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BOTSWANA’S BUILT ENVIRONMENT NEWSPAPER | Vol. 5, Issue 2 | FEBRUARY 2015 HOME IMPROVEMENT
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INTERNATIONAL NEWS
DIY Special: How to make
Feature: No land ownership
Concrete Countertops p12
for foreigners (Zuma) p3
MAIN FEATURE
National Budget – Salvation for the Construction Sector?
• Construction Industry Sees Government spending for first time in 5 years • Some P4.6 billion to be spent on Schools, Housing, Hospitals, Bridges and Power stations By Kibo Ngowi and H. Killion Mokwete
PROFESSIONAL PRACTICE
Calling your Surety Bond Claims
What to do and avoid
p18
Get to Builders Warehouse.
Get it done! SPEAK TO US ABOUT A TRADE ACCOUNT! BUILDERS WAREHOUSE BOTSWANA: GABORONE: Airport Junction Shopping Centre, Plot No. 70665, A1 Road, Tel: 00267 393 0533
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MONDAY TO FRIDAY: 7AM - 6PM; SATURDAY: 7AM - 4PM; SUNDAY AND PUBLIC HOLIDAYS: 8AM - 2PM
Property Financing
is Becoming an Illusion
in Botswana By Othata Batswetse
According to the Bank of Botswana Banking Supervision Annual Report of 2013, household debt remains high. The statistics show that Batswana have developed an appetite for property acquisitions but this will turn out to be an illusion for the greater masses that had expected to follow suit by moving towards assets acquisition. p9
P203.8 million for nursing staff houses and hospital design
2015/16 Budget Proposals Key Priority Sectors See full breakdown of sector allocations inside on p4
203.8 million Health projects
453 million Energy Projects P340 million for two new secondary schools
P4.661
billion
Researching the
Real Estate Industry
681.2 million Education projects
By Kibo Ngowi
P333 million for new power station projects
The National Budget has once again been released and for Botswana’s beleaguered construction industry the allocations have come as a reason to rejoice for some and a source of frustration for others. Boidus Focus delves into
the budget to make sense of the figures and speaks to key stakeholders within the CI to learn what this means for the construction sector.
Botswana Insurance Company:
Guest Editorial:
Contract Works Damage
Procedure & Costs
p4,6,7,13
Construction Insurance
p15,16
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MEDIA EVENTS
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OIDUS FOCUS Registered at GPO as a Newspaper | Volume 3, Issue #4
BOTSWANA’S BUILT ENVIRONMENT NEWSPAPER
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Sustainability Today: 06 Starting blocks with
Botswana’s Architecture Design and Urban Landscape Newspaperclimate | J U Nchange E 2013 www.boidus.co.bw
NEWS | page 02
EDITORIAL | page 04
Letlole Larona Breaks Ground at the Kromberg and Schubert Botswana (Pty) Plant
Government to Promote IntroHow ready is Botswana for duction of Residential Developthe Inevitable Change towards BOIDUS FEATURE > Decarbonisation targets? ment into the CBD Global
SUSTAINABILITY | page 06
| Volume 4, Issue 7 | AUGUST 2014
Education Feature: Factors to Consider 18 When 15 Botho University Builds Establishing Francistown Campus
Sector Regulation
EDUCATION | pages 15
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Guide to School Programmes: 2013 Built Environment Careers Guide
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BUILDINGS | page 06
A Luta Continua on the Land Question Airport Roof Gone with the Wind
The Idea of Eco Cities: Need for harmony between policy and green initiatives
Meet three of Botswana’s best Event Feature: State of our CitiesBDC FAIRSCAPE PRECINCT, The rising engineers
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Buy or Build a new Home: The Pros and Cons
Disentangling the Web – A Look at Infrastructure Project Management
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Felix Chavaphi, founder of Norcon Group; Tapa Moseki, partner at Engineering CBD Executive Seminar Event Partners International; Matlhodi Keaikitse, partner at Ezra’s Contracting Services Realm of Splendor - Live, Work & Play With Breath taking Views by Kibo Ngowi Bringing together key CBD stakeholders such as landowners and developers to engage on issues that affect their developments and investment
BR Properties - Botswana’s first Parastatal Property Investment Subsidiary
“Public Piazza, Mixed Use Podium and Sky gardens coming to Gaborone”
by Kibo Ngowi & HK Mokwete
by Kibo Ngowi & HK Mokwete
Red East Construction: Award Winning Chinese Contractor
by Kibo Ngowi
BR Properties is a pioneer organisation as it is the first example of a company established to commercially exploit the real estate assets of a Botswana Government enterprise. The performance of this company will serve as a test case for many other
by Kibo Ngowi / H. Killion Mokwete Boidus Focus sat down with the Managing Director of Red East Construction, a Subsidiary of the Zhengtai Group Mr Zhu Dexiang to try and understand what has set this Chinese construction
company apart from its counterparts and defied the perception of poor construction workmanship as a uniquely Chinese problem. >>> CONTINUED PAGE 07
departments with ambitions of creating similar entities. Boidus Focus met with BR Properties Managing Director Oarabile Zhikhwa to explore the brief history and long-term ambitions of her organisation. >>> CONTINUED PAGE 05
LEFT: Felix Chavaphi, MIDDLE: Tapa Moseki, RIGHT: Matlhodi Keaikitse
“I would say that as an engineer, especially in the construction field, experience is crucial, which is why firms tend to only hire engineers with a high amount of experience for senior project roles. And that’s understandable to me, because as much as you can go to school and read books, there’s no substitute for actually being involved in a project...” - Matlhodi Keaikitse
Government to Promote Introduction of Residential Development into the CBD
Top: Guests and delegates at the CBD Event Bottom: Architect and Urban Designer Jo Noero from Noero Architects and University of Cape Town Right: Hon. Assistant Minister of Trade and Industry, Keletso J. Rakhudu, officially opening the event
The Boidus Media, State of our CitiesCBD Executive Seminar recently held at Masa Centre was by any measure a resounding success. The Seminar event brought together for the first time ever in Botswana, key stakeholders of the New CBD development such as investors, development owners, government, industry champions
and the public in sharing of ideas and opportunities about our upcoming CBD. Envisaged as the future heart of Gaborone City, the CBD is slowly taking shape and the seminar sought to make it a centre stage focus of discussions and professional deliberations. In this Boidus Focus Special, find event abstracts:
As you reflect on the ‘challenges and opportunities’ of developing a CBD, I would like to encourage all of you to think of this as what our generation will be remembered for having done, not only for this City, but for the nation, albeit through the toughest times. Assistant Min. of Trade & Industry, Hon. Keletso J. Rakhudu
“In this line of work you need to put yourself in a position where you have interest
and ownership Extract Seminar Paper Presentation by Jobe Ofetotse, DTRP of the projects you’re deal-
ing with because structural engineering is a sensitive field in that we are dealing Introduction failings of the CBD concept but more with peoples’ safety. We are putting up Thank you to the organizers for inviting challenging to come up with solutions which are going to house lives DTRP to contribute to this important where problems havestructures been identified. A Successful CBD represents among other things; and highly topical seminar. That is what we hopeso theyou seminar will approach this profession can’t • A success CBD Image of the city and the country Felix Chavaphi Portfolio concentrate upon. as simply a job. You have to see it as a • Generation of the country’s prosperity of Botswana Library at a cost of P54 • Successful partnership between the Government & PVT[TOP] sector University In organizing it, BOIDUS have directly responsibility and a privilege.” Dimitri Kokinos: Portfolio Structuring Manager (Stanlib) million with Murray & Roberts responded to our concern that it is easy From a DTRP standpoint, the forum [BOTTOM] Gaborone Shopping - Tapa Moseki >>> CONTINUED PAGES 08, 13, 18 >>> CONTINUED PAGE 04 to be criticalTaxi and Rank identify perceived Complex by Boidus Admin
Plot 7 at a cost of P2million with Murray & Roberts
>>> CONTINUED PAGES 03, 04, & 06
FIND CREATIVE
TO COMMERCIAL
ANSWERS QUESTIONS.
IDEAS EXPO BOTSWANA is an event designed to combine the best of creativity, business and technology in which participants are invited to give talks, do demonstrations, and show their work. Renowned experts in branding, business and marketing.
Interactive session for learning and networks.
Exhibition with the latest innovation.
Certification of attendance.
Latest trends and technology.
P500
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June 21-22
University of Botswana
P300
student price for both days
*PRICE PER DAY FOR INDIVIDUALS OR PAY P500 FOR BOTH DAYS. FOR INDIVIDUAL AND CORPORATE TICKETS CONTACT +267 72 49 51 71
>>> CONTINUED PAGES 04, 08
FNB’s CBD HQ – Intelligent Corporate Architecture by Kibo Ngowi
First National Bank (FNB) has moved into its newly built headquarters in Gaborone’s rapidly developing Central Business District (CBD). Located in plot 54362, the Head Office called First Place, boasts the banks’ “one-stopshop” capability. With an expansion of
the office facilities accommodating all the Bank’s divisions such as Electronic Banking, Private Banking, Property Finance, WesBank, Firstcard to mention but a few, customers get a full bouquet of FNBB products under one roof. >>> CONTINUED PAGE 07
Birds-eye view
A Fresh Approach to Buiding a Home - Inside House Agolen II
by Leago Public Piazza
Sebina
As stakes an architect, opportunity to inopposed viewed, With high in the Botswana ofreality one area. to the way it is usually views from across the City. Boidus building offers, not only the as being static. There is no other ficedesign market,a Botswana Development was buildrecently given exclusive tour of Corporation’s is ofThe which been such the construction site to experience creation of aFairscape physical Precinct expression the Iconic ing tower typology thathas embodies a nosetbuilding to raise the barbut of also what the quality slowly emerging off the skyline first hand itself, possibility tion of architecture thanofthe house, the this exciting project as it office space is by delivering an AFairgrounds is setting unmissable becomes reality. for architecture to mould the life and most basic and primal form of shelter grade mixed use development which view of a gleaming honey comb memories of its inhabitants. Therefor human beings. will see work, play and live become lattice structure with unparalleled >>> CONTINUED PAGES 08, 13 fore, one could argue that architecture should be thought of as being alive as
>>> CONTINUED PAGE 14
Office of the President
The Relocation of the Office of The President Is it the Right Move Or Not? by HK Mokwete
The current debate in parliament over a budget allocation request of P195 million for the purposes of augmenting funds to either- acquire or build a new office block to house the Office of
the President (OP) is missing the bigger picture of what should be debated when procuring the office space for the ‘Highest Office in the Land.’ >>> CONTINUED PAGE 04
an overview of the country’s property market in 2014. Boidus Focus spoke to Vantage Properties founder and Managing Director Sethebe Manake to learn more about the report and its significance. p8,11
Design Pad:
Sectional Title
p11
Property consultancy firm Vantage Properties has made a significant step forward in closing the gap in formalised data on Botswana’s property industry with the release of the Botswana Property Report,
CBD EXECUTIVE SEMINAR - Oct 2014 CBD EXECUTIVE SEMINAR - May 2013 DESIGNER’S FORUM - Apr 2012 BOTSWANA PROPERTY MARKET - Coming Feb 2015 BOTSWANA PROPERTY MARKET - Sep 2013 HOUSING AFFORDABILITY IN BOTSWANA - Mar 2012 FNBB AFFORDABLE HOUSING MARKET - Dec 2013
[
SOCIAL MEDIA Professionals Information Seekers Students Organization Affiliations Find us online:
]
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LOCAL NEWS P2
BOIDUS FOCUS FEBRUARY 2015
Barclays Moves to a New News Briefs February 2015
Home in the CBD By Boidus Admin
venience to our customers and clients. I am also proud that with it the new location offers stateof-the art technology and environmentally friendly solutions that contribute positively to our Sustainability agenda. At the new Head Office, we are driving a paperless environment and have also introduced recycling facilities, to mention a few.”
Barclays bank officially opened its new head office at the central business district (CBD) in Gaborone on Thursday. The building was officially opened by, by Bank of Botswana (BoB) Governor, Linah Mohohlo. Reinette van der Merwe, Barclays Botswana MD, said the new building was a milestone and a continuation of its journey to be the “Go-To” bank in Botswana. “I am happy that the new building is situated in a prime business area, providing con-
“The new Head Office aligns to Barclays Africa Property Consolidation programme, which is inline with the One Africa strategy to offer easy access to our services and provide consistency in the look and feel as one entity across the continent.” “It is the first of its kind in Africa after Absa twin towers,” she concluded. The arrival of Barclays at Prime Plaza sees development owners; Time Projects deliver yet another blue chip to their landmark development.
Compiled by Keeletsang P. Dipheko
P78 million
The total loss Botswana Development Corporation (BDC) registered for the financial year ending June 2014
BDC lose P78 million in last financial year Botswana Development Corporation (BDC) registered a loss of P78 million for the financial year ended June 2014. At the BDC results announcement recently, BDC Managing Director Bashi Gaetsaloe said going forward, BDC aims to grow profits while maintaining a smaller team to be more responsive. Gaetsaloe said the company will continue to scrap nonperforming projects. He stated that BDC is not an empowerment agency, which effectively means that the company will henceforth stop putting money into businesses that are not making returns and also stop engaging in small scale businesses.
BHC Services Go Digital The Botswana Housing Corporation (BHC) will hold a stakeholder engagement workshop before they roll out their digital marketing plan later this month. The stakeholder workshop will include players from the fields of communication, marketing and IT and will focus on areas such as search engine marketing essentials and the role of content marketing in improving customer service. The digital phase will also create links between the BHC online portal and the websites of its main stakeholders. “BHC would like to hyperlink to the stakeholders in order to improve its ranking position on Google search,” said BHC Deputy Chief Executive Officer Nkaelang Matenge.
National Budget Promotes Homeownership The Ministry of Lands and Housing has been awarded P893 million of the development budget, according to the 2015/16 national speech budget. When delivering the speech, Minister of Finance and Development Planning Kenneth Matambo stated that the Self Help Housing Agency (SHHA) would receive P214.7 million to promote homeownership by citizens and that this would include turnkey projects. From the P893 million allocated to the ministry, the major projects to be pursued are land servicing in Palapye and Metsimotlhabe at P250 million. Shortage of land has been identified as a constraint to investment and land allocation for residential property.
Construction, Property Investment, Physical set up Giving you a new age in modern engineering needs encompassing Electrical, Mechanical, Land Surveying (in partnership with Azmuth Surveys) and Building Design (In partnership with Signature Homes) and Construction as well as Quantity Surveying. We are here to take you to another level. All services including Electrical and mechanical engineering, Land surveying, Building design and construction, Plumping ,glazing and Quantity surveying are available. We also do property maintenance and our lines are open 24hours: For a free quote call our hot lines 75718193 or 75946169 Or email your request to max@silvonmark.com Cell: +26775718193/ 75946169 | Tel: +2673101965
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CBD rentals added P142 million on Government bill The Gaborone Central Business District (CBD) has piled over P124 million on the government bill. The Auditor General Pulane Letebele has discovered that this happened after two ministries – Ministry of Youth, Sports and Culture and Ministry of Trade and Industry – moved to the CBD and signed lease agreements with landlords without the authority of the Procurement and Asset Disposal Board (PPADB). In June 2013, the Ministry of Youth, Sports and Culture signed a rental contract amounting to P81 228 890 for a period of five years, while the Trade Ministry signed its contract with P60 784 200 which runs for the same period in December 2012. .
Find these stories and more at:
www.boidus.co.bw
BOIDUS FOCUS FEBRUARY 2015
INTERNATIONAL NEWS P3
No land ownership for foreigners, says Zuma By Boidus Admin / Source: SA Commercial Prop News
“Foreigners will not be allowed to own land in South Africa,” declared Zuma. He said they would instead be eligible for long-term leases… “In this regard, the Regulation of Land Holdings Bill will be submitted to Parliament this year,” he said to applause in the National Assembly… “We are also exploring the fifty/fifty policy framework, which proposes relative rights for people who live and work on farms.” Delivering his 2015 State of the Nation Address (SONA) to Parliament on Thursday in Cape Town, South African President Jacob Zuma said land ownership by foreigners will be prohibited. South Africa tightened rules over foreign ownership of its agricultural land amid concerns that
New Urbanism
heralds a return on
property demand and development
in Africa
The concept of new urbanism in Africa, hailed as a fresh approach to urban living from both a town planning and architectural perspective, has far-reaching implications from a property demand and development point of view. As growing urbanisation in Africa aids economic growth - as larger concentrations of people in cities create large customer bases, promote more efficient labour markets and reduce transport costs, increasing opportunities arise in regard to residential property development and ownership, reports Pam Golding Property group CE Andrew Golding. “Many of the largest cities in Africa are growing rapidly – Nairobi, Kinshasa and Dar es Salaam, for example, are expected to see population growth of over 70 percent by 2025. Africa’s mega-cities, including Lagos, Cairo, Luanda and Johannesburg, are increasingly the engines of its economic growth.” Opportunities for property Investment in Africa range from large property developments in all segments of the market, from low cost housing through to exclusive villas, as well as on an individual property basis, depending on the particular buying needs. (Africa Property News)
NAIROBI
Kinshasa
dar es SALAAM
it is losing control of its own food security, slashing the amount beyond which land purchases would require regulatory approval. Zuma said more than 36,000 land claims had been lodged nationally. The cut-off date was 2019. In terms of new proposed laws, a ceil-
ing of land ownership would be set at a maximum of 12,000 hectares. These provisions are among the plans the ANC has said it will implement to deal with land distribution. An estimated 7% of land in South Africa is owned by foreigners. (SA Commercial Prop News)
Development Budget
Recurrent Budget MAIN FEATURE P4
BOIDUS FOCUS FEBRUARY 2015
billion ed by Ministries Departments
3.32 billion Ministry of Minerals, Energy and Water Resources (MMEWR)
3.33 billion shared by Ministries and Departments
National Budget: Expenditure breakdown, sector allocations
iculture
nsport cations
10.31 billion The Ministry of Education and Skills Development
By H. Killion Mokwete
P12.93
P36.7 Recurrent Recurrent BudgetBudget
Continued from the FRONT PAGE
Development Development BudgetBudget
billion Development Budget
billion Recurrent Budget
1.04 billion Ministry of State President 3.33 billion 3.33 billion
7.33 billion 7.33 billion shared by Ministries shared by Ministries and Departments and Departments
shared by Ministries shared by Ministries
10.31 billion 10.31 billion The Ministry of Ministry Education The of Education 5,67 billionand Skills Development and Skills Development
n Defence, Justice y
andbillion Departments and Departments 1.1 Ministry of Agriculture
Ministry of.Health
1.07 billion 1.07 billion Ministry of Ministry Agriculture of Agriculture
1.2 billion Ministry of Local Government and Rural Development
billion billion
Ministry of Ministry Transport of Transport and Communications and Communications
332.1 million Land servicing
4
1.32 billion1.32 billion Ministry of Defence, Justice Ministry of Defence, Justice Ministry of Local Government Ministry of Local Government and Securityand Security 2 and Rural Development and Rural Development
3 1.2 billion 1.2 billion 1 760 million water projects
203.8 million 203.8 million Health projects Health projects
300 million Agric infrastructure
4
453 million 453 million Energy Projects Energy Projects
billion
681.2 million332.1 million 332.1 million hospitals at Mochudi Education projects Land servicing Land servicing
4
5
2
1
1
865 million P82.1 million infrastructure Special TransportforInfratructure Economic Zones
P4.661 P4.661
MoH ITC 681.2 million 681.2P203.8 million Education projects million Education projects
5See colors above 5 for 2015/16 allocation
Shared Budget
MLH P893.3 million MoED 151.4 million 151.4 million P844.6 Village infrastructure 580 million Village infrastructure 580 million million ITC ITC
P3.33
P214.7 million 865 million 865 million Self Help Housing Agency Transport Infratructure (SHHA) Transport Infratructure
allocated to new projects:
billion
Schools | Bridges | Hospitals | Power Stations
P250 million Palapye and Metsimotlhabe Land Servicing
P500 million North-South Water Carrier II
P150 million Kanye -B Molepolole connection North-South Water Carrier
MMEWR
billion
P100 million Morupule A refurbishment
P3.32
billion
Development Budget
P130 million Digital Migration
P12.93 billion
P730 million ISPAAD and LIMID
P100 million Electrification of villages P89 million Maun Water and Sanitation
P33 million ZIZABONA P50 million Rakola Power Substation
MoA P1.1
P50 million North West Power Transmission Grid
P300 million ICT Infrastructure
billion
MTC P1.62
P100 million Pandamatenga Infrastructure Development Project
P151.4 million Village Infrastructure
P150 million Oil Storage P100 million Mahalapye and Palapye Water Network extension
MSP P1.04
P200 million Zambezi Water Development
2014/15 allocation
P4.6 billion
Officers (<D4)
P194.8 million HIV/AIDS Programme
P150 million e-Government
3
2
billion P30 million billion 580 million Housing Scheme Public
151.4 million Village infrastructure
P160 million Poverty Eradication initiatives
3
760 million 760 million water projects water projects
and Moshupa
nursing staff houses 300 million 300 million Agric infrastructure Agric infrastructure
2014/15 vs 2015/16 develop5 ment budget comparison
5
Where the moneyP4.661 is going: 344.7 million 344.7 million housing housing
1.62 billion1.62 billion Ministry of Transport Ministry ofand Transport and Communications (MTC) Communications (MTC)
5 billion 1.1 billion 1.1 Ministry of Agriculture Ministry of Agriculture
5,67 billion 5,67 billion
203.8 million Ministry of.Health Ministry of.Health Health projects 453 million 5.2 billion5.2 billion Energy Projects 344.7 Local Government and Local Government and million housing Rural Development Rural Development
P340 million unified schools at Tsabong and Takatokwane
billion billion
1.04 billion 1.04 billion Ministry of State Ministry of State President President
5.04 billion 5.04 billion Ministry of Ministry Defence,ofJustice Defence, Justice and Security and Security
P100 million Teachers houses
1.32 billion Ministry of Defence, Justice and Security
P12.93 P12.93
P36.7 P36.7
5.2 billion Local Government and 2.08 billion 2.08 billion Rural Development
3.32 billion3.32 billion 1.62 billion Ministry of Minerals, Energy Ministry of Minerals, Energy and Water Resources and Water of Resources Ministry Transport and (MMEWR) (MMEWR) Communications (MTC)
billion MLGRD
P1.2
billion
P341.2 million Primary School
P635.6 million Ipelegeng Programme
MDJS P1.32
billion The bulk of which goes to BDF for improving its operational readiness
P280 million Kazungula, Thamalakane & Mohembo bridges P265 million Kasane, Maun and Sir Seretse Khama airports P190 million Mankgodi-Kanye-Jwaneng and Rakhuna-Mabule roads
BOIDUS FOCUS FEBRUARY 2015
PART
2
Essay 1
consumer education P5
PRACTICAL ADVICE GUIDE
February 2015
The process of converting tribal land to common law and ultimately deed of transfer The rights to land are generally allocated through two different types of certificates. These are Customary Land Grants which are allocated under customary law and Common Law Lease. In Botswana these rights are allotted over three different land tenures and these are: Tribal Land – All land in rural areas, with the exception of land owned under freehold title or State land, is owned by the Government of Botswana and vested in various land boards established under the Tribal Land Act (constitutes about 71% of Botswana’s land area). State land – State land exists in both rural and urban areas and is owned by the Government of Botswana. The land is managed under the State Land Act. In urban areas, the land is allocated to individuals and organizations for residential, industrial and commercial purposes. Allocations can be in the form of either Fixed Period State Grant (FPSG) or a Certificate of Rights (COR). COR is administered by the Self-Help Housing Agency (SHHA), (constitutes about 25% of Botswana’s land area). Free Hold Land – Freehold land is mainly represented by farms and can be found in the agricultural belts that were earlier managed and transferred to non citizens under The Land Control Act of 1975. Freehold land is perpetual, inheritable and transferrable (constitutes 4% of Botswana’s land area). Once allocated, the land owner has certain rights to the land, which can be classified as statutory or customary land rights. Statutory land rights, governed under common law, mean that an ownership guarantees certain rights such as the right to sell one’s property, to transfer the property on the market and customary land rights have limitations to land developments outside those stated under the Customary Act. Customary land rights (for residential/arable purposes) are secured by a “customary land grant certificate” which grants exclusive, perpetual, and heritable use rights to individual applicants. This form of grant is available only to citizens and is made by the land board to citizens only for a certain number of years. These rights can also be transferred, provided the land was developed for the purpose intended. To acquire transfer and mortgage rights, one must convert their tenure from Customary Law Grant of lease to a Common Law Grant of lease. Land Boards can grant common law leases on tribal land to Batswana.
The application to the relevant area main Land Board is subject to; • a survey of the property conducted and • approved diagram of survey by the Director of Surveys and Mapping,
Common Law Grant of Leases can be divided into two categories – short term leases and long term leases. The short term lease is a grant of land rights and is set up on a monthly basis. Each party has to give a one month notice when they want to end the agreement. This lease is carried out for land which does not exceed 5 acres or 2.02 hectares. The long term lease is granted for 99 years for residential purposes and for industrial and commercial purposes the lease is for 50 years and eligible to be renewed for an additional 50 years. Leases are fully negotiable. The grant is a written agreement handed out by the land board. These grants can be registered in the Deeds Registry Office and once they are, mortgage bonds may be registered in order to secure loans. Conversion of COR to FPSG State Land in urban areas can be allocated through a Certificate of Rights (SHHA areas) to Fixed Period State Grant (FPSG). COR land is not subject to title deeds registered at the Deeds office and is held in terms of certificates of rights. The owner is, with the consent of the relevant township authority, at liberty to sell, lease or otherwise alienate such property. However a mortgage bond cannot be taken over such property as it is not subject to any formal diagrams. To obtain a mortgage, the COR land has to be converted to FPSG which provide the grantee with absolute rights of disposal over the relevant property, subject, to compliance with the development covenant in the Deed. Conversions from COR to FPSG can be done through; • Commissioning a cadastral survey costing about P2000; • Arranging a water connection, which costs about P600, equivalent to a one month’s wages; • Registering the new title at the Deeds Registry Office (there is no registration fee if the value of the plot is below P20, 000); • Paying the title conversion fee at the Deeds Registry Office. The first step in the conversion process is for the COR owner to apply to the City Council for conversion. This would be followed by title registration at the Deeds Registry Office once the survey diagram has been approved by the Department of Surveys and Mapping.
BBS has Sales Consultants who are well informed, trained and always ready to assist you. You may reach them at 3971396 or visit any of our branches country wide for assistance.
MAIN fEATURE P6
BOIDUS FOCUS FEBRUARY 2015
National Budget – Salvation for the Construction Sector? By Kibo Ngowi
Continued from the FRONT PAGE
Institute of Botswana Quantity Surveyors Chairman
Robert Akanyang On the hopes and expectations leading up to this year’s government budget
RA:
I expected the minister to address a number of key issues that are currently affecting the industry namely: Corruption; progress on regulation of professional bodies/contractors; and project implementation. Corruption continues to hinder project delivery nationwide. In fact there is a strong sentiment within the construction industry that government projects are awarded without due probity throughout government procuring entities and councils. These processes and procedures are riddled with nepotism and favoritism. I personally had envisaged the minister to address these issues clearly and concisely in this year’s budget speech. Implementation of projects is a problem. But how long have we known about this? What have we done previously to address the issue and where are we failing? What are we going to do differently this time around to address this issue? I do not think the Minister has done any justice by just mentioning implementation as an issue. In my opinion this issue requires a robust action plan that encapsulates a holistic view of the problem, involving both the private and public sectors. In the last budget speech the Minister described Government’s efforts in building a regulated construction industry. In particular, reference was made to the passing of the Quantity Surveying Registration Act as well as other Acts passed to regulate other professional disciplines. The public wants to be appraised on what has been achieved since the passing of these Acts. Are they adding any value? Are there any problems encountered? What are the problems and how are
they being addressed?
On the state of quantity surveying education programmes in Botswana – Are the local institutions producing a sufficiently skilled workforce?
RA:
No. Let me put this into perspective. In the current environment consultant fees are insufficient to pay competitive salaries on projects (Let that sink in before you even consider delayed payments from Government and its effect on the cash-flow of a firm). Therefore you cannot expect the industry to undertake any meaningful training of staff. While the ministry (of education) has the lion’s share of the budget, one would expect this to translate into producing ready oiled machines i.e. graduates that are ready to undertake full duties from day one. Sadly this is far from reality. One must commend the government’s efforts in training Batswana, particularly in the construction industry. The majority of professionals have trained in some of the best universities in the world. However, most of them cannot find employment locally to further their careers as credentials alone will not suffice. We have a number Batswana ready to be absorbed by the industry provided that the projects are available. Companies that are employing Batswana (in majority) must be recognized or incentivized; the inclination of only recognizing citizen ownership in awarding/reserving projects is inadequate. We have 100% citizen-owned companies that consist of a 100% non-citizen staff compliment and vice versa. Such a practice cannot build our professional stock. Subsequently there is more value in making a broader assessment which is beneficial to Batswana as a whole and not just an individual.
BOCCIM Construction Sector Head
Markos Markides On the hopes and expectations leading up to this year’s government budget
MM: In this year’s budget there was more of the same. I would like to see more of government stipulation for contractors to be given 30% of all projects. Botswana’s statistics are poor so we don’t know where we are with that 30% - it would be good to have some accurate figures in that area. The first priority is that projects should be done and funds should not be turned back to the treasury. Mr. Matambo said that 27% of the development budget of 2014 was not spent. That’s a huge amount of money and here we are as citizens with our companies falling apart, foreign companies falling apart and we don’t even get figures on retrenchment numbers. We have to register with the labour department when we retrench but I wonder what happens to those statistics. I would say the future looks average good as long as the budget is spent and there’s no use holding back, because prices tend to rise so there is no use in postponing. It’s better to get on with it; also if you deny the Botswana economy water, roads, rail and power you are just holding back development. Additionally, although it may be a bad political move, government should refrain from building social roads; by social roads I mean a road to a settlement of 500 people; right now we can’t afford that as a country so we should rather rebuild or reinforce a road that carries major traffic and can impact the economy.
On skilled labour in the construction industry
MM:
We wrote some stuff back to the BOCCIM secretariat. One is we firmly believe that the economy of Botswana, in a big long term picture, cannot be divorced from the importation of good skilled professionals. We don’t have enough good skilled artisans. We may have people who have those papers or qualifications but it doesn’t mean they are any good. There’s a problem of skilled professionals in many government departments. For instance, the roads department has been led through acting appointments for the last 10 years. We need someone to be in charge for 5 to 6 years to have a real impact on the organisation. We don’t want someone there forever but we need a good strong leader, whether it’s a citizen
or a foreigner, to stay there long enough to effect change. It’s the same story with DBES; they have acting appointments for the directorship but for such an important post you cannot survive on acting appointments alone. We know it’s because the government won’t offer the right salary so even the few citizens who are capable of leading the organisation are not interested. It’s good to protect citizens and yes we don’t want foreigners to swamp our country but if you look at examples all over the world, whether it’s in Asia, Europe, or America, the most advanced economies are relying on foreign skills to drive their massive growth rates. Then we talk about diversifying the economy but we don’t see much action in that direction because if you want to diversify the economy you need to have diverse skills. We can’t wait for Batswana to develop those skills; we have to import our skills; we have to attract the right people from whichever country they may come from. At the moment we are sending a very bad signal to potential investors. I said in my report to BOCCIM that we believe very fervently that just cancelling permits sends a very bad signal to potential investors because there are people who have been here for 25 years, bought houses, own vehicles, have kids going to school here, people who have taken part in this economy and their work permits are being cancelled.
On other potential government initiatives to support the construction industry
MM:
We need a list of upcoming projects from every ministry. We will not hold them to it; we will not take them to court or expose them to some tribunal if they give us the list of projects and the reality varies from the list. The point is that we’ll be able to see what’s coming, even if it does not bear relation to reality on the budget; even if they say x road, x pipeline, x sewerage are coming up plus or minus on this date, let it be but let’s see the list so it can give us optimism and give the banks confidence that projects are coming. Also, the big mines in the country are half owned by government but they are secretive. When a contractor wins a mine tender we don’t know what price everybody else put; you don’t know if you were the lowest or the highest quoted. Why should they be different from the PPADB? Mines should have de-briefing sessions like any other government entity to explain to the companies that did not win the contract why they didn’t win and what they need to do differently in future.
Takeaways from the 2015/16 budget 1. Out with the old, in with the new:
The 2015/16 budget proposes more new projects than at any other time since the recession hit in 2008. More than P1.65.8 billion will be spent on new construction projects outside maintenance. These will include new schools, hospitals, houses and bridges.
2. Housing finally makes
it into budget allocations: Housing has been included in this year’s budget with over P350 million allocated for the new improved SHHA housing scheme and construction of nurses and teachers housing.
3. The Hand Outs:
The budget allocations continue with big allocations to social safety programmes such as ipelegeng, destitute allowances, ISPAAD and LIMID.
4. The surprise: Rail projects have
not received any budget allocations in this year’s budget despite moves to restore the commuter train and anticipated mega projects on the transkalahari rail network. This might be an indication that these projects are still way off from implementation.
MAIN FEATURE P7
BOIDUS FOCUS FEBRUARY 2015
National Budget cont. By Kibo Ngowi
Continued from the FRONT PAGE
Real Estate Institute of Botswana (REIB) President
Modiredi Maruping On the potential impact of this year’s government budget on the real estate sector
MM:
I believe this year’s budget will have a positive impact on the sector. The sector performance is driven in part by expenditure on everything else because increased expenditure drives up confidence in the general economy and results in confidence in the property sector as Batswana would have more money to spend. The Minister also reserved about 30% of works for locals. The real estate industry does not need to be directly awarded money from the budget. As long as projects are being done and the economy does well it will do well as people will spend on property. We just need better salaries, roads, water, and power for the industry to flourish.
On Government initiatives to promote homeownership amongst Batswana
MM: Considering the constraints of the last few years Government needs to be commended for what they have managed to do in this area but more needs to be done. The expansion of the SHAA scheme must be fast tracked and other affordable housing schemes must be speedily set up.
On the state of real estate education programmes in Botswana – Are local institutions producing a sufficiently skilled workforce?
MM:
Unfortunately the industry does not feel that the graduates that have come out of Botswana Institutions to join the real estate industry thus far are sufficiently skilled. More contact is needed with practitioners to improve on this. Most existing professionals in the real estate industry were educated in the UK, Australia, South Africa and other foreign countries. These have sufficient skill. Government is doing enough in financing students as Schools are filled with students studying real estate. Schools have to improve on the programmes and delivery thereof. Most commentators doubt the quality of lecturers. Government is not doing enough in ensuring that the right people teach. BOTA (or the new animal) cannot be left alone to determine the content of real estate courses. The relevant Professional Bodies and Regulatory Bodies (this must also apply to other industries) must be involved. It is not enough just to declare that a course meets the requirements for a degree or certificate when the outcome does not satisfy the industry. These bodies must also pick up the cue and enter into discussions with accrediting organisations.
Botswana Institute of Engineers (BIE) President
Dr. Oagile Kanyeto On the hopes and expectations leading up to this year’s government budget
OK: I was hoping to see a large portion of the
budget going towards completion of some big projects which have been pending for some time such as Sir Seretse Khama Airport, North-South Carrier Water Project, Power Generation Projects, etc and also implementation of projects that have been on hold such as the country’s road network including Gaborone Interchanges. To some extent these expectations were met because we see some of these projects being specifically cited in the budget.
On the potential impact of this year’s government budget on the construction industry
OK:
What is interesting for me is to see the budget trying to encompass projects from a wide range of engineering disciplines like Electrical/ Electronic, Mechanical, Civil, Mining engineering, etc. It is interesting to see government committing resources towards coal beneficiation. This will definitely bring our Chemical Engineers and related science-based fields to the party. It is also exciting to see the budget specifically emphasizing Research and Development. While a lot has been said about diamond beneficiation, we should expect even better rewards from coal beneficiation – starting from Research and Development to establishment of diverse industries that produce several coal by-products. This is
very exciting for science, engineering and technology fields.
HAVING TROUBLE KEEPING YOUR BUSINESS RECORDS?
On government intiatives introduced to support the construction industry
OK: The most important initiative was the implementation of the Registration Act, which is imminent. We hope to see a lot of improvement in our profession from now on. The Budget Speech talked a lot about poor project implementation and cost overruns. It is my feeling that the regulated engineering practice will have a lot to contribute towards solutions of these problems. The budget emphasizes the importance of the private sector in the creation of wealth for development of the nation, and we at BIE believe that the establishment of regulatory bodies like ERB is a way of creating a conducive environment for the private sector to thrive.
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This is not sustainable at all. And it’s not only unsustainable for the engineering profession, but for the economy of the nation as a whole. As a developing country, there is a lot to do and to be done; we cannot afford to not have new projects at any particular time. Yes, maintenance is very important too, but we cannot divert all spending away from new projects.
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FEATURE P8
BOIDUS FOCUS FEBRUARY 2015
Researching the Real Estate Industry By Kibo Ngowi
that the character of retail is evolving which is good for the growth of the economy. The consumer is evolving and as such it is only natural that retail must follow suit.” Meanwhile, the residential sector has experienced a major increase in prices in the past few years, rendering housing unaffordable for an increasingly large segment of the population.
Continued from the FRONT PAGE
One of the most consistent complaints about Botswana’s property industry voiced by professionals across the spectrum, from developers to consultants, has been the lack of formal data to provide an insight into the state of the sector. Property consultancy firm Vantage Properties has made a significant step forward in closing the gap in formalised data with the release of the Botswana Property Report, an overview of the country’s property market in 2014. Boidus Focus spoke to Vantage Properties founder and Managing Director Sethebe Manake to learn more about the report and its significance.
“The report highlights the key areas that have affected the property investment cycle resulting from various decisions and actions made by stakeholders in the country, together with global events that impacted the response of the property market,” explains Sethebe. Vantage Properties collaborated with the Real Estate Institute of Botswana (REIB) as they wanted to ensure that what they delivered was to the satisfaction of the institute and met the demand of the institute’s clients. Though the focus of the report is the performance of the market in 2014, it does look back at past trends to put the market in context.
“We have established that real estate in Botswana runs on a six-year cycle, meaning it dips every six years, but this does not mean that it dips to the same level or that all the sectors dip at the same time,” says Sethebe. “Others would lead the cycle and sometimes even slow down in the next cycle depending on the impact of decisions made at monetary and fiscal policy levels.” Speculation has been rife in recent times that the country’s office and retail sectors are reaching saturation, with the advent of prime office space in areas such as the new CBD and the Fairground Office Park, with its flagship structure the Fairscape Precinct.
“We have learnt that the rise of residential prices is directly related to the increase in consumer spending and that the drop in interest rates during the same period further influenced the growth in prices as affordability had increased. Interestingly, consumer spending increased by 247% from 75% government spending growth, which explains why property prices were growing exponentially at the time.” The development of this report has been a passion project for the woman behind it. Sethebe was brought to tears during a heartfelt speech she delivered at the launch of the report in which she said she was overwhelmed by the support she had received from friends, family and contemporaries to turn this dream into a reality. “I first thought of the need to educate Batswana about property investment in 2008. I just had not crystallised the how,”
she told me in an interview shortly after the launch. “So back then I used to organise property investment seminars and invite stakeholders to come and educate the public on property issues. Now, the method of educating the nation has crystallised into various platforms, one of which is the Botswana Property Report.” “I believe that knowledge is power, so the benefit of this report would be that one would have a more holistic perspective of the dynamics of the property market. Hopefully it would also spark interest in some of the areas in the country that we have noted as growth areas. We expect that we will provide better and more detailed focus in the whole country in other upcoming reports.” Sethebe holds an MSc in Strategic Management, a BSc in Property Studies, as well as a Certificate in Sectional Title Management, Development Feasibilities and Development Management. She has been in the property industry for nine years this year, having operated as a valuer and an agent early on in her career. She has worked as a property manager and an asset manager for equal amounts of time and has worked in portfolios of different real estate investment vehicles, listed companies, pension funds, partnerships and special purpose vehicles, both locally and in a few other African countries. “My passion has always been in real estate finance structures, particularly in trying to find solutions for our local market,” she says. p11
“In terms of retail and office, in this six-year period, the office market led the cycle. One would recall that office rentals had reached highs of plus or minus P190 per sqm. And in some cases offices were higher than retail, whereas fundamentally retail rentals are viewed as the highest rated space. Then came the expiry of the development covenants of CBD developments in Gaborone, which led to rapid growth in the supply of offices.” The proliferation of shopping malls, especially in Gaborone, has also been a cause for concern for many observers, with economist Roman Grynberg even posing the question, “Is Gaborone being malled to death?” in an op-ed he wrote for this publication. “We don’t believe that the retail market responded in any unnatural manner as we have found no external pressure that has led to the growth of the sector; therefore it will respond naturally in the cycle. We do believe
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Sethebe Manake (L) & Victor Senye at the official launch of the Botswana Property Report
REAL ESTATE P9
BOIDUS FOCUS FEBRUARY 2015
Property Financing is Becoming
an Illusion in Botswana By Othata Batsetswe / Financial Inclusion Specialist & Project Coordinator / Principal Finance Administrator
Batswana are now waking up to the reality that loose consumption in the form of personal loans, credit cards and other non-asset accumulation spending is not securing the future they desire for themselves and their children. There are consistent calls for a land audit and in response government has to a certain extent tried and continues coming up with initiatives that will allow Batswana to own property, though this is proving to be not insufficient as evidenced by the recent commotion of the masses that turned up to apply for residential plots in Kgatleng area. It is evident that the demand for land is urban based as the response is not massive in rural areas. This appetite will prove to be an illusion as commercial banks have now adopted a different model for financing property acquisition. While government is issuing land, the financial institutions have decided that they will only finance acquisition of already existing structures. This therefore means having land does not guarantee that you will have a decent dwelling at the end of the day. These kinds of models could be due to a number of factors that need a direct policy intervention by the Central Bank, Ministry of Finance and Development Planning and the Office of the President to stop the commercial banks from taking this position. It is morally and ethically wrong to have financial institutions that focus on short-term consumption while neglecting the key areas that can grow the economy and promote significant changes in the landscape of the rural, peri-urban and urban communities. This policy will also address matters that border on wealth creation for the economy since it will address issues of access to finance for asset accumulation. The position to finance acquisition of already existing structures means that the rich and affluent will be the only ones having the power and means to build. That purchasing power is the reason why now most people are selling plots â&#x20AC;&#x201C; it is the only option they have given the current financing models. This is also an indication that the current commercial entities are out of touch with reality and therefore the call to support and promote an indigenous bank that will have a clear appreciation of the demand side for financial services. This calls for a revamp of the National Development Bank, Botswana Building Society, Botswana Savings Bank and the UNIGEM so that they mitigate the current gap left by the current players in the market. Lucky are those that hold mortgages since they have an opportunity to refinance and construct structures. Unfortunate are first time land owners. The pity lies with those without a steady income as there is no hope for them to ever get financing. Government employees can also take advantage of the SHHA scheme but the greater population
is left stuck with land or plots which of course will be repossessed after five years of awarding. The current housing allowances are an insult as even a tent costs more than the money given. This is a sorry state where 17% of Batswana employed can actually qualify for mortgage loans but home ownership is at less than 5%.
The distortion that will come in the valuation sector will be appalling. Property valuers and financing institutions have no choice but to connive and value high prices so that the OMV financed at least qualifies you to access finance. This pronouncement by the commercial entities is
Since the beginning of 2015 there have been drastic changes on affordability with some banks now offering prime +6% and some financing 80% of the OMV which makes you realise that there must be something wrong with our property financing market. The implication of this is that homeownership becomes a luxury or something for the rich.
commercial entities. The LAPCAS project has been designed to make life easy for acquisition of title deeds but now when the fruit is ripe the suppliers abandon it. Going into 2015, Batswana need financial institutions that understand them and can provide affordable mortgages. The two national banks that are commercialising should remain focused on the core mandate of the various acts of parliament that constituted them. There has to be innovation within the financial sector to meet this gap. Batswana cannot afford to pay rent forever. Issues of transfer costs and upfront deposits also need to be looked at since they are hidden costs that make borrowing high. If possible, capacity should be strengthened at government level to provide this much needed national service. Asset financing entities have to be set up and rolled out to all parts of the country to help Batswana get a grip on their future.
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Continued from the FRONT PAGE According to the Bank of Botswana Banking Supervision Annual Report of 2013, household debt remains high. Mortgage loans increased by 43.3% from P4.6bn to P6.6bn in 2013. From January 2014 till June 2014, the mortgages credit increased from P6.8bn to P7.5bn reflecting a further 10% increment. The statistics show that Batswana have developed an appetite for property acquisitions but this will turn out to be an illusion for the greater masses that had expected to follow suit by moving towards assets acquisition.
also a clear sign that they are out of touch with the market and there is clearly a lack of innovation within property financing departments across the
GUEST COLUMNIST P10
BOIDUS FOCUS FEBRUARY 2015
Design Pad:
It’s all in the Furniture By Tshepiso Motlogelwa and Keshia Mogopa, Interior Designers
When buying furniture, it is vital to consider prime needs. First and foremost, individuals in charge of ordering office furniture should make a list of all basic necessities. Chairs are a given, as are desks, storage units, cubicles, and meeting tables. A list of basic requirements can be helpful for expand-
ing one’s view on other things that the office might need, and lists also provide clarification on future necessities. When renovating an office space, allow workers to voice their own opinions on which type of furni-
ture they want. Workers within the company may need specific chairs that provide support for their back during the day. Considering that workers make the backbone of a company, having comfortable and motivated employees can be helpful for providing productivity in the workplace. Plus, if
they feel as though their voice is being heard and their needs fulfilled (within professional reason), it may improve the overall employee morale. As Graham Evans puts it: “The right desk = better efficiency = better productivity = profitability.”
Cecil Nurse Furniture, Gaborone An interview with Graham Evans, MD, CN Furniture Gaborone operate from a one room office! In a work setting, furniture defines the company’s image and offers the all-important first-impression to any client or visitor stepping into the environment. You know better than anyone how important your employees are to your company so setting aside the time to pick out the right furniture for your office is worth the effort.
As a business CEO, there is a ton to think about – finances, hiring, marketing, branding, partnerships and more – but there is one subject that is seldom discussed yet just as important – office furniture. Taking the time to choose quality office furniture can help improve your employees’ attitude toward their work and therefore improve their productivity. Your desk and work station are not only for convenience; they also play a major role in your efficiency, morale and overall performance. It is therefore important to choose appropriate furniture for your office, even if you
Reliance Office Supplies trading as Cecil Nurse Business Furniture is a franchise in Gaborone that prides itself on offering business furniture which speaks volumes regarding your office. Graham Evans, the company director, explains that CN Furniture is concerned with selecting and providing the best office furniture to its clients as well as offering a personalised customer service experience where clients also get to visualise their selected furniture in a 3D space model. With the proper interior and ideal business furniture you are able to set a good tone for the business and impress prospects the minute they walk into the premises, building immediate trust and assurance in your client that you will be able to deliver the best quality service or product.
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FEATURE / GUEST COLUMNIST P11
BOIDUS FOCUS FEBRUARY 2015
Researching the Real Estate Industry By Kibo Ngowi
Continued from PAGE 8
Sethebe explains that Vantage Properties is a property consultancy firm with its focus being in property market research. The firm conducts independent research on the overall market to produce reports, conducts contracted research typically for development speculation and consults on property investment matters. The Vantage team is comprised of Sethebe and three other ladies: Motheo Maje who holds an MA in International Business Economics; Thapelo Ntaisi who has a BSc (Hons) Economics and Management; and Gontlafetse Maphosa who holds a BA (Hons) in Business Enterprise. Vantage Properties will be producing the Botswana Property Report annually, along with quarterly reports and a monthly newsletter. Sethebe says they intend to have the quarterlies to carry more detail and analysis of the month on month developments as well as comparison to last years. Sethebe closes the interview with a hint at
Consumer spending in Botswana rose dramatically by 247% between 2010 and 2014 while wages rose negligibly by less than 5% during the same period. Loans and Advances to households for property rose by 172% during this period from roughly P2.6 billion in 2010 to around P7.3 billion in 2014. This data indicates that the growth of the residential property market in the past four years has been almost entirely credit driven.
what Vantage Properties has in store for the future: We’re working on something that we cannot share at the moment but it is a
technology that would be very useful for the ordinary Motswana so watch this space.
Only time will tell what impact Vantage Properties and the data it produces will have on the Botswana real estate industry.
CONSTRUCTION INSURANCE - Contract Works Damage By Christopher Burton
mum, loss or damage to any kind of immobile property while under construction. Also known as Contractors All Risks insurance (in respect of predominantly civil works and buildings) or Erection All Risks insurance (in respect of plant, machinery and equipment), this coverage may extend to include:
Construction insurance is both a varied and complex subject, just as the types of risks that may be encountered during construction are extremely diverse. The property covered (the “contract works”) may for example be a road, bridge, building, factory or even a power station and may include or exclude mechanical and electrical plants such as generators, boilers, lifts, gantry cranes etc., whilst being assembled and installed therein. Therefore the extent of cover required will normally depend on the nature of the contract, what is stipulated in the contract documents and what is available in the market where the insurance is placed. The name “construction policy” is generally used to describe a policy that covers, as a mini-
• Constructional Plant covers loss or damage to constructional plants such as cranes used in the course of constructing the contract works. • Liability indemnifies the insured against legally liability arising out of: »» Bodily injury to third parties (other than employees), or »» Damage to third party property, arising out of or in connection with the contract site. • Removal of Support indemnifies the insured against legally liability arising out of shock or vibration or the removal or weakening of support to property in the vicinity of the contract site. Other covers associated with construction may include Marine Cargo (Imports), Professional Indemnity, Advanced Profits, Workers Compensation and Common Law Liability, Motor Comprehensive and Third Party Liability on mobile construction plants.
Construction policies may be arranged either for single projects or on an annual policy basis covering a variety of projects falling below an agreed upon estimated final contract value and within certain contract risk types. The larger projects tend to be insured on an individual basis. Who is responsible for the arrangement of these insurances (the Contractor or Employer) will be dictated by the contract conditions, whilst the risk of the contract site will be that of the contractor except for certain defined perils such as war risks. The contractor’s responsibility starts from the commencement of the works and ends on the date stated on the completion certificate or occasionally seven days thereafter. Completion certificates may be issued for the whole or part of the works. Each insurer and all major brokers will have their own construction wording and the quality and extent of cover will vary. Generally the policy covers against physical loss or damage to the permanent and temporary works during: 1. Dismantling; 2. Transit including loading, unloading and temporary storage; 3. Preparation of the contract site and while the property is on the contract site until completion of and transfer of risk to the employer; 4. The defects liability period (as described in
the contract conditions) pertaining to any part of the permanent works but only in respect of loss or damage arising from: »» A cause occurring prior to commencement of such defects liability period, or »» Any act or omission of the contractor, agents, suppliers or sub-contractors in pursuance of their obligations during this period. Where a partial completion certificate is issued it is often important that the Contractors All Risks policy remains in full force and this is achieved by the inclusion of a Beneficial Occupation clause. Cover is not necessarily automatic. It is unfortunately not possible in this brief article to discuss every clause that may be included under the Works Damage section of a Contractors All Risks policy. Suffice it to say that it is recommended that the advice of a competent construction insurance practitioner is sought prior to the purchase of any construction insurance policy. The next article will look at the common pitfalls to Construction Insurance. Christopher Burton is an Underwriting Manager at BIC
HOME IMPROVEMENT P12
BOIDUS FOCUS FEBRUARY 2015
DIY Projects - How to Make Concrete Countertops
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Concrete has become a popular countertop material in both kitchens and bathrooms. What makes concrete an even more budget-friendly option is that—in contrast to, say, natural stone—it’s easy to work with.
with olive oil; doing so will let the concrete slip more easily from the frame later on. Before you can even think about pouring the concrete, however, one essential step remains: adding reinforcement, in the form of steel mesh. For best results, suspend the mesh at the middle point in the vertical height of your melamine form. How? Drill screws into the outside walls of your frame; connect the mesh to the screws via zip ties, strong ties, or even a bungee cord; then extend the metal wiring across the breadth of the frame. Bear in mind that in order for this approach to be successful, you must be careful to mix the concrete to a watery—but not too watery—consistency. If this all sounds painstaking, consider the alternative: Mix the concrete however you like; pour it to fill the form halfway; set in the steel mesh; then fill the rest of the form.
1. BUILD THE FORM
Start by determining the dimensions you want the countertop to be. Next, build a form into which you can pour the concrete so that once it dries, the hardened material will conform more or less exactly to your desired specifications. If your concrete countertop is going to be inset with a sink, the form you build must include cutouts for the sink itself and faucet. To leave room for these fixtures, you can build recesses into the form.
2. REINFORCE THE FORM
Now lightly coat the melamine frame interior
3. MIX THE CONCRETE
When you’re ready to mix concrete for the project, closely follow the manufacturer’s instructions. Aim to achieve a thick, oatmeal-like consistency. If you find that it’s too hard to work with, add a little water (but only a little). The wetter the concrete, the more brittle it becomes upon drying. Consider augmenting the concrete with additives that inhibit cracking and shrinking. Known as admixtures, these ought to be readily available at your local home improvement retail store.
over the concrete surface. This time, reach for the trowel and use it to eliminate any lingering imperfections.
5. REMOVE THE FORM
4. POUR THE CONCRETE
Lay a plastic sheet over the concrete to prevent it from losing too much of the moisture it needs to cure properly. Generally speaking, the longer you allow the concrete to dry, the stronger it ends up being. For maximum strength, you can let the concrete harden for a period of weeks, but for this purpose leaving it alone for a few days is plenty. Once that time has elapsed, go ahead and remove the melamine frame, then lift the concrete countertop into position on top of your base cabinets.
Next, use a wood float, raising its leading edge slightly, to smooth the concrete further. Meanwhile, tap the sides of the form gently with a rubber mallet so as to create the vibrations necessary to dissipate air bubbles. After letting the concrete harden for a couple of hours, come back to the form and once more run a tool
6. FINISH THE JOB
Pour enough concrete into the form to fill its volume completely, then use your hands to work the material along the edges and into the corners. If you attached the steel mesh reinforcement to the frame itself, cut those connections now. Then proceed to use a flat board, such as a one-by-four, to level, or screed, the concrete. Move the board back and forth in order to smooth the surface and fill low spots. Keep a trowel at the ready, so you can quickly deal with any excess.
There’s a good chance at this point that small cracks or bubbles may be visible in your countertop. If you like them, do nothing. Otherwise, you can perform spot repairs with concrete patching compound. Remember, however, that after applying the patches, you must then sand the countertop with diamond-grit sandpaper (manually or using a power sander). Finally, wash the counter thoroughly, removing all debris and fine particles of dust; let the countertop dry completely, then finish the job by applying a concrete sealer or a coating of foodsafe polyurethane (optionally followed by an application of canuba wax).
MAIN FEATURE P13
BOIDUS FOCUS FEBRUARY 2015
BOCCIM President Highlights Business and
Investment at FNB Budget Review Seminar By Kibo Ngowi and H. Killion Mokwete
Keith Jefferis
Independent Economist Perspective Boidus Focus spoke to Independent Economist Keith Jefferis to gain his perspective on the current government budget and how it will potentially impact the country’s construction industry.
BF: What role do you see the construction industry playing in the economy this year? Is it poised to contribute significantly to the GDP?
Continued from the FRONT PAGE
Major Short comings in the Budget
The First National Bank (FNB) Budget Review Seminar is an annual event aimed at giving participants an opportunity to interrogate and understand the Botswana national budget with the help of expert panelists. Immediately after this year’s government budget speech, FNBB hosted its 21st Budget Review Seminar. In attendance were Honourable Ministers, CEOs & Heads of Government and Non-Governmental Organizations and Heads of Parastatal Organizations, amongst other distinguished guests.
• Lack of Implementation – inconsistency between aspirations and the business environment on the ground • No mention of targets for reducing employment • No recognition of the private sector’s role in funding and delivering infrastructure • Reference to innovation and R&D but no budgetary commitment • No mention of huge projects currently under consideration - (TKR, Mmamabula, Kazungula Bridge, Cut 9&3) • No specific comment about specific deliverables by parastatals • No feedback on performance of the various levies • Reference to women and youth but no specific targets • No mention of fiscal reforms in the budget • Business Climate – no measures announced »» Visas, Work & residence permits »» Major pronouncements made unlikely to happen in the next 12months
The panelists of this year’s seminar included Sizwe Nxedlana, a Chief Economist at First National Bank SA who delivered an overview of the Global Economy; Mr. Rudi Binedell, a Chartered Accountant who delivered a 2015 Budget Analysis focusing on Tax implications; and BOCCIM President Mr. Lekwalo Leta Mosienyane who delivered a presentation on the impact of the Budget on the Business and Investment Climate. Below is a summary of the points Mr. Mosienyane covered in his presentation:
What did the Business Community expect from the Budget? • Job Creation as Priority – High unemployment amongst youth • Emphasis on the private sector’s role in creating employment – Business environment • Major Investments in Key Priority Sectors »» Energy »» Water »» Education »» Balanced Budget or Surplus
The actual 2015/16 Budget • Excellent, high level aspirations and intentions • Modest surplus indicating prudent management • Investment in priority areas »» Airports, energy, optical fibre, water and roads. • Pronouncement on R & D • Citizen economic empowerment • Commitment to improving the business climate »» De-regulation of the market to improve competition »» Creation of clusters »» Integrated procurement program by PPADB »» Improving productivity in the public sector to improve service delivery »» Training public officers on contract management
Consensus • Broad consensus on growing the economy. • Broad consensus on the private sector - and not government - as the source of economic growth, wealth and employment.
What then needs to be done to facilitate a good investment climate? • Reduce tax »» Levies add to the tax burden. • Simplify the tax code »» A complicated tax system takes time and resources to comply with. • Smart regulation »» Need for conducive, reliable and predictable regulatory environment. »» Regulatory impact assessment (RIA) - assess the impact of new regulations on business. • Role of government »» Promote growth »» Privatisation of state-owned enterprises to reduce the role of government and thereby deepen capital markets to enhance the investment climate.
Macro v/s Micro Issues • Botswana's macroeconomic fundamentals remain sound. • Close the gap between the macro and micro issues such as licensing, company registration, visas and permits in order to improve the business and investment climate.
KJ: Construction accounts for about 6% of GDP, and this doesn’t change much from year to year. Construction growth is likely to be relatively slow, probably similar to recent growth rates of around 3-4%. BF: How has the performance of the construction industry affected other sectors of the economy? KJ:
Presumably it affects demand for some manufactured products such as cement and building materials, which are also likely to experience slow growth, but unfortunately the GDP figures published by Statistics Botswana do not distinguish these sub-sectors.
BF:
As it stands, what impact do you think this year’s budget will have on the construction sector?
KJ:
There is a large increase projected in the development budget for 2014/15 and 2015/16, compared to the previous year. Much of this budget consists of projects that have a construction element, so perhaps this will boost the sector somewhat.
BF: In the past you have highlighted that the measurement of construction sector growth in the national accounts is poor. Many industry players and representative organisations insist that the industry is experiencing a slump while official data
says the sector is growing. Do you feel government can make sound decisions on the construction industry with the current available data?
KJ: The gap between data and reality seems to have been resolved to some extent, in that official data now shows relatively slow construction growth. But generally, the quality of many official economic statistics is poor, which does not provide a sound basis for decision making. BF: Previously you mentioned that the decreased government spending on construction projects was not the result of tightening but rather a structural change resulting from most of the country’s ‘infrastructure deficit’ having been met. Do you see this trend continuing with the current budget? KJ:
As noted above, a big increase in development spending has been budgeted. This may indicate that more is being spent on projects. However, official budgetary definitions are becoming confused, so that, for instance, Ipelegeng is included as development spending, as are subsidies to loss-making Parastatals; even though these are in reality recurrent spending items. So it is increasingly difficult to determine whether an increase in development spending really indicates more spending on infrastructure, or something else. But the general point that much of the infrastructure deficit has been met remains.
BF: If indeed the days of large scale government construction projects are coming to an end, what areas of growth can the construction industry explore to fill the gap?
KJ: ects.
Private sector and parastatal proj-
ADVERTISING P14
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BOIDUS FOCUS FEBRUARY 2015
guest editorial P15
BOIDUS FOCUS FEBRUARY 2015
Sectional Title Procedures and Costs By Akheel Jinabhai
The developer must by himself, or through his agent at the meeting, furnish the tenants with full particulars of the proposed development scheme and comply with the restriction of sales in terms of section 11 as detailed below. Section 11 of the Sectional Titles Act states that no developer shall sell any unit in a development scheme which is occupied by a tenant to a person other than the tenant in possession unless, he has, first made an offer to sell the unit to the tenant in possession by a letter delivered either personally or by registered post, he has given the tenant three months' notice within which to consider the offer and the tenant has either refused to accept the offer or failed to accept the offer within the aforesaid three month period. Where a tenant refuses an offer or fails to accept Around the late 1990s the Sectional Titles Act, No. 7 of 1999, introduced a new form of ownership in immovable property in Botswana, namely the concept of sectional ownership of Buildings. Sectional title gives the holder of such a title real rights in and to a specific portion of a building (a ‘section’), combined with a type of co-ownership in the common areas of such building. Sectional ownership is increasingly being used in Botswana to deal with a growing shortage of land in urban areas and the tenure problems associated with multiple ownership in parts of buildings. The registration of sectional titles was pioneered by myself, Akheel Jinabhai, during my days as an upcoming talent in the legal fraternity. This article will outline how sectional title schemes are registered. Drawing up of a Sectional Plan and Registration thereof with the Director of Surveys and Mapping (DSM) This is basically the drawing up of the sectional plan diagrams that will be required to register the Sectional Scheme at the Deeds office. This is usually done by a Land Surveyor or an Architect. In terms of time frame and considering the amount of units, they will take about 14 days to submit the DSM. The Surveyor will require the following; • A copy(ies) of the approved architectural drawings for the developments on the property; • A copy(ies) of the Title Deed for the Lot; • An indication of how the parking should be allocated to the units or permission for him to allocate; • The name of scheme.
an offer within the aforesaid three month period, the developer shall not, within a period of six months from the date on which the tenant refused to take the offer or failed to accept the offer, as the case may be, offer for sale or sell the unit to any person other than the tenant in possession at a price lower than the price at which it was offered to the tenant in possession unless, the developer has again offered the unit at that lower price for sale to the tenant in possession and the tenant has refused the offer within a period of three months from the date thereof, or has failed to accept the offer on the expiry of the three months. The only instance where the above procedure does not have to be followed is where the tenant is in breach of the lease agreement with the developer. In that instance, the lease may be terminated in accordance with the lease agreement
by the Land Surveyor, then comes the next step.
Application for registration of a Sectional Plan and opening of Sectional Titles Register with the Deeds office The next step is the actual application prepared by an attorney in terms of Section 12 of the Act, which application is made to the Deeds office for the registration of the sectional plan and for the Deeds office to open a sectional titles register over the plan (scheme). To submit this application the attorney will need; • Two original sets of the sectional plan (which will be provided by the land surveyor as aforesaid); • The servitudes and conditions of title burdening or benefiting the land and the other registerable conditions imposed by the developer
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The time frame for examination and approval of the drawings at DSM will be approximately six weeks from date of lodgment. In terms of Section 6 of the Sectional Titles Act, which applies in this case, it states that where an existing building, which is to be converted into a development scheme, is a residential building occupied by tenants under a tenancy agreement, no application shall be made by a developer to the Director of Surveys and Mapping for the registration of a sectional plan unless the developer has, prior to the making of the application, notified every tenant, in writing, by a letter delivered either personally or by registered post, of a meeting of all tenants in possession to be held at a date, at least 14 days after the delivery of the letter, in the building or such other building as may be specified in the letter which is within a reasonable distance from the building in question and is located within the area of jurisdiction of the local authority.
itself or if the lease has a termination clause. After the Sectional Plan has been approved as aforesaid and the diagrams are handed over to an attorney
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guest editorial P16
BOIDUS FOCUS FEBRUARY 2015
Sectional Title Procedures & Costs By Akheel Jinabhai
Continued from PAGE 15
Herbs, Pots and Sunshine
• •
You don’t need huge spaces to grow a gorgeous (and useful!) herb garden. Most herbs are perfect container plants and will thrive on your deck, patio, balcony, foyer table or front steps, provided you offer them the right growing conditions »» First and foremost, herbs need full sun for best performance. Place your containers in locations that receive at least eight hours of direct sun. »» Grow indoor herbs in the sunniest location you can find, but don’t expect them to perform as well as they do outside. »» Also, don’t give your herbs too much love. Avoid the fertilizer; most herbs will give you the strongest fragrance and flavor if they’re grown in lean soil. »» Water wisely; while most herbs prefer dry conditions, some need more moisture to thrive. »» Use a soil-less potting mix to provide excellent drainage and space for roots to grow. Planting your Herbs in containers/pots also allows easy access to their fragrance and flavors.
•
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(this will be obtained from the current title deed); The original floating copy of the title deed of the land in question; Any mortgage bond to which the land may be subject, together with the consent of the mortgagee to the opening of the sectional title register. Further, arrangements should be made with the relevant Bank to release the original title deed and bond. This is essential as every time a sale and transfer takes place, same will be endorsed as deducted from the title deed and bond. Arrangements will have to be made with the Bank to get Consents to Release signed for each unit when processing the transfer. This basically means that for each sale, once satisfied that the purchase price has been covered, the attorney undertakes to the Bank to pay that purchase price upon the transfer of the unit into the name of the purchaser. This process is usually time-consuming as the Bank always has their internal procedures that delay the signing of the consents. It is advisable to make arrangements with the Bank to have a meeting with the signatory of the consents and the person who will receive the consents from the attorney via email and forward same to the signatory. The purpose of such a meeting is to explain to them the transaction and procedure clearly in order for same to proceed smoothly; The rules (these can be the standard rules prescribed by the Act) which rules may be amended by the client; Certificate of compliance of development (attorney will make an application to the Department of Lands for this certificate); The rates and taxes on the property must be fully paid and up to date, in order to obtain a rates and BURS clearance certificate.
Once all the documents and/or infor-
mation listed above are received by the attorney, it will take three days to prepare the relevant documents for signature by the developer and any other involved party. The registration process for this step takes between 10 to 14 working days and the cost of registering and opening the sectional title scheme is usually around P15, 000 + P1000 per unit (excluding VAT). Transfer of units to purchasers and formation of the body corporate After the registration of the sectional plan has been completed and the sectional titles register has been opened at the Deeds office the attorney will now be in a position to transfer the units to the individual potential purchasers. The costs in relation to the transfer of the units into the names of the purchasers will be for the account of the purchasers and mainly depend on the sale price of the unit. The following costs will be paid by the purchasers; • Transfer and bond (if any) costs; • The purchaser will also have to pay a tax to Government for transfer. This tax is either 12% VAT if VAT is charged on the purchase price. If VAT is not charged than there will be a transfer duty tax that will have to be paid which is 5% of the purchase price (citizens are exempted from the first P200 000.00). In terms of Section 39 of the Act, there shall be deemed to be formed an association which shall be a body corporate whenever any person other than the developer becomes an owner in a scheme. The association shall be called by the name of the scheme. The association shall, subject to the provisions of the Act, be responsible for the enforcement of the rules of the scheme, and for the control, administration and management of the common property for the benefit of all owners. The pro-
visions of the Companies Act shall not apply in relation to an association. The association shall have perpetual succession and shall be capable of suing and of being sued in its corporate name in respect of any contract made by it, any damage to the common property, any matter in connection with the land or building for which the association is liable or for which the owners are jointly liable, any matter arising out of the exercise of any of its powers or the performance or non-performance of any of its duties under the Act or any rule and any claim against the developer in respect of the scheme if so determined by special resolution. A developer shall convene a meeting of the members of the association not later than 60 days after the formation of the association, the agenda of the meeting to be as prescribed in the management rules, at which meeting the developer shall furnish the members with: • A copy of the sectional plan; • A certificate from the local authority to the effect that all rates due by the developer up to the date of the formation of the association have been paid; and • Proof of revenue and expenditure concerning the management of the scheme from the date of the first occupation of any unit until the date of the formation of the association. The developer shall cease to be a member of the association when he ceases to have a share in the common property and any other member of the association shall cease to be a member thereof when he ceases to be the owner of a unit in the scheme in question. The above is meant only as a brief introduction to the scenarios regarding the registration of sectional titles. The information given is general and is not intended as legal advice. Akheel Jinabhai is Managing Director of Akheel Jinabhai & Associates
Minimum Thickness Needed
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Blown in Thickness
Settled Thickness
R-Value
Reduced Summer Heat Flow %
Reduced Winter Heat Flow %
50mm
50mm
1.31
76%
61%
75mm
75mm
1.97
81%
86%
100mm
100mm
2.63
87%
89%
125mm
125mm
3.29
91%
93%
EDITOR’S NOTE / guest editorial P17
BOIDUS FOCUS FEBRUARY 2015
EDITORS NOTE
After 5 years of Maintenance Budget spending, the Industry has little to show for it.
Re-Imagining the
Urban Environment By Tefo Paya
By H. Killion Mokwete, RIBA Chartered Architect The 2015/16 Budget speech has radically moved away from the past 5 years focus on government maintenance projects towards some measured public infrastructure projects spending. New schools, hospitals, bridges and power stations are to be built in the 2015 budget proposals. This has come as indeed great news for the construction industry as it might be the start of some much needed government spending in the sector after so many years of painful austerity. In the past years, the government has invested over 4billion in maintaining government buildings, roads and other public infrastructures. What is not yet clear is exactly what has been maintained and to what quality and standards. The maintenance programme has been plagues by a lot of short comings throughout the past years of focus. The first two budget years of 2009 and 2010 saw money earmarked for these projects returned to the MFDP due to lack of information as to exactly which government buildings needed maintenance and to extent. This lack of preparedness exposed the weakness of the maintenance strategy. There seemed to have been no pre-planning and proper tools on how this would be done on the ground. BOCCIM came to the rescue, through proposals to undertake an entire government building fleet audit but in the end this was a costly exercise that ended up being done by private consultan-
cy around 2013, some years after the initial spending on maintenance projects. What has also become apparent is that there really was never any coherent strategy to make useful the maintenance funds beyond the painting and face-lifting of such facilities. There was no for example any capacity building intentions behind such a strategy to make sure that after 5 years of focusing on this, we might actually come out with specialist’s for example on heritage buildings. In fact this could have been the perfect time to develop a comprehensive conservation and heritage laws to guide the rehabilitation, preservation and maintenance of our aging buildings. Maintenance of some of these buildings might also for example have taken the opportunity to improve the energy consumption of these structures, through green measures such as new insulations, new windows systems and shading structures or other environmentally friendly interventions. This way a new niche industry of green building products, expertise and other value chain opportunities in sustainable building might have been nurtured. Instead, the maintenance programme was done with no guidelines, no expectations beyond face-lifting and in the end a lot more opportunities have been missed with no long term benefits.
BOIDUS TEAM February 2015 MANAGING EDITOR
H. Killion Mokwete
BUSINESS DEVELOPMENT
PHENYO Motlhagodi Martha Rooi
Taelo Maphorisa
STAFF WRITER
SALES
Keeletsang Dipheko Ngwewabo Mokwete
going to the Theatre is a norm. Drama needs to be employed more in various fields such as therapy and alternative education. The nation needs to be shown how vital the Arts are to the development of our country and in creating a unified identity where everyone is given a voice. Lastly, Theatre and Drama need to be recognised as viable professions and more investment is needed, from both Government and the Private sector.
This partnership signalled the beginning of a bigger plan to bring these aforementioned disciplines into the world of property, business and investment. The Arts have a major role to play within the urban environment of Gaborone. Art needs to be incorporated into new urban development projects and to be used to re-activate areas that have been forgotten.
Apart from entertaining and educating, Drama and Theatre can be incorporated into all forms of media, especially when it comes to understanding audiences and how to creatively engage them. This is also vital for marketing. This trend is seen mainly in developed countries where all that is learnt in Drama is translated to other fields. This is what is called Applied-Drama and Applied-Theatre. This is where Theatre and Drama techniques are applied to other fields such as the corporate world, education, therapy and so on.
Art is there to bring life to the city. During the conference, Art was not only there to entertain but also to inspire and showcase the collaborative potential between the creative industries and business. The creative industries have huge economic potential as well as limitless collaborative possibilities to enhance the urban environment that we all live in.
GUEST COLUMNISTS
GRAPHICS ASSISTANT
DEPUTY EDITOR
Kibo Ngowi
ACCOUNTS
DISTRIBUTION
ART DIRECTOR
Bridget MacKean
Art is visible and inherent in everything. When it comes to innovation and ground-breaking creations, Art – in various forms – is always present in some way. On the 10th of October 2014, The Company@Maitisong, in partnership with Boidus Media, ensured that the Arts were visible at the 2014 CBD Executive Conference. The opening had a wonderful fusion of Theatre, Poetry, Dance and Comedy.
Tara Michelle Theron Tebogo Sekwenyane Tlotlo Arnold
Akheel Jinabhai CHRISTOPHER BURTON KESHIA MOGOPA OTHATA BATSETSWE TSHEPISO MOTLOGELWA TEFO PAYA
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I would like to focus on Theatre and Drama as Art as this is the field that I am most actively involved in. In Botswana, there are many challenges that face Theatre and Drama practitioners. Firstly, Batswana have a limited view of these disciplines and the Arts in general. Awareness needs to be raised and more Batswana need to be exposed to all the myriad possibilities. Theatre and Drama practitioners in Botswana need to work harder to develop a culture where
However, Batswana have not yet realised the extent to which the Arts can energise and inspire other industries. There are a number of talented young people who possess a great deal of energy and belief in themselves. With the right guidance and training, I see Botswana’s Theatre industry reaching a level where new and exciting work will be created. Thus boosting the economy and supplementing the current growth of the urban environment. In conclusion, as an Artist, I challenge all to attend at least one Arts event with an open mind. Allow the work to speak to you, find what is possible and let the creativity flow. Be aware of the Artist within you and find ways that Art can be allowed into your industry; be inspired to innovate and invigorate the urban environment around you.
ADVERTISING P18
BOIDUS FOCUS FEBRUARY 2015
Calling your Surety Bond Claims - What to do and avoid? By Boidus Admin
Fictitious scenario; It’s Friday and, as the afternoon creeps into the weekend, you, the project owner, are dissatisfied with the progress of Quality Constructors. It’s obvious, with the lack of performance this week, there is no way the project is going to be completed on time! At 3:00 p.m. the phone rings. X Mechanical, the mechanical subcontractor, angrily threatens to walk off the job. Quality Constructors hasn’t paid them and they intend to take legal action to file a lien on the project if something isn’t done. That’s going to go over great with the lenders! There is no choice; it’s time to declare Quality in default and call the surety! The three parties to performance bond;
In the language of the construction industry, the three parties to a performance bond are usually the contractor (principal), the owner (obligee), and the surety/guarantor. Claimant: A party who has a right to make a bond claim.
Obligee: The construction project owner or the party to whom the contractor (principal) is bound under a contract. Payment Bond: A written instrument, generally issued in tandem with a performance bond, whereby the surety is bound to pay certain parties, such as subcontractors or material suppliers, furnish-
ing labor or material to the contractor for use in performance of the bonded contract to the extent provided by the bond or any applicable statute. Performance Bond: A written instrument whereby a surety has undertaken to guarantee that a named principal shall perform in accordance with the terms and conditions of an underlying agreement with the obligee. In essence, the performance bond protects the owner from financial loss should the contractor fail to perform the contract.The contractor and the surety, jointly and severally, bind themselves, their heirs, executors, administrators, and successors and assigns to the owner for the performance of the construction contract, which is incorporated herein by reference. Principal: The contractor or subcontractor whose performance under a contract is guaranteed to the owner or obligee.
ATTENTION CONTRACTORS
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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.
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Surety/Guarantor: A corporation licensed to provide guarantees to third parties of the performance of its contractor (principal) in discharging the contractor’s responsibilities to the owner (obligee).
What should you do?
1. First, be fair in your contract and in dealings with the contractor. When entering a contract, you do so for the end goal of completing the project to fulfill a defined need. If you require your contractor to bond the project, you are taking the extra step and expense to use a prequalified contractor to perform the work. What remains is to manage the construction process and to comply with your part of the contract. 2. Second, be prudent in managing the construction process. Name one body of law that has more case law than that surrounding the construction industry. It is hard to do! 3. Third, know and understand the traditions of the construction industry and your contract, including your responsibilities under it. 4. Fourth, document the progress of your project. Remember that the surety promises to fulfill the contract when the “principal is in default of the contract and has been declared to be in default by the “obligee.” Well-documented project files go a long way towards assisting the claims representative in his or her investigation, and ultimately help you substantiate the default if the matter goes to court. 5. Fifth, seek legal assistance in pursuing your claim. If you are involved in a surety claim, something has gone wrong in the contractual relationship between you and your contractor. Given the multitude of jurisdictions, and the thousands of interpretations surrounding the case law governing the construction industry, you should not rely on a layperson’s interpretation of a contract, nor should you rely on a surety to make those interpretations for you. Seek legal counsel to assist you with this contractual problem, and in doing so, seek counsel who is familiar with the construction industry. This is a specialized field of law. Proper counsel can save time, money, frustration, and frequently, unnecessary litigation. Finally, we have emphasized that the claims investigation is required once a default or complaint is made. Find out who is in charge of the surety claims operations from the contractor or surety bond producer, and be certain to follow instructions for proper notification, in writing, to that party. Getting the process underway correctly is vital to prompt and effective claims service.
It’s important to keep in mind that:
1. The surety is not a judge or referee of disputes between the owner and the contractor. Until such time as the contractor has been properly declared in default of the contract, the surety’s obligations to the owner have not matured. 2. If the contractor is, and is declared by the owner to be, in default under the contract, the surety will take action. 3. There are three basic forms of default: a. default via a breach of a material contractual term or condition related to the work such as failure to make satisfactory progress; b. financial default such as failure to pay suppliers or subcontractors for work properly performed; and c. Voluntary default.
advertising P19
BOIDUS FOCUS FEBRUARY 2015
COMPANY PROFILE Scotch Macdonald (Pty) Ltd. Trading as Delta Glass & Aluminium has developed a wealth of experience over the years in Botswana Architectural Glass and Aluminium supply market. Delta Glass & Alu minium is Botswana’s foremost supplier of Suppliers of: an enormous variety of specialised glass PO Box AD 214 ADD Gaborone products and Architectural aluminium Architectural Aluminium & Botswana applications such as Shop front systems, Tel: (+267) 3925395 Glass, Curtain Wallings, Shower Curtain Wall, windows and doors, shower Fax: (+267)3925350 and Patio Doors cubicles, skylight and Louvers and numer ous other products that complement the Fenestration Industry. Plot 53609, Unit 7 Gaborone West Industrial As an active member of the Botswana BuCompany Profile Gaborone, Botswana reau of Standards technical advisory com-
mittee we at Delta Glass & Aluminium Scotch Macdonald (Pty) Ltd. Trading as Delta Glass & Aluminium has developed a wealth of Tel: (+267) 3925384 / 95 combine the technical expertise of the experience over the years in Botswana Architectural Glass and Aluminium supply market. Delta Fax: (+267) 3925350 most experienced glass and aluminium Glass & Aluminium is Botswana’s foremost supplier of an enormous variety of specialised glass Cell: (+267) 71321032 products and Architectural aluminium applications such as Shop front systems, Curtain Wall, designers and engineers in Southern AfriEmail: grantstacydelta@gmail.com windows and doors, shower cubicles, skylight and Louvers and numerous other products that complement the Fenestration Industry. As an active member of the Botswana Bureau of Standards technical advisory committee we at Delta Glass & Aluminium combine the technical expertise of the most experienced glass and aluminium designers and engineers in Southern Africa to render expert opinion on all aspects of aluminium and glass fenestration, we help determine the best solutions, both technically and economically, with systems and products that have been carefully engineered and thoroughly tested to comply with the most stringent performance specifications. Operating from our 1600 square metre warehouse in Gaborone west industrial, Delta has a most comprehensive distribution network in place to service local and northern businesses with our fleet of purpose built vehicles. Most importantly, Delta boasts a team of highly experienced technical, production and management personnel focused on maintaining the high level of service and quality standards for which we are renowned.
XIAN PROPERTIES (Pty) Ltd
ca to render expert opinion on all aspects of aluminium and glass fenestration, we help determine the best solutions, both technically and economically, with systems and products that have been carefully engineered and thoroughly tested to comply with the most stringent performance specifications. Operating from our 1600 square metre warehouse in Gaborone west industrial, Delta has a most comprehensive distribution network in place to service local and northern businesses with our fleet of purpose built vehicles. Most importantly, Delta boasts a team of highly experienced technical, production and management personnel focused on maintaining the high level of service and quality standards for which we are renowned.
www.cnonline.co.bw
PVC CEILING, TIMBER & FLOOR TILES WHOLESALER WE SUPPLY & INSTALL: fire resistance, water resistance, advanced technology, Fast installation, paintless, easy cleaning, long lasting 15-20 years.
YOUR OFFICE. DELIVERED.
BUSINESS FURNITURE
RELIANCE OFFICE SUPPLY We stock a wide range of Timber: Purline(50*76), Rafter (38*152, 38*228, 38*114, ), Brandary (38*38, 38*50) all sizes from 4.2m-6.6m)
We are Botswana’s leading corporate furniture supplier and have been in operation since 1989. We hold the exclusive Botswana franchise for CECIL NURSE. Business Furniture, the prestigious South African company with 9 branches in South Africa. Having worked for years with interior designers, corporate layout specialists and on large corporate projects, we have now rebranded and redesigned our own space here in Gaborone. Whilst in the past we relied on catalogues and design software to display our furniture to customers, we now have a dedicated showroom to display our ranges in all their full-size glory. Please allow us the opportunity to welcome you into our working haven and to introduce you to our ranges of: executive and operator
desking and seating; reception furniture; soft seating; boardroom furniture; screens and partitions; training and educational furniture; restaurant, cafe and canteen furniture and storage and filing systems. Our furniture is of the highest quality, with most products holding a 5 year warranty. We showcase ranges for all budgets including pieces designed and imported from Italy. We provide delivery and installation, so that you can order in the knowledge that your furniture will be set-up in your office to your exacting specifications.
We understand that you spend an average of 264 days at work each year. Let us help you spend those days surrounded by the beautiful office furniture you deserve.
RELIANCE OFFICE SUPPLIES (PTY) LTD t/a CECIL NURSE BUSINESS FURNITURE Location-Gaborone, Block 3-along the Western Bypass
Tel: 3951421 Cel:75405777
email: zhang_resawf@hotmail.com
Plot 1247, Haile Selassie Rd, Old Industrial, Gaborone | P.O. Box 1084 Mogoditshane, Botswana Tel: +267 3956578 | Fax: 3974377 | Email: graham@cnonline.co.bw
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BOIDUS FOCUS FEBRUARY 2015
Get to Builders Warehouse.
Get it done! Our range of products include: • Bathroom • Braai • Building • Décor • DIY • Electrical • Flooring • Garden/Pool • Handtools • Paint
SPEAK TO US ABOUT A TRADE ACCOUNT! BUILDERS WAREHOUSE BOTSWANA: GABORONE: Airport Junction Shopping Centre, Plot No. 70665, A1 Road, Tel: 00267 393 0533 FRANCISTOWN: Plot Number 31247, Mowana Park, Somerset West Industrial, Along A1 Road, Tel: 00267 2425200/5222 MONDAY TO FRIDAY: 7AM - 6PM; SATURDAY: 7AM - 4PM; SUNDAY AND PUBLIC HOLIDAYS: 8AM - 2PM