Minister of Investment, Trade and Industry (MITI), Mmusi Kgafela, has commenced the process of assessing an appeal by Growmine Africa (Pty) Ltd against the Gambling Authority’s decision to terminate the company as the preferred bidder for the national lottery.
The Business Weekly & Review can confirm that Growmine Africa submitted an appeal to Minister Kgafela and that he has commenced the process of assessing the appeal. Kgafela did not respond to phone calls made to his mobile phone and messages sent to him regarding this. However, Carthage Matlhaga, Chairman of Growmine, confirmed that indeed an appeal has been submitted and that the minister is expected to make a decision in 60 days.
After terminating Growmine, the Gambling Authority announced that Ithuba Solutions (Pty) Ltd, previously the reserve bidder, had become the preferred bidder. In an interview, Todd Mangadi, Chairman of Ithuba Solutions said they also await the decision of the Minister following Growmine’s appeal. He said after the appeal, ithuba will file a replying affidavit while the minister will engage experts to help him assess the matter.
The Gambling Authority did not respond to The Business Weekly & Review inquiries seeking to establish what will happen now that the matter is before the minister.
On 26 July 2021, the Gambling Authority terminated Growmine Africa (Pty) Ltd as the preferred bidder for the multibillion pula national lottery because the latter failed to raise P100 million for a national rollout plan as required. The revocation means that Growmine, a 100 percent citizen owned company with the largest consortium ever, will not operate Botswana’s first-ever national lottery, in favour of the foreign controlled Ithuba Solutions (Pty) Ltd, unless its appeal becomes successful.
Growmine Africa, trading as Dineo tsa Pula, was announced as the preferred bidder for the national lottery on 4 June 2020, while Ithuba Solutions was named the reserve bidder for the purpose of awarding the first-ever Botswana National Lottery for a period of 10 years.
The Authority indicated then that the selection of Growmine Africa was subject to successful negotiations and conclusion of a licence agreement between the Authority and Growmine as the preferred bidder. Interestingly, the Gambling Authority announced on 26 July that negotiations between itself and Growmine were unsuccessful and as a result, the Authority had decided to revoke Growmine’s status as the preferred bidder.
In the announcement the Authority said the negotiations had failed because Growmine had failed to satisfy the Authority on a key, non-negotiable requirement as per the Request for Application (RFA) for the licence to operate the national lottery as well as a key undertaking made in their application and in presentations to the Evaluation Committee. The authority did not, however, give details.
Investigations by The Business Weekly & Review established that Growmine’s troubles began when the company failed to provide a P100 million financial guarantee to the Authority and a convincing national rollout strategy.
Initially, Growmine’s financial security was guaranteed by Sefalana Holdings Limited, which holds the largest shareholding in Growmine at 40 percent. Sefalana, led by its Managing Director (MD) Chandra Chauhan, had provided a P100 million financial guarantee to Growmine, which was to be used for the national rollout.
However, an internal fight for control of Growmine ensued among shareholders, leading Sefalana to withdraw its financial undertaking. Subsequent investigations showed that certain Growmine shareholders were struggling to raise funds and meet the Gambling Authority’s requirements before the issuance of the national lottery license.
Growmine needed to have P100 million, or at least a financial guarantor, so as to meet the Gambling Authority’s requirements. In the lotto licence negotiations, it was also a requirement for Growmine to have a clear national lottery rollout plan. Those in the know, however, say Growmine had proposed to the Gambling Authority to undertake a phased rollout on city by city basis because of the financial shortfalls. The gambling Authority is said to be against that because the national lotto should be a national project rolled out to all parts of Botswana in a one-off undertaking.
As a result of Growmine’s revocation, the Gambling Authority said it had invited Ithuba Solutions, the reserve bidder, to negotiate the national lotto licence.
In a case where the preferred bidder is unsatisfied with the Authority’s decision, as is the case with Growmine, the RFA allows for Growmine to appeal the decision with the minister, after which the matter may be taken to court, if the minister decides not to overturn the Gambling Authority’s decision.
In Matlhaga’s view, the Authority’s decision is unjustified, which is why they are appealing. “It came as a shock to us,” he told The Business Weekly & Review in an interview. Matlhaga said financial backing should not be the only reason to warrant the Authority’s decision.
“We are in a negotiation, and the requirements as per the RFA, should be a package,” he said. “They should not be singled out. We were selected as the preferred bidder by the evaluation team because technically and otherwise, we demonstrated better than anyone that we can operate the national lottery.”
He added that they are working on a plan to raise the required funds and that the Authority should allow them to do so rather than revoke their status. He noted that Growmine is the largest-ever citizen consortium and its 100 percent owned by citizens of Botswana. In Matlhaga’s view, it would thus be a shame for the Gambling Authority to revoke Growmine which would have resulted in a multibillion pula industry being operated by a citizen company.
“The government is busy preaching citizen empowerment,” he said. “It would be a shame if the Gambling Authority frustrates those efforts.” Meanwhile, the Gambling Authority is defending a case before court in which Ithuba Solutions was challenging its decision to select Growmine as the preferred bidder. Ithuba is represented by prominent law firm, Desai Law Group.