Engen Botswana Limited (ENGEN.bw) 2021 Annual Report
I am extremely pleased to report that the Company achieved remarkable results for the 2021 financial year, with financial performance outstripping all previous records.
The financial highlights are discussed in detail elsewhere in this report but suffice to say that Engen Botswana Ltd has had an exceptionally successful year, despite the numerous challenges we faced as a company and as a country.
The robust global recovery in 2021 which was driven by strong consumer spending and some uptake in investment — with trade in goods surpassing pre-pandemic levels — marked the highest growth rate in more than four decades.
However, in January 2022 the IMF World Economic Outlook (WEO) estimated that global growth was expected to weaken from 5.9% in 2021 to 4.4% in 2022, largely reflecting anticipated declines in the economies of the United States and China. A revised assumption reflecting the withdrawal of monetary accommodation and continued supply shortages resulted in a 1.2% downward revision for the United States, while the impact of pandemic-induced disruptions related to the zero-tolerance COVID-19 policy in China produced a 0.8% downgrade in estimates of Chinese growth for 2022.
However, the war in Ukraine has led to further downgrading of expectations for the global economy. In April 2022, revised estimates anticipate that economic damage from the conflict will contribute to a substantial slowdown in global growth in 2022 and significantly add to inflation. Fuel and food prices have increased rapidly, hitting vulnerable populations in low-income countries hardest. As a result, global growth is projected to slow to 3.6% in 2022 and 2023, 0.8% lower than projected in January.
War-induced commodity price increases and broadening price pressures have led to 2022 inflation projections of 5.7% in advanced economies and 8.7% in emerging market and developing economies — 1.8% and 2.8% higher than projected last January. To prevent further economic fragmentation, maintain global liquidity, manage debt distress, respond to the humanitarian crisis, tackle climate change, and end the pandemic, nations will need to engage in unparalleled multilateral efforts.
With the highly transmissible Omicron variant and its sub-variants unleashing new waves of infections, the human and economic costs of the pandemic are projected to continue to increase.
Liu Zhenmin, Under-Secretary-General of the United Nations Department of Economic and Social Affairs notes that “without a coordinated and sustained global approach to contain COVID-19 that includes universal access to vaccines, the pandemic will continue to pose the greatest risk to an inclusive and sustainable recovery of the world economy”
Crude Oil prices fluctuated considerably during 2021, with the price of a barrel of WTI Crude costing $47.62 at the beginning of January, $74.88 a barrel at the end of December – an overall increase of 57% – and a high of $83.36 a barrel being recorded in October 2021. Post the reporting period, oil prices have soared in the wake of Russia’s invasion of Ukraine, and a WTI Crude Oil price of $119.65 a barrel was recorded on 8th March 2022. While the conflict continues, the unpredictability of oil prices is set to persist, with European importers finding themselves under increasing pressure to radically reduce their dependence on Russian oil and gas.
As at the end of April 2022, in continuing efforts to apply pressure on Russia, the EU confirmed plans to tighten sanctions, with Germany saying it was willing to support an immediate embargo on Russian oil. On the demand side, US manufacturing activity grew at its slowest pace since July 2020, and China’s factory activity contracted for a second straight month to its lowest level since February 2020 amid renewed coronavirus-induced lockdowns.