In an effort to accelerate the sluggish implementation of the Selebi Phikwe Revitalisation Strategy, Government has moved to advance the implementation by setting up a special Cabinet Committee to identify hurdles that impedes the successful execution of the strategy.
Addressing a full council meeting in Selebi Phikwe last week, the Minister of Investment, Trade and Industry, Bogolo Kenewendo said the recovery of the economy of Selebi Phikwe and the SPEDU region remains a priority hence Government’s continued efforts aimed at finding a lasting solution that will make Selebi Phikwe achieve full economic sustainability.
Kenewendo noted that the cabinet committee will address all shortcomings and fast-track all processes to ensure that the implementation of the strategy moves with speed. Kenewendo underscored President Mokgweetsi Masisi’s pronouncement regarding the re-birth of Selebi Phikwe which he made in his maiden speech as president on April 1st.
The committee is expected to address issues of regulatory delays like the Environmental Impact Assessment which councillors said often hold up projects thereby stalling progress and negatively affecting strategic growth plan. Echoing the president’s sentiments, Kenewendo reiterated that Government will particularly intensify its efforts to revitalise the economy of the SPEDU region to effectively respond to the closure and liquidation of BCL. She stated that Government through her ministry will continue with promoting investor fiscal and non-fiscal incentives that include low general tax rates as part of the revitalisation strategy in order to attract investors.
“The incentive packages are preliminary. Investors are looking for more, particularly a more enabling environment for business. The special cabinet committee that has been put together will look into the overall Phikwe business environment,” she said. The Minister also pointed out that Government will expedite the implementation of the Special Economic Zone through the Special Economic Zone Authority (SEZA). She revealed that the Investment ministry will work hard to service the land allocated to SEZA so as to make the environment enabling for business.
She commended SPEDU for its effort, noting that progress has been made albeit being slow. She pointed out that an accelerated pace of progress is anticipated once everything takes shape. She outlined targeted investment shows and strengthened collaborations and proper implementation of the Economic Revitalisation Programme as key in realising an increased pace of progress.
The Selebi Phikwe Revitalisation Programme is headed by former Bank Governor, Linah Mohohlo as Coordinator. Kenewendo added that a successful resuscitation of the Selebi Phikwe economy need full support of the local authority to facilitate investment promotion by making the environment conducive for business for thrive to be able to create employment.
“We must all work together to transform the country for the better. We must be active participants in supporting the National Transformation Agenda. We have a transformation agenda as ministry so as to improve our services,” said the minister who was in Selebi Phikwe on retreat with the leadership of the ministry and of all parastatals under the Ministry of Investment, Trade and Industry. Councillors hailed setting up of the special Cabinet committee as a welcome development as it proves Government’s sincerity of commitment to hasten the process of reviving the economy of Selebi Phikwe and the SPEDU region. However, they were sceptical of delivery as they bemoaned lack of delivery on the many promises made by Government ever since the closure of the mine.
Councillor Evelyn Kgodungwe of Thakadiwa Ward said that despite the many promises, there is nothing to show of Government’s commitment to deliver on all promises made. Kgodungwe noted that SEZA existed before the mine closure and wondered whether it has been expanded to cater for the sad realities of the mine closure.
Nominated councillor and former Mayor of Selebi Phikwe, Leonard Mojuta requested the minister to consider assisting resilient companies that have remained in Selebi Phikwe despite the closure of the mine which similarly affected their revenue. He said these loyal investors if assisted, can also help in creating sustainable jobs for the people of Selebi Phikwe. Mojuta emphasised the importance of not only looking for foreign investors while neglecting local ones that may have the potential to turn around the economy of the town.
Investment Land under SPEDU
Meanwhile, out of the 74 industrial plots under the authority of SPEDU, 15 plots have been allocated to investors. The plots were allocated in April 2017 through a tender process after consultation with the SPEDU Board. Additional 20 plots are under review to be recommended for direct allocation by end of June 2018. The allocated plots are not fully developed and there is no industrial activity as yet. The developments of these allocated plots are at different stages of development which include de-bushing, fencing and design. Construction for at least 50% is estimated to start by June 2019.
SPEDU’s Director for Strategic Projects, Jazenga Uezesa revealed in a correspondence to council that there are no jobs created by the 15 companies that have been allocated land except for those who were engaged during the preparation of the plots. SPEDU continues to engage these 15 developers to encourage them to develop the plots according to their development agreements.
SPEDU’s correspondence was addressing questions raised by Councillor Evelyn Kgodungwe of Thakadiwa Ward who had wanted to know how may plots out of the 74 plots under the authority of SPEDU have been allocated to investors, how many have been developed and with industrial activity taking place, the total number of people employed by the companies allocated plots and if SPEDU had any corrective measures to ensure development of the plots.
SPEDU is currently engaged with 41 companies that have expressed interest in establishing in the SPEDU region. These companies are at different stages of progression. Fifteen (15) companies are at Expression of Interest stage, six companies being one for Thune Irrigation Scheme, Botoka Temo, Urban Agriculture, Aviation Investment and Development Company, SK Group and AD-Infinitum Consultants-Blue Energy Africa are all at assessment and due diligence stage.
Two companies are at request for land allocation stage. The companies are Higher Motors and Silkroad. Another two are at Environmental Impact Assessment (EIA) stage. These two companies are for Truck Stop and Bulk Fuel Station and Refurbishment of Bus terminal as well as development of a commercial centre.
Five companies for the Farm Electrification along Motloutse River project, Platjan Bridge Construction, Pula Dynes Pharmaceutical Plant, Cabling Data Centre and Oxygen Gas Air Separation Plant are at the stage of factory shells renovation. Four companies, Almaz, Asante Tech, Bulb World and Better Service Group are currently at the stage of installation of equipment while only seven companies are at operational stage. The seven companies in operation are Kwenantle and Tsarona for Lotsane Irrigation Project, NaPro, Dinesh Textiles, Allegiant, Nitaz Collection and FIL-AM Textiles.
According to SPEDU, one of the challenges hindering the development is insufficient strategic infrastructure that include inadequate number of factory shells and serviced land. The development, approval and implementation of the SPEDU incentives is one way that the Government is being supportive in facilitating SPEDU companies and investors.
Councillor Kgodungwe had also wanted to know the progress with SPEDU companies or investors who want to set up businesses in Selebi Phikwe, the challenges hindering envisaged development as well as Government’s commitment to facilitating SPEDU companies.
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.”
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.
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.”