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      Ever Adaptable, Wilderness Safaris is More Robust Post-COVID

      … and continues to meet expectations as a dependable employer in the rural communities in which it operates where the company is also keen on comprehensive environmental education and as a reliable source of revenue for the government in taxes and other means

      mm by Keabetswe Newel
      March 13, 2023
      in News
      Reading Time: 6 mins read
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      Wilderness conservation and its impact on communities

      OWS chairman Kabelo Binns

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      Wilderness Botswana has many positive impacts on Botswana’s economy and on government revenue.

      This has emerged in a recent Impact Report conducted by Wilderness under the captaincy of the Chairman of Okavango Wilderness Safaris, Kabelo Binns. Firstly, it emerges that Wilderness pays the government for taxes and licences of various kinds, leases on state land and resource royalties. These have totalled P618 million over the last 10 years, peaking at P94 million during 2020 alone.

      Over the same period, it emerges that shareholders have been paid dividends amounting to P259 million, meaning that the government has made P2.40 for every P1.00 distributed to shareholders. Research conducted by the independent Centre for Applied Research in respect of the 2018 financial year calculated that these payments to the government by Wilderness Botswana amounted to 0.5 percent of total government revenues. However, the impact of COVID-19 can be seen from the fact that payments to the government during the 2021 full year slumped to just short of P4 million, down from P94 million the previous year.

      According to Binns, salaries paid to staff are also an important contributor to the economy. He emphasises that Wilderness also makes significant purchases of goods and services from suppliers in Botswana. “These have amounted to P1.5 billion over the last 10 years, having peaked at more than P200 million per annum during 2018 and 2019,” he says. “We now purchase approximately 90 percent by value of our goods and services from local suppliers, up from just 66 percent in 2013.”

      He states that all of these suppliers obviously employ staff and pay taxes, among other things, adding to the multiplier effect down the value chain. The levels of investment in Botswana shows that capital expenditure in the country over the 10-year period which totalled P628 million, having peaked at P176 million in 2018 due to investment in redevelopment of Mombo and aircraft purchases.

      A notable growth space arises from the fact that Wilderness travel shops in Botswana and elsewhere also make sales to third party products in Botswana, i.e. Wilderness sells bednights to camps and hotels owned by competitors. Over the last 10 years, these sales have been worth P1.5 billion, having peaked at more than P280 million during 2019/20 before the onset of the pandemic.

      “It is worth noting that many of these sales are made to our competitors and that we are major suppliers of business to companies such as Great Plains Conservation, Natural Selections, Sanctuary, Chobe Holdings (Desert and Delta, Ker and Downey), Machaba, Mashatu, &Beyond, Belmond and Kwando,” Binns points out.

      Impact on conservation and communities

      Wilderness operates in remote rural areas on land set aside for conservation by the government and/or communities. These areas have few sustainable economic activities and the communities also suffer from limited access to education, healthcare and basic utilities. Binns is keenly aware that these factors lead to heavy reliance on the environment and can be a threat to biodiversity conservation.

      He says these areas and the people living around them are the foundations of their business and that their strategy is designed and implemented to provide promising opportunities and to address key threats to biodiversity. According to Binns, key in the pillars of the Wilderness impact is provision of employment to people living around these areas. The Wilderness Group employs in the region of 1 100 people in Botswana. Of these, Binns says 96 percent are citizens. This localisation of staff employment has been growing steadily over the years. Research conducted by Wilderness some years ago indicated that each employee supports an average of eight dependents.

      “One of the major economic advantages of our business is how employment-intensive it is,” he notes. “Over the last 10 years, Wilderness Botswana has employed an average of 3.5 staff members per guest bed. This very high employment ratio is needed to provide the standards of service expected by guests visiting high-end lodges such as ours.” Binns points to how this shows a strong correlation between the price charged for staying in the camps (which determines the standard of service expected), and the number of staff employed per guest bed. Says the Chairman of Okavango Wilderness Safaris: “The higher the price charged, the more staff needed to meet the required service standard.

      “This reality has important implications for any suggestion that Botswana’s tourism model should be changed to one focussed on lower prices and higher volumes of visitors (which could also have negative environmental consequences).” He adds that employment of such large numbers of staff means payment of significant salary bills, noting that Wilderness Botswana has paid its staff just over P1 billion over the last 10 years. “It is interesting to note that payments made to staff are equivalent to P4 for every P1 paid to shareholders,” he says.

      “Much of this cash has circulated in local economies, resulting in economic multiplier effects primarily in the Ngami and Chobe areas. Of course, such salary bills have also resulted in significant payroll tax revenue to the government. In 2020, Wilderness paid P12.5 million in payroll tax revenue and a total of P85 million over the last 10 years plus a further P5.1 million in training levies.”

      It is helpful to see that these staff costs in the context of the overall costs incurred by Wilderness Botswana are the largest line item by a wide margin (38 percent of total). Aircraft repair costs amount to a further 17 percent while lease rentals and royalties and guest hosting costs are the next largest costs at about 9 percent each. These four line items constitute 73 percent of the costs of Wilderness business with all the remaining costs making up the 27 percent balance. The eco-tourism outfit says it creates value for the wilderness and wildlife. The company notes that employment and small business support and integration reduce reliance on natural resources.  Wilderness also believes that the improved education increases economic opportunities, family resilience and support for conservation.

      As matter of fact, Wilderness holds that it offers protection as one of its empowerment pillars. The company notes that human-wildlife co-existence and wildlife security programmes protect people from wildlife and wildlife from people. The training provided to staff contributes to and empowers them and is a focus of our pillar of education. Binns says another important contribution to empowerment is made in the form of payments to communities for the use of their concessions because the funds are used for development and upliftment of these communities.

      “These currently amount to more than P6 million per annum (not including the community share of resource royalties paid in respect of their concessions: We have no insight as to the disposition of those funds) but peaked at P7.4 million per annum pre-COVID. Over the last 10 years, these payments have totalled P61 million,” he says, adding that the payments did not decline much during COVID-19 due to the largely fixed nature of those lease commitments.

      A further P160 million was paid over the same 10-year period to staff employed in these concessions (P19 million p.a. pre-COVID). “In addition to the business and employment relationships with Wilderness staff and communities, we and our guests and other partners also make various philanthropic contributions to the communities with which we work,” says Binns. “The most important of these are in the field of education, which is the subject of its own ‘Impact Pillar’ that I will soon elaborate on. But many others are also made, depending on the needs of the communities and the funding available.”

      Impact of COVID-19 on Wilderness

      Although the 2020 COVID-19 pandemic is now largely over, it had such significant impacts on the business. The main impact was in the lack of visitors resulting from border closures and cancellation of international flights. These resulted in Wilderness Botswana sales slumping to 5 percent and 24 percent of pre-COVID levels in 2021 and 2022 respectively.

      As a result, Binns says it was necessary for management to embark on a survival strategy aimed at preserving cash. The main elements of this strategy were: Deferring or cancelling all non-essential capital expenditure, implementing significant cost-cutting measures across the business, negotiating with banks to restructure debt facilities, and securing funding support from shareholders, to mention a few.

      The Group embarked upon aggressive efforts to re-engineer itself, particularly with regard to channels to the market. Binns says the result is a more robust and diversified organisation, albeit one with reduced cash reserves and increased debt. “The year 2023 has been a much better one, although occupancy rates are still more than 15 percent down from those enjoyed pre-COVID,” he points out. “Global supply chain constraints, as well as Botswana’s restrictions on importation of certain fresh produce, the growing cost of fuel and other inflationary pressures, are weighing on the recovery.

      “These are, of course, being exacerbated by looming prospects for a global recession. Forward bookings suggest that business is not likely to return to pre-COVID levels before FY2025. The very serious impacts that the pandemic had on Wilderness Botswana and the industry are dramatically illustrated by many of the charts and graphs presented in this report, which show serious disruptions in financial years 20/2021 and 21/2022.”

      Tags: Chobe Holdings (Desert and DeltaCOVID-19Great Plains ConservationKabelo BinnsKer and Downey)MomboNatural Selections

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