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How attractive is Botswana to foreign investors?

President Mokgweetsi Masisi in a desperate measure to turn around the fortunes of Botswana’s economy and create jobs has been trotting the globe in a bid to convince investors to come and set-up businesses in Botswana. While Masisi’s gesture is fundamental in re-energizing the economy which has been sluggish since the 2008 economic down turn, there are underlying factors that may thwart his ambitions, writes ALFRED MASOKOLA.

The latest Global Competitiveness Report ranks Botswana 90th most competitive economy out of 140 countries, far much worse off than it ranked in 2009, where it was number 56 in the world. In the latest Doing Business Report, Botswana is ranked 86 out of 190 countries far much worse than it did in 2006, when it was ranked 40th in the world.

These two reports — The Global Competitiveness Report  and Doing Business Report, published by the World Economic Forum and World Bank respectively, are the best indicators that Botswana can use to see how it is faring when compared to its competitors and why investors may choose other countries over Botswana.

In 2018, the World Economic Forum introduced a new methodology emphasizing the role of human capital, innovation, resilience and agility, as not only drivers but also defining features of economic success in the 4th Industrial Revolution. As a result, the GCI scale changed to 1 to 100 from 1 to 7, with higher average score meaning higher degree of competitiveness. The report is made up of 98 variables organised into twelve pillars with the most important including: institutions; infrastructure; ICT adoption; macroeconomic stability; health; skills; product market; labour market; financial system; market size; business dynamism; and innovation capability.

The Global Competitiveness Report also looks into the private sector’s capacity to generate and adopt new technologies and new ways to organise work, through a culture that embraces change, risk, new business models, and administrative rules that allow firms to enter and exit the market easily. The report recognises that an agile and dynamic private sector increases productivity by taking business risks, testing new ideas and creating innovative products and services.

In an environment characterized by frequent disruption and redefinition of businesses and sectors, successful economic systems are resilient to technological shocks and are able to constantly re-invent themselves. With the business dynamism and innovation capability recognised a key indicator in the 4th industrial revolution, Botswana is not among leaders in this respect and it there are emerging countries such as Kenya and Rwanda, who despite ranking inferior to Botswana in overall rankings, have entered the space with much needed agility.

Botswana Innovation Hub (BIH) Director of Marketing and Partnerships, Tshepo Tsheko contended last week at Botswana International Trade Centre (BITC) media engagement session that Botswana should build capacities in the ICT to attract tech giants to set-up in Botswana.
He said failure to do so would not make Botswana an attractive place to do business in as ICT is the driver of business for government and other organisations, noting that countries like Kenya and Rwanda are doing what Botswana had the opportunity to do in its economy.

“Botswana should make a decision on what we want to invest in. Investors will not do it for us, they are looking for market,” he said. “We want to be known for something in ICT and innovation, and we still have the opportunity to decide.” Tsheko said, what we say we are to the world does not matter, what matters is what people from other countries experience the moment they set their foot in the country. 

He said currently there is credibility gap in ICT and innovation efforts in Botswana, because the local market is apprehensive which has resulted in local digital solutions not being taken. Tsheko expressed confidence that Botswana has necessary skills in ICT to solve challenges facing the country.

WHY HAS BOTSWANA LAGGED BEHIND IN ICT AND INNOVATION?

Although Botswana performs better than most countries in the Sub-Saharan Africa, with South Africa, Mauritius and Seychelles ranking ahead — there is a compelling need to invest in ICT and innovation in Botswana, according to the The Global Competitiveness Report.
Soon after being sworn in parliament in 2016, Bogolo Kenewendo, then a backbencher highlighted that Botswana’s snail progress was hindering the country from transforming its economy. 

“Like I said in parliament during my contribution, businesses and investors do not care that we are a landlocked country, they are looking for a place where they can easily do business hassle free and reap the best rewards,”Kenewendo told WeekendPost then. Kenewendo observed that Botswana lacks agility and is moving at a snail pace, hence other countries such as Rwanda are able to perform better. In the past 10 years Rwanda economy grew at 7.2 percent on average, and also attracted foreign investment of 4.2 percent of its GDP over the same period, according to the Global Competitiveness Report.

In the same period, Botswana’s economy only experienced an average of 3.6 percent growth and attracted 2.8 percent in FDI. . “Some of them came here to benchmark in Botswana, then went back to implement because they have agility. The world is moving faster, so we need to be agile,” she said. Today, Kenewendo is the custodian of Botswana’s business environment as the Minister of Investment, Trade and Industry, a position she assumed after Masisi became president in April last year.

After taking over the reins, the youthful legislator admitted that that a lot has to be done in business reforms. She has since embarked on policy and regulatory reforms at her ministry to improve the business land scape in Botswana in order to improve the doing business rankings. Chief among the reforms were the adoption of the 2014 Doing Business Roadmap and Action Plan, whose objective is to reduce the cost of doing business in Botswana as well as create an environment where business is not hindered by unnecessary regulation and bureaucracy.

Last year parliament passed amendments to both companies and the registration of Business Names Acts as well as introduction of new pieces of legislation that allows for re-registration of both the existing companies and business names, paving way for the implementation of the Online Business Registration System (OBRS). The system is expected to be launched during the first quarter of 2019 and is expected to bring with it benefits such as improve data integrity, reduced turnaround times, less paperwork and improved overall efficiency.

WHAT IS THE STATUS OF BOTSWANA’S INFRASTRUCTURE?

Botswana is ranked 108 in infrastructure pillar in the Global Competitiveness Report. The infrastructure pillar looks at the quality and extension of transport infrastructure (road, rail, water and air) and utility infrastructure. This is so because the report indicate that better-connected geographic areas have generally been more prosperous. Well-developed infrastructure lowers transportation and transaction costs, and facilitates the movement of goods and people and the transfer of information within a country and across borders. It also ensures access to power and water—both necessary conditions for modern economic activity.

In 2017, Head of South African Development Community (SADC) Public Private Partnership (PPP) Network, Kogan Pillay warned that Botswana and Africa will go into recession in the next 10 years if the country does not adequately invest in its infrastructural needs. Pillay, who has vast experience in the implementation of PPPs and has previously worked for the South African government, is of the view that Africa’s big investors will shun the continent because of lack of infrastructure necessary for doing business.

“World Bank has warned about this happening,” he said at a workshop organised by Ministry of Finance and Economic Management. “Africa would not attract FDI (Foreign Direct Investment) because nobody would want to do business in a country which does not have infrastructure. It makes doing business difficult,” Pillay stated. According to Pillay, Africa needs US$ 90 billion to fund its infrastructural needs but it only has US$45 million availed for such.

It is believed that Botswana’s infrastructural needs can be resolved by developing an effective PPPs framework. Pillay believes that Botswana is not ready for PPPs until it develops a legal frame work which will guide investment and implementation of PPPs. “What Botswana has now is a policy, but you need to put it into law like other countries including South Africa,” he said. Pillay said PPPs are long term concessions to the private sector and should be done in a prudent manner to avoid forcing the country into bad commitment.

RESTORING INVESTOR CONFIDENCE

Botswana’s Foreign Direct Investment (FDI) ambitions have been met with counterproductive policies in the past decade which has led to frustrations and dent on Botswana as investment destination. In 2016, then BITC CEO, Letsebe Sejoe made shocking revelations that foreign investors are still finding it hard to pick Botswana as an ultimate place to do business because of the complications associated with running businesses in the country.

Sejoe then told the Parliamentary Committee on Statutory Bodies and Enterprises that Botswana is entirely opposite to what it has the world perceiving it as. Sejoe listed Permits and VISAs as the biggest challenge facing investors as he noted that delays in issuing the two frustrates inventors who end up going to other countries such as Rwanda, which has built a more conducive environment for investors.

The issue of permits and VISAs were reportedly handled by the Directorate on Intelligence Security (DIS), which has unlimited discretion on who is accepted or rejected. The parliament committee also heard that there was no turnaround time agreed on, and that the premises and VISAs can be rejected without explanation. Sejoe, who has since left the BITC then advised that part of solving the problem is to create a legal framework or policy which will guide certain procedures needed to facilitate business for companies lured by BITC to do business in Botswana.

He said while they have relationships with different stakeholders over facilitating the ease of doing business for foreign investors in Botswana, such partnerships are not binding and sometimes some institutions just ignore a request because they are not compelled by the law to do so. For instance, in countries like Mauritius they have what they call silent means approval. If a permit is supposed to be processed within 24 hours and there is no response after that time, the applicant has the right to go ahead because lack of response shows no objection,” he said.

Sejoe said Botswana should do the same, and design laws which promote business and protects investors if it is to continue being attractive to foreign investors.  “Government does not appreciate the enormous impact the foreign direct investment can make in the country’s economy. We have this attitude of treating everyone the same,” he said. “There is also lack of appreciation of frustration experienced by these investors,” Sejoe added.

Sejoe said not only are new investors facing problems of permits, but that foreign owned companies, some which have employed hundreds of citizens are facing the same problem when they want to renew their permits. “Botswana is not an open economy like we say we are to the world. There are people who have been doing business in Botswana for over 30 years and government rejected their application for citizenship over the period and all of a sudden they were told to go,” he said.

“Investors are cagey on this. Some who are already doing business in Botswana are sceptical about expanding their business because their future in Botswana is uncertain. Investors need certainty and some level of predictability,” he further advised. Sejoe narrated that some companies with operational businesses in Botswana but with their directors residing outside Botswana have had their directors’ VISAs rejected when they wanted to attend a business meeting in Botswana; he said this recount proved that Botswana is a difficult environment to do business in. Masisi has however admitted to this problem and has moved swiftly to act, the first step being to relief Director General of DIS Colonel Isaack Kgosi and further promising to embrace the policy of open economy. 

WHICH COUNTRIES ARE FARING BETTER IN SUB-SAHARAN AFRICA?


Mauritius ranks 49th globally. With a score of 63.7 out of 100 it achieves the best performance in Sub-Saharan Africa, in line with 2017. Mauritius’s leading position in the region is reflected in a GDP growth consistently above 3 percent since 2006, and above 4 percent over the past three years.

The competitiveness performance of Mauritius is relatively strong in eight of 12 GCI pillars, where it ranks 67th or higher. Among these eight pillars Mauritius has achieved its best score on the Product market pillar (65.6, 19th), thanks to a high degree of openness (6th) and a non-distortive fiscal policy (62.6, 16th). In addition, Mauritius is characterized by strong business dynamism (66.5, 35th) and sustained by lean administrative requirements (83.2) that enable companies to open and close with relative ease.

Finally, Mauritius has achieved a strong performance on the Institutions pillar (38th, 62.9), second only to Rwanda in the region. This is a considerable competitive advantage in SubSaharan Africa, where 65 percent of economies score below 50. On the other hand, the pillars where Mauritius delivers a weaker performance are those related to human capital: the Labour market (58.3, 74th), Skills (61.0, 74th) and Health (77.7, 83rd) pillars.

In particular, Mauritius is penalised by high redundancy costs (73.6 weeks of salary, 136th) and limited participation in the various levels of the educational system (6.8 mean years of schooling, 106th). South Africa ranks 67th globally—with a score of 60.8—and attains the second spot in Sub-Saharan Africa. Among its strengths, South Africa is home to a large market size (68.4), good infrastructure (68.6) and a well-developed financial system (82.1, 18th). More specifically, South Africa’s financial sector offers a Chapter 2: Regional and Country Analysis 36 | The Global Competitiveness Report 2018 relatively balanced access to various sources of finance, including credit (100.0, 11th), venture capital (33.0, 63rd), equity (100.0, 2nd) and insurance (100.0, 3rd).

 In addition, South Africa’s innovation capability is relatively advanced (44.3, 46th), although limited by insufficient research and development (37.5). Among its weaknesses, South Africa’s performances on the Health pillar (43.2, 125th) and Security (43.7, 132nd) sub-pillar are among the worst in the world. Driven by high incidence of communicable diseases and high rate of homicides (34 per hundred population, 135th), these factors are major challenges for the economic and human development of the country. Low ICT adoption (46.1, 85th) is another important restraint on South Africa’s competitiveness.

Only 54 percent of the adult population has access to the internet, and only 70 out of 100 people have subscribed to mobile-broadband services (66th). Similarly, the digital skills (116th) and critical thinking skills (78th) of the current workforce are inadequate for the progress of a successful economy in the Fourth Industrial Revolution.

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Details emerge in suspected Batswana poachers in Namibia

28th June 2022
suspected Motswana poacher arrested

New details about a suspected Motswana poacher arrested in Namibian and his accomplice who is on the run were revealed when the suspect appeared in court this week.

The Motswana Citizen who was shot and wounded by Namibia’s anti poaching unit is facing criminal charges under criminal case number (CR NO 10/06/2022) which was registered at the Divundu Police Station in the Mukwe constituency of the Kavango East Region on 10 June 2022.

It is alleged that a patrol team laid an ambush after discovering a giraffe’s fresh carcass in a snare wire and hanging biltong.  According to the Charge Sheet, the suspect Djeke Dihutu, aged 40 years, is charged with contravening and transgressions of Nature Conservation Ordinance andcontravening Immigration Act 07 in Mahango Wildlife Core Area, Bwabwata National Park. Dihutu’s first court appearance was on the 17th of June 2022, Rundu and it was postponed to the 07 July 2022. He is currently hospitalized in hospital under Police Guards.

Commenting on this latest development, the Namibian Lives Matter Movement National Chairperson Sinvula Mudabeti applauded the Namibian Anti Poaching Unit for its compliance with what it called the universal instrument on the Code of Conduct for Law Enforcement Officials adopted by the United Nations General Assembly resolution 34/169.

“We are aware that the duties of the police carry a great deal of risk, but our police has shown that they have a moral calling and obligation to protect even foreigners suspected of serious crimes on Namibian soil,” said Mudabeti.

According to him, whereas the Botswana Police Service, the Botswana Defence Force (BDF) and Directorate of Intelligence Service (DIS) have “very low moral ethics, integrity, accountability and honesty, the Namibian security agencies has shown very high levels of ethical leadership in the discharge of their duties even under duress.”

He said Namibian’s anti poaching unit has exercised one very important value, that is, the use of force only when it is reasonable and necessary. Mudabeti said this is in harmony with international best practices as enshrined in Article 2 of the UN instrument on law enforcement conduct, “In the performance of their duty, law enforcement officials shall respect and protect human dignity and maintain and uphold the human rights of all persons.

Our police have protected the life of a Botswana poacher and accorded him dignity, which is very foreign to our Botswana counterparts,” he said. He said article 3 of the same instrument above, calls for Law enforcement officials to use force only when strictly necessary and to the extent required for the performance of their duty.

“This provision emphasizes that the use of force by law enforcement officials should be exceptional; while it implies that law enforcement officials may be authorized to use force as is reasonably necessary under the circumstances for the prevention of crime or in effecting or assisting in the lawful arrest of suspected offenders, no force going beyond that was used by our Police,” he said.

Furthermore, Mudabeti said, whereas the universally accepted norm of the law of proportionality ordinarily permits the use of force by law enforcement, it is to be understood that such principles of proportionality in no case should be interpreted to authorize the use of force which is disproportionate to the legitimate objective to be achieved.

“Our police have used force proportional to the situation at hand. Great work indeed! Article 6 urges law enforcement officials to ensure the full protection of the health of persons in their custody and, in particular, shall take immediate action to secure medical attention whenever required,” he said.

Mudabeti said the Botswana poacher was immediately taken to hospital whereas the Nchindo brothers who were captured on Namibian soil, beaten, tortured and executed while pleading to be taken to the hospital we left to die.

“The Namibian Doctor gave evidence in court that Sinvula Munyeme’s lungs showed signs of life (during the autopsy) and that he could have survived if he was accorded immediate medical assistance in time but was left to die while BDF soldiers looked and possibly ignored his cry for help,” he said.

Mudabeti said unlike in Botswana where there are no clear separation of powers between the BDF, Botswana Police Service, Department of Intelligence and their Directorate of Public Prosecutions,” we have a system that allows for checks and balances and allows our people and foreigners who are found on the wrong side of the law to be accorded the right to a fair trial.”

He said Botswana citizens are treated with dignity when apprehended in Namibia and not assaulted, tortured and executed. “We are a civilized country that respects international law in dealing with non-Namibian criminals. The Namibian Police have not mistreated the Botswana poacher but have given him the benefit of the doubt by allowing due processes of the law to be followed,” he said.

He added that, “We are a peace loving nation that has not repaid Botswana by the evil that Botswana has done to Namibia by killing more than 37 innocent and unarmed Namibians by the trigger happy BDF.” He concluded that, “Our acts of mercy in arresting Botswana citizens should never be mistaken for cowardice.”

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Gov’t, Unions clash over accommodation

28th June 2022
accomodation

The government has reportedly taken a decision to terminate provision of pool housing and subsidy for civil servants as it attempts to trim the public service wage bill.

This emerges in a dispute that is currently before the Labour Office headquarters lodged by unions representing thousands of civil servants across the country. This publication understands that the decision to cease providing pool housing and rental subsidy for public officers is part of proposals that government put on the table during its negotiations with public service unions in order for it to adjust salaries.

A letter from Labour Office addressed to the Directorate of Public Service Management (DPSM) shows that the directorate is cited as the First Respondent. The letter is titled, “Dispute lodged: Cessation of provision of pool housing and subsidy for pubic officers.”

“This serves as a notification and requirement to a mediation hearing,” the letter informed DPSM. According to the letter, the Botswana Teachers Union (BTU), Botswana Sectors of Educators Trade Unions (BOSETU) Botswana Nurses Union (BONU) and Botswana Land Board &Local Authorities &Health workers Union (BLLAHW) who lodged the complaint are cited as the Applicant.

“Please come for mediation hearing. The hearing will be conducted by Mr Lebang. The hearing is scheduled for date/time 29th June 2022, 09: 00HOURS at Block 8 District Labour Office, Gaborone. Please bring all relevant documents,” reads the letter in part.

According to a document described as a proposal paper on the negotiations on salaries and other conditions of employment of public officers by the employer (government), the government did not only propose to stop providing accommodation to civil servants but also put a number of proposals on the table.

The proposal papers states that the negotiations (which have since been concluded) cover three government financial years; 2022/23, 2023/24 and 2024/25. The government proposed an across the board salary adjustments as follows; 3% for the financial year 2022/23 effective 1st April 2022, across the board salary adjustment of 3.5% for the financial year 2023/24 effective 1st April 2023 subject to performance of the economy and across the board salary adjustment of 4% for the financial year 2024/25 effective 1st April 2024 subject to performance of the economy.

The government also proposed phasing out of retention and attractive (Scarce Skills) Allowance with a view to migration towards clean pay, renegotiate and set new timelines for all outstanding issues contained in the Collective Labour Agreement, executed by the employer and trade unions on the 27th August 2019, to ensure proper sequencing, alignment and proper implementation.
The government also proposed to freeze public service recruitment for the 2022/23 financial year and withdraw the financial equivalence of P500 million attached to vacancies from Ministries, Department and Agencies (MDAs).

Another proposal included phasing out of commuted overtime allowance and payment of overtime in accordance with the law and review human resource policies during the financial year 2022/23, 2023/24 and 2024/25.

The government argued that its proposals were premised on affordability and sustainability adding that it was important to underscore that the review of salaries and conditions of service for public officers was taking place at a time when there were uncertainties both in the global and domestic economies.

“Furthermore there is need to ensure that any collective labour agreement that is concluded does not breach the fiscal deficit target of 4% of GDP,” the proposal paper stated. The proposal paper further indicated that beyond salary adjustments, the Government of Botswana is of the view that a more comprehensive consideration “must be taken on the issue of remuneration in the public service by embracing principles such as total rewards compensation which involves taking a fully comprehensive and holistic approach to how our organization compensates employees for the work.”

The proposal paper also noted that, “Clearly, the increase in salaries and changes to other conditions of service which have monetary consequences will further increase the proportion of the budget taken by salaries, allowances and other monetary based conditions of services.”

“The consequential effect would be a reduction of the portion that can be used for other recurrent budget needs (e.g. maintenance of assets, consumable supplies such as medicines and books) and for development projects,” the proposal states.

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BPF NEC probes Serowe squabbles

28th June 2022
BPF

Opposition Botswana Patriotic Front (BPF) National Executive Committee will in no time investigate charges party members worked with the ruling Botswana Democratic Party (BDP) membership to tip the scales in favour of the latter for Serowe Sub-council Chairmanship in exchange for deputy seat in a dramatic 11th hour gentleman’s deal, leaving the ruling party splinter under the political microscope.

In a spectacular Sub-council election membership last Thursday, the ruling BDP’s Lesedi Phuthego beat Atamelang Thaga with 14 votes to 12 for Serowe Sub-council Chairmanship coveted seat and subsequently the ruling party’s councilor Bernard Kenosi withdrew his candidacy in the final hour for the equally admired deputy chair paving the way for Solomon Dikgang of BPF, seen as long sealed ‘I scratch your back and you scratch mine’ gentleman’s agreement between the contenders.

Both parties entered the race with a tie of votes torn between 12 councillors each, translating for election race that will go down to the wire definitely. But that will not be the case as two BPF councilors shifted their allegiance to the ruling party during the first race for Chairmanship held in a secret ballot and no sooner was the election concluded then the ruling party answered back by withdrawing its candidacy for the deputy chair position to give BPF’s Dikgang the post on a silver platter unopposed.

BPF councilor Vuyo Notha confirmed the incident in an interview on Wednesday, insisting the party NEC was determined to “investigate the matter soon”. “During the race for the Chairmanship, two more BPF voted for alongside the ruling party membership. It was clear Dikgang voted alongside the BDP as immediately after the vote for Chairmanship was concluded, Kenosi withdraw his candidacy to render Dikgang unopposed as a payback,” Notha added.

As for the other vote, Makolo ward councilor will not be drawn for the identity preferring instead to say: “BPF NEC will convene all the councilors to investigate the matter soon and we will take from there.” Notha will also not be drawn to conclude may be the culprit councilors could have defected to the ruling party silently.

“If they are no longer part of us they should say so and a by-election be called,” was all he could say. As it stands now, the law forbids sitting Councilors and Parliamentarians from crossing the floor to another party as to do so will immediately invite for a new election as dictated by the law. Incumbent politicians will therefore dare not venture for the unknown with a by-election that could definitely cost their political life and certainly their full benefits.

Notha could also not be dragged to link the culprit councilors actions to BPF Serowe region Chairperson Tebo Thokweng who has silently defected to the ruling party and currently employed by the party businessman and former candidate for Serowe West Moemedi Dijeng as PRO for the highly anticipated cattle abattoir project in Serowe.

“As for Thokweng he has not resigned from the party but from the region’s chairmanship,” he said. WeekendPost investigations suggest Thokweng is the secret snipper behind the recruitment drive of the votes for the elections and is determined to tear the party dominance in Serowe and the neighbouring villages asunder including in Palapye going forward.

This publication’s investigations also show BPF’s Radisele and UDC’s Mokgware/Mogome councilors are under the radar of investigations for the votes-themselves associated with the workings and operations of Thokweng.

“NEC will definitely leave no stone unturned with their investigations to get into the bottom of the matter. Disciplinary actions will follow certainly,” Notha concluded, underscoring the need to toe the party line to set a good precedent. For the youthful councilor, the actions of his peers has set a wrong precedent which has to be dealt with seriously to deter future culprits.

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