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Parastatals’ losses clock billion Pula mark

Almost P1 billion of tax payer’s money has been lost by 18 of the biggest state-owned enterprises, among them, Botswana Meat Commission (BMC), which recently made headlines when it nearly closed shop owing to P40 million debt.

The accumulated losses by the quasi-government institutions who are all failing to make profits stands at P742, 187, 254.00, according to Auditor General Report. This is without the other nine parastatals which are yet to submit audited reports to the Auditor General. There are possibilities that the loss could spill over billions. The state-owned BMC which has continued to experience financial challenges and has relied on government bailouts, loan guarantees and grants since years back, is yet to turn profit and is as good as insolvent.

BMC has on top of their deficit received P546 million as loans from government and it is yet to be paid back. However, the accounting officer of the commission has informed the Public Accounts Committee in the past that “a Government decision had been made in February 2018, to convert all loans to the Commission into equity.” 

BMC were audited by Messrs Ernst & Young, Certified Auditors, who were appointed by the Commission board. In the year under review, the Group and the Commission recorded a loss of P238.47 million and P242.15 million before revaluation loss on property, plant and equipment of P220.38 million and P222.28 million, compared to a loss of P222.52 million and P204.05 million, respectively, reported in the previous year.

The commissions’ balance sheet also shows a negative digit as it has current assets of P222.50 million while total current liabilities are P487.90 million, resulting in a net current liabilities position of P265.40 million, while that of the Commission showed current assets of P222.57 million and current liabilities of P543.30 million giving a current liabilities position of P320.73 million.

Most of the BMC debts accrue from overspending on paying for feedlots. “Management highlighted that there were instances beyond the Commission and the feedlotter’s control that sometimes resulted in cattle standing beyond the average time, such as days spent by cattle in sick pens and veterinary issues. Further it has been noted, as in the previous year, a balance of P7.29 million in the Botswana Post clearing account. 

“In response management (BMC) stated that they engaged Botswana Post on several occasions regarding the matter and it was not concluded. The Commission had decided to engage legally to settle the dispute as it was a dispute between the parties,” report highlights.
Other bleeding parastatals include Air Botswana (AB-P42.10 million) and Motor Vehicle Accident Fund (MVA-P126.49 million), Botswana Agriculture Marketing Board (BAMB-P65.36).

Their combined losses top P233.95 million and without much hope of their prospects improving drastically in the near future. The auditors had attributed AB losses to the fact that in the previous years, “management had not performed a formal review (except for motor vehicles) for a number of fully depreciated assets in the assets register to determine whether the assets were in use or needed”.

The auditors noted that the Corporation had not obtained approval from the Minister for tariff changes made during the year under review. “Management indicated that fares were influenced by competition, demand and seasonal promotions which require adjustments to fares to the prevailing conditions which could be as frequent,” says the report. MVA however could not tell the AG as to why they recorded such a deficit but in the past year it made a P260.62 million losses.

FIVE PARASTATALS MAKE P1.5 BILLION PROFIT

Five parastatals however; have made a promising profit of P1, 541,290.00 billion accumulatively. Water Utilities Corporation (WUC P513.46), Botswana Telecommunications Limited (BTCL P217.35 million), Botswana Power Corporation (BPC 67.411 million), Botswana Housing Corporation (BHC P87.75 million) and lastly Botswana Railways (BR P48.62 million).

Despite WUC making the highest profits it could have done more way better in profitability, “the auditors noted that total debtors outstanding for over 90 days amounted to P431.27 million, including Government debtors who made 50 percent of total debtors at year-end.” The auditors also indicated that at the end of the financial year under review, the Corporation was lagging behind on consumer billing, with a number of bills amounting to P37.52 million for 2017/2018 being processed in the financial year 2018/2019. BTC on the other hand while it made profit, it is a decrease from P237.35 million in the previous year.

10 PARASTATALS YET TO SUBMIT AUDITED REPORTS

The AG is lamenting that ten of the parastatals failed to furnish him with the audited finances for revision. NDB which is perennially on the red seeking bail-out loans from government did not submit. In 2016, NDB requested government to inject capital amounting to about P1 billion in the next three years in order to transform the bank and prepare it for commercialisation.  In 2017, it was offered P400 million by government, P100 million of it being a grant while the remaining P300 million was a loan.

Last year, NDB again approached and lobbied the Parliamentary Committee on Public Enterprises and Statutory Bodies to facilitate a process that will see the beleaguered bank being recapitalised to stay afloat en route commercialization. CEDA which has in the past been defrauded millions of pula with the latest being P50 million loans to Samson Moyo Guma’s United Refineries which was never paid back also is on the list. Most of the monies loaned to entrepreneurs have not been paid back, a factor likely to see the Thabo Thamane led organisation also recording millions of deficit.

Other enterprises that are yet to submit the returns are Botswana Savings Bank (BSB), Botswana Tourism Organization (BTO), Botswana Unified Revenue Services (BURS), Civil Aviation Authority Botswana (CAAB), University of Botswana (UB), Public Enterprises Evaluation and Privatization Agency (PEEPA), Vision 2036 Council and Mineral Development Corporation (MDC). Reasons as to why they did not furnish the AG office with the report varied from “failure to have a functional board, others waiting the report from the auditors.”

“I had circularised all statutory bodies and state-owned enterprises requesting them to forward to me copies of their audited financial statements and reports for purposes of review and inclusion of the review results in this report,” AG Pulane Letebele says in his 201 paged reports. With the exception of the Botswana Railways and Air Botswana which are under the ambit of the AG, the rest of the statutory bodies and state-owned enterprises are audited by independent auditors appointed by their Boards of management under the terms of their governing statutes. However, by a long-standing arrangement these entities provide the AG with the audited accounts and reports of their organisations for purposes of review and inclusion of the review results in this report to the National Assembly.

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Over 2 000 civil servants interdicted

6th December 2022

Over 2,000 civil servants in the public sector have been interdicted for a variety of reasons, the majority of which are criminal in nature.

According to reports, some officers have been under interdiction for more than two years because such matters are still being investigated. Information reaching WeekendPost shows that local government, particularly councils, has the highest number of suspended officers.

In its annual report, the Directorate on Corruption and Economic Crime (DCEC) revealed that councils lead in corrupt activities throughout the country, and dozens of council employees are being investigated for alleged corrupt activities. It is also reported that disciplined forces, including the Botswana Defence Force (BDF), police, and prisons, and the Directorate of Intelligence and Security (DIS) have suspended a significant number of officers.

The Ministry of Education and Skills Development has also recorded a good number of teachers who have implicated in love relationships with students, while some are accused of impregnating students both in primary and secondary school. Regional education officers have been tasked to investigate such matters and are believed to be far from completion as some students are dragging their feet in assisting the investigations to be completed.

This year, Mmadinare Senior Secondary reportedly had the highest number of pregnancies, especially among form five students who were later forcibly expelled from school. Responding to this publication’s queries, Permanent Secretary to the Office of the President Emma Peloetletse said, “as you might be aware, I am currently addressing public servants across the length and breadth of our beautiful republic. Due to your detailed enquiry, I am not able to respond within your schedule,” she said.

She said some of the issues raised need verification of facts, some are still under investigation while some are still before the courts of law.

Meanwhile, it is close to six months since the Police Commissioner Keabetwe Makgophe, Director General of the Directorate on Corruption and Economic Crime (DCEC) Tymon Katlholo and the Deputy Director of the DIS Tefo Kgothane were suspended from their official duties on various charges.

Efforts to solicit comment from trade unions were futile at the time of going to press.

Some suspended officers who opted for anonymity claimed that they have close to two years while on suspension. One stated that the investigations that led him to be suspended have not been completed.

“It is heartbreaking that at this time the investigations have not been completed,” he told WeekendPost, adding that “when a person is suspended, they get their salary fully without fail until the matter is resolved”.

Makgophe, Katlholo and Kgothane are the three most high-ranking government officials that are under interdiction.

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Masisi to dump Tsogwane?

28th November 2022

Botswana Democratic Party (BDP) and some senior government officials are abuzz with reports that President Mokgweetsi Masisi has requested his Vice President, Slumber Tsogwane not to contest the next general elections in 2024.

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African DFIs gear to combat climate change

25th November 2022

The impacts of climate change are increasing in frequency and intensity every year and this is forecast to continue for the foreseeable future. African CEOs in the Global South are finally coming to the party on how to tackle the crisis.

Following the completion of COP27 in Egypt recently, CEOs of Africa DFIs converged in Botswana for the CEO Forum of the Association of African Development Finance Institutions. One of the key themes was on green financing and building partnerships for resource mobilization in financing SDGs in Africa

A report; “Weathering the storm; African Development Banks response to Covid-19” presented shocking findings during the seminar. Among them; African DFI’s have proven to be financially resilient, and they are fast shifting to a green transition and it’s financing.

COO, CEDA, James Moribame highlighted that; “Everyone needs food, shelter and all basic needs in general, but climate change is putting the achievement of this at bay. “It is expensive for businesses to do business, for instance; it is much challenging for the agricultural sector due to climate change, and the risks have gone up. If a famer plants crops, they should be ready for any potential natural disaster which will cost them their hard work.”

According to Moribame, Start-up businesses will forever require help if there is no change.

“There is no doubt that the Russia- Ukraine war disrupted supply chains. SMMEs have felt the most impact as some start-up businesses acquire their materials internationally, therefore as inflation peaks, this means the exchange rate rises which makes commodities expensive and challenging for SMMEs to progress. Basically, the cost of doing business has gone up. Governments are no longer able to support DFI’s.”

Moribame shared remedies to the situation, noting that; “What we need is leadership that will be able to address this. CEOs should ensure companies operate within a framework of responsible lending. They also ought to scout for opportunities that would be attractive to investors, this include investors who are willing to put money into green financing. Botswana is a prime spot for green financing due to the great opportunity that lies in solar projects. ”

Technology has been hailed as the economy of the future and thus needs to be embraced to drive operational efficiency both internally and externally.

Executive Director, bank of Industry Nigeria, Simon Aranou mentioned that for investors to pump money to climate financing in Africa, African states need to be in alignment with global standards.

“Do what meets world standards if you want money from international investors. Have a strong risk management system. Also be a good borrower, if you have a loan, honour the obligation of paying it back because this will ensure countries have a clean financial record which will then pave way for easier lending of money in the future. African states cannot just be demanding for mitigation from rich countries. Financing needs infrastructure to complement it, you cannot be seating on billions of dollars without the necessary support systems to make it work for you. Domestic resource mobilisation is key. Use public money to mobilise private money.” He said.

For his part, the Minster of Minister of Entrepreneurship, Karabo Gare enunciated that, over the past three years, governments across the world have had to readjust their priorities as the world dealt with the effects and impact of the COVID 19 pandemic both to human life and economic prosperity.

“The role of DFIs, during this tough period, which is to support governments through countercyclical measures, including funding of COVID-19 related development projects, has become more important than ever before. However, with the increasingly limited resources from governments, DFIs are now expected to mobilise resources to meet the fiscal gaps and continue to meet their developmental mandates across the various affected sectors of their economies.” Said Gare.

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