Grow Mine 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 Grow Mine was subject to successful negotiations and conclusion of a licence agreement between the Authority and Grow Mine as the preferred bidder. Interestingly, the Gambling Authority announced on 26 July 2021 that negotiations between itself and Grow Mine were unsuccessful and that the Authority had decided to revoke Grow Mine’s status as the preferred bidder as a result.
In the announcement, the Authority said the negotiations failed as a result of Grow Mine’s failure 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, specify the details.
Nevertheless, investigations by The Business Weekly & Review have established that Grow Mine’s troubles began when the company failed to provide a P100 million financial guarantee to the Authority as well as a convincing national rollout strategy. This publication can confidently reveal that Grow Mine was given a 30-day notice to show cause why its preferred bidder status should not be revoked. That notice period expired on 27 May 2021.
Grow Mine’s financial security was initially guaranteed by Sefalana Holdings Limited, which holds the largest shareholding in Grow Mine at 40 percent. Sefalana, led by its Managing Director (MD) Chandra Chauhan, had provided a P100 million financial guarantee to Grow Mine that was to be used for the national rollout. However, an internal fight for control of Grow Mine ensued among shareholders, resulting in Sefalana withdrawing its financial undertaking.
The Business Weekly & Review saw a letter written by Max Marinelli, Board Chairperson of Sefalana Group Holdings, notifying all Grow Mine Africa (Pty) Ltd shareholders of their decision to withdraw their financial support to Grow Mine. The letter is dated 6 May 2021, and it is addressed to Colmar Enterprises (Pty) Ltd, which is the second largest shareholder in Grow Mine at 23.5 percent.
Colmar shareholders are former CEO at Botswana Development Corporation (BDC) Moatlhodi Lekaukau, Frederick Selolwane, former president Ian Khama’s nephews Dale Seretse TerHaar and Marcus Patrick-Khama TerHaar, former president of Botswana Football Association (BFA) Maclean Letshwiti, former Puma Energy Botswana Managing Director Mahube Mpugwa, Itumeleng Ramsden, Bing Liu, as well as a company called Homec Investments Propriety Limited that is owned by Boitumelo Paya, Larona Makgoeng and Percy Raditladi.
The Marinelli letter was also addressed to the third largest shareholder in Grow Mine, at 13 percent, a company named Citizen Money Makers (Pty) Limited. It is owned by Boipuso Molatlhegi, Cinderella Molome, Boatametse Mpofu, Thato Raletsatsi and Kebobonye Pabalinga.
Idlehill (Pty) Limited, which belongs to Managing Partner at Collins Newsman & Co, Parks Tafa and owns 10 percent in Grow Mine Africa, also received the letter; as did Carthage Ringo Matlhaga, through his company Carthlee Inventions Propriety Limited, which owns 10.5 percent in Grow Mine. So did Mokgethi Frederick Magapa, who directly owns 3 percent in Grow Mine Africa.
According to the letter, it appears that on 19 April 2021, Grow Mine shareholders wrote to the MD of Sefalana Group, Chauhan, asking him to approach the Sefalana Board of Directors to seek an extension of the financial support to Grow Mine Africa at a fee.
That request was rejected outright, with the Sefalana MD instead reminding the other shareholders of his decision in a letter dated 13 November 2020 in which he notified the other Grow Mine shareholders that Sefalana would no longer partake in matters relating to the lottery or make any financial contributions thereto.
“That decision remains unchanged. Sefalana also advised you of our intention to revoke its financial support within 60 days of that letter dated 12 January 2021. In an attempt to assist Grow Mine in progressing with its negotiations with the Gambling Authority, this support was extended to 30 April 2021 and then again to 31 May 2021. During this combined notice period of over 6 months, Grow Mine was required to obtain replacement funding support,” Marinelli wrote in the letter.
He also noted that that has always been the reason for the aforementioned extension. “Unfortunately, we are not able to extend this any further and this letter serves (as a) formal notice of our support being withdrawn on 30 May 2021,” the Sefalana Board chairman wrote to Grow Mine shareholders. Significantly, Marinelli asked Grow Mine shareholders to notify the Gambling Authority of Sefalana’s decision by the 7 June 2021.
Investigations show that after Sefalana withdrew its financial support to Grow Mine Africa, the other Grow Mine shareholders have been struggling to raise the necessary funds to meet the Gambling Authority’s requirements for issuance of a national lottery licence. Grow Mine needed to have P100 million or at least a financial guarantor to meet the Gambling Authority’s requirements. In the lotto licence negotiations, it is also a requirement for Grow Mine to have a clear national lottery rollout plan.
Those in the know, however, say Grow Mine had proposed to the Gambling Authority to undertake a phased rollout city by city because of the financial shortfalls. The Authority is said to be against this because the national lotto should be a nationwide project rolled out to all parts of Botswana in a one-off undertaking.
As a result of Grow Mine’s revocation, the Gambling Authority says it has invited Ithuba Solutions, the reserve bidder, to negotiate the national lotto licence.
In an interview, the Chairman of Grow Mine Africa, Carthage Matlhaga, said they met on Tuesday evening as the Grow Mine board and unanimously decided to appeal the Gambling Authority decision to the highest office, being that of the Minister of Investment, Trade and Industry, Mmusi Kgafela.
In a case where the preferred bidder is unsatisfied with the Authority’s decision, as is the case with Grow Mine in this instance, the RFA allows the preferred bidder to appeal the decision with the minister, after which the matter may be taken to court if the minister decides not to overturn Gambling Authority’s decision.
Investigations by The Business Weekly & Review have established that a delegation from Grow Mine has already met with Minister Kgafela to express their grievances. In an interview, Matlhaga said they are appealing because the Authority’s decision is unjustified. “It came as a shock to us,” he told The Business Weekly & Review. Asked on whether Sefalana’s decision to revoke its financial guarantee led to the revocation, Matlhaga said financial backing should not be the only reason upon which to base the Authority’s decision.
“We are in a negotiation and the requirements as per the RFA should be a package,” he argued. “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.”
Matlhaga said they are working on a plan to raise the required funds and that the Authority should allow them to raise the funds rather than revoke their status. Further, he added, Grow Mine boasts the largest-ever citizen consortium and is 100 percent owned by citizens of Botswana. He added that it would be a shame for the Gambling Authority to persist with revocation of Grow Mine’s status which would have resulted in a multibillion pula industry being operated by a citizen company. “The government is busy preaching citizen empowerment. It would be a shame if Gambling Authority frustrates those efforts,” he noted.
Directors of Ithuba Solutions are Todd Mangadi, Benson Madisa, Lawrence Maika and their South African partners Louis Almero Du Pisanie, Mogonediwa Andrew Mafojane and Charmaine Mabuza. Ithuba RSA owns 75 percent shares while 25 percent is owned by citizen shareholders through Flameback Botswana (Pty) Ltd.
The Gambling Authority is defending a case in court in which which Ithuba Solutions was challenging its decision to select Grow Mine as the preferred bidder. Ithuba is represented by prominent law firm, Desai Law Group.