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BITC first five years generates P10.5 billion

Botswana Investment & Trade Centre (BITC) revealed this week that since its inception in 2013, the organization has opened export windows worth over P10 billion. Newly appointed BITC Chief Executive Officer (CEO), Keletsositse Olebile shared this during a round table discussion with the media in Gaborone this week.

“We have developed compelling value propositions  , this are well package documents that says in the beef value chain for example where are the specific opportunities that we can take out to market and not just in beef but also in coal, soda ash just to name but few,” he said. Olebile explained that export-led investment promotion was a key deliverable in the BITC mandate and the organization take pride on considerably satisfactory output in such.

He underscored that this was the export earnings of companies they assisted only, and products uptake they facilitated.  “We only measure our performance in areas and companies we assisted,” he said. Olebile explained BITC pushes the export-led narrative because the local market is small for business.


 “For Botswana it is a reality that we are a very small population and the most pronounced reason why investors pick a particular location to set up shop has been established to be the size of a market, because we are such a limited market it becomes very key for us to though a location in Botswana   find access into the region for our Botswana based factories and commodity producers.  That is why we running some of this commendable drives for export promotion,” explained the new BITC chief.

BITC CEO also highlighted that one of the key export promotion initiatives that b fruits were inter boarder trade to leverage fully on duty free arrangements, SACU and other trades facilitation windows.  “We have also successfully managed to facilitate cross boarder value chain linkages to say, if a certain industry is flourishing in one of our neighboring countries how can we tap in the value chain and supply some commodities required in that particular industry,” he said.


He cited an example of car manufacturing in South Africa. “That is to say for industries such as vehicle manufacturing or assembly plant we  will be on the look out  to identify what we can effectively house in Botswana to be able to accelerate job creation here,” he said.
According to BITC, cross boarder linkages have been able to create a very effective window for Botswana based companies to access established and much bigger regional markets.

 “We emphasize auto components manufacturing to say let companies set up here with a view to supply bigger  industrial  plants in South African for example, and we have successfully delivered that with companies such Kromberg & Schubert, and a number of manufacturing companies in Lobatse, which are doing business without sister government investment arm Botswana Development Corporation(BDC)”  

BITC Director for Export Promotion  shared that for the five year period under the just ended strategy ,leading products which contributed significantly to BITC ‘s  facilitated export earnings basket were salt and soda ash ,coal  and even the struggling beef industry. “We have been working closely with Botswana Ash and we assisted them with improving their effectiveness as an exporter, facilitating them to access established market such as the Zambian & DRC markets which are key consumers of salt and soda ash after South Africa,” she said.

BITC executives further explained that to continue pushing the export-led economy agenda various strategic proposition were already being put in place to harness value chain businesses that can be birthed from salt and soda ash, coal and beef. “We are already in final stages of completing a feasibility study to look at how we can facilitate the setting-up of chemical processing plants and glass manufacturing using the soda ash to ensure that we create the much needed jobs,” shared the Acting Chief Operations Officer, Reginald Selelo.

 
Olebile  highlighted that in the new strategy for BITC deliberate actions will be taken to push and advocate for  the liberation of the beef sector “through regional opportunities mapping, identification of natural endowments that can sponsor economic sectors to thrive in a particular environment, the beef industry has been established as a key sector that we have comparative and competitive advantage as a country so we are pushing for the transformation of BMC and by in large the entire sector so that it performs to its full potential of delivering even more jobs for our people” he said

BITC also revealed that there were plans to resuscitate Ostrich farming industry to further deliver more export earnings.  “We have recently visited the Dibete Ostrich facility where plans were conceived to revitalize the industry with assistance from benchmarking missions in our neighboring South Africa, the latter account for more that 65 percent of global market share, so we have engaged with the Ministry of Agriculture in that regards,” shared the CEO.

It was also signaled that processes were in place to implement Coal value propositions in a bid to unearth the industry value chains. Leading minds in the coal industry have reiterated that Botswana needs not to look any further in creating jobs for its people and diversifying the mining industry from diamond sector dominance. Latest prospected reserves indicate that Botswana sits on over 200 billion tonnes of coal deposits of which contain different segments of grade value as per economically minable mineralization.  

Though a number of companies mostly with Australian origin are already on the ground exploring the economic mineralization of the coal deposits, experts observed that further robust steps must be taken to develop a world class coal industry that can attract global capital and major investment players in turn birthing rigorous industrialization. BITC says in its international missions to lure investors into Botswana such as the recent one in Dubai and upcoming one in China coal industry was one the earmarked sectors to woo external capital into the country.

“We are looking into the entire energy sector, in the areas of renewable energy –coal-methane space, bio gas and bio diesel, we are also working with relevant stakeholders to find investors for the coal-liquid plant which is earmarked to leverage on the abundant coal and make fuel out it, petroleum products, industrial reagents and factory chemical components in turn creating thousands of jobs, boosting our export earnings and growing our economy,” shared Olebile.

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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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