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Multibillion-Pula Trans Kalahari Railway takes shape

Botswana Railways and its Namibian Counterpart state owned TransNamib recently penned down a Memorandum of Understanding (MoU) to facilitate the joint development of a container terminal at Gobabis.

 Located around 110km west of Botswana Namibia boarder. Gobabis is the terminus of a 1067 Km gauge line from the port of Walvis Bay via the capital Windhoek. According to executives of the two companies the MoU would serve as a standing point to assist the two governments with the development of proposed Trans-Kalahari railway.

 The 1500 kilometers railway line would connect Botswana to the Namibian Atlantic coast, traversing the vast semi-arid, sandy savannah of the Kalahari Desert from Botswana to Namibia, with the sole benefit of connecting the land-locked Botswana to Namibia's port of Walvis Bay, thus unlocking the value of coal mining in Botswana and power generation in the region.

TransNamib Corporate Communications Executive Ally Hangula Paulino observed this week that the over P100 billion railway line would complement the existing Trans-Kalahari corridor, which links Botswana to the port of Walvis Bay, but stretches 1 900 kilometres from Walvis Bay, through Windhoek, Gaborone in Botswana and Johannesburg to Pretoria in South Africa.

 The just signed Trans-Kalahari railway agreement includes adding a coal terminal and associated loading facilities to the Namibia-Botswana corridor that would benefit other landlocked Southern African Development Community (SADC) countries like Malawi, Zambia and Zimbabwe by providing alternative transportation routes. Botswana Government signed several agreements on the Walvis Bay and the shortcoming has been that the port and cargo bay are unutilized by the traders and Botswana business people.

According to Botswana Investment & Trade Center (BITC) government trade facilitation and investment wooing machinery the Botswana Dry Port acts as a key receipt or dispatch point for commodities either destined for Botswana or regionally providing storage and bagging.
 Opportunities presented by the Port are therefore in line with this, covering transport and logistics services to and from the Port including other services offered at the Port such as cartage services, container handling, stacking, storage, a break bulk terminal, general purpose warehouse, empty container park and value-added services such as customs clearance.

 The dry port facility project has cost the Botswana government about P50 million, under the commercial management of Botswana Railways Botswana Government leased a portion of land, measuring 36200sq from the Namibian government to establish a Dry Port in its quest to facilitate import/export activities for Botswana Businesses and international trade undertakings. Botswana as a member of Southern African Customs Union (SACU) has several trade agreements and advantages it has and enjoys from the membership.

Trans Kalahari High Way which is a corridor that links Botswana, South Africa and Namibia is one of the infrastructures put up by the Governments and international partners to help enhance cross border trade in the region.  The Trans Kalahari Corridor (TKC) is a tripartite trans-boundary Corridor Management Institution that was established with a political and economic vision to pursue or contribute towards deeper regional integration programs of SADC, SACU and indeed NEPAD.

The Trans Kalahari Corridor (TKC) is a road network spanning approximately 1900 kilometers across the territories of Botswana, Namibia and South Africa.  It starts in the Gauteng Province in South Africa and continues through Rustenburg and Zeerust in the North-West Province, through Lobatse and Kanye in Botswana, the Mamuno and Trans Kalahari Border Posts, through Gobabis, Windhoek and Okahandja in Namibia and right through to the Port of Walvis Bay.

The port of Walvis Bay on the west coast of Namibia strategically links to other Corridors in the sub-region, namely: Trans Kunene Corridor, Walvis Bay-Ndola-Lubumbashi (Trans Caprivi) Corridor, Windhoek-Luanda Corridor and Trans Oranje Corridor. Road network linkages cut across these Corridors creating a strategic network. The TKC also connects the ports of Walvis Bay with the Maputo Corridor, resulting in the Coast-to-Coast Corridor.

This Corridor is known for providing a short transport link across the entire breadth of the South African Sub-continent. Compared to the traditional routes via southern Namibia to South Africa’s Gauteng, TKC cuts the distance by 400 kilometers, making it a more preferred route and providing cost effective logistical advantages to users. The TKC is a strategic route-of-choice that provides linkages between the Americas and East European markets and the Southern African hinterland

The Trans Kalahari Corridor is complemented by the Maputo Corridor on the east coast of Africa, thus forming a transport corridor over the entire breadth of southern Africa. The Trans Kalahari Corridor Management Committee, a joint regional committee with rotatory chairmanship, was initiated and established by Namibia’s Ministry of Works, Transport and Communication in conjunction with the Botswana and South African Governments as well as private sector transport representatives. The Committee’s purpose is to simplify cross-border transactions and customs operations along the Corridor.

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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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