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Base metals, solar power take centre state

Botswana will remain a mining country, alongside efforts to address over dependence on mineral revenue, the country is also moving steadily to diversify within the mining industry itself.

This position emerged at the recent Botswana Resources Sector Conference organized by Capital Conferences in Gaborone this week. The event gathered investors, experts and leading personalities and entrepreneurs from Banking, Mining, Assert & Fund Managers, and other financial institutions.

Delivering the keynote address Minister of Mineral Resources, Green Technology and Energy Security – Eric Molale said in addition to Botswana’s economic transformation strategies for revenue diversification the intention is to derive value and economic growth from beneficiation of base metals and refocusing exploration of solar power and storage battery minerals such as nickel, cobalt, manganese, and rare earth minerals.

“These minerals puts Botswana in a lucrative and better position of taking  advantage of the emerging electric vehicles and other renewable technologies utilizing battery storage” he said Molale said Government commitment to developing base metals mining sector has been evident from various facilitation projects such as the 1.4 billion pula North West Power Grid undertaken to resources various copper & nickel mining projects along the Kalahari Copper belt in Ghanzi and Ngamiland districts.

He further cited the Mmamabula –Lephalele railway project which intends to unlock regional market for Botswana’s coal by providing a logistic corridor. Minister Molale went on to note that Government has earmarked broader beneficiation in the mining sector as one of its key area of action to drive job creation and to unlock other value chain business opportunities. “Our particular attention will be on diamonds, we will be opening up to vibrant polishing and cutting industries as well as jewelry making,” he said.

He shared that the failure of the national economic growth to reach the vision 2016 target of the 7.5% was mainly due to the low performance of the mining sector as a result of global uncertainties faced during NDP 10 period. “We are now midway through NDP 11 and lessons learned during the NDP 10 period must have made us wiser in navigating the challenges associated with this industry, the average rate of growth target for Vision 2036 is set at six percent.

This time we must not miss the mark. All eyes will be on the mineral resources sector to play a leading role in assisting the country to achieve the Vision 2036,” he said. Speaking on behalf of Debswana, the event’s main sponsor and key component of Botswana‘s mining industry Lead Engineer, Puso Mooketsi said that it was  befitting for Debswana to sponsor this collaborative conference as the company believes that it is one of the forums where the future is carved.

"The nation will also require baton carriers by the time Debswana resources get exhausted, so in the best interest of the future of this country as a company that has led its economic transformation we want to take part in development on other industries within the mining sector," he said. Also key to the conversation at the conference were the national power concern which has been underscored as an impediment to development of manufacturing and processing industries which requires high voltage factories to run.

The two industries are also earmarked for creation of much needed jobs especially for young people who are currently unemployed in large numbers. Attendants at the conference highlighted that with its high number of clear days in a year, Botswana provides an excellent solar resource, noting that a logical conclusion is that solar could provide a meaningful contribution to Botswana's energy demands.

The increasing cost and unreliability of power from Eskom in South Africa provided the impetus for the Botswana government to research renewable energy, with the most obvious contender being solar. In early 2017, Botswana Power Corporation (BPC) decided to start a programme to procure 100MW of solar energy and exploit the plentiful natural resource. Wayne Kingwill, Managing Director of Vivo Energy said solar power solutions have also become far more affordable and commercially viable over the past few years. “Many issues that plagued solar have also been resolved.


The introduction of hybrid systems using more sophisticated battery technology and diesel generation to store energy and boost production at peak times has resolved a constraint that solar power could only be generated during the day” he said
The Vivo Energy Boss shared that his company is currently taking up interest in development of solar energy as an alternative source of power.

"We have donated so far over 2000 solar lamps to students in communities that are off the national electricity grid line to give them an opportunity to study after hours. We have since discovered that the pass rate in those areas went up,” said Wayne Kingwill explaining how his company also leverage on Solar Energy to empower local communities and shape the future of young.

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Botswana on high red alert as AML joins Covid-19 to plague mankind

21st September 2020
Botswana-on-high-alert-as-AML-joins-Covid-19-to-plague-mankind-

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.

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Finance Committee cautions Gov’t against imprudent raising of debt levels

21st September 2020
Finance Committe Chairman: Thapelo Letsholo

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.

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Gov’t Investment Account drying up fast!  

21st September 2020
Dr Matsheka

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”

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