Special Economic Zones Authority (SEZA) could be far if it was not for this country’s nagging processes of acquiring land and change or transfer of land use. The Authority’s Director Investor Attractions and Monitoring Joel Ramaphoi raised this complaint during Business Botswana Annual General Meeting on Wednesday.
To enhance competitiveness, economic improvement, ease of doing business and attraction of foreign direct investment, Botswana implemented Special Economic Zones(SEZs) which are guided by the Special Economic Zones policy. SEZs will be regulated by a parastatal called SEZA that will lead in the development, marketing and monitoring of designated Special Economic Zones.
During this year’s National Business Conference Business Botswana President Gobusamang Keebine said that in 2016, they resolved to “Immediately implement” the Special Economic Zones (SEZ) policy beginning with one commercially viable zone that would be permitted to implement policies within the zone to improve Botswana’s competitiveness and address constraints to investment and doing business.
In the same conference President Mokgweetsi Masisi explained that the special economic zones policy and the cluster development model in critical areas such as tourism, beef, financial services, agriculture and mining were intended to promote economic diversification thus creating the much needed jobs. This SEZs needs land to be used for economic acceleration projects. This year the International Monetary Fund advised Botswana that initiatives like SEZs should be “given more attention.”
However according to Ramaphoi, the issue of land allocation or availability of land to be zoned prove to be a big impediment before SEZA. “Land acquisition has been a big problem. There are always delays in land acquisition amd it is a big challenge. We need to get enough land which will enable to carry out our mandate,” said SEZA director, Ramaphoi. Ramaphoi gave an example of Lobatse where they struggled to acquire 200hectres for SEZA as “it took too long to get land.”
One participant at the Annual General Meeting asked if SEZA was aware of using land through technology-where even plants can be planted in a small space like a room through the use of technology. Ramaphoi said Botswana is not yet at that stage. He also explained that the biggest problem seems to be the change or transfer of land use; for example changing agricultural land to industrial land.
During the recent National Business Conference President Masisi said his government is working on legislation “that will fast track the processing of applications for the change of land use so that the land owners can benefit from its optimal utilization.” Masisi revealed that the target date for finalization of the legislation will be December this year, something which should be good news for SEZA and Ramaphoi.
Government has zoned seven land spaces to be used as SEZs; Lobatse 70 hectares, Sir Seretse Khama International Airport 780 hectares, Fairgrounds 50 hectares, Palapye 500 hectares, Selibe Phikwe 1100 hectares, Francistown 700 hectares, Tuli Block 400 hectares and Pandamatenga 41000 hectares.
The SEZs has been divided into phases and in the first phase there is Sir Seretse Khama International Airport (added with the Diamond Hub as industrial and business transport zone); Selibe Phikwe(like base metal beneficiation, chemical manufacturing and agro business and Francistown(mining and logistics). In the second phase there is; Lobatse(meat and leather hub), Palapye(coal benefication), Tuli Block(horticulture), Pandamatenga(agro-business) and Gaborone Fairgrounds(financial services hub).â€¨
Assistant Minister of Investment, Trade and Industry Moiseraele Goya told Parliament this year conferring of all the eight SEZs will be finalized during 2018 and land servicing of the seven sites was intended to be completed by December 2018 and March 2020 respectively. Goya also revealed that the sale and marketing of all sites started in April 2018.
When debating the Special Economic Zones Bill No. 10 of 2015 which “seeks to boost industrialization and Botswana’s competiveness in the global economy”, Sefhare-Ramokgonami legislator Dorcas Makgato lauded the initiative of SEZs would expedite industries competitiveness in the global market, hence strengthening the country’s export earnings. However, her bubble was busted by the late Mochudi East NP Isaac Davids who said that even though the Bill was a good initiative, it was going to be hampered by shortage of water and power in the country where the SEZs are located.
Boteti East MP Lelatisitswe Sethomo who supported the bill wanted people in the SEZs to be empowered. Maun East MP Kostantinos Markus complained that his region was left out of the zoning even though it is a tourism attraction area. On Wednesday during Business Botswana AGM, SEZA director Ramaphoi said they have decided to start with 8 zones. He said they have been benchmarking on China which has only 4 SEZs but is successful economically.
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.
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.
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”