Botswana World Bank Office in collaboration with Ministry of Investment, Trade & Industry (MITI) gathered over sixty (60) representatives from private sector, government, and academia to discuss Botswana’s draft National Entrepreneurship Policy.
The two-day event, held this week on Monday and Tuesday is the first-ever entrepreneurship policy discussion convened in Botswana to study the draft policy formulated by MITI. Giving welcome remarks at the event held in Masa Centre, Gaborone, World Bank Botswana Country representative Xavier Furtado said his office has as one of its key priorities assisting Botswana with its National Economic Diversification efforts as well as assist the country with the pressing issue youth unemployment.
Xavier explained that the event was meant to create a platform of deepening consultations around the draft policy and also to ensure that the policy in its current draft form is speaking directly to the needs, challenges and priorities of key stakeholders in the entrepreneurship network of Botswana. Mr Furtado noted that Innovation and entrepreneurship are key aspects of a dynamic business environment, a competitive economy and inclusive growth.
“A wide range of factors are vital for innovation and entrepreneurship to succeed. These factors include, inter-alia, appropriate skills, knowledge, access to finance and a regulatory environment that enables entrepreneurs to start and efficiently grow their enterprises,” he said. Xavier further explained that World Bank Global Entrepreneurship Network is supporting the policy development process by helping to convene the policy hack which is meant to harness the experience and perspectives of the core actors in Botswana’s entrepreneurship ecosystem, so their views are reflected in the new policy and its implementation.
He said the Entrepreneurship Policy Hack provides a platform to ensure that the draft National Entrepreneurship Policy reflects a common understanding of the key challenges facing Botswana's entrepreneurs as well as inform a common vision for prioritized solutions that can accelerate entrepreneurship in Botswana. The hack comprised thematically focused working group discussions addressing key themes identified in the current draft of the National Entrepreneurship Policy.
“The Entrepreneurship Policy hack provides a platform for an open dialogue with stakeholders on improving the business environment in Botswana, which is critical to the growth of the economy ,Inclusive citizen participation and engagement in the policy making process is essential to successful policy development and implementation,” said Furtado.
Delivering key note speech at the event Minister of Investment, Trade & Industry, Bogolo Kenewendo explained that the ever changing and disruptive technologies pose opportunities and challenges to traditional industries thus Governments grapple with unexpected and unfamiliar regulatory issues. She explained that in response, a new approach to public policy making has emerged, one that is based on dialogue and sandbox-type idea exchanges, namely the Policy hackathon.
“To this end, the Policy hack is defined to help both public and private sector leaders from entrepreneurial ecosystems around the world to experiment and leverage this approach,” said Kenewendo. The Minister further unpacked that prior to the development of National Economic Policy 2019, SMMEs development and Entrepreneurship Policy in Botswana was based on the SMME policy of 1999.
In 2013, the then Ministry of Trade and Industry commissioned a study to review the Policy and come up with a holistic National Entrepreneurship Policy for Botswana, which will provide a broad and inclusive framework for all initiatives geared towards the promotion of entrepreneurship and SMMEs development in Botswana.
The National Economic Policy was further explained as an instrument developed to provide a framework to stir the creation of new start-ups and expansion of existing enterprises with high growth potential, as well as addressing the challenges that may constrain their development. “The NEP2019 emphasizes export-led growth, hence it is focused at fostering entrepreneurship as well as promoting SMMEs development with a view to creating globally competitive industries,” said Kenewendo.
She said it further emphasises strengthening coordination among all institutions involved in entrepreneurship and SMMEs development for effective implementation of the Policy. “Our role today is to be active listeners to the concerns, feedback and suggestions that are going to be generated as part of this collaborative and co-creation process”, said Honorable Bogolo Kenewendo, “My Ministry commits to take on board all the insights derived from the policy hack and will ensure that they are considered for adoption into the NEP”. Kenewendo explained that the Policy hack will assist MITI to further review and refocus the Policy before resubmission to Cabinet, and subsequently to Parliament, more especially the Policy implementation matrix.
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”