Botswana Railways (BR) through its subsidiary, Botswana Railways (BR) Property last week signed an agreement with Time Projects Botswana, a property development company to develop a mixed used project which will entail construction of a state of the art mall. BR owns a chunk of land in Francistown measuring 11.6 hectares which has been lying idle for years.
The aim of this project is to unlock the development potential of the plot through partnership with the private sector.
Botswana Railways (BR) first made the announcement to build its mall in the second city worth close to P400 million in 2014.
The project was supposed to take off in 2017 and was postponed several times owing to a number of factors such as identification of investment partners and the Covid-19 pandemic.
Giving opening remarks during the signing of the subscription and shareholders agreement between the partners last week in Francistown, the Acting Chief Executive Officer of Botswana Railways Chelesile Malele said this is their second project after Rail Park Mall in Gaborone.
“A number of people have been curious and asking questions as to why BR does not focus entirely on its core business which is providing rail transport. However, I should make it clear that Botswana Railways is focused 100 percent on the running of trains. When it comes to property management, its subsidiary BR Properties is mandated with management of all these transactions and projects,” she said
She further said BR property facilitates the opening of Special Purpose Vehicles (SPV) to manage the day to day operations of these malls. An SPV is a subsidiary created by a parent company to isolate financial risk. She said in Francistown they have opened an SPV company (Rail Diamond) which is a tripartite partnership between BR, BR properties and Time Projects (Pty) Ltd. The same arrangement was done for Rail Park Mall where JTTM Properties is the SPV company. Malele said it is important to note that government encourages them to work with the private sector as this will help them to be self sustainable and not depend on government for funding. She further said this project will help diversify their income as BR and enhance their borrowing capacity.
“Running a railway transport operation is very costly. When we diversify our income we will depend less on government,” Malele said.
BR has over the years reeled through financial challenges some of which led to the stoppage of its passenger train.
Giving a brief overview of the project the Managing Director of BR Properties Utlwanang Golebanye said the project was informed by a thorough study to look for a way in which Botswana Railways can become financially sustainable by diversifying its income.
“Our pilot project was Rail Park Mall in Gaborone and this will be our next project in terms of commercializing Botswana Railways land. We have land in major towns and cities across the country that we intend to put to good use by commercializing it. The effort being that we want to generate income to support BR so that it reduces its reliance on government budget support,” he said.
Golebanye explained that from their land which measures 11.6 hectares, initial development is earmarked for 6 hectares, the reason being that they have been affected by the Covid -19 pandemic. He said the pandemic has had its hand in subduing off-takers in terms of offerings that are coming into market with regards to property development. He said they are phasing their development and this phasing will be demand led. He also explained that they will be more focused in complementing on what exists in Francistown and will not frustrate their competitors.
“We look to promote economic transformation in Francistown by making sure that this earmarked project conforms and continues the development of the city. We will continue to work with the Francistown City Council in this project. Our aim is to also generate returns for our three partners being Botswana Railways, Botswana Railways Properties and Time Projects,” he said.
Golebanye emphasized that their overarching aim is to promote and participate in the growth of Botswana as BR group. He said if things go according to plan, the ground breaking ceremony for the project will be done in December 2022. The initial phase of the project is expected to cost over P100 million.
For his part the Director of Time Projects Botswana Mmoloki Turnie Morolong said the core business of their company is property development. He said they develop property where there is business sense and obviously where there is profit.
“We have developed property across Botswana in areas like Lobatse, Ramotswa, Ghanzi, Serowe, Francistown and Letlhakane. We have done developments on our own and with partners. These partners include individuals, corporate companies and others. We know the Botswana market and we know it well. We are happy to be working with Botswana Railways in this project,” he said.
BR will lease the development land to the SPV on a long term lease(40 years basis), the value of which will be held by the SPV as BR’s equity contribution. Time Project Botswana will contribute equity in finances, equivalent to the value of BR’s land and Botswana Railways Property as the facilitator of the project from inception shall be allotted shares in consideration of the project facilitation services rendered.
