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Guma throws Masisi in centre of BTO controversy

President Mokgweetsi Masisi has been asked to take action against Minister of Environment, Natural Resources Conservation and Tourism Tshekedi Khama owing to his actions that threw Botswana Tourism (BTO) into controversy.

The Parliamentary Committee on Statutory Bodies and Public Enterprises, chaired by Tati East legislator and former Botswana Democratic Party (BDP) chairman Moyo Guma was tabled before parliament this week following a period anticipation. The report, which was presented by committee acting chairperson Ndaba Gaolathe was not kind to Khama over his actions in the running of BTO affairs.

The report points out that Khama breached BTO Act in several ways, including among others; failure to appoint a board within a reasonable time-frame to run the affairs of the BTO; intentional and unlawful supervision of the BTO as if it is a department of the Ministry; going against procedural advice of the Permanent Secretary, Chief Executive Officer of the BTO and Non-Bank Institutions Regulatory Authority; and unlawful procurement appointments during the absence of the Board.

Blame is also apportioned to Khama for the BTO satellite office which was to be established in Dubai, at the minister’s instruction.  According to the report, the Board had indicated that due diligence was not conducted to determine the viability of the office since it was Khama’s instruction. “The result was that a market analysis was not done to determine whether the market was relevant and worth the investment for the Botswana products. In spite of such procedural deficiencies the BTO was to spend P17 million on the establishment of Dubai office over a period of three years,” reads the report.

“It became apparent during the interrogation of the CEO that the BTO Board was no-existent for nine months hence the Ministry usurping the functions of the Board. The Committee was of the view that procedurally and in accordance with statutory requirements the CEO should take instructions from the Board not the Ministry.” The report implicates Khama in making direct procurement of services of one Mike Brook for the production of 10 copies worth P1,347,500 in the absence of the board.

Khama is found to have been directly involved in the restructuring of the BTO, a decision which would have required an additional P23 million which was not budgeted for, subsequently necessitating the Ministry of Tourism to approach parliament through supplementary appropriation. “It came to light that the Minister was directly running the BTO. The decision to restructure should have emanated from the Board and not the Minister,” the report reads.

The committee also found Khama to have acted wrongly when he instructed BTO to appoint a medical insurance company to provide an insurance cover for BTO. A direct appointment of ASUIA as a service provider for inbound insurance was to be made at the request of Khama. A contract was to be signed with the company at the direction of the Minister. “The NBFIRA had advised that BTO should engage a local insurer before opening the tender to international bidders. This advice was ignored by the Ministry,” indicates the report.

The committee further found that the decision made by Khama should have actually been made by the Board. In another wrong doing, Khama instructed then BTO CEO Brian Dithebe to appoint Changu Newman to be the BTO attaché in Washington DC against the advice from the Human Resources Unit.

“Mrs Newman’s overall performance in the assessment indicated marginally below average competency potential compared to other professionals in management. This also had a bearing on the issues of governance where the Minister interfered with the running of the BTO,” says the report.

The firing of BTO CEO was not procedural according to the report. The Acting Chairman of the Board acting together with Ministry agreed and terminated the contract without following proper procedures since the Acting Chairman of the Board cannot legally act on his own without other members of the Board, stated the report. “The Committee was of the view that the action of the Acting Chairman and the Ministry was procedurally flowed.”

RECOMMENDATIONS

The Committee recommends that the BTO be instructed to to conduct a forensic audit for a three year period ending December 2017, under the direction of the Auditor General and report findings to Parliament) the Tourism Bill, 2017, seeks to validate a process which was done improperly, and therefore the Committee recommends that the bill be deferred pending the outcome of the detailed forensic audit, Khama has also been warned to refrain from acting in such a manner that violates the BTO Act, with further recommendation that President takes appropriate action in relation to the Minister’s meddling with the affairs of the BTO.

In November 2017, Masisi, then Vice President coaxed Khama to withdraw the Tourism Development Levy Bill, after it emerged from the committee that Khama tried to validate his actions at BTO through the bill. The committee also comprise of Major Gen Pius Mokgware, Gilbert Mangole, Sethom Lelatisitswe, Dr Phenyo Butale, Kosta Markus and Mephato Reatile.

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Mowana Mine to open, pay employees millions

18th January 2022
Mowana Mine

Mowana Copper Mine in Dukwi will finally pay its former employees a total amount of P23, 789, 984.00 end of this month. For over three years Mowana Copper Mine has been under judicial management. Updating members, Botswana Mine Workers Union (BMWU) Executive Secretary Kitso Phiri this week said the High Court issued an order for the implementation of the compromise scheme of December 9, 2021 and this was to be done within 30 days after court order.

“Therefore payment of benefits under the scheme including those owed to Messina Copper Botswana employees should be effected sometime in January latest end of January 2022,” Kitso said. Kitso also explained that cash settlement will be 30 percent of the total Messina Copper Botswana estate and negotiated estate is $3,233,000 (about P35, 563,000).

Messina Copper was placed under liquidation and was thereafter acquired by Leboam Holdings to operate Mowana Mine. Leboam Holdings struck a deal with the Messina Copper’s liquidator who became a shareholder of Leboam Holdings. Leboam Holdings could not service its debts and its creditors placed it under provisional judicial management on December 18, 2018 and in judicial management on February 28, 2019.

A new company Max Power expressed interest to acquire the mining operations. It offered to take over the Mowana Mine from Leboam Holdings, however, the company had to pay the debts of Leboam including monies owed to Messina Copper, being employees benefits and other debts owed to other creditors.

The monies, were agreed to be paid through a scheme of compromise proposed by Max Power, being a negotiated payment schedule, which was subject to the financial ability of the new owners. “On December 9, 2021, Messina Copper liquidator, called a meeting of creditors, which the BMWU on behalf of its members (former Messina Copper employees) attended, to seek mandate from creditors to proceed with a proposed settlement for Messina Copper on the scheme of compromise. It is important to note that employee benefits are regarded as preferential credit, meaning once a scheme is approved they are paid first.”

Negotiated estate is P35, 563,000

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Councilors’ benefits debacle-savingram reveals detail

18th January 2022

A savingram the Ministry of Local Government and Rural Development sent to Town Clerks and Council Secretaries explaining why councilors across the country should not have access to their terminal benefits before end of their term has been revealed.

The contents of the savingram came out in the wake of a war of words between counselors and the Ministry of Local Government and Rural Development. The councilors through the Botswana Association of Local Authorities (BALA) accuse the Ministry of refusing to allow them to have access to their terminal benefits before end of their term.

This has since been denied by the Ministry.  In the savingram to town councils and council secretaries across the country, Permanent Secretary in the Ministry of Local Government and Rural Development Molefi Keaja states that, “Kindly be advised that the terminal benefits budget is made during the final year of term of office for Honorable Councilors.”  Keaja reminded town clerks and council secretaries that, “The nominal budget Councils make each and every financial year is to cater for events where a Councilor’s term of office ends before the statutory time due to death, resignation or any other reason.”

The savingram also goes into detail about why the government had in the past allowed councilors to have access to their terminal benefits before the end of their term.  “Regarding the special dispensation made in the 2014-2019, it should be noted that the advance was granted because at that time there was an approved budget for terminal benefits during the financial year,” explained Keaja.  He added that, “Town Clerks/Council Secretaries made discretions depending on the liquidity position of Councils which attracted a lot of audit queries.”

Keaja also revealed that councils across the country were struggling financially and therefore if they were to grant councilors access to their terminal benefits, this could leave their in a dire financial situation.  Given the fact that Local Authorities currently have cash flow problems and budgetary constraints, it is not advisable to grant terminal benefits advance as it would only serve to compound the liquidity problems of councils.

It is understood that the Ministry was inundated with calls from some Councils as they sought clarification regarding access to their terminal benefits. The Ministry fears that should councils pay out the terminal benefits this would affect their coffers as the government spends a lot on councilors salaries.

Reports show that apart from elected councilors, the government spends at least P6, 577, 746, 00 on nominated councilors across the country as their monthly salaries. Former Assistant Minister of Local Government and Rural Development, Botlogile Tshireletso once told Parliament that in total there are 113 nominated councilors and their salaries per a year add up to P78, 933,16.00. She added that their projected gratuity is P9, 866,646.00.

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Households spending to drive economic recovery

17th January 2022

A surge in consumer spending is expected to be a key driver of Botswana’s economic recovery, according to recent projections by Fitch Solutions. Fitch Solutions said it forecasts household spending in Botswana to grow by a real rate of 5.9% in 2022.

The bullish Fitch Solutions noted that “This is a considerable deceleration from 9.4% growth estimated in 2021, it comes mainly from the base effects of the contraction of 2.5% recorded in 2020,” adding that, “We project total household spending (in real terms) to reach BWP59.9bn (USD8.8bn) in 2022, increasing from BWP56.5bn (USD8.3bn) in 2021.”  According to Fitch Solutions, this is higher than the pre-Covid-19 total household spending (in real terms) of P53.0 billion (USD7.8bn) in 2019 and it indicates a full recovery in consumer spending.

“We forecast real household spending to grow by 5.9% in 2022, decelerating from the estimated growth of 9.4% in 2021. We note that the Covid-19 pandemic and the related restrictions on economic activity resulted in real household spending contracting by 2.5% in 2020, creating a lower base for spending to grow from in 2021 and 2022,” Fitch Solutions says.

Total household spending (in real terms), the agency says, will increase in 2022 when compared to 2021. In 2021 and 2022, total household spending (in real terms) will be above the pre-Covid-19 levels in 2019, indicating a full recovery in consumer spending, says Fitch Solutions.  It says as of December 6 2021 (latest data available), 38.4% of people in Botswana have received at least one vaccine dose, while this is relatively low it is higher than Africa average of 11.3%.

“The emergence of new Covid-19 variants such as Omicron, which was first detected in the country in November 2021, poses a downside risk to our outlook for consumer spending, particularly as a large proportion of the country’s population is unvaccinated and this could result in stricter measures being implemented once again,” says Fitch Solutions.

Growth will ease in 2022, Fitch Solution says. “Our forecast for an improvement in consumer spending in Botswana in 2022 is in line with our Country Risk team’s forecast that the economy will grow by a real rate of 5.3% over 2022, from an estimated 12.5% growth in 2021 as the low base effects from 2020 dissipate,” it says.

Fitch Solutions notes that “Our Country Risk team expects private consumption to be the main driver of Botswana’s economic growth in 2022, as disposable incomes and the labour market continue to recover from the impacts of the Covid-19 pandemic.”
It says Botswana’s tourism sector has been negatively impacted by the Covid-19 pandemic and the related travel restrictions.

According to Fitch Solutions, “The emergence of the Omicron variant, which was first detected in November 2021, has resulted in travel bans being implemented on Southern African countries such as South Africa, Botswana, Lesotho, Namibia, Zimbabwe and Eswatini. This will further delay the recovery of Botswana’s tourism sector in 2021 and early 2022.”  Fitch Solutions, therefore, forecasts Botswana’s tourist arrivals to grow by 81.2% in 2022, from an estimated contraction of 40.3% in 2021.

It notes that the 72.4% contraction in 2020 has created a low base for tourist arrivals to grow from.  “The rollout of vaccines in South Africa and its key source markets will aid the recovery of the tourism sector over the coming months and this bodes well for the employment and incomes of people employed in the hospitality industry, particularly restaurants and hotels as well as recreation and culture businesses,” the report says.

Fitch Solutions further notes that with economies reopening, consumers are demanding products that they had little access to over the previous year. However, manufacturers are facing several problems.  It says supply chain issues and bottlenecks are resulting in consumer goods shortages, feeding through into supply-side inflation.  Fitch Solutions believes the global semiconductor shortage will continue into 2022, putting the pressure on the supply of several consumer goods.

It says the spread of the Delta variant is upending factory production in Asia, disrupting shipping and posing more shocks to the world economy. Similarly, manufacturers are facing shortages of key components and higher raw materials costs, the report says adding that while this is somewhat restricted to consumer goods, there is a high risk that this feeds through into more consumer services over the 2022 year.

“Our global view for a notable recovery in consumer spending relies on the ability of authorities to vaccinate a large enough proportion of their populations and thereby experience a notable drop in Covid-19 infections and a decline in hospitalisation rates,” says Fitch Solutions.
Both these factors, it says, will lead to governments gradually lifting restrictions, which will boost consumer confidence and retail sales.

“As of December 6 2021, 38.4% of people in Botswana have received at least one vaccine dose. While this is low, it is higher than the Africa average of 11.3%. The vaccines being administered in Botswana include Pfizer-BioNTech, Sinovac and Johnson & Johnson. We believe that a successful vaccine rollout will aid the country’s consumer spending recovery,” says Fitch Solutions.  Therefore, the agency says, “Our forecasts account for risks that are highly likely to play out in 2022, including the easing of government support. However, if other risks start to play out, this may lead to forecast revisions.”

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