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The conundrum of State Owned Enterprises

Over the past 10 financial years, Botswana‘s national coffers have been on the receiving end of poorly performing state owned enterprises (SOEs).These quasi- governmental organizations have been returning to authorities’ year and year out to seek more capital investment, some seeking  guarantee to loan facilities offered by commercial banks.

However even up to today the financial performance of these institutions is still very much found wanting. After a series of restructurings, remodeling, and retrenchments, among other things,  state owned enterprises space remains a no go area for Botswana to derive any source of pride from, and  one of the burning issues as the nation goes into national polls next week. Earlier this year, Auditor General reported that almost P1 billion pula of public funds has been drowned by 18 of the biggest state-owned enterprises in the 2018/19 financial year. In total, these businesses have registered combined loss adding to P742, 187, 254.00, with 9 parastatals yet to submit their annual reports as at May this year, signaling possibilities of losses figure going up.


THE BACKDROP

Following the 2008 global financial crises the country’s state owned investment arm Botswana Development Corporation (BDC) was the first to be hit, registering losses and failing to pay dividends to government. BDC then whirled into downward trajectories in the following years, marred with allegations of corruption, poor investment decisions. Some of its investment businesses liquidated and collapsed, such as the Palapye Glass project which was later auctioned at just over P10 million after hundreds of millions of investment.

Another culprit is Botswana Meat Commission (BMC), the once globally celebrated and financial sound meat producer registered a net loss of P229.7 million in 2016, following a net profit of P332.6 million in 2015. The net profit realized in 2015 was due to Government cash injection of P600 million. BMC was recently reported to be in over P40 million debts. National Development Bank has  also in the recent years  drowned into financial crises, failing to service its government loans and failing to retrieve its loans from its clientele, thus making losses year and year out. NDB recorded a net loss of P168.2 million in 2017, compared to a net loss of P21.2 million in 2016. NDB was given P400 million by Ministry of Finance during 2016/17 financial year, while P200 million was disbursed during the 2017/18 year.

National utility outfits in Botswana Power Corporation (BPC) registered a net loss of P140.2 million in 2017; compared to a net loss of P99.6 million in 2016 while Water Utilities Corporation (WUC) on the other hand recorded a net loss of P137.6 million in 2017, from a net profit of P119.4 million in 2016. National commercial flights outfit, Air Botswana registered a net loss of P12.4 million in 2017, compared to a larger net loss of P86.1 million in 2016.In 2018 Air Botswana recorded a loss of P42.10 million while Motor Vehicle Accident Fund recorded a loss  of P126.49 million. Botswana Agriculture Marketing Board BAMB recorded a loss P65.36

On a major highlight, in February 2016 government agreed to guarantee a 1 billion pula loan acquired from Barclays Bank by BCL, a state owned mine, 8 months later the country’s oldest copper and nickel mine was shut down sending over 5000 direct employees to streets. It was reported that 3 weeks before a decision was taken to close BCL , the company’s management had submitted a proposal requesting another P1 billion from the government, and decision makers reached a consensus that enough was enough, no more bail out.

CALLS FOR PRIVATIZATION

Calls have been rife across all walks of political and economic commentary, with observers urging government to exit doing business with a view to give space for private sector. In 2016, while speaking at Grant Thornton Private Growth Business Awards, former cabinet minister and business man, Charles Tibone indicated his lack of faith in the public enterprises in terms of their growth potential owing to their continued non-performance. “What is even more concerning is that the majority of these parastatals businesses are chronically unprofitable, they operate on negative returns on investment or on life support from Government through subsidies,” he said.

Tibone noted that a case can be made for parastatals that provide a social service like Water Utilities Corporation (WUC) or those which regulate sectors such as Botswana Communication Regulatory Authority (BOCRA) or Civil Aviation Authority (CAAB) not investment business, banking and financial services , logistics and airline businesses.
Last year former Member of Parliament for Tati East, Samson Guma Moyo made a public call to government, urging the state to fast track disposing of Botswana Development Corporation (BDC), Local Entrepreneurship Agency (LEA), National Development Bank (NDB), & Citizen Entrepreneurship & Development Agency (CEDA) into one competitive development Bank. Moyo said the aforementioned parastatals were a complete waste of government limited resources as their mandates and purpose of establishment were more or less the same and a duplicate of one another.

RESTRUCTURING, MERGING PRIVITISATION EFFORTS

One of the ministries that house a good number of parastatals is Ministry of Investment, Trade & Industry (MITI). Currently 80 % of MITI total recurrent budget allocation goes to funding its parastatals. MITI houses 8 parastatals and 3 state owned enterprises making a total of 11.In the 2017/18 MITI channeled over P753 million pula on its 9 parastatals which include CEDA, BITC and LEA amongst others compared to P721 563 220 spent in the previous financial year being 2016/17.

Figures indicate that The Citizen Entrepreneurship Development Agency (CEDA) has been receiving the largest share of this money from the past 5 financial years. In 2013/14 CEDA received over P340 million, in 2017/18 the agency received over 298 million pula. CEDA which is a financing agency to promote entrepreureship amongst local’s suggestion were already proposing its merger with BDC and /or NDB. Last year Minister of Investment Trade and Industry Bogolo Kenewendo announced that a process was ongoing to merge some of her ministry parastatals.

In February this year government through PEEPA announced that  state owned airline Air Botswana currently running four operations in house, being passage business, ground handling facilities, engineering and maintenance, as well as cargo services would be restructured.“We want to unbundle it and asses these divisions separately and propose independent operations of this segments so they run efficiently” he said. With BMC, PEEPA CEO said in an interview with WeekendPost in February this year that following government‘s decision to liberalize the beef industry and open up the market with regard to beef oversea exportation , more players will emerge  mirroring the end BMC monopoly.

WE STILL NEED STATE OWNED ENTREPRISES – PROFESSOR LUMUMBA

In this wake of privatization wave, experts and observers however still note that Africa still needs state owned enterprises to realize its developmental goals, transformation of its economies and creation of employment for its people.   Renowned Lawyer, thought leader and international pan African speaker Professor Lumumba is of the view that the African Agenda of high income economies will require significant government participations.

In a interview with local journalists in Gaborone last week Lumumba said African countries should borrow a leaf from Scandinavian countries in the area of successfully combing government participation with private sector for economic growth “I don’t agree with the talk that private sector is the solution to all our problems, we need to combine public ownership and mix it up with private sector DNA, by doing so we ensure that the social investment aspect of the business is take care off” he said.

Observers say non performance of State owned enterprises in Africa and Botswana in particular is an issue of poor management, political interference and corruption. “Norway, Sweden, Demark and other Scandinavian countries have successfully managed to combine commercial interest with best interest of the general population, the private sector comes with good corporate governance and wining business models, and government comes with social investment interest”

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Motamma Horatius on politics and motherhood

13th January 2021
motamma

While it takes a lot to penetrate and thrive in the male dominated political space in Botswana, Block 3 Ward councillor Motamma Horatius, is one of the few females defying the odds.

Driven by passion, Horatius has always worn many hats and today she has become one of the few women who are thriving in the political space in Botswana. Prior to pursuing politics, she was an active participated in the creative space.

Horatius, a beauty queen, notably famous for her reign as Miss World Tourism Botswana represented Botswana in a television show famously known as Big Brother Africa. During her stay in the house, she got termed darling of the continent for an outstanding performance that promoted unity, humility and culture.

After serving for some time in public space, and making a name for herself as well as serving as a brand ambassador she decided to step in a career that will forever challenge her. This was after she had travelled the world and demonstrated her unique leadership skills and brilliance.

“I stopped and asked myself why am I not incorporating this brilliance back home. And wherever you go worldwide Botswana with all her faults is a beacon of hope in everything. And even successful countries came here to benchmark and implemented our policies and are flourishing such as Rwanda. So I decided to join active politics and go straight to the ruling party to add a youthful feel to an already existing force and help modernise it to serve better not from afar but from within,” she clarified.

“So my ample experience in civic leadership across countries around the world catapulted me to join active politics because I wondered, if I can do as much as an individual even across nations, how much can I do whilst in office, locally. And I chose to start from the ground up, in order to avoid leaving the locals behind.”

The stern and tenacious young leader, currently sit as the Chairperson of Finance Committee at Gaborone City Council, and also chairs Performance Monitoring Committee.

While a typical girl would dream of becoming either a nurse or choose a ‘girl’ orientated deemed career, she had a heart for politics from a very young age.  By the time she left the creative space, she had already made a name for herself, that she needed no introduction.

“I had to acknowledge first that I am a woman, and being a woman means you have to work 200 percent more than your male counterparts. So it took sleeplessness nights, and a massive amount of working smart to win legitimately,” she said.

She acknowledges that she faced a lot of challenges during the 2019 elections which she had to overcome through the assistance of her loved ones and family.

“Politics is expensive but I managed by God’s grace, family, friends, acquaintances and good Samaritans but my mind helped. I am a very good planner when it comes to execution,” she said.

“Another hurdle is, being a young woman, I had conceived during the time of primary elections; so campaigning whilst expectant, managing your emotions through betrayals, insults, stress, house-to-house then giving birth and having to hit the ground in less than two weeks having given birth via C-section, was a hurdle I overcame by God’s mercy and I am thankful to my family for helping me with the kids because politics means a lot of time away from home.”

“Another hurdle was to portray an all rounded culturally grounded Motswana woman soft but yet stern, respectful but can articulate issues well. Because even though we are civilized our society still upholds unwritten yet practiced values of what a woman is and what a man is, and if you defy societal expectations, it judges you harshly. But thankfully I remained focused on who I was and didn’t try alternate anything When I lost some of the original members of my campaign team. The pain was deep. But I wiped my tears. Soldiered on, and God increased twice the initial number.”

At some point she had to face demeaning words from other male contestants, but the best to do at the time was to shun negativity and stay focused. Male intimidation never tugged her down.

“My experience with 2019 elections was rather inclined to learning as it was my first time running for office as a politician, so I wanted to see if really hard work has results because I always hear stories of how people are bought,” she said.

“So since I was not buying anyone, I was on a learning curve to test my hard work style of delivery against what is believed out there. So it was exciting and again I say it was a learning curve as most NGOs fighting to increase women participation in politics were continuously training us.’

Despite everything she feels women political participation in Botswana is still low. She has pleaded with the media to cover them more often as she believes maybe it will help more women to run for office.

Botswana has few women in parliament, giving men dominance in policy decisions. In a 63-seat parliament, Botswana has only seven female MPs, four of them being specially elected lawmakers.

According to the 2019 edition of the biennial Inter-Parliamentary Union (IPU) Map of Women in Politics. Among the top African countries with a high percentage of women in ministerial positions are Rwanda (51.9%), South Africa (48.6%), Ethiopia (47.6%), Seychelles (45.5%), Uganda (36.7%) and Mali (34.4%).

The lowest percentage in Africa was in Morocco (5.6%), which has only one female minister in a cabinet of 18.

Other countries with fewer than 10% women ministers include Nigeria (8%), Mauritius (8.7%) and Sudan (9.5%).Other African countries with high percentages of women MPs include Namibia (46.2%), South Africa (42.7%) and Senegal (41.8%), according to the report.

Though a slight increase, Botswana is still lagging behind when it comes to women political participation.

According to a report made by IEC for the 2019 elections, there is 11.1% women representation in parliament. There has been a 1.6% slight increase from the 2019 election compared to the 2014 elections.

According to United Nations, there are two main obstacles that prevent women from participating fully in political life.

These are structural barriers, whereby discriminatory laws and institutions still limit women’s ability to run for office, and capacity gaps, which occur when women are less likely than men to have the education, contacts and resources needed to become effective leaders.

As it stands though, Botswana has continued to recognize gender equality as central to socio-economic, political and cultural development through its National Vision 2036.

Following the adoption of the National Policy on Gender and Development in 2015, the National Gender Commission was established in September 2016, to monitor implementation of the policy.

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Gov’t imposes austerity as financial year closes

11th January 2021
President Masisi

Government ministries and departments have moved to cut expenditure in the last quarter of financial year in order to survive the economic hardship occasioned by the covid-19 pandemic. Since the outbreak, Government and the private sector have been hard hit financially due to limited economic activity brought about by government response to fighting the pandemic.

In an urgent savingram by the Permanent Secretary in the Ministry of Local Government and Rural Development, Molefi Keaja addressed to all council secretaries and town clerks, the government informs that it is facing unprecedented budgetary challenges for Financial Year 2020/2021.

“This has necessitated measures to be put in place to conserve cash and ensure that government is able to honour its financial obligations in the remaining (3) months of the financial year,” said the savingram dated 24 December 2020.

The Government has cut all travel by Ministries, Departments and Agencies (MDAs) including State owned entities (SOEs) and Local Authorities until the next financial year in April 2021.
It has also taken a decision that all meetings, interviews, seminars, workshops, conferences, retreats, annual ceremonies and hospitality events should be conducted virtually, which save on the cost of securing venues, conference facilities and meals/refreshments.

“No replenishment of refreshments for the Executive Cadre (E2 salary scale and above) until the end of the financial year,” Keaja directed. Last year government also resolved that due to the financial effects of Covid-19 the government will no longer recruit for any jobs during the 2020/2021 financial year.

The Cabinet directed that the 2020/2021 provision for vacancies be withdrawn from Ministries, Departments and Agencies recurrent budgets to cater for supplementary estimates. According to the saving gram then by the Directorate on Public Service Management (DPSM) said the country faces fiscal challenges which have been accentuated by the emergence and the spread of the COVID-19 pandemic.

Amongst key ministries and departments affected were the Botswana Defence Force, National Strategy Office, Directorate of Intelligence and Security (DIS), Commissioner of Police, Commissioner of Prisons, Clerk of National Assembly and the Directorate on Corruption & Economic Crime (DCEC).

It further deliberated that all various institutions that had begun recruitment for existing vacant positions be frozen for the remaining period of the 2020/2021 financial year. “Since funds for the vacancies will only be recruited in the next financial year 2020/20121, Ministries, Department and Agencies are advised to discontinue recruitment into such vacancies until 1st April 2021. Those who are already at an advanced stage of recruitment process are advised to withhold appointments until further notice.”

The Director of Directorate on Public Service Management (DPSM), Goitseone Mosalakatane, told the parliamentary Public Accounts Committee (PAC) in September that despite the high unemployment rate, they cannot hire for the posts because part of the funds have been withdrawn to fight the Coronavirus.

With just a few days into the New Year, Covid-19 seems to be taking its toll and its effects will be felt vastly in the long run. Countries worldwide, including Botswana are injecting in millions of money in the fight against the deadly virus therefore placing immense uncertainty on country’s economy.

When delivering his speech at last year’s State of Nation Address President Mokgweetsi Masisi said during 2020, the domestic economy was expected to contract by 8.9 percent indicating that this is attributed to an expected sharp decline in major sectors such as mining, (minus 24.5 percent); trade, hotels and restaurants (minus 27.4 percent); construction (minus 6 percent); manufacturing (minus 3.9 percent); and transport and communications (minus 2.5 percent).

However, he assured that the economy is expected to rebound during 2021, with overall growth projected at 7.7 percent. The anticipated recovery will be driven by a rebound in growth of some major sectors such as mining (14.4 percent), trade, hotels and restaurants (18.8 percent), and transport and communications (4.2 percent).

Furthermore, Masisi pointed out that the recovery will also be supported by the Economic Recovery and Transformation Plan currently being implemented by Government. “It is critical to note that these projections are dependent on, among others, the duration of the COVID-19 pandemic and related restrictions.

These containment measures have the effect of reducing spending by firms and households and causing supply-chain disruptions. Beyond this, the recovery phase will be influenced by confidence effects on households and businesses; sectoral transformation and changes in work patterns; as well as prospects for the recovery of global financial markets and commodity prices.”

Emphasising this, he explained that despite the challenges of COVID-19 there still remains the delicate balance of opening the economy whilst containing the disease burden. “Inflation according to the latest data from Statistics Botswana, inflation fell significantly from 2.2 percent in September 2019 to 1.8 percent in September 2020, remaining below the lower bound of the Bank of Botswana’s medium-term objective range of 3 to 6 percent,” he said.

The significant decline in inflation mainly reflects the downward adjustment in fuel prices in June 2020. However, inflation may rise above the current forecasts if the international commodity prices increase beyond current projections and in the event of upward price pressures occasioned by supply constraints due to travel restrictions and lockdowns.

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BDP readies for Congress

11th January 2021
BDP congress

The Botswana Democratic Party (BDP) last year had to cancel its elective congress due to the strict measures that had to be put in place due to Covid-19 pandemic outbreak.

Two other party events Women’s Wing Congress including the much anticipated victorious election celebration were also postponed due to the pandemic as gatherings were cancelled indefinitely.
However the BDP is adamant that the party will be able to hold its National Congress and all other events that had been frozen this year.

Speaking to this publication chairman of BDP Communication & International Relations Sub-Committee Kagelelo Kentse said that the party was readying itself for the congress with the main objective being to review resolutions that were taken at their 38th National Congress in Mochudi in 2019. Emphasising this, Kentse said it was commendable that most of the resolutions taken in 2019 have by far been fulfilled.

Moreover, he said it would mean a lot for the party to be able to meet at the congress, this he said would give them the opportunity to introspect and reflect with regards to their manifesto. In 2019 the BDP made about eleven resolutions of which five of these were resolved and gazetted. The abridged resolutions were that the amendment of the law to allow agricultural land owners to use up to 50 percent of their land for non-core purposes, to amend the law to cancel transfer duty on property transferred between the spouses.

President Masisi also passed a law to allow married couples to be independently allocated land and increase threshold for non-payment of transfer on property acquired from P250k to P750k. On the resolution in the tourism sector, Kentse said efforts are very advanced to have local play a part. He said there is ongoing work with the Ministry of Lands on concessions that will be allocated to citizens.

According to the BDP communications chair the Ministry of Tourism has availed more opportunities in dams for tourism thus far, having already issued expression of interest for Letsibogo, Dikgatlhong, and Gaborone dams. Citizens are said to have applied for tenders which are currently under evaluation. There are about 45 campsites set aside for citizens in game reserves and forest reserves for tourism.

The resolution on the declaration of assets and liabilities law which was passed and amended this year, was supported by all legislators including those from opposition. Emphasising this he explained that contentions were on issues to do with valuations, and leaders have started declaring.

With the Congress comprising of the elective congress, the BDP is yet to embark on it an objective Kentse said is on their to do list this year even though the calendar of events has not yet been made.
The elective congress has aroused interest, especially the Secretary General position which has attracted a number of participants of which observers believe will accord the incumbent, Mpho Balopi, the current secretary general, the opportunity to buy time if at all he will seek re-election in the position.

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