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Botswana realizes over P3 Billion of FDI in 2018

Minister of Investment, Trade and Industry Bogolo Kenewendo says a total of P3.2 Billion worth of Foreign Direct Investment was realized in 2018/19 against a target of P2.3 Billion.

The positive FDI inflows were as a result of a number of companies investing a significant amount of money under the International Financial Service Centre IFSC and the mining sector. Meanwhile, a total of P3.4 Billion worth of Domestic and Expansions investment was achieved in the same period against a target of P2.8 Billion.

In contributing towards fulfilment of National Development Plan 11’s ultimate goal of addressing the country’s main development challenge of unemployment, the Ministry facilitated and funded creation of 7756 jobs from April 2018 to March 2019. A total of P370.7 Million worth of investment has been realized since implementation of the SPEDU Revitalization Strategy, culminating in creation of 1.5 jobs. For the year 2018/2019, Domestic and Expansions Investment stood at P176.6 Million and P43.9 Million was realized in Foreign Direct Investment creating 623 jobs. Over 3 hundred jobs have been realized from April to July 2019. The construction of the Plathan Bridge is 88% complete.

Kenewendo said BOSSC processed a total of 602 government authorization and achieved 97% approval rate in the previous year. In the quest to promote and facilitate the establishment of investment opportunities across Botswana, BITC opened a new regional office in Francistown in March 2019.

Meanwhile, the Ministry through the Local Enterprise Authority LEA has reviewed the Leather park business plan. Following approval of the revised business plan, the project manager is currently reviewing tender documents to accordingly align them and this was finalized last month. To this end, consultations with various stakeholders are being undertaken with a view to ensure adequate supply of leather once the park becomes operational. In this regard hides and skin collectors, exporters, artisan tanners and leather product manufacturers elected an interim national leather industry association to work with government on 31 Just 2019.

 LEA presented a business model for Letlhakane Municipal abattoir which will be used to produce quality hides and skins to key stakeholders. Development of the business plan is on-going. First meeting of intuitions of High Learning, Botswana Qualifications Authority BQA and Human Resource Development Council HRDC was held on 6th August 2019 to mobilise them for training and skill development for the leather industry.

Further, meeting with fodder production unit was held to mobilise fodder farmers to use treated waste water and boreholes with enough water to produce fodder to mitigate drought. A list of fodder producers is being compiled to ease contact. A breeding plan for small stock farmers has been developed to assist them in small stock rearing so as to address low off-take, birth and mortality rates.

Under the Export Development Apex, Kenewendo said the Ministry will facilitate export-led growth by promoting export of goods for which the country has a comparative and competitive advantage. She said through the Export Development Apex, new markets have been secure for Botswana exporters. ‘’as of June 2019, market access for a number of products to the East African Community has been secured.

Tariff negotiations were concluded under the auspices of the SADC-EAC-COMESA Tripartite Free Trade Area Agreement. Product lines to benefit immediately from the liberalized trade include beef, processed salt and plastic tubes. Under the current review of SACU- European Free Trade Association, Botswana stands benefit from increased market access for products- beef and lamb meat.

Further, under the African Continental Free Trade Area negotiations, Botswana will benefit from access to almost all African states market. New markets have also been acquired in Zimbabwe and South Africa, exporting lab equipment and organic fertilizer respectively. In addition, six textile companies have been selected to supply Cash Bazaar retail stores.

Furthermore, the Minister noted that the Revised National Export Strategy was launched in May 2019 and has identified priority sectors for export as follows; Arts and Craft, Garments and textile, jewellery and semiprecious stones, leather and leather product, meat and meat products, and light manufacturing and indigenous products sector,

She highlighted that seven companies were taken through QMS training, while seventeen were assisted to develop export marketing plans and diagnostic assessment were done on 14 companies. Kenewendo underlined that BITC with the support from UNDP have engaged the services of Imani Development consultancy to develop the Revised BEDP.

International Trade Centre has committed to assisting BITC with efforts to help set up an e-commerce marketplace to sell products manufactured by Ngwao Boswa Basket Weavers Association. Products are to be marketed and sold through either Amazon Handmade or Esty virtual platforms. She also said that Options currently being explored include opening a PayPal Business Account at FNB Botswana, as opposed to setting up a subsidiary company in the US.

Moreover, she noted that BITC in collaboration with Ministry of Youth Empowerment, Sport and Culture Development are working towards building a storage facility in Gumare to stockpile products for external market. To this end, fabrication of structure has been completed, and it is awaiting transportation to Gumare for handover.

The operationalization of Medium to Long-Term and Outward Insurance Initiative Products was approved in August 2018 in line with the National Economic Development Council NEDC approval. MLT encourages businesses operating in Botswana to export capital goods or participate in projects outside the country with medium to long term repayment terms, whilst OII encourages investors operating in Botswana to expand outside the boarders.

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Mowana Mine to open, pay employees millions

18th January 2022
Mowana Mine

Mowana Copper Mine in Dukwi will finally pay its former employees a total amount of P23, 789, 984.00 end of this month. For over three years Mowana Copper Mine has been under judicial management. Updating members, Botswana Mine Workers Union (BMWU) Executive Secretary Kitso Phiri this week said the High Court issued an order for the implementation of the compromise scheme of December 9, 2021 and this was to be done within 30 days after court order.

“Therefore payment of benefits under the scheme including those owed to Messina Copper Botswana employees should be effected sometime in January latest end of January 2022,” Kitso said. Kitso also explained that cash settlement will be 30 percent of the total Messina Copper Botswana estate and negotiated estate is $3,233,000 (about P35, 563,000).

Messina Copper was placed under liquidation and was thereafter acquired by Leboam Holdings to operate Mowana Mine. Leboam Holdings struck a deal with the Messina Copper’s liquidator who became a shareholder of Leboam Holdings. Leboam Holdings could not service its debts and its creditors placed it under provisional judicial management on December 18, 2018 and in judicial management on February 28, 2019.

A new company Max Power expressed interest to acquire the mining operations. It offered to take over the Mowana Mine from Leboam Holdings, however, the company had to pay the debts of Leboam including monies owed to Messina Copper, being employees benefits and other debts owed to other creditors.

The monies, were agreed to be paid through a scheme of compromise proposed by Max Power, being a negotiated payment schedule, which was subject to the financial ability of the new owners. “On December 9, 2021, Messina Copper liquidator, called a meeting of creditors, which the BMWU on behalf of its members (former Messina Copper employees) attended, to seek mandate from creditors to proceed with a proposed settlement for Messina Copper on the scheme of compromise. It is important to note that employee benefits are regarded as preferential credit, meaning once a scheme is approved they are paid first.”

Negotiated estate is P35, 563,000

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Councilors’ benefits debacle-savingram reveals detail

18th January 2022

A savingram the Ministry of Local Government and Rural Development sent to Town Clerks and Council Secretaries explaining why councilors across the country should not have access to their terminal benefits before end of their term has been revealed.

The contents of the savingram came out in the wake of a war of words between counselors and the Ministry of Local Government and Rural Development. The councilors through the Botswana Association of Local Authorities (BALA) accuse the Ministry of refusing to allow them to have access to their terminal benefits before end of their term.

This has since been denied by the Ministry.  In the savingram to town councils and council secretaries across the country, Permanent Secretary in the Ministry of Local Government and Rural Development Molefi Keaja states that, “Kindly be advised that the terminal benefits budget is made during the final year of term of office for Honorable Councilors.”  Keaja reminded town clerks and council secretaries that, “The nominal budget Councils make each and every financial year is to cater for events where a Councilor’s term of office ends before the statutory time due to death, resignation or any other reason.”

The savingram also goes into detail about why the government had in the past allowed councilors to have access to their terminal benefits before the end of their term.  “Regarding the special dispensation made in the 2014-2019, it should be noted that the advance was granted because at that time there was an approved budget for terminal benefits during the financial year,” explained Keaja.  He added that, “Town Clerks/Council Secretaries made discretions depending on the liquidity position of Councils which attracted a lot of audit queries.”

Keaja also revealed that councils across the country were struggling financially and therefore if they were to grant councilors access to their terminal benefits, this could leave their in a dire financial situation.  Given the fact that Local Authorities currently have cash flow problems and budgetary constraints, it is not advisable to grant terminal benefits advance as it would only serve to compound the liquidity problems of councils.

It is understood that the Ministry was inundated with calls from some Councils as they sought clarification regarding access to their terminal benefits. The Ministry fears that should councils pay out the terminal benefits this would affect their coffers as the government spends a lot on councilors salaries.

Reports show that apart from elected councilors, the government spends at least P6, 577, 746, 00 on nominated councilors across the country as their monthly salaries. Former Assistant Minister of Local Government and Rural Development, Botlogile Tshireletso once told Parliament that in total there are 113 nominated councilors and their salaries per a year add up to P78, 933,16.00. She added that their projected gratuity is P9, 866,646.00.

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Households spending to drive economic recovery

17th January 2022

A surge in consumer spending is expected to be a key driver of Botswana’s economic recovery, according to recent projections by Fitch Solutions. Fitch Solutions said it forecasts household spending in Botswana to grow by a real rate of 5.9% in 2022.

The bullish Fitch Solutions noted that “This is a considerable deceleration from 9.4% growth estimated in 2021, it comes mainly from the base effects of the contraction of 2.5% recorded in 2020,” adding that, “We project total household spending (in real terms) to reach BWP59.9bn (USD8.8bn) in 2022, increasing from BWP56.5bn (USD8.3bn) in 2021.”  According to Fitch Solutions, this is higher than the pre-Covid-19 total household spending (in real terms) of P53.0 billion (USD7.8bn) in 2019 and it indicates a full recovery in consumer spending.

“We forecast real household spending to grow by 5.9% in 2022, decelerating from the estimated growth of 9.4% in 2021. We note that the Covid-19 pandemic and the related restrictions on economic activity resulted in real household spending contracting by 2.5% in 2020, creating a lower base for spending to grow from in 2021 and 2022,” Fitch Solutions says.

Total household spending (in real terms), the agency says, will increase in 2022 when compared to 2021. In 2021 and 2022, total household spending (in real terms) will be above the pre-Covid-19 levels in 2019, indicating a full recovery in consumer spending, says Fitch Solutions.  It says as of December 6 2021 (latest data available), 38.4% of people in Botswana have received at least one vaccine dose, while this is relatively low it is higher than Africa average of 11.3%.

“The emergence of new Covid-19 variants such as Omicron, which was first detected in the country in November 2021, poses a downside risk to our outlook for consumer spending, particularly as a large proportion of the country’s population is unvaccinated and this could result in stricter measures being implemented once again,” says Fitch Solutions.

Growth will ease in 2022, Fitch Solution says. “Our forecast for an improvement in consumer spending in Botswana in 2022 is in line with our Country Risk team’s forecast that the economy will grow by a real rate of 5.3% over 2022, from an estimated 12.5% growth in 2021 as the low base effects from 2020 dissipate,” it says.

Fitch Solutions notes that “Our Country Risk team expects private consumption to be the main driver of Botswana’s economic growth in 2022, as disposable incomes and the labour market continue to recover from the impacts of the Covid-19 pandemic.”
It says Botswana’s tourism sector has been negatively impacted by the Covid-19 pandemic and the related travel restrictions.

According to Fitch Solutions, “The emergence of the Omicron variant, which was first detected in November 2021, has resulted in travel bans being implemented on Southern African countries such as South Africa, Botswana, Lesotho, Namibia, Zimbabwe and Eswatini. This will further delay the recovery of Botswana’s tourism sector in 2021 and early 2022.”  Fitch Solutions, therefore, forecasts Botswana’s tourist arrivals to grow by 81.2% in 2022, from an estimated contraction of 40.3% in 2021.

It notes that the 72.4% contraction in 2020 has created a low base for tourist arrivals to grow from.  “The rollout of vaccines in South Africa and its key source markets will aid the recovery of the tourism sector over the coming months and this bodes well for the employment and incomes of people employed in the hospitality industry, particularly restaurants and hotels as well as recreation and culture businesses,” the report says.

Fitch Solutions further notes that with economies reopening, consumers are demanding products that they had little access to over the previous year. However, manufacturers are facing several problems.  It says supply chain issues and bottlenecks are resulting in consumer goods shortages, feeding through into supply-side inflation.  Fitch Solutions believes the global semiconductor shortage will continue into 2022, putting the pressure on the supply of several consumer goods.

It says the spread of the Delta variant is upending factory production in Asia, disrupting shipping and posing more shocks to the world economy. Similarly, manufacturers are facing shortages of key components and higher raw materials costs, the report says adding that while this is somewhat restricted to consumer goods, there is a high risk that this feeds through into more consumer services over the 2022 year.

“Our global view for a notable recovery in consumer spending relies on the ability of authorities to vaccinate a large enough proportion of their populations and thereby experience a notable drop in Covid-19 infections and a decline in hospitalisation rates,” says Fitch Solutions.
Both these factors, it says, will lead to governments gradually lifting restrictions, which will boost consumer confidence and retail sales.

“As of December 6 2021, 38.4% of people in Botswana have received at least one vaccine dose. While this is low, it is higher than the Africa average of 11.3%. The vaccines being administered in Botswana include Pfizer-BioNTech, Sinovac and Johnson & Johnson. We believe that a successful vaccine rollout will aid the country’s consumer spending recovery,” says Fitch Solutions.  Therefore, the agency says, “Our forecasts account for risks that are highly likely to play out in 2022, including the easing of government support. However, if other risks start to play out, this may lead to forecast revisions.”

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