Botswana: South Africa’s trade partner or economic neo-colony?
Former cabinet minister and Phakalane Estates proprietor, David Magang once opined that Botswana’s poor manufacturing sector and importation of more than 80 percent of the foodstuffs from South Africa, effectively renders Botswana a neo-colony of the former.
Various stats available indicate that the trade between two countries is a one-sided affair, lending credence to Magang’s view that, “In fact so beholden are we to the South African economy we are effectively its neo-colony.” Both countries are former British colonies and members of the African Union, the Commonwealth of Nations and the Southern African Development Community (SADC). The foundation for the trade relationship between South Africa and Botswana dates back to the establishment of the Southern African Customs Union (SACU) in 1910.
South Africa’s Economic Strength
South Africa is the 67 most competitive nation in the world out of 140 countries ranked in the 2018 edition of the Global Competitiveness Report published by the World Economic Forum. Mauritius and SA rank first and second as most competitive economies in Africa. Meanwhile ranks Botswana 90th most competitive economy out of 140 countries.
South Africa’s greatest competitive advantages are its financial system (ranked 18th), market size (35th) and level of innovation (46th) and sound infrastructure with a road connectivity ranking of 5 out of 140 countries, efficiency of clearance policies (34th) meanwhile Botswana fares badly in same areas, due to inadequate infrastructure, for ICT adoption and innovation among others.
According to Ernest Mahlaule, Group Chairman of Gauteng Growth and Development Agency, who is also former President of Johannesburg Chamber of Commerce and Industry, between 2014 and 2018, South Africa and Botswana traded R291.9 billion (about P212.2 billion) with Botswana receiving R 263.8 billion (P191.8 billion) worth of goods and services from South Africa, whilst South Africa received R 28.2 billion (P20.5 billion) worth of goods and services from Botswana.
“During the period under review South Africa enjoyed a trade surplus of R 235.7 billion. However, trade between the two countries has been muted, growing at a compound annual growth rate of 1.1 per annum since 2014,” Mahlaule told conference delegates at South Africa-Botswana Business Forum, which was part of the just ended Global Expo.
“Over the same period, 2014 and 2018, Gauteng and Botswana traded R169.4 billion. Botswana received R 152.0 billion worth of goods and services from Gauteng, whilst the City region received R 17.4 billion worth of goods and services form its SACU neighbour.”
During the period under review Gauteng enjoyed a trade surplus of R 134.6 billion. However, trade between the two regions has been muted, growing at a compound annual growth rate of 1.3 percent per annum since 2014, according to Mahlaule.
“It is worth noting that the Gauteng city region accounts for 62.1 percent of all Botswana bound SA exports and similarly 57.6 percent of Botswana sourced imports are bound for Gauteng. Gauteng exports mainly Mineral Fuels, advanced machinery and vehicles to Botswana. Botswana exports mainly Precious stones and inorganic chemicals to Gauteng.
Mahlaule stated that, since 2014, South African companies have invested R 2.1 billion (P1.5 billion) in Botswana generating 497 direct jobs. Gauteng accounts for 81 percent of SA FDI into Botswana. Notable companies who have invested in Botswana since 2014 include Carrick Wealth, Standard Bank, and Open House Management. While Botswana has mandated Botswana International Trade Centre (BITC) to lure investors to set-up in Botswana, another mandate entails promoting and facilitating the promotion of locally manufactured goods to foreign markets.
Mahlaule believes Gauteng present a better business climate for Botswana ventures to set-up in South Africa. Already, owing mainly to the proximity of the Gauteng to Botswana, and its economic strength, Botswana has developed a good trade relationship with the region. The Gauteng province is home Pretoria, the capital city of South Africa, as well as Johannesburg, the country’s largest city. Gauteng City Region is home to a quarter of South Africa’s population and generates 35 percent of the country’s GDP.
The concentration of national population and growth makes the Gauteng City Region pivotal to the national agenda of Transformation, Modernisation and Re- Industrialisation. Between 2014 and 2018 exports of goods and services from Gauteng, accounted for 55 percent of total exports into South Africa. Over the same period Imports amounted to 65 percent of total goods and services imported into South Africa. Total trade in the province was approximately 87 percent of the total provincial GDP. Highlighting more accentuated trade openness relative to the whole country.
During the Global Expo, Botswana’s Minister of Investment, Trade and Industry, Bogolo Kenewendo indicated that Botswana wants to work closely with the Emerging Markets as they want to learn from them strategies of economic transformation which is Botswana’s aspiration for the next 10 years. “We also want to industrialise our economy and leap-frog into Fourth Industrial Revolution, which will require new markets for our new products and sourcing of intermediate inputs and raw materials. Emerging Markets will provide us with such opportunities,” said Kenewendo.
Kenewendo, who assumed the reins as Minister of Investment, Trade and Industry last year at the beginning of April in 2018, indicated that as part of efforst to lure investors to Botswana, government has made efforts to improve its doing business environment through reforms of business processes and legal framework. “We are also in the process of improving our regulatory framework through the implementation of the Better Regulation Strategy to introduce Impact Analysis that will ensure that laws introduced have positive impact rather than introduce bottlenecks,” she said.
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Nigerians, Zimbabweans apply for Chema Chema Fund
Fronting activities, where locals are used as a front for foreign-owned businesses, have been a long-standing issue in Botswana. These activities not only undermine the government’s efforts to promote local businesses but also deprive Batswana of opportunities for economic empowerment, officials say. The Ministry of Trade and Industry has warned of heavy penalties for those involved in fronting activities especially in relation to the latest popular government initiative dubbed Chema Chema.
According to the Ministry, the Industrial Development Act of 2019 clearly outlines the consequences of engaging in fronting activities. The fines of up to P50,000 for first-time offenders and P20,000 plus a two-year jail term for repeat offenders send a strong message that the government is serious about cracking down on this illegal practice. These penalties are meant to deter individuals from participating in fronting activities and to protect the integrity of local industries.
“It is disheartening to hear reports of collaboration between foreigners and locals to exploit government initiatives such as the Chema Chema Fund. This fund, administered by CEDA and LEA, is meant to support informal traders and low-income earners in Botswana. However, when fronting activities come into play, the intended beneficiaries are sidelined, and the funds are misused for personal gain.” It has been discovered that foreign nationals predominantly of Zimbabwean and Nigerian origin use unsuspecting Batswana to attempt to access the Chema Chema Fund. It is understood that they approach these Batswana under the guise of drafting business plans for them or simply coming up with ‘bankable business ideas that qualify for Chema Chema.’
Observers say the Chema Chema Fund has the potential to uplift the lives of many Batswana who are struggling to make ends meet. They argue that it is crucial that these funds are used for their intended purpose and not siphoned off through illegal activities such as fronting. The Ministry says the warning it issued serves as a reminder to all stakeholders involved in the administration of these funds to ensure transparency and accountability in their disbursement.
One local commentator said it is important to highlight the impact of fronting activities on the local economy and the livelihoods of Batswana. He said by using locals as a front for foreign-owned businesses, opportunities for local entrepreneurs are stifled, and the economic empowerment of Batswana is hindered. The Ministry’s warning of heavy penalties is a call to action for all stakeholders to work together to eliminate fronting activities and promote a level playing field for local businesses.
Meanwhile, the Ministry of Trade and Industry’s warning of heavy penalties for fronting activities is a necessary step to protect the integrity of local industries and promote economic empowerment for Batswana. “It is imperative that all stakeholders comply with regulations and work towards a transparent and accountable business environment. By upholding the law and cracking down on illegal activities, we can ensure a fair and prosperous future for all Batswana.”
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Merck Foundation and African First Ladies mark World Health Day 2024
Merck Foundation, the philanthropic arm of Merck KGaA Germany marks “World Health Day” 2024 together with Africa’s First Ladies who are also Ambassadors of MerckFoundation “More Than a Mother” Campaign through their Scholarship and Capacity Building Program. Senator, Dr. Rasha Kelej, CEO of Merck Foundation emphasized, “At Merck Foundation, we mark World Health Day every single day of the year over the past 12 years, by building healthcare capacity and transforming patient care across Africa, Asia and beyond.
I am proud to share that Merck Foundation has provided over 1740 scholarships to aspiring young doctors from 52 countries, in 44 critical and underserved medical specialties such as Oncology, Diabetes, Preventative Cardiovascular Medicine, Endocrinology, Sexual and Reproductive Medicine, Acute Medicine, Respiratory Medicine, Embryology & Fertility specialty, Gastroenterology, Dermatology, Psychiatry, Emergency and Resuscitation Medicine, Critical Care, Pediatric Emergency Medicine, Neonatal Medicine, Advanced Surgical Practice, Pain Management, General Surgery, Clinical Microbiology and infectious diseases, Internal Medicine, Trauma & Orthopedics, Neurosurgery, Neurology, Cardiology, Stroke Medicine, Care of the Older Person, Family Medicine, Pediatrics and Child Health, Obesity & Weight Management, Women’s Health, Biotechnology in ART and many more”.
As per the available data, Africa has only 34.6% of the required doctors, nurses, and midwives. It is projected that by 2030, Africa would need additional 6.1 million doctors, nurses, and midwives*. “For Example, before the start of the Merck Foundation programs in 2012; there was not a single Oncologist, Fertility or Reproductive care specialists, Diabetologist, Respiratory or ICU specialist in many countries such as The Gambia, Liberia, Sierra Leone, Central African Republic, Guinea, Burundi, Niger, Chad, Ethiopia, Namibia among others. We are certainly creating historic legacy in Africa, and also beyond. Together with our partners like Africa’s First Ladies, Ministries of Health, Gender, Education and Communication, we are impacting the lives of people in the most disadvantaged communities in Africa and beyond.”, added Senator Dr. Kelej. Merck Foundation works closely with their Ambassadors, the African First Ladies and local partners such as; Ministries of Health, Education, Information & Communication, Gender, Academia, Research Institutions, Media and Art in building healthcare capacity and addressing health, social & economic challenges in developing countries and under-served communities. “I strongly believe that training healthcare providers and building professional healthcare capacity is the right strategy to improve access to equitable and quality at health care in Africa.
Therefore, I am happy to announce the Call for Applications for 2024 Scholarships for young doctors with special focus on female doctors for our online one-year diploma and two year master degree in 44 critical and underserved medical specialties, which includes both Online Diploma programs and On-Site Fellowship and clinical training programs. The applications are invited through the Office of our Ambassadors and long-term partners, The First Ladies of Africa and Ministry of Health of each country.” shared Dr . Kelej. “Our aim is to improve the overall health and wellbeing of people by building healthcare capacity across Africa, Asia and other developing countries. We are strongly committed to transforming patientcare landscape through our scholarships program”, concluded Senator Kelej.
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Interpol fugitive escapes from Botswana
John Isaak Ndovi, a Tanzanian national embroiled in controversy and pursued under a red notice by the International Criminal Police Organization (Interpol), has mysteriously vanished, bypassing a scheduled bail hearing at the Extension 2 Magistrate Court in Gaborone. Previously apprehended by Botswana law enforcement at the Tlokweng border post several months earlier, his escape has ignited serious concerns.
Accused of pilfering assets worth in excess of P1 million, an amount translating to roughly 30,000 Omani Riyals, Ndovi has become a figure of paramount interest, especially to the authorities in the Sultanate of Oman, nestled in the far reaches of Asia.
The unsettling news of his disappearance surfaced following his failure to present himself at the Extension 2 Magistrate Court the preceding week. Speculation abounds that Ndovi may have sought refuge in South Africa in a bid to elude capture, prompting a widespread mobilization of law enforcement agencies to ascertain his current location.
In an official communiqué, Detective Senior Assistant Police Commissioner Selebatso Mokgosi of Interpol Gaborone disclosed Ndovi’s apprehension last September at the Tlokweng border, a capture made possible through the vigilant issuance of the Interpol red notice.
At 36, Ndovi is implicated in a case of alleged home invasion in Oman. Despite the non-existence of an extradition treaty between Botswana and Oman, Nomsa Moatswi, the Director of the Directorate of Public Prosecution (DPP), emphasized that the lack of formal extradition agreements does not hinder her office’s ability to entertain extradition requests. She highlighted the adoption of international cooperation norms, advocating for collaboration through the lenses of international comity and reciprocity.
Moatswi disclosed the intensified effort by law enforcement to locate Ndovi following his no-show in court, and pointed to Botswana’s track record of extraditing two international fugitives from France and Zimbabwe in the previous year as evidence of the country’s relentless pursuit of legal integrity.
When probed about the potential implications of Ndovi’s case on Botswana’s forthcoming evaluation by the Financial Action Task Force (FATF), Moatswi reserved her speculations. She acknowledged the criticality of steering clear of blacklisting, suggesting that this singular case is unlikely to feature prominently in the FATF’s assessment criteria.