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BEDP drives local exporters to economic makeover

The University of Botswana through Department of Marketing in collaboration with Botswana Investment Trade Centre (BITC) hosted a two day Botswana Exporters Development Programme (BEDP) training workshop for local exporters.

The BEDP is designated to develop a pool of appropriately skilled exporters and to contribute to a growing number of actively involved exporters in the now ailing economy. According to Professor Rina Makgosa, head of the department of Marketing in the University of Botswana, the programme is meant to drill the local exporters to be able to penetrate adequately foreign markets and take their businesses abroad.

She said some businesses or manufacturers have good products which can suit foreign markets as well as contribute to economic growth and diversification. She said action was lagging behind, hence the workshop intends to stimulate action to develop progressive exporters.
The workshop training covered aspects such as the necessity of why local companies should export, the need for diversifying the export trade and how exporters can penetrate the outside market environments. The initiative attracted representatives from small medium exporting businesses and large exporters such as Senn Foods.

Professor Edward Marandu challenged the local businesses to take exporting serious because of the good reasons that make Botswana to be exporting hub such as Botswana being an open economy. “The economy in Botswana is very open and therefore for exporters there is need to diversify the export base which is mainly mineral exports,” he said. Marandu further underscored that exporting comes with opportunities such as getting foreign exchange by the country, and creating employment opportunities because of the high level of production which is involved in exporting.

“Exporters also need to consider expanding into other new foreign flourishing markets such as South Korea, Hong Kong and Taiwan. For now Botswana’s market is mainly limited to EU, SADC and USA which are congested in the meantime,” said Marandu. Although exporting is normally faced with trade barriers such as lack of adequate access to the markets due to limited resource constraints, the exporting businesses were encouraged to seek assistance from local organizations such as Botswana Export Credit Insurance (BECI) and BITC which can offer support to the exporters in terms of identifying markets for their goods and enhancing export competitiveness and readiness amongst the exporters. Regional and international trade agreements such African Growth and Opportunity Act (AGOA), COMESA and SADC which also helps in marketing businesses of the party member states.

For her part, Dr Catherine Phambuka Nsimbi said exporters will always come across obstacles such as culture, religion or language barriers and risks as it entails entering the new territory. She therefore advised that intensive market research should be conducted by an exporting business and urged that the use of technology such as E–Commerce for marketing and advertising. She noted with great concern that research has shown there has been a decline in the textile export industry which used to be flourishing in the early 90s. She said that there is therefore need for formation of business clusters by local manufacturers who export.

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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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