a proven breach of the underlying contract, and a loss suffered by the employer as a consequence of this breach. In this respect a conditional bond is generally seen as a guarantee, in that it imposes an obligation upon the guarantor, subject to the beneficiary establishing proven default in the underlying contract. It, however, differs from a guarantee in that the beneficiary is not required to first seek recovery from the principal. On-demand bond; In contrast to this, a ‘pure’ on-demand bond is characterised by the absence of any conditions required to make a call on the bond other than the making of the call itself. In this way, a primary obligation is imposed upon the surety (or ‘bondsman’). In practice, the risk to an issuer of performance security of a call is significantly greater in view of the fact that loss, default or breach does not need to be proven. This risk is reflected in the increased costs of this kind of security compared to a conditional bond. Hybrid bond; Hybrid bonds, as the name would suggest, could fall anywhere along the spectrum between conditional bonds and ‘pure’on-demand
ATTENTION CONTRACTORS
LET US TAKE YOUR RISK BECI is the only credit insurer in Botswana, set up in 1996. The primary function of BECI is the granting and development of credit insurance. The company has evolved through time into issuance of other related products, such as Construction Guarantees and related guarantees. BECI has been instrumental in the development of credit discipline in the country.
Tel: +267 31 88015 Plot 115, Unit 6 Kgale Mews, Millenium Park
www.beci.co.bw With construction insurance from BECI, you can get on with your contract works without having to worry about the risks that often come with a project.
BUILD WITH CONFIDENCE
BECI provides guarantees to ensure that your contract will be performed according to its terms. In the event that the contract is not performed, BECI will pay damages if the contractor cannot. BECI surety bonds, or guarantees, include: • Bid/tender bond • Performance bond • Advance payment bond • Retention bond • Letters of intent
LOSS, DAMAGE AND INJURY BECI also provides insurance cover for: • Contractor’s All Risk, and • Worker’s Compensation For over 15 years, BECI has been helping entrepreneurs in Botswana to minimise credit risks, improve cash flow and focus on what really matters: growing their businesses.
BECI is a subsidiary of Botswana Development Corporation
bonds. As a result of the varying degree of conditionality present in hybrid bonds, making a call on these bonds can create the most difficulties in practice. A hybrid bond will require some conditions to be satisfied by the beneficiary in order for them to make a call on the bond. For instance the beneficiary may have to produce specific documents evidencing the grounds under which they believe the principal has breached the underlying contract or the loss that they have suffered. EXPIRY DATE It is important to look out for clauses dealing with the expiry date of the bond, especially given that there is usually a relationship between the trigger for the expiry of the bond and the underlying contract. Clauses dealing with the expiry of the bond could include specific procedures for renewing or extending the bond when certain circumstances are met. Careful consideration of these clauses should be given in respect of the timing of a call and the potential benefits that could be obtained by renewing or extending the bond. Depending on what type of bond has been purchased, it may be necessary to extend the bond beyond expiry in order to fulfil the procedural conditions required to make a valid call on the bond. Fixed-term expiry dates should be treated with caution, as there is not only the risk of projects overrunning but there may well be events capable of triggering the expiry of the bond before the fixed expiry date. THE UNDERLYING CONTRACT The terms of underlying contracts will often impact on a bond call and so it is essential that these are examined before calling on a bond. The underlying contract could go so far as to stipulate the circumstances under which a call can be made. CORPORATE DUE PROCESS AND FINANCIAL DUE DILIGENCE In order to comply with the conditions of a bond, a beneficiary may have to provide statements from company directors to evidence that they have an honest belief that there has been a breach of contract by the principal or that the company has suffered a loss. To guarantee that all of the conditions of a call are satisfied, it should be kept in mind that there may be an amount of corporate due process required in order to get any appropriate authorisation or necessary documents such as witness statements or board minutes. Financial due diligence on the contractor is advisable wherever there is a wider commercial context under which a call on a bond could be made and where a bond call could have the effect of jeopardising a broader commercial interest. EVIDENTIARY REQUIREMENTS AND CHALLENGES TO A CALL In a similar way, companies should consider and take immediate steps to obtain any evidence they might need in the event that their bond call is challenged. Beneficiaries are often required, when making a call, to specify what breach has been made by the contractor and the grounds upon which they are making a call. If the call is challenged, evidence may be needed to show that the call was not fraudulent. Beneficiaries should give careful consideration when specifying the breach as to what evidence they have available to support their specification. JURISDICTIONAL ISSUES If there are multijurisdictional issues and it is anticipated that any call will be resisted, then the beneficiary under a bond should have a clear strategy in place that can be implemented if a challenge is made. It is also important to take care when selecting the governing law and jurisdiction of the bond agreement. Some jurisdictions may be perceived to be more difficult than others or more uncertain, perhaps as a result of political bias or >>> CONTINUED PAGE 18
BOIDUS FOCUS December 2013
Comments Page 17
Editors Choice - Building of the YearYear Ends Same as it began FNB HEADQUATERS-CBD EDITOR’S NOTE
by H. Killion Mokwete, RIBA Chartered Architect
2013 ends just as it started, with little ado in construction Industry. Industry key stakeholders still speak loudly of the lack of opportunities for survival. The loud murmurs are most pitched when you speak to local contractors who cannot be satisfied by the rollout of the direct allocation of maintenance projects. Although meant well and could go a long way to provide a base for the industry, the projects are still plagued by delays, uncertainty and obviously limited to just small works. The real project opportunities lie in ‘Unbugling of the Mega Projects’ which still remain all talk with no action. Mega projects such as BIH, Kazungula Bridge, and the Mmamabula Power plants are all still being pitched to the mega international contractors while local companies remain on the sidelines or at best teamed up in formality JVCs. The highlight of the year from a Boidus point of view has been the willingness of the industry to come together and talk, share and network. Boidus Media initiated two key events this year, including the CBD Executive Seminar (May) and the Botswana Property Breakfast Forum (September) both of which are billed as annual events. The response and support was phenomenal and very encouraging. Just like all other mature markets and industries elsewhere, Botswana’s property and construction industry needs to develop constant dialogue within itself, with policy makers and consumers in order to stay relevant. The challenges that remain as the industry prepare to welcome 2014 is the continued government austerity, Industry regulation, limited areas of market growth and the continued failure to penetrate regional markets. The future of the growth of the industry lies with its ability to wean itself from government work and explore alternative regional markets as potential areas for growth. One would think that since there is a construction Pitso by the Ministry of Infrastructure Science and Technology (MIST) there would be a speedy appearance of change in the industry, but it looks like the ministry is still failing to address issues of concern by the industry.
Boidus Team EDITOR H. Killion Mokwete DESIGN Bridget T. MacKean PROOF READING Ngozi Chukura
SALES Refiloe Noko Thabo Sarona
JOURNALISM Keeletsang P. Dipheko GUEST COLUMNISTS Euan Massey Phenyo Motlhagodi Ngozi Chukura
DISTRIBUTION Roy Selebalakhai PHOTOGRAPHY Mokgweetsi Phetabosigo
BOIDUS F O C U S
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Corporate Identity meets Staff welfare by Boidus Admin
Our pick of the Building of the Year, is focused on celebrating a newly completed and opened building from the pool of other outstanding buildings that we have featured over the year 2013. The FNB’s CBD Headquarters opened in the early half of the year is our ‘Editors Choice-Building of the Year’. The First Place as it is called is a synergy in design of both the clients brief requirements and people focused building finished with a humane touch that is normally devoid of office space. The key feature which is evident throughout the building is expression of the ancillary facilities. As Ms Chanda Masedu, explained it “Staff welfare was
a major design feature as evidenced by the Pause Areas contained on each floor, complete with furniture arranged in the style of a cafe; vending machines; coffee-makers; television sets with DSTV subscriptions; a staff gym and a staff canteen.” These areas, she says, all have wireless internet access allowing staff to breakout and even work on the balcony overlooking the entire CBD. The mahogany finished four storey core lavishly gives one a soft and homely welcome to what is otherwise sharp and business spaces associated with banking buildings. The office suites boast an airy open plan with customized personal desks, a truly 21st century working environment.
At fourth level, the private client suites feel more like a home, as do the beautifully finished reception and ‘Pause Areas’. At ground floor the welcome area and reception present a colourful welcome and the staff canteen will eventually break out to the outside at ground floor of the building. The screen façade of the building is protected with vertical louvers providing an intelligent sun screening from the north sun. All this has been done to ensure a quality working environment for FNB staff and a machine lime efficient building. The building scores excellent on all fronts and sets a new standard for corporate architecture in Botswana.
Expert Contributors Page 18
BOIDUS FOCUS December 2013
CONSTRUCTION FEATURE
Defective Materials and Workmanship in Construction Projects – How to protect yourself? by Euan Massey, director MDA Abdulla Consulting
Defects in construction projects are not new. The Latham report published in the UK in the mid nineties highlighted defects in construction as a major issue. Although most countries don’t have construction industries large enough to warrant reports of the scale and import of the Latham report, it is clear that defects in construction projects in Southern Africa remain a major concern. The recent collapse of a floor slab, the size of a football field, at a shopping centre under construction in Tongaat, just outside of Durban, South Africa, and the suggestion that the collapse occurred due to defective materials and / or engineering, highlights the impact which defects may have on a project.
not properly dealt with. Amendments to specifications and the formulation of tests on completion should be project specific and not something borrowed from a previous project. A set of generic descriptions, specifications and tests often fail to pass muster when it comes to protecting yourself against defects. The next point to note is that they all provide remedies which are considered fairly harsh to the uninitiated. Asking a contractor, subcontractor or supplier to remove work or materials and reconstruct or resupply same is often considered an onerous remedy which may severely impact such party’s finances and introduce considerable delay to the completion of the project.
The provision of insurance is important and indeed in the event of a major loss for a business entity, it becomes the only viable means of repaying financiers or ensuring business continuity. However, rarely does insurance receive the attention and priority it deserves. In order to understand and appreciate this area of business, it is necessary to start at the beginning. The identification of risk is obviously the first step towards the development of risk management and reduction strategies. Business insurance can protect a business from closing due to catastrophic loss. Fires, floods, theft and other forms of natural disasters have seen the end of many businesses in Botswana. When a company carries insurance against these types of losses, its a form of guarantee that there will business continuity. One important element that often gets overlooked is having a prevention or disaster plan in place. These simple, yet effective prevention strategies can save a business in the long run and reduce the unnecessary damage. When in business, always ensure that you:
How do parties to construction contracts protect themselves against defects, particularly those found in materials and workmanship?
The construction or supply contracts should, however, go further and provide specifics as to the requirements for quality of materials and workmanship.
During the development of one of our client’s apartment blocks they discovered that the columns to their new three storey building were out of tolerance, which impacted the aesthetics to some of the upmarket kitchens. Putting aside the remedy against the client’s architect or engineer, the contractual remedy against the contractor, at that stage, was to knock the building down and reconstruct – an unsavory remedy for a number of reasons including the time likely to be taken to reconstruct. Our client decided against such remedy and ultimately negotiated a discount with the contractor. The lesson here is that parties may want to include other remedies not found in all construction contracts, for example, payments linked to quality (not always advisable), extended defects liability periods and low performance damages.
So, for example, the FIDIC 4th Edition Red Book (reprinted 1992) provides for the engineer to carry out tests of materials and plant (clause 37.3) and if such tests reveal that the materials or plant are defective or otherwise not in accordance with the contract, then the engineer
The third and final point is that defective work needs to be proactively managed. The above example provides an illustration of one of the effects of poor management and which could ultimately result in a finding of fault on the part of the employer’s professional team (Van
may reject such materials or plant (clause 37.4). There are tests on completion – that is tests which need to be passed before the works are considered complete – which tests are to be stipulated in the contract. There is also a taking over procedure which requires that the works only be taken over if they are substantially complete in accordance with the contract (clause 48.1).
Immerzeel & Pohl and others v Samancor 2001 (2) SA 90 (SCA)). It is important that all parties under a construction contract recognise their rights under the contract and police such rights closely. Ignoring such rights and trying to find a “non-contractual” solution could prove disastrous.
It is a term of all construction contracts, implied by law, that the contractor is to execute the work, first, in a proper and workmanlike manner and, secondly, that the materials used must be of sound quality and fit for their designated purpose (see Hughes v Fletcher 1957 1 SA 326 (SR)). These provide general rights to protect a party against defects.
These provisions are typical of those found in construction contracts for protecting the rights of the employer against defective work – but what do they mean practically?
MDA Abdulla Consulting are experts in providing legal and commercial advice in respect of construction contracts.
The first point to note is that they all rely on the content of the contract. Here we are talking about the information specified in the contract (typically the information provided by the employer or his professional team). All too often this portion of the contract is overlooked and
Maintain an active risk management program Companies must create a policy statement that conveys it’s commitment and encourages employees involvement. Construct adequately The design of the company building will determine the extent of fire exposure. Have fixed protection where needed When it comes to preventing fire damage and loss of life, automatic sprinklers remain the best method Implement prevention programs Companies must invest in continued training for equipment usage as well as in the service and maintenance of the equipment. Maintain regular preventative maintenance programs for buildings and equipment and have regular inspection of electrical equipment for potential overheating. constantly improve your prevention programs. Ensure good housekeeping Avoid the buildup of combustible waste and deposits (dust) and remove hazards from the workplace. Ensure that you have special hazards protection Well protected facilities isolate flammable liquid, adequate natural or mechanical ventilation in confined areas. Have an emergency response service There should be adequate and functioning equipment installed, and a plan for response times with specific personnel overseeing the plan and its effectiveness. Conduct training There should be regular training to ensure employees are qualified to use the machinery in their daily work, ongoing training on fire fighting and loss prevention as well as an an effective Health & Safety department. Planning is critical to preparing for the unexpected, ensure that your company conducts an extensive risk assessment and enough coverage, because when the unfortunate happens, you wouldn’t want any surprises.
Botswana Insurance Company Limited Tel: 3600500 | Fax: 3972867 Website: www.bic.co.bw | Mobisite: m.bic.co.bw
Performance and Retention Bonds: Avoiding Pitfalls
by Boidus Admin / (Adapted from www.inhouselawyer.co.uk and www.hklegal.co.uk) because litigation takes more time and so is more costly. Also, the approach of the courts to various procedures associated with litigation may differ and this could have a material impact upon a call. As a result of this, local advice should be sought to determine course of action.
fied by the project engineer or consultant. These stage payment clauses frequently provide for the employer to retain a certain percentage of each stage payment as cover for any hidden defects in the completed works which may arise at a later date. Typically the percentage retained by the employer ranges between 5 and 10% of the stage payment.
AVOIDING PITFALLS ON CALLS ON RETENTION BOND Most project agreements call for stage payments to be made as the work progresses. Stage payments are triggered by presentation of progress certificates certi-
Recovery of retention is a problematic area for all parties in the contractual chain, with non-payment of retention often being the cause of substantial cash flow problems. With insolvency rates currently at a record high, it is now
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more important than ever for contractors and sub-contractors to focus on recovering retention. Firstly, retention is often not released on time and in accordance with the contract. This is a problem for all parties in the contractual chain. In a typical construction contract, the level of retention can often be more than the level of profit margin; therefore, until retention is paid, it essentially means that the party having their retention withheld may be in loss. Secondly, in the case of sub-contracts,
the release of retention is often dependent on circumstances outside of the sub-contractor’s control, such as the remedying of defects under the main contract by other parties. RECOVERY OF RETENTION Unfortunately, it is becoming more and more unusual for paying parties to release due retention when they are required to; therefore, a strategy needs to be formulated in relation to recovering retention. The contractual position regarding recovery of retention will vary; however, in all cases it is vital that parties who are owed retention ensure that
they are organised and have maintained their records properly. To promote good record keeping and increase chances of obtaining retention payment, it is beneficial to produce an appropriate spread sheet for each contract which specifies notable information relating to the contract. For example, the project name, start date and practical completion. Against applicable milestones, it should be highlighted when and how much retention is due to be released. Parties owed retention monies should be persistent in chasing payment, resorting to formal applications for payment (with interest) if necessary. If the above steps do not help, it might then be necessary to take formal legal steps to recover retention.
BOIDUS FOCUS December 2013
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BOIDUS FOCUS December 2013