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Debswana unleashes P1 million for roadside marketplace

Botswana’s flagship mining company Debswana, last week announced a P1 million pledge to help build a new roadside marketplace for the sale of fresh produce alongside Botswana’s A1 road, Botswana‘s main highway.

The country’s largest private sector employer and the world’s leading rough diamond producer announced that the market place will be built at Makoro settlement, a stone away from the bourgeoning town of Palapye. According to Debswana, which is a 50-50 venture between Botswana Government and Global diamond mining conglomerate De Beers, the aim is to provide shelter for traders who currently rely on umbrellas to protect them from harsh weather conditions such as heat waves and unanticipated rainfalls.

Debswana said through a statement released this week that the new structures will also offer an appealing environment for motorists to take a break, quench their thirst by purchasing the goods also aiding safe and refreshed drives along the A1 road. The site chosen is on the A1 national highway, which runs across Botswana from the Zimbabwean border through Gaborone to the South Africa border. Makoro has become known as a marketplace showcasing and trading traditional food, drinks and fresh produce from local farms.

On sale, in their season, are such foods as groundnuts, watermelon and mophane worms, an African delicacy. “Customers will also be able to buy indigenously crafted items such as woven baskets and beaded jewelry in the new market, acting as a collection point for recycling materials,” stated Debswana in a statement. About 50 traders have been registered to operate on the site, which supports mainly vulnerable women selling produce to support their families.

 The new marketplace is likely to attract more women from the greater Palapye and Tswapong areas. Boikhutso Malela, Corporate Affairs Manager for Social Performance at Debswana shared that: “all these women spend all their time in this market, from morning until late. So we have an opportunity to decent shelter for them to sooth and aid their trading.” Botswana Investment and Trade Centre (BITC), the country investment promotion agency has also, through its Brand Botswana unit, pledged P1 million towards the project.

BITC sees the project as key undertaking towards promoting domestic investment and aiding small medium enterprise (SMEs). Brand Botswana aims to brand the place as the ‘Home of Local Food’. The project, valued at P2.6 million project will be made of in total of eight structures made from prefabricated containers customised for use as retail units. The containers will be situated on each side of the road and each side of the gate. Small Micro, Medium Enterprise (SMMES) are regarded as new economic language for developing countries.

Encompassing small scale business, community cooperatives, hawkers, roadside traders and medium scales businesses SMMEs account for over 30 percent of Botswana’s workforce. Currently contributing over 20 percent to Botswana‘s economy the SMME sector is viewed as an integral role player in Botswana’s economic path.

Stakeholders involved in the project include Kgosi Topo Sebina, who oversees the Makoro village; Moiseraele Goya, Member of Parliament for Palapye and Assistant Minister of Trade and Investment; the Palapye Sub-Land Board; the local council; the Makoro vendors; the Department of Roads; the Department of Veterinary Science; Morupule coal mine; and the Local Enterprise Authority. Work on the new marketplace structures is expected to begin in March and is likely to take three months, followed by an opening ceremony.

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

21st September 2020

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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