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Why MPs choked P1billion transfer

Minister of Finance and Economic Development, Dr Thapelo Matsheka was on Thursday this week forced to withdraw a request to have P1.1 billion appropriated from the Development Budget to fund shortfalls in Government’s re-current budget owing to unbudgeted increment of public service salaries.

The withdrawal followed a fierce resistance from opposition benches, with the Umbrella for Democratic Change (UDC) threatening to take the matter to court for interdiction. The UDC collectively believed that appropriating money from the development fund to augment shortfalls in the recurrent budget would be at variance with the Public Finance Management Act. The request was tabled on Wednesday before parliament, but consequent to UDC resistance, the matter was referred to the General Assembly [comprising all MPs] which met on Thursday morning for further discussion.

According to Dr Matsheka, at the General Assembly, it was concluded, through the guidance of Attorney General that the request to reallocate funds from the Development Fund to finance projected shortfall in the recurrent budget, as result of the salary adjustments approved after the 2019/2020 budget was concluded, was legal.

 “The opinion from the Attorney General proffered this morning [Thursday] at the General Assembly was that, indeed, the request by my Ministry was legal in terms of the supreme law of this country, which is the Constitution,” Matsheka told parliament when withdrawing the request. Dr Matsheka eventually agreed to withdraw the request in favour of a more agreeable approach.

It has emerged that while Public Finance Management Act forbids what the Minister of Finance proposed before parliament, the ruling party tried to find their way through the constitution, as they believed it is the “supreme law”, enough to relegate the Public Finance Management Act to a mere provision. However, the UDC court action threats were alive, and BDP feared the matter could enter the public domain and cause a stir should the opposition MPs challenge it in court.

WeekendPost also established that, a number of BDP legislators also opposed the request. One MP who opposed the motion from the floor on Wednesday, in presence of President Mokgweetsi Masisi, was Reggie Reatile, the Jwaneng-Mabutsane representative. Prior to reaching parliament, the request was first put before the Finance and Estimates Committee, Chaired by Kanye North lawmaker, Thapelo Letsholo.

Despite the Committee raising concerns with the request, it gave the proposal thumbs up. The committee comprises of Letsholo, Tshekedi Khama (Serowe West), Ignatius Moswaane (Francistown West), Tumisang Healy (Gaborone Central), Wynter Mmolotsi (Francistown South), Dr Kesetegile Gobotswang (Sefhare-Ramokgonami), Liakat Kablay (Letlhakeng-Lephephe), and Oarabile Regoeng (Molepolole North).

The Committee indicated its concern “over diversion of funds allocated to the development projects to finance the recurrent budget.” During his proposal, Dr Matsheka contented that the shortfall in the recurrent budget was an emergence, while the opposition were of the view that the decision to increase salaries in the absence of funds was for political expediency.

“Presidential Directive CAB.1/99 stipulates that only Supplementary Budget requests that arose from emergencies or were not foreseen qualify under this dispensation. Government took a decision to award salary and allowances increases to public servants after the budget process for financial year 2019/2020 was concluded,” Matsheka argued.

INCREMENT OF PUBLIC SERVANT SALARIES WAS NOT BUDGETED FOR  

During the past few months, Government made several commitments, including salary increment for two consecutive financial years as well as adjustment of salaries for public servants within security forces; namely Botswana Defence Force (BDF), Botswana Police Service (BPS) and Botswana Prisons Service (BPS).

A total of four ministries namely: Presidential Affairs, Governance and Public Administration; Basic Education; Local Government and Rural Development; and Defence, Justice and Security, had submitted Supplementary Budget requests to be funded from the Consolidated Fund. The Ministry of Presidential Affairs, Governance and Public Administration requested an additional funds amounting to P12,447,940. The request was to cater for the shortfall arising from adjustment of salaries for public officers for financial year 2019/2020 under the Directorate on Intelligence and Security (DIS).

The salary adjustments of 10 percent, 6 percent and 4 percent, for salary scales A and B; C and D; and E and above, respectively, were announced by Government in March 2019, after the budget for 2019/2020 financial year had been concluded. The salary adjustments were implemented with effect from 1st April, 2019.

The Ministry of Basic Education required a total supplementary funding of P71,234,580. Of this amount, a sum of P60,869,290 was needed to augment the shortfall under the Basic Salary and Allowances accounts at Headquarters, the Department of Out of School Education and Training and the Department of Teaching Service Management. The salaries and allowances accounts need additional funding following Government’s decision to award salary adjustments of 10 percent, 6 percent and 4 percent for various salary 8 grades effective from April 2019.

The remainder of P10,365,290 was intended to cover the shortfall in the Temporary Teachers account of the Department of Secondary Education. The Ministry of Local Government and Rural Development requested additional funding of P260,014,920 comprising P122,517,050 for Revenue Support Grant (RSG) to Councils and P137,497,870 for Social Protection Allowances. Under the RSG, the shortage is caused by increases to staff salaries, allowances and pension contributions, which were affected by the 10 percent, 6 percent and 4 percent salary adjustments.

Councillors’ salaries, termination allowances and other allowances have been increased by various amounts whilst the Ward/Village/Umbrella Development Committees’ allowances were increased by P50 per beneficiary per month. In regard to social protection allowances namely; Destitute Allowance, Disability Allowance and Old Age Pension Scheme, the increases were P50 per beneficiary per month for the first two (2) allowances and P100 per beneficiary per month for Old Age Pension Scheme.

The increases were also announced after the budget for 2019/2020 had been concluded. The Ministry of Defence, Justice and Security requires a total sum of P757,402,760 for Basic Salary and Allowances for three of its departments. These are Botswana Defence Force at P248,353,120; Botswana Police Service at P430,508,030; and Prisons and Rehabilitation for P78,541,610. The additional provision was intended to cover the shortfall caused by the 10 percent, 6 percent and 4 percent salary adjustments, which took effect on 1 st April 2019.

SEVERAL PROJECTS FACED SACRIFICE

In order to mitigate against the crisis, cabinet tried to sacrifice certain projects, which were perceived to be not on time. “Given the increasingly constrained fiscal space, my Ministry has assessed and identified areas of possible savings from slow spending projects funded under the Development Fund to finance the Consolidated Fund Supplementary Estimates requests. “I am proposing reallocations from the 2019/2020 Development Budget of the Ministry of Land Management, Water and Sanitation Services (MLWS).

“In this connection the sum of P1,101,100,200 comprising P800,000,000; P200,000,000 and P101,100,200 from the Water Supply Pipelines; Water Supply and Sanitation Networks; and the Land Development projects respectively, is proposed for reallocation. “These are slow spending projects that are still left with sizeable unspent balances. This proposed reallocation will not have any adverse effect on the annual 10 budgets of the projects concerned nor on the Total Estimated Cost,” Matsheka told parliament.

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Vendors ready for the Tobacco Control Bill

21st September 2021
Vendors

Some vendors have been misled
Vendors thrive on households goods and fresh produce

Despite the previous false allegations that the Tobacco Control Bill will lead to several 20 000 vendors across the country losing their jobs, several local vendors have expressed that they are ready for the bill and because vendors sell mostly household goods

“This is something that we openly accept and receive as street vendors, the problem is some of our counterparts were misled and made to believe that we will not be allowed to sell cigarettes on our stalls.

Some of us got to understand that the bill states that we have to be licensed to sell cigarettes, we are not supposed to sell them to children under the age of 18 years of age and eliminating the selling of single sticks. We understand that this agenda is meant to develop a healthy nation but not take us down,” said Mbimbi Tau a vendor who operates from Mogoditshane.

The Tobacco Control Bill has been passed in several countries and street vendors are operating properly without any challenges faced. Tau further mentioned that there is no way that the Tobacco Control Bill will affect their business operations, all they have to do as vendors are to get the required documentation and do what the bill requires.

Another vendor Busani Selalame who operates from Gaborone Bonnington North was not shy to express his support towards the Tobacco Control Bill, “the problem is that some people within our sector have been misled and now they think that the bill is meant to take our operations down and completely stop selling cigarettes.

I support the fact that we are not supposed to sell cigarettes to children who are under the age of 18 years of age this has always been wrong, as parents we should be cautious of such and ensure that our children are disassociated with cigarettes,” said Selalame.

The Tobacco Control Bill prohibits advertising, promotion and sponsorship by the tobacco industry to prevent messages, cues, and other inducements to begin using tobacco, especially among the youth, to reassure users to continue their use, or that otherwise undermine quitting.

Renowned economist Bakang Ntshingane is of the view that since vendors sell household goods and fresh produce they are likely to keep on making profits despite what the Tobacco Control Bill comes with. He further stated that the Tobacco Control Bill will not be of harm on the local economy since the country does not manufacture or produce any tobacco related products.

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BANCABC Botswana poised for growth amid tough operating environment

21st September 2021
BANCABC

BancABC Botswana, the BSE-listed bank today announced its half year results for the six months ended 30 June 2021, against a subdued economic backdrop, exacerbated by the COVID-19 pandemic and related lockdowns.

BancABC has remained resilient in the current operating environment as business activity increased in the first half of 2021, with Real GDP up by 0.7% in the first quarter compared to a contraction of 4.6% in the previous quarter. Commenting on the results, Managing Director Kgotso Bannalotlhe said, “Currently, economic activity is relatively stable.

While COVID-19 placed significant pressure on the economy and our overall business, BancABC Botswana has shown remarkable resilience amid a tough operating environment.  While the bank operates in an environment that is seeing a rise in COVID-19 infections, it is encouraging that the business has maintained a healthy capital adequacy ratio as well as being successful in improving total expenses with focus on cost containment across the board.”

The retail segment saw an increase in customer deposits this year, signalling an improvement from the previous period and strengthening the current funding mix. This segment has built great momentum and continues to advance its digital strategy, through various products such as the mobile banking app, SARUMoney, as well as enhanced product offerings such as the introduction of fash cash. The Bank has invested in its digital capabilities to ensure a seamless and hassle-free banking experience for all its customers.

The commercial segment was successful in reducing the cost of funding. In addition, Treasury and Global Markets performed well, doubling from the previous comparative period. The current year performance across the bank’s different segments is testament to the bank’s strong income lines, aiding the Bank’s resilience during this time.

“The Bank experienced slow loan book growth due to a constrained economic environment, however, we remain optimistic that as the economy recovers, credit appetite amongst the Bank’s customer-base will increase. In addition, we reported good non-interest revenue, driven by increased trading income on the back of improved margins and volumes. Our outlook remains positive as we expect momentum across the different segments to improve over time,” said Ratang Icho-Molebatsi, BancABC Botswana Finance Director.

In April 2021, BancABC Botswana’s ultimate holding company, Atlas Mara Limited, as well as ABC Holdings Limited and Access Bank Plc announced an agreement to a proposed acquisition of 78.15% of BancABC Botswana. The transaction presented an opportunity for BancABC Botswana’s strong retail banking operation to merge with Access Bank’s wholesale banking capabilities, augmenting itself as one of Africa’s leading banks.

“The transaction provides significant scope for revenue diversification and growth in the corporate and SME banking segment. Increased access to trade finance, treasury, international payments and loans through the wider distribution network offered by Access Bank’s presence in the key trade corridors that connect Africa to the rest of the world, presents solid opportunities for BancABC Botswana”, commented Icho-Molebatsi “With the transaction, BancABC Botswana’s customers stand to benefit from best-in-class digital platforms and product suites, leveraging Access Bank’s group IT infrastructure as well as other fintech solutions”, said Bannalotlhe.

Further, with Access Bank expanding its footprint into Botswana, it will position the Bank to deliver a more complete set of banking solutions to Batswana across the country”, concluded Bannalothle.

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Botswana secures P1.5 billion from African Development Bank 

21st September 2021
Peggy Serame

 Last Friday, the board of Directors of the African Development Bank Group authorised a $137 million (P1.5 billion) loan to support Botswana’s Post COVID-19 pandemic economic recovery.

The funds, extended under the Bank Group’s Botswana Economic Recovery Support Program, will be used to enact multi-sector reforms that will increase spending efficiency, create jobs and drive inclusive growth.

The project has three components: enhancing domestic resource mobilisation and mitigating fiscal risks to enhance macroeconomic performance and create fiscal space for spending on social safety nets; supporting private sector-led agriculture and industry to bolster productivity and value addition and increase job opportunities, and offering business development services to micro and small enterprises to advance social protection and gender equity. The three components are expected to reinforce one another.

“The African Development Bank is providing support for reforms to enhance private sector-led agriculture and transformation of the industrial sector,” said Leila Mokadem, Director General of the Southern Africa Regional Development and Business Delivery Office. “Agriculture value addition can serve as a springboard for industrialisation and job creation,” she added.

The project aligns with the Bank Group’s Ten-Year Strategy (2013-2022) and its High Five strategic priorities, particularly Industrialise Africa and Improve the quality of life of the people of Africa. The African Development Bank observed that Botswana has a very low risk of debt distress and a positive medium-term growth outlook. However, a lack of economic diversification exposes the country to significant vulnerabilities.

The Bank Group’s active portfolio in Botswana amounts to UA 57.7 million ($81.9 million) and comprises four projects. The financial sector accounts for the largest share of the portfolio by industry (97.1%), followed by agriculture (1.7%) and industry (1.2%). In the past, the African Development Bank partnered with various Botswana government agencies to accelerate economic growth.

On the 21st of February 2020, the bank signed a thematic Line of Credit (LoC) of P900 Million for a 10-year tenor with Botswana Development Corporation (BDC), a wholly state-owned investment agency. This was during that time, the single largest transaction of its nature to ever take place in Botswana.

The LoC was penned to support the BDC’s long-term strategy to scale up its investments in critical sectors, including manufacturing, transport and service sectors, with the overall objective of supporting the transformation and industrialisation of the Botswana economy. BDC eyed a more comprehensive socio-economic benefit with this partnership, including attracting investments into the economy and employment creation.

The African Development Bank is a multilateral development finance institution. It has an overarching objective to spur sustainable economic development and social progress in its regional member countries (RMCs) through mobilising and allocating resources for investment and providing policy advice and technical assistance to support development efforts.

This transaction was poised to support further BDC’s focus on safeguarding its balance sheet to ensure financial sustainability whilst fulfilling its mandate as the Botswana Government’s principal investment arm.

The COVID-19 pandemic has landed massive blows on Botswana; apart from claiming more than 2300 lives thus far, the contagious plague has exacerbated existing growth challenges. The effects of the pandemic have led to an estimated real gross domestic product (GDP) contraction of 7.9% in 2020, according to the World Bank, worse than that of the 2009 global financial crisis.

The contraction reflects the impact that reduced global demand, travel restrictions and social distancing measures have had on output in crucial production and export sectors, including the diamond industry and tourism.

Botswana’s fiscal deficit is set to widen to 11.3% of GDP in FY2020/21, from 5.6% in FY2019/20, reflecting a sharp decline in mineral revenues, a sticky public sector wage bill, and the impact of the COVID-19 spending. Similarly, the current account deficit is estimated to have widened to 8 percent of GDP in 2020 following the sharp decline in diamond exports.

Developments in the global diamond industry will significantly impact the short-term recovery, given Botswana’s dependence on the commodity. While recovery is expected in 2021 due to a favourable outlook for the diamond industry, the economic impact of COVID-19 is likely to be deep and long-lasting. The P1.5 billion African Development Bank loan comes after the World Bank approved a P2.5 billion boost for Botswana early this year.

The Programmatic Economic Resilience and Green Recovery Development Policy Loan (DPL) will support the implementation of Botswana’s Economic Recovery and Transformation Plan and is designed to strengthen COVID-19 pandemic relief while bolstering resilience to future shocks.

In August, Botswana received the International Monetary Fund (IMF) 189 Special Drawing Rights allocation worth P3 billion. The IMF SDR is a non-currency asset that Botswana can convert into hard currency by trading it with other IMF member countries.

 

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