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Risks facing Botswana: Unemployment, Water Crises and Cyber attacks

A whitepaper published by the World Economic Forum, titled “The Sub-Saharan Africa Risks Landscape” outlined risks facing the Sub-Saharan Africa region with Botswana’s main risks being Unemployment, Water Crises as well as Cyber Attacks.

The report, published last week reveals that global risks increases as sub-Saharan Africa faces additional risks to its regional economy. Adding to the three aforementioned risks faced by Botswana, the two other risks include ‘failure of regional and global governance’ as well as ‘failure of national governance.’

The report is informed by the studies conducted by the WEF, through the 2018 Executive Opinion Survey, in which executives in 22 out of 34 countries in sub-Saharan Africa identified “unemployment and underemployment” as the most pressing concern for businesses. “No other region surveyed by the Forum recorded this level of consensus among respondents – highlighting the profound challenges that the region faces on this issue, particularly in light of the demographic and technological changes that lie ahead,” said the report. 

According to the International Labour Organization, the unemployment rate in sub-Saharan Africa is 6 percent, but the report noted that this figure masks deep-seated problems as more than 70 percent of the region’s workers are in vulnerable employment – compared to a global average of 46 percent. “People in sub-Saharan Africa are still disproportionately likely to enter the labour market at a young age, and the region has the world’s lowest levels of access to higher education – a combination that is likely to perpetuate a cycle of low skills and working poverty,” noted the report.

“Yet, despite these risks, there are some positive trends. Economic and social conditions have improved over the past 20 years, with real per capita incomes rising 50 percent on average.  Moreover, Africa’s population of young people is expected to double to approximately 830 million by 2050 – representing 29% of the total world youth population – a trend that could open new economic opportunities for the continent.

According to the African Development Bank (AfDB), “While 10 to 12 million youth in Africa enter the workforce each year, only 3.1 million jobs are created, leaving vast numbers of youth unemployed,” the report observed. One hurdle for economic growth on the continent – and the future employment of Africa’s current younger generation – is the challenging state of its infrastructure. According to the AfDB, there simply is not sufficient “infrastructure in power, water and transport services that would allow firms to thrive.”

The AfBD calculations estimate “that the continent’s infrastructure needs amount to $130– $170 billion a year, with a financing gap in the range $67.6–$107.5 billion.” The World Bank estimates that the continent’s infrastructure gap reduces productivity by approximately 40 percent.
 The report stated that, business leaders in sub-Saharan Africa surveyed by the Forum ranked “failure of critical infrastructure” as the fourth leading risk to business in the region.

According to the Infrastructure Consortium for Africa, out of a total of $81.6 billion committed to infrastructure development in Africa in 2017, 42 percent was from governments, 24 percent from China and 24 percent from bilateral donors, multilateral agencies and African institutions. Just 3 percent of investment came from the private sector.

 The upcoming implementation of the African Continental Free Trade Area (AfCFTA) – which will create the largest single market in the world for goods and services, as well as the free movement of investments and people – makes the need for investing in proper infrastructure even more pronounced, the reported said.  “One reason for the challenge around infrastructure investment is a mixed fiscal picture on the continent. The region’s GDP is expected to grow at 3.8 percent in 2019 – an improvement over the 2.6 percent rate of 2018,” the report indicated.

“The aggregate growth rate for the region would be higher – 5.7 percent – if Angola, Nigeria and South Africa, which are growing collectively at an average of 2.5 percent and are the region’s largest economies, were excluded. However, according to the Brookings Institution, “The number of African countries at high risk or in debt distress has more than doubled from eight in 2013 to 18 in 2018”; and almost 40 percent of sub-Saharan African countries are at risk of slipping into a major debt crisis.

The region’s debt-to-GDP ratio has increased significantly over the past decade (from 23 percent in 2008 to 46% in 2017), and the high proportion of public borrowing creates conditions for potential future debt crises and limits policy-makers’ short-term flexibility: The IMF and the AfDB have already noted that rising debt-servicing costs are diverting public spending from investment.

The Forum’s Executive Opinion Survey reflected concern about these risks, with business leaders ranking “fiscal crises” as the fifth highest risk. Four countries ranked it in the top three risks (Burundi, Chad, Eswatini and Namibia). Thus, it is likely that debt-servicing demands will create pressures for government policy-makers to increase taxation and reduce public spending, including on development priorities such as health or education.

In addition, governments may choose to take out loans to pay off existing debt. Such measures would make it more difficult for the region to achieve the African Union’s Agenda 2063 targets, according to the report. Executives in sub-Saharan Africa ranked “failure of national governance” as the second leading risk to business. “This may not be surprising given recent political developments across the continent,” report said.

According to the Brookings Institution, “Since the beginning of 2015, Africa has experienced more than 27 leadership changes, highlighting the continent-wide push for greater accountability and democracy.” In 2018, 15 African countries held general elections, and in 2019 at least 20 nations are holding elections.

Top 10 risks for doing business in sub-Saharan Africa
1 Unemployment or underemployment
2 Failure of national governance
3 Energy price shock
4 Failure of critical infrastructure
5 Fiscal crises
6 Failure of financial mechanism or institution
7 Failure of regional and global governance
8 Water crises
9 Food crises
10 Unmanageable inflation

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Travel ban unfair and unjustified – Masisi

7th December 2021
President Dr Mokgweetsi Masisi

For the past two years, the world has been at combat with various COVID-19 variants. A new variant of concern which is considered to have a combination of the greatest hits (Alpha, Beta, Gamma, and Delta) has sent alarm bells around the world.

Botswana’s COVID-19 genomic surveillance, which actively monitors COVID-19 variants in Botswana, picked four samples that were concerning and discovered a completely new variant. In accordance with international obligations, as a responsible member state under the International Health Regulations of 2005, Botswana submitted the suspected new variant for the entire global scientific community to respond to this early finding. Shortly after, the Republic of South Africa, also submitted a similar concerning variant.

The new variant, ‘Omicron’ is named after the 15th letter of the Greek Alphabet to avoid public confusion and stigma.
The news spread like wild fire which resulted in European Union member states, the United Arab Emirates and United States of America imposing travel bans on Botswana and other sister SADC nations, resulting in drawing a wedge between nations.

In his address on the occasion of an update on Government’s response to the COVID-19 pandemic President Dr Mokgweetsi Masisi has shunned the response by some countries to Botswana’s detection of the Omicron variant stating that it is unfortunate as it appears to have caused unnecessary panic amongst the public across the world. He considers it defeating the spirit of multilateral cooperation in dealing with this global pandemic.

“The decision to ban our citizens from travelling to certain countries was hastily made and is not only unfair but is also unjustified while remain confident that reason and logic will prevail, the harshness of the decision has the effect of our shaking our belief in the sincerity of declared friendship and commitment of equality and economic prosperity for us,” he said.

President Masisi has appealed to the nations that have imposed travel restrictions on Botswana to reflect and review their travel restrictions stance against the Southern African region.

African leaders and heads of state are in agreement on a matter. Some stating that the travel bans are ‘uncalled for, afro phobic, unscientific, strict, unfair and unjustified’. They have come out to bash the unilateral travel bans and request immediate upliftment of the restrictions imposed on SADC member states by European Union member states, the United Arab Emirates and United States of America.

While Batswana are banned from international travel, locally as at 26th November 2021, a total of 195 068 COVID19 cases and 2 418 deaths had been reported since the beginning of the pandemic.

“We have been steadily witnessing a decrease in the number of new cases and deaths in the last three months. We are currently reporting an average of less 10 infections per 100 000 people compared to 648 cases per 100 000 people at the peak of the third wave. We have also observed a gradual decline in hospitalizations across the country with an average of less than 10 patients at a time at Sir Ketumile Masire Teaching Hospital (SKMTH) and our other health facilities countrywide,” pointed out President Masisi.

Masisi encouraged Batswana not to despair as to date, all the nations’ key indicators remain stable. “This is comforting although it still does not warrant any complacency on our part in terms of behaviour and other attitudinal patterns towards this dreadful disease. We are actively monitoring the evolving situation in view new variant of concern,’’ he sternly advised.

Government through the different Ministries leading the different sectors, has been working tirelessly to prepare for potential outbreaks and a fourth (4th) wave. This will be achieved through; installing oxygen generating plants and increasing skilled human capacity.

With regards to the vaccination programme; as of 29th November 2021, an estimated One Million and Fifty Three Thousand Three Hundred and Sixty One (1 053 361) people translating to 75.7% of the target Batswana citizens and residents over the age of 18 years have received at least 1 dose of the COVID-19 vaccines. A total of Nine Hundred and Fifty Thousand Nine Hundred and Seventy Three (950 973) people translating to 68.4% have been fully vaccinated. This number exceeds the 64% target Botswana has set to achieve by end of December 2021.

Masisi enthusiastically revealed that; “We are one of the three countries in Africa that have achieved the World Health Organisation target of vaccinating at least 40% of the entire population by December 2021. We are committed to ensure that all is done to reduce the transmission of the virus in the country.

More vaccines are being procured to ensure availability for those who have not yet received any dose. Government is also considering booster doses for those who may be identified as qualifying for them.”

President Masisi urged Batswana to continue observing the COVID-19 health protocols of social distancing, washing hands or sanitizing and wearing masks and avoid unnecessary travelling.

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China pledges a billion vaccines to Africa

7th December 2021

As COVID-19 pandemic continues to shake the world, China has promised to donate a billion coronavirus vaccines, advance billions of dollars for African trade and infrastructure, and write off interest-free loans to African countries to help the continent recover from the coronavirus pandemic. All these promises emerged at the Conference of the Forum on China-Africa Cooperation (FOCAC) held in Senegal at the end of November 2021.

Chinese President Xi Jinping announced that China will provide one billion doses of vaccines to Africa when delivering keynote speech at the Eighth Ministerial FOCAC via video link on 29th November. Of those, 600 million would be via donations and the rest would be produced jointly by African countries and Chinese companies. In addition, China would send medical teams to help the continent deal with the pandemic.

President Xi also announced nine programmes that China will work closely with African countries in the next three years. He mentioned the medical and health program, the poverty reduction and agricultural development program, the trade promotion program, the investment promotion program, the digital innovation program, the green development program, the capacity building program, the cultural and people-to-people exchange program, the peace and security program. President Xi hailed China-Africa relations as a shining example for building a new type of international relations.

Furthermore, Xi said Beijing would pump US$10 billion into African financial institutions for onward lending to small and medium enterprises. He promised to extend another US$10 billion of its International Monetary Fund allocation of special drawing rights, which would help stabilise foreign exchange reserves. In addition, China will write-off interest-free loans due this year, to help the economies that had been ravaged by the pandemic. Last year, China also promised to write off interest-free loans due at the end of 2020.

Beijing pledged US$60 billion to finance Africa’s infrastructure at the forum in Johannesburg in 2015, and a similar amount when the gathering was held in the Chinese capital in 2018. But in the past few years, Chinese lenders, including the policy banks – Exim Bank of China and China Development Bank – have become more cautious and are now demanding bankable feasibility studies amid debt distress in the continent.

Besides seeking more money for projects, Xi said China would encourage more imports of African agricultural products, and increase the range of zero-tariff goods, aiming for US$300 billion of total imports from Africa in the next three years.

China would also advance US$10 billion of trade financing to support African exports into China. He said the country would also advance another US$10 billion to promote agriculture in Africa, send 500 experts and establish China-Africa joint agro-technology centres and demonstration villages. African countries are pushing to grow exports of agricultural products into China. At the moment, Beijing maintains an enormous trade surplus over the continent. African imports from China include machinery, electronics, construction equipment, textiles and footwear.

Meanwhile, State Councilor and Foreign Minister Wang Yi summarized FOCAC achievements when meeting with journalists ahead the 8th FOCAC Ministerial Conference. Wang said that the FOCAC is a crucial platform for collective dialogue between China and Africa and an effective mechanism for practical cooperation.

He said since the inception of the FOCAC 21 years ago, Chinese enterprises have built over 10,000 kilometers of railways, nearly 100,000 kilometers of roads, nearly 1,000 bridges, nearly 100 ports, and over 80 large-scale power facilities in Africa.

In addition, they have assisted Africa in building over 130 medical facilities, 45 gymnasiums and more than 170 schools, and training over 160,000 professionals in various fields. Chinese medical teams have provided medical service to an accumulated number of 230 million, and China’s network service has covered around 700 million user terminals.

Yi said that the Eighth FOCAC Ministerial Conference was a great success. According to Yi, the success of the conference confirmed the strong will of China and Africa to work together to overcome difficulties and seek common development, and showed the huge potential and bright prospects of China-Africa cooperation.

Wang summarized the most important consensus reached at the conference as following: 1) both sides will promote the spirit of China-Africa friendship and cooperation; 2) China and Africa will work together to defeat the pandemic; 3) both sides will work to enrich China-Africa cooperation in the new era; 4) the two sides will work together to practice true multilateralism; 5) China and Africa will jointly build a China-Africa community with a shared future in the new era.

FOCAC, is one of the developments that came as a major shift in the dynamics of the China-Africa relationships came about in the 1980s when China embarked upon its “Opening up and Reform Policy” –a wide-ranging policy that gave birth to the new China. Economic and geo-strategic interests rather than the desire to export a specific political philosophy drive China’s current relationship with Africa.

For Africa though, the key problem is that our economies are weak in value creation. 
As argued by one economist, what workers and factories produce is produced more efficiently, with better quality and at lower cost, by other economies. “In such circumstances, making money is easier through rent than through value creation.

African governments should be capable of guiding their private sector towards value creation, a key factor for achieving a sustainable competitive edge in the global market. Furthermore, partnerships that Africa forges should be targeted to enhance such an environment”. The question remains as to whether China’s intervention in Africa will help address this challenge.

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COVID-19 has pushed cost of living up – report

7th December 2021

A report by The Economist Intelligence Unit (The EIU) has given its outlook for the rise and fall of living costs around the world.

The report is based on current and past trends impacting the cost of living, including currency swings, local inflation and commodity shocks. In addition, it compares more than 400 individual prices across over 200 products and services in 173 cities.

The Worldwide Cost of Living (WCOL) rankings continue to be sensitive to shifts brought about by the COVID-19 pandemic, which have pushed up the cost of living across the world’s major cities. Although most economies are now recovering as covid-19 vaccines are rolled out, the world’s major cities still experience frequent surges in cases, prompting renewed social restrictions. In many cities this has disrupted the supply of goods, leading to shortages and higher prices.

The report highlights that “the inflation rate of the prices tracked in the EIU’s WCOL across cities is the fastest recorded over the past five years. It has accelerated beyond the pre-pandemic rate, rising by 3.5% year on year in local-currency terms in 2021, compared with an increase of just 1.9% in 2020 and 2.8% in 2019.”

However; supply-chain problems, as well as exchange-rate shifts and changing consumer demand, have led to rising prices for commodities and other goods. The most rapid increases in the WCOL index were for transport, with the price of a litre of petrol up by 21% on average.

Tel Aviv, a city on Israel’s Mediterranean coast tops the WCOL rankings for the first time ever, making it the most expensive city in the world to live in. The Israeli city climbed from fifth place last year, pushing Paris down to joint second place with Singapore. Tel Aviv’s rise mainly reflects its soaring currency and price increases for around one-tenth of goods in the city, led by groceries and transport, in local-currency terms. Property prices (not included in the index calculation), have also risen, especially in residential areas.

The cheapest cities are mainly in the Middle East and Africa, or in the poorer parts of Asia. Damascus has easily retained its place as the cheapest city in the world to live in. It was ranked the lowest in seven of the ten pricing categories, and was among the lowest in the remaining three. While prices elsewhere have generally firmed up, in Damascus they have fallen as Syria’s war-torn economy has struggled. Tripoli, which also faces political and economic challenges, is ranked second from the bottom in our rankings, and is particularly cheap for food, clothing and transport.

“Over the coming year, we expect to see the cost of living rise further in many cities. Inflationary expectations are also likely to feed into wage rises, further fuelling price rises. However, as central banks cautiously raise interest rates to stem inflation, price increases should moderate from this year’s level. We forecast that global consumer price inflation will average 4.3% in 2022, down from 5.1% in 2021 but still substantially higher than in recent years. If supply-chain disruptions die down and lockdowns ease as expected, then the situation should improve towards the end of 2022, stabilising the cost of living in most major cities.”

“The survey has been designed to enable human resources and finance managers to calculate cost-of-living allowances and build compensation packages for expatriates and business travellers. It can also be used by consumer-goods firms and other companies to map pricing trends and determine optimum prices for their products across cities. In addition, the data can be used to understand the relative expense of a city to formulate policy guidelines,” highlights the report.

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