Minister of Investment, Trade and Industry Bogolo kenewendo says partnerships with the private sector by government are imperative in the growth, protection and empowerment of the productive sector in Botswana.
She was speaking at the Botswana Insurance Company (BIC) Brand Refresh in Gaborone recently. ‘’As you would be aware, we have as the Government of Botswana decided to pay a specific focus on Small, Medium Enterprise development and we believe that with partners from the private sector, we can grow the sector and be globally competitive.’’
‘’We are implementing the doing business reforms, opening up new markets for both goods and service-the latest being an agreement with the EAC as part of the TFTA, and we strive to create an enabling environment for all to compete and grow from home brand to international players,’’ she said.
Kenewendo observed that opportunities are endless, citing that the BIC is a leader in short term insurance with about 25% market share. ‘’There is more to conquer in Botswana and the rest of the region, therefore I challenge you because I see partners that can change our generation of wealth creation an open floodgates of unending opportunities for many generations to come as will be witnessed by BIC brand refresh,’’ she said.
‘’We take pride when heritage brands like Botswana Insurance Company revamp and refresh their mandate for a renewed purpose and cause but still rooted on their legacy and heritage. We live in a highly competitive global market where firms, industries and countries alike reflect on their natural endowments and more to deliver value. BIC has aggressive ambitions of half billions in revenues and yet invests in an organizational culture of excellence and accountability. Your growth is also synonymous with the country’s, as we are both going through transformation which we hope brings many folds of prosperity,’’ Kenewendo underscored.
However, Kenewendo underlined that as BIC modernizes the brand, it should develop the services it offers. ‘’Modernization is not about a good looking brand; it is about alignment with modern principles of inclusivity. In the last fin scope survey, it was reported that there is only twenty-six percent uptake of insurance services in Botswana. Only thirty-five, twenty-seven and seventeen percent are served in urban, semi urban and rural areas respectively. This means there are still many opportunities of growth to advance inclusive insurance products,’’ she said.
Some of the issues that must be considered for inclusivity, Kenewendo stressed are affordability, adding that 61% of the population cite cost as the main barrier to accessing insurance. Kenewendo stated that there is need to push for more financial education and assurances should be given for the need of insurance against risk. She stressed that there should be a focus on the productive sectors especially the Small, Medium Enterprises SMEs.
Further, she noted that it is important for BIC to create a stellar brand that customers will reminisce, and a trademark that they can associate themselves with and that transcend markets. For his part, Chief Executive Officerof BIC, Newton Jazire noted that as a company, they are committed to opening new paths and opportunities: ‘’Our employees, clients and brokers are the true engine of our inspiration, we are here to make their lives better. As a brand, trained to make our clients and stakeholders lives better, powered by unique value proposition of well-kept promises and culture of value creation, our efforts that refabricate across all industry, our name and culture will never be forgotten.’’
He further said selling products and services that are suitable to markets needs is a necessity designed to help build strong foundations upon which the entire industry could thrive. ‘’We have created insurance legacy which is unmatched by any home brand, we never forget who we are, we are built to last and our name has to be remembered, after all time does not forget.’’
Jazire pointed out that the new logo demonstrates their traditional strength, perspective of corporate governance, market reputation and credibility. He said it will also reflect of their capabilities, new energies and innovation and serve to differentiate BIC from their competitors. BIC is one of the country’s oldest companies for financial inclusion providing risk related services. Established over forty-four years ago, BIC championed and ushered in short term insurance services. In 1975, the company reregistered through the Ministry’s flagship OBRS. It is the first insurance company to be issued in Botswana.
This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.
The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.
Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.
He was speaking in Parliament on Tuesday delivering Parliament’s Finance Committee report after assessing a motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.
Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.
The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.
The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.
The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.
This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.
Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.
Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.
However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.
Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.
When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.
This as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.
Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.
The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.
Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.
In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.
Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.
Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.
Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.
Acknowledging the need to draw down from GIA no more, current Minister of Finance Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”
He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”