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BAMB charts new path to push food security

Botswana Agricultural Marketing Board (BAMB) new Chief Executive Officer, Leonard Morakaladi, has said his organisation is currently taking a new path which will see it move to become a key player in the economic make up as well as national agendas of employment creation and economic diversification. Morakaladi was addressing a press conference recently in Gaborone.

Morakaladi is of the view that apart from the fact that Agriculture puts food on the table, the sector carries inarguable potential in contributing to the country’s Gross Domestic Product and creation of much needed jobs especially for the unemployed young people. Giving a brief update on the company’s operations the CEO shared that apart from buying local produce BAMB was also moving into creating linkages between livestock producers and arable producers in the area of grain by-products uptake by local livestock farmers.

Morakaladi also offered clarification on pricing concerns, saying BAMB pricing was based on regional trends as Botswana was on overall importing most of its grain.  “We use the Southern African Features Exchange, we basically benchmark our prices based on the prevailing pricing in the Southern Africa region so that if we run out of grain we can still have our boarders open so that we can import, so we try by all means to harmonies the prices,” he said.

He also explained that his organization operates on two types of pricing being, contract pricing and non contract pricing. Under the contract prices category BAMB enters into an agreement with an indentified grain producer with proven production capacity.  “This provides hedging mechanism for our continuous suppliers who adhere to our agreement in feeding us with certain amount of grain at agreed time intervals, this usually encompasses our large scale commercial farmers,” he said.

Morakaladi explained that under this category, procuring prices are a bit higher that non contract prices. BAMB also, leveraging on government incentives offers 30 % input cost payback to producers for every 5 hectares of grain produce. Regarding Botswana’s grain production capacity quantity, the BAMB Chief Executive said that currently Botswana was producing on average 20 000 metric tons of Maize against the annual consumption of 142 000 metric tons.

 “This season we are only expecting just over 10 000 metric tons, this clearly reflects that we are by far net importers of maize and always will be unless we improve this tonnage,” he said. Against the annual consumption of 90 000 metric tons of sorghum Botswana is almost able to feed itself as a nation. “This season we are expecting 35 000 metric tons of harvest, coupled with over 40 000 metric tons in our storages we can comfortably say we will easily meet our annual consumption demand,” he said.

Morakaladi also said the same about cowpeas production explaining that this season, Botswana produced around 7 000 metric tons which will carry the nation through coupled with substantial grain available in BAMB storages to date. BAMB is mandated with taking care of the Government Strategic Grain Reserve (SGR) through which the organization ensures that in the worst case scenario Botswana would have enough grain to feed itself for a significant amount of time.

“We are looking at having at least 30 000 metric tons of Maize, Sorghum and beans in our storage facilities, this can also be maintained by hosting over 234 million pula, ready in the bank  to buy grains at any point in time to ensure we continue feeding the nation,” he said.
He underscored that going forward the Board intends to fast track implementation of the cluster strategy.

“We will be working closely with our small and medium scale farmers to try and assist them with incubation and clustering mechanism to inculcate the spirit of clustering which co nsequently results in increased output because when our farmers produce individually they have  challenges with accessing  fertilizers, recapitalization and machinery.”Morakaladi also shared that BAMB will engage farmers association and community cooperatives to see how they can work together towards increased grain produce.

“Our commercial farmers are an important component in our course but we believe they are at a level now where they can stand on their own, they have graduated, this now allows us to invest more incubation and technical assistance into our small farmer,” he said.
BAMB also provides an advisory role to the livestock farming community through its business centers countrywide which includes retailing veterinary requisites ranging from vaccines, dips, de wormers, antibiotics, veterinary instruments, antibiotics, mineral and vitamin supplements for livestock and poultry.

In the 2016/17 financial year Botswana Agricultural Marketing Board registered total revenue increase of 20.5% from P332 million in 2016 to P400.7 million at end of the 2017 financial year. The revenue growth in revenue was mainly attributed to sale of animal feeds, veterinary medicines, which for the first time were the major contributor to BAMB total sales. However the board experienced a decline in profit as compared to the year ending March 2016 as it recorded a profit of P19, 959, 41 as at March 2017.

BAMB is tasked with providing a market for locally grown scheduled crops such as cereals, pulses/beans and oilseeds, as well as ensure that adequate supplies exist for sale to customers at affordable prices. The organization has in recent years been undergoing restructuring of their business operations and remodeling its management strategies intended at benefiting the producer and uptake consumer better.

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Botswana on high red alert as AML joins Covid-19 to plague mankind

21st September 2020

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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