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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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DIS blasted for cruelty – UN report

26th July 2022
DIS BOSS: Magosi

Botswana has made improvements on preventing and ending arbitrary deprivation of liberty, but significant challenges remain in further developing and implementing a legal framework, the UN Working Group on Arbitrary Detention said at the end of a visit recently.

Head of the delegation, Elina Steinerte, appreciated the transparency of Botswana for opening her doors to them. Having had full and unimpeded access and visited 19 places of deprivation of liberty and confidentiality interviewing over 100 persons deprived of their liberty.

She mentioned “We commend Botswana for its openness in inviting the Working Group to conduct this visit which is the first visit of the Working Group to the Southern African region in over a decade. This is a further extension of the commitment to uphold international human rights obligations undertaken by Botswana through its ratification of international human rights treaties.”

Another good act Botswana has been praised for is the remission of sentences. Steinerte echoed that the Prisons Act grants remission of one third of the sentence to anyone who has been imprisoned for more than one month unless the person has been sentenced to life imprisonment or detained at the President’s Pleasure or if the remission would result in the discharge of any prisoner before serving a term of imprisonment of one month.

On the other side; The Group received testimonies about the police using excessive force, including beatings, electrocution, and suffocation of suspects to extract confessions. Of which when the suspects raised the matter with the magistrates, medical examinations would be ordered but often not carried out and the consideration of cases would proceed.

“The Group recall that any such treatment may amount to torture and ill-treatment absolutely prohibited in international law and also lead to arbitrary detention. Judicial authorities must ensure that the Government has met its obligation of demonstrating that confessions were given without coercion, including through any direct or indirect physical or undue psychological pressure. Judges should consider inadmissible any statement obtained through torture or ill-treatment and should order prompt and effective investigations into such allegations,” said Steinerte.

One of the group’s main concern was the DIS held suspects for over 48 hours for interviews. Established under the Intelligence and Security Service Act, the Directorate of Intelligence and Security (DIS) has powers to arrest with or without a warrant.

The group said the “DIS usually requests individuals to come in for an interview and has no powers to detain anyone beyond 48 hours; any overnight detention would take place in regular police stations.”

The Group was able to visit the DIS facilities in Sebele and received numerous testimonies from persons who have been taken there for interviewing, making it evident that individuals can be detained in the facility even if the detention does not last more than few hours.

Moreover, while arrest without a warrant is permissible only when there is a reasonable suspicion of a crime being committed, the evidence received indicates that arrests without a warrant are a rule rather than an exception, in contravention to article 9 of the Covenant.

Even short periods of detention constitute deprivation of liberty when a person is not free to leave at will and in all those instances when safeguards against arbitrary detention are violated, also such short periods may amount to arbitrary deprivation of liberty.

The group also learned of instances when persons were taken to DIS for interviewing without being given the possibility to notify their next of kin and that while individuals are allowed to consult their lawyers prior to being interviewed, lawyers are not allowed to be present during the interviews.

The UN Working Group on Arbitrary Detention mentioned they will continue engaging in the constructive dialogue with the Government of Botswana over the following months while they determine their final conclusions in relation to the country visit.

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Stan Chart halts civil servants property loan facility

26th July 2022
Stan-Chart

Standard Chartered Bank Botswana (SCBB) has informed the government that it will not be accepting new loan applications for the Government Employees Motor Vehicle and Residential Property Advance Scheme (GEMVAS and LAMVAS) facility.

This emerges in a correspondence between Acting Permanent Secretary in the Ministry of Finance Boniface Mphetlhe and some government departments. In a letter he wrote recently to government departments informing them of the decision, Mphetlhe indicated that the Ministry received a request from the Bank to consider reviewing GEMVAS and LAMVAS agreement.

He said: “In summary SCBB requested the following; Government should consider reviewing GEMVAS and LAMVAS interest rate from prime plus 0.5% to prime plus 2%.” The Bank indicated that the review should be both for existing GEMVAS and LAMVAS clients and potential customers going forward.

Mphetlhe said the Bank informed the Ministry that the current GEMVAS and LAMVAS interest rate structure results into them making losses, “as the cost of loa disbursements is higher that their end collections.”

He said it also requested that the loan tenure for the residential property loans to be increased from 20 to 25 years and the loan tenure for new motor vehicles loans to be increased from 60 months to 72 months.

Mphetlhe indicated that the Bank’s request has been duly forwarded to the Directorate of Public Service Management for consideration, since GEMVAS and LAMVAS is a Condition of Service Scheme. He saidthe Bank did also inform the Ministry that if the matter is not resolved by the 6th June, 2022, they would cease receipt of new GEMVAS and LAMVAS loan applications.

“A follow up virtual meeting was held to discuss their resolution and SCB did confirm that they will not be accepting any new loans from GEMVAS and LAMVAS. The decision includes top-up advances,” said Mphetlhe. He advised civil servants to consider applying for loans from other banks.

In a letter addressed to the Ministry, SCBB Chief Executive Officer Mpho Masupe informed theministry that, “Reference is made to your letter dated 18th March 2022 wherein the Ministry had indicated that feedback to our proposal on the above subject is being sought.”

In thesame letter dated 10 May 2022, Masupe stated that the Bank was requesting for an update on the Ministry’s engagements with the relevant stakeholder (Directorate of Public Service Management) and provide an indicative timeline for conclusion.

He said the “SCBB informs the Ministry of its intention to cease issuance of new loans to applicants from 6th June 2022 in absence of any feedback on the matter and closure of the discussions between the two parties.”  Previously, Masupe had also had requested the Ministry to consider a review of clause 3 of the agreement which speaks to the interest rate charged on the facilities.

Masupe indicated in the letter dated 21 December 2021 that although all the Banks in the market had signed a similar agreement, subject to amendments that each may have requested. “We would like to suggest that our review be considered individually as opposed to being an industry position as we are cognisant of the requirements of section 25 of the Competition Act of 2018 which discourages fixing of pricing set for consumers,” he said.

He added that,“In this way,clients would still have the opportunity to shop around for more favourable pricing and the other Banks, may if they wish to, similarly, individually approach your office for a review of their pricing to the extent that they deem suitable for their respective organisations.”

Masupe also stated that: “On the issue of our request for the revision of the Interest Rate, we kindly request for an increase from the current rate of prime plus 0.5% to prime plus 2%, with no other increases during the loan period.” The Bank CEO said the rationale for the request to review pricing is due to the current construct of the GEMVAS scheme which is currently structured in a way that is resulting in the Bank making a loss.

“The greater part of the GEMVAS portfolio is the mortgage boo which constitutes 40% of the Bank’s total mortgage portfolio,” said Masupe. He saidthe losses that the Bank is incurring are as a result of the legacy pricing of prime plus 0% as the 1995 agreement which a slight increase in the August 2018 agreement to prime plus 0.5%.

“With this pricing, the GEMVAS portfolio has not been profitable to the Bank, causing distress and impeding its ability to continue to support government employees to buy houses and cars. The portfolio is currently priced at 5.25%,” he said.  Masupe said the performance of both the GEMVAS home loan and auto loan portfolios in terms of profitability have become unsustainable for the Bank.

Healso said, when the agreement was signed in August 2018, the prime lending rate was 6.75% which made the pricing in effect at the time sufficient from a profitable perspective. “It has since dropped by a total 1.5%. The funds that are loaned to customers are sourced at a high rate, which now leaves the Bank with marginal profits on the portfolio before factoring in other operational expenses associated with administration of the scheme and after sales care of the portfolio,” said the CEO.

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Botswana ranked 129 in female MPs representation

26th July 2022
Minister of Finance & Economic Development Peggy Serame

The Global Gender Gap Index, a report published by the World Economic Forum annually, has indicated that Botswana is among countries that fare badly when it comes to representation of women in legislative bodies.

The latest Global Gender Gap Index, published last week, benchmarks the current state and evolution of gender parity across four key dimensions (Economic Participation and Opportunity, Educational Attainment, Health and Survival, and Political Empowerment). It is the longest-standing index which tracks progress towards closing these gaps over time since its inception in 2006.

This year, the Global Gender Gap Index benchmarked 146 countries. Of these, a subset of 102 countries have been represented in every edition of the index since 2006, further providing a large constant sample for time series analysis.

Botswana ranks number 66 overall (out of 146 countries), with good rankings in most of the pillars. Botswana ranks 1st in Health and Survival, 7th in the Economic Participation and Opportunity, 22nd in Educational Attainment, and 129th in Political Empowerment.

The Global Gender Gap Index measures scores on a 0 to 100 scale and scores can be interpreted as the distance covered towards parity (i.e. the percentage of the gender gap that has been closed). The cross-country comparisons aim to support the identification of the most effective policies to close gender gaps.

The Economic Participation and Opportunity sub-index contains three concepts: the participation gap, the remuneration gap and the advancement gap. The participation gap is captured using the difference between women and men in labour-force participation rates. The remuneration gap is captured through a hard data indicator (ratio of estimated female-to-male earned income) and a qualitative indicator gathered through the World Economic Forum’s annual Executive Opinion Survey (wage equality for similar work).

Finally, the gap between the advancement of women and men is captured through two hard data statistics (the ratio of women to men among legislators, senior officials and managers, and the ratio of women to men among technical and professional workers).

The Educational Attainment sub-index captures the gap between women’s and men’s current access to education through the enrolment ratios of women to men in primary-, secondary- and tertiary-level education. A longer-term view of the country’s ability to educate women and men in equal numbers is captured through the ratio of women’s literacy rate to men’s literacy rate.

Health and Survival sub-index provides an overview of the differences between women’s and men’s health using two indicators. The first is the sex ratio at birth, which aims specifically to capture the phenomenon of “missing women”, prevalent in countries with a strong son preference. Second, the index uses the gap between women’s and men’s healthy life expectancy.

This measure provides an estimate of the number of years that women and men can expect to live in good health by accounting for the years lost to violence, disease, malnutrition and other factors.
Political Empowerment sub-index measures the gap between men and women at the highest level of political decision-making through the ratio of women to men in ministerial positions and the ratio of women to men in parliamentary positions. In addition, the reported included the ratio of women to men in terms of years in executive office (prime minister or president) for the last 50 years.

In the last general elections, only three women won elections, compared to 54 males. The three women are; Nnaniki Makwinja (Lentsweletau-Mmopane), Talita Monnakgotla (Kgalagadi North), and Anna Mokgethi (Gaborone Bonnington North). Four women were elected through Specially Elected dispensation; Peggy Serame, Dr Unity Dow, Phildah Kereng and Beauty Manake. All female MPs — save Dow, who resigned — are members of the executive.

Overall, Botswana has 63 seats, all 57 elected by the electorates, and six elected by parliament. Early this year, Botswana Democratic Party (BDP) secretary general and Gaborone North MP, Mpho Balopi, successfully moved a motion in parliament calling for increment of elective seats from 57 to 61. Balopi contented that population growth demands the country respond by increasing the number of MPs.

In Africa, Botswana play second fiddle to countries like Rwanda, Namibia, South Africa, Burundi, and Zimbabwe who have better representation of women, with Rwanda being the only country with more than 50 percent of women in parliament.

The low number of women in parliament is attributed to Botswana’s current, electoral system, First-Past-the-Post. During the 9th parliament, then MP for Mahalapye East tabled a motion in parliament in which she sort to increase the number of Specially Elected MPs in parliament to augment female representation in the National Assembly.

The motion was opposed famously, by then Specially Elected MP, Botsalo Ntuane, who said the citizens were not in favour of such a move since it dilute democracy, instead suggesting the Botswana should switch to Proportional-Representation-System. Botswana is currently undergoing Constitutional Review process, with the commission, appointed in December, expected to deliver the report to President Mokgweetsi Masisi by September this year.

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