In the wake of uncertainties surrounding finite resources that natural diamonds are, forecasted introduction of robotic labour in mining undertakings as well as synthetic diamonds, Botswana government has identified the country’s second largest economic sector â€•tourism, as the next “big thing”.
President Mokgweetsi Masisi told members of the press on Monday that to add to the figure of people already employed in the tourism sector, government was already hard at work, creating and supporting new products within the sector to create even more jobs and diversify the economy.
Currently, mineral revenue particularly from diamond export is Botswana’s economic engine. The Tourism industry is the country’s second foreign income earner and GDP contributor. More than 25 000 Batswana are employed in the Tourism sector and its supporting industries such as hospitality, amongst others. Currently Botswana’s Tourism sector is heavily dependent on wildlife and natural environments as key tourists’ attraction features and money spinning apparatus.
“We have identified diversification of tourism products, full utilization of wildlife, and leisure and entertainment industry as key sectors to unpack and unleash our economy to its potential,” Masisi revealed this Monday. The president also added that consultation with relevant stakeholders was ongoing to review the hunting ban with possibilities of lifting the ban or relaxing some of its terms and conditions.
Botswana Tourism Organization (BTO), a parastatal under the Ministry of Environment , Natural Resources Conservation and Tourism has been in recent years supported, organized and initiated various events and showcases in tourist attraction places in a bid to boost revenue within the tourism sector and also support and develop other economic sectors. BTO has facilitated and supported a number of events, including the Khawa Dune Challenge, the Gaborone International Air Show, Race for Rhinos and the Makgadikgadi Epic amongst others.
These events according to Botswana Tourism Organization do not only cultivate cultural diversity, unity, ownership but also put food in small business owners’ tables as well as unleash many other value chain business opportunities. BTO is of the view that through such tourism events, Botswana doesn’t only diversify its tourism products but also empowers locals economically. To further boost wildlife tourism and raise awareness about Botswana’s unique environmental features and epic landscapes BTO intends to come up with various events and grow existing ones into regional and continental showcases recognized globally, highlighted Masisi.
Masisi observed that events such as Matsieng and Gaborone international Air show have significant and much more benefits beyond tourism. “These events market Botswana as a diverse investment centre because different people from around the world’s developed economies grace the events, the people don’t only sleep in our hotels, spend money here, use our local logistics but also get to know about other existing investment opportunities across the economic spectrum,” he said.
Masisi also reiterated that to further diversify the tourism sector government has earmarked Agro tourism as another key route in generating income for Batswana “We are looking at how our people can combine Agriculture and generating revenue through landscape viewing , through refreshing , leisure and relaxation packs within their different farms.”
The President also underscored that if Botswana‘s tourism products are diversified with much more value, Batswana will be wooed to visit their own country rather than flying outside for holidays and leisure excursions. The World Tourism & Travel Council (WTTC) projects that Botswana’s tourism industry’s direct contribution to the country’s GDP will grow by 5.8 % this year. According to the global tourism body, direct contribution of Travel & Tourism to Botswana’s Gross Domestic Product was BWP7, 129.6 million in 2017.
The WTTC further revealed that the sector’s total contribution to the GDP was BWP21, 496.5 million (USD2, 072.9mn) in 2017 accounting for 11.5% of GDP further suggesting a rise of 4.9% in 2018, and a rise of 4.5% pa to BWP34, 874.2 million 11.7% of GDP in 2028. It int latest report, the organisation revealed that in 2017 Botswana’s Travel & Tourism industry directly supported 26,000 jobs which equates to 2.6% of the country‘s total employment. It further forecasted that in 2018 the sector share on Botswana’s employment will go up by 4.3% and continue to grow by 4.5% pa to 42,000 jobs in 2028. The 2028 projection suggests that the sector will support 3.4 % of Botswana’s total employment then.
In 2017 visitors that graced Botswana’s attractive places generated BWP7, 119.6 million accounting for 7.4% of the country‘s total exports. The World Travel & Tourism Council further projects that the visitor’s export will realize an increase of 5.7 % in 2018 and grow by 4.6% pa, from 2018-2028, to BWP11, 791.1 million. In 2017 the industry investment stood at BWP4, 596.8 million which was 8.3% of total investment. “It should rise by 3.3% in 2018, and rise by 4.5% pa over the next ten years to BWP7, 357.2mn (USD709.5mn) in 2028, 8.6% of total,” the Annual research report by the global tourism entity stated in part.
The Tourism sector is one of the world’s largest economic sectors, creating jobs, driving exports, and generating prosperity across the world. The annual analysis of the WTTC on global economic impact of Travel & Tourism reveals that in 2017 the sector accounted for 10.4% of global GDP and 313 million jobs (that is 9.9% of total employment). The Tourism Satellite Account compiled by United Nations World Tourism Organization (UNWTO) noted early this year that in 2016 alone Botswana’s Tourism sector realized 1.9 million visits which generated over 14 billion pula worth of business.
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”