Guest Speaker at the Hospitality and Tourism Association of Botswana (HATAB) 2018 Conference and University of Botswana Vice Chancellor, Professor David Norris has emphasized the vitality of proper and comprehensive research in developing Botswana’s Tourism industry to a world-class sector that competes globally. The annual Conference was held in Maun last weekend.
Prof Norris is of the view that research is key in providing knowledge to management and policy decision makers. He observed that properly quantified data on tourism was lacking and very limited especially from within African countries. He highlighted that only holistic and overview studies were conducted by international organisations that were not even based in Africa. According to Norris, in the worst case scenario, the data was either unreliable or even non-existent owing to the fact that businesses worried more about cost implications than benefits thereof.
As such, the Professor called for a comprehensive approach that brought together all stakeholders for a value chain analysis and proper knowledge management. The University of Botswana Boss also stated that the importance of research broadens to inform the sector if the Botswana’s tourism industry had marginalised, closing out the poor and even whether the industry players were doing enough to promote other areas of tourism apart from wildlife.
He said robust research methodologies to address these questions need to be undertaken if any significant progress as far as inclusive growth in this lucrative sector is to be achieved. The sector currently contributes billions and over 25 000 indirect and direct jobs to Botswana’s economy.
According to Professor Norris, available research findings by institutions such as Okavango Research Institutes (ORI) were unfortunately not taken up to inform policy crafting by industry stakeholders . In terms of this conference theme “Communication, Information and Education: Power lines of Tourism Development –communication of research findings was still a problem in Botswana, research data that is compiled by for instance ORI on a number of areas in the tourism sector is not utilized by the industry,” he said.
ORI Director, Professor Joseph Mbaiwa criticised Botswana’s 28 year Old Tourism Policy terming it outdated and misinformed to current global industry trends and requirements. He said it retarded the growth of the industry. Mbaiwa said review of the policy was long overdue because it was no longer serving the interests of the industry. “Botswana might be deceived that its tourism industry was growing, but comparatively it was suppressed given that over the years there had been a decline in tourism arrivals while the country’s global share in the industry remained very low,” he said.
He argued that the outdated policy hinders a chance for industry growth saying Botswana had not adequately taken advantage of its tourism potential owing to the old policy that does not inform evolved economic trends.“Through the revised policy, the industry could also respond to issues of diversification, sustainability, economic efficiency as well as social, environmental and cultural challenges to eventually put Botswana in a competitive mode,” said Professor Mbaiwa. Further, he highlighted that such was not the government’s role alone but that of all industry players as well.
HATAB Chairperson Dr Thapelo Matsheka told attendants that Botswana Government was not consultative on issues of Tourism sector decision making. He accused the government of being selective in engaging the private sector. Dr Matsheka said government makes unilateral decisions on key issues affecting the industry.
“The decisions actually affect the private players in this sector directly but the latter are not fully consulted and engaged by government and this was hindering the unleash of the lucrative industry to the fullest,” he said He also noted that government needed to privatise some tourism events that Botswana Tourism Organisation (BTO) organises with taxpayers’ money. “Some of these events can be better hosted by the private sector, money should be hived from there, not just in sponsorships that are later unaccounted for because BTO’s account also pours in chunks of funds towards these event,” reiterated Matsheka.
Human Resource Development Council Chief Executive Officer, Dr Raphael Dingalo, emphasised the need to strengthen the tripartite alliance of the private sector, government and academia in the development and growth of the tourism industry. Deputy Permanent Secretary in the Ministry of Environment, Natural Resources Conservation and Tourism, Mr Felix Monggae noted that the Tourism Training levy was unutilized as uptake by industry players was low. He said the levy account was sitting at over 17 million pula available for use by relevant and eligible persons and companies.
“There are issues of sub-standard service in the tourism industry yet the training levy is aimed to help tourism operators address such by offering training in various skills in tourism and hospitality,” he said. In response to grievances that that locals and indigenous Batswana were left out in this lucrative sector, Monggae told delegates that government tourism licensing encourages citizen participation and hence, about 1 600 licensed tourism entities were recorded by January this year with 1 177 citizens only, 256 joint ventures and 254 non-citizens.
The tourism industry continues to be one of Botswana cardinal economic sectors, literally one of the anchors of the county’s fiscals, contributing significantly to government revenue and creating a whole value chain of Small Medium Enterprises and supporting other macro businesses that account for significant shares in Botswana ‘s economic setup.
The World Tourism & Travel Council (WTTC) has projected that the industry’s direct contribution to the country’s GDP will grow by 5.8 % in 2018, information contained in the organization’s Annual Research report indicates. The report states that the direct contribution of Travel & Tourism to Botswana’s GDP 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 the GDP, further suggesting a rise of 4.9% in 2018, and a rise of 4.5% p.a to BWP34, 874.2 million 11.7% of GDP in 2028.
The HATAB conference is one of Botswana’s Tourism industry premier policy discussion and views exchange event. This year the meet underscored a number of issues that needed to be addressed as a matter of urgency. The HATAB Conference gathers academics, tourism industry players, travel and tourism industry stakeholders as well as other complementing economic drivers to discuss travel & tours, hospitality and the entire Tourism industry. The Tourism sector is Botswana’s second largest foreign income earner and GDP contributor after the mining sector, spearheaded by the lucrative diamond industry.
Marcian Concepts have been contracted by Selibe Phikwe Economic Unit (SPEDU) in a P230 million project to raise the town from its ghost status. The project is in the design and building phase of building an industrial hub for Phikwe; putting together an infrastructure in Bolelanoto and Senwelo industrial sites.
This project comes as a life-raft for Selibe Phikwe, a town which was turned into a ghost town when the area’s economic mainstay, BCL mine, closed four years ago. In that catastrophe, 5000 people lost their livelihoods as the town’s life sunk into a gloomy horizon. Businesses were closed and some migrated to better places as industrial places and malls became almost empty.
However, SPEDU has now started plans to breathe life into the town. Information reaching this publication is that Marcian Concepts is now on the ground at Bolelanoto and Senwelo and works have commenced. Marcian as a contractor already promises to hire Phikwe locals only, even subcontract only companies from the area as a way to empower the place’s economy.
The procurement method for the tender is Open Domestic bidding which means Joint Ventures with foreign companies is not allowed. According to Marcian Concepts General Manager, Andre Strydom, in an interview with this publication, the project will come with 150 to 200 jobs. The project is expected to take 15 months at a tune of P230 531 402. 76. Marcian will put together construction of roadworks, storm-water drains, water reticulation, street lighting and telecommunication infrastructure. This tender was flouted last year August, but was awarded in June this year. This project is seen as the beginning of Phikwe’s revival and investors will be targeted to the area after the town has worn the ghost city status for almost half a decade.
The International Monetary Fund (IMF) has slashed its outlook the world economy projecting a significantly deeper recession and slower recovery than it anticipated just two months ago.
On Wednesday when delivering its World Economic Outlook report titled “A long difficult Ascent” the Washington Based global lender said it now expects global gross domestic product to shrink 4.9% this year, more than the 3% predicted in April. For 2021, IMF experts have projected growth of 5.4%, down from 5.8%. “We are projecting a somewhat less severe though still deep recession in 2020, relative to our June forecast,” said Gita Gopinath Economic Counsellor and Director of Research.
The struggle of humanity is now how to dribble past the ‘Great Pandemic’ in order to salvage a lean economic score. Botswana is already working on dwindling fiscal accounts, budget deficit, threatened foreign reserves and the GDP data that is screaming recession.
Latest data by think tank and renowned rating agency, Moody’s Investor Service, is that Botswana’s fiscal status is on the red and it is mostly because of its mineral-dependency garment and tourism-related taxation. Botswana decided to close borders as one of the containment measures of Covid-19; trade and travellers have been locked out of the country. Moody’s also acknowledges that closing borders by countries like Botswana results in the collapse of tourism which will also indirectly weigh on revenue through lower import duties, VAT receipts and other taxes.
Latest economic data shows that Gross Domestic Product (GDP) for the second quarter of 2020 with a decrease of 27 percent. One of the factors that led to contraction of the local economy is the suspension of air travel occasioned by COVID-19 containment measures impacted on the number of tourists entering through the country’s borders and hence affecting the output of the hotels and restaurants industry. This will also be weighed down by, according to Moody’s, emerging markets which will see government losing average revenue worth 2.1 percentage points (pps) of GDP in 2020, exceeding the 1.0 pps loss in advanced economies (AEs).
“Fiscal revenue in emerging markets is particularly vulnerable to this current crisis because of concentrated revenue structures and less sophisticated tax administrations than those in AEs. Oil exporters will see the largest falls but revenue volatility is a common feature of their credit profiles historically,” says Moody’s. The domino effects of containment measures could be seen cracking all sectors of the local economy as taxes from outside were locked out by the closure of borders hence dwindling tax revenue.
Moody’s has placed Botswana among oil importers, small, tourism-reliant economies which will see the largest fall in revenue. Botswana is in the top 10 of that pecking order where Moody’s pointed out recently that other resource-rich countries like Botswana (A2 negative) will also face a large drop in fiscal revenue.
This situation of countries’ revenue on the red is going to stay stubborn for a long run. Moody’s predicts that the spending pressures faced by governments across the globe are unlikely to ease in the short term, particularly because this crisis has emphasized the social role governments perform in areas like healthcare and labour markets.
For countries like Botswana, these spending pressures are generally exacerbated by a range of other factors like a higher interest burden, infrastructure deficiencies, weaker broader public sector, higher subsidies, lower incomes and more precarious employment. As a result, most of the burden for any fiscal consolidation is likely to fall on the revenue side, says Moody’s.
Moody’s then moves to the revenue spin of taxation. The rating agency looked at the likelihood and probability of sovereigns to raise up revenue by increasing tax to offset what was lost in mineral revenue and tourism-related tax revenue. Moody’s said the capacity to raise tax revenue distinguishes governments from other debt issuers. “In theory, governments can change a given tax system as they wish, subject to the relevant legislative process and within the constraints of international law. In practice, however, there are material constraints,” says Moody’s.
‘‘The coronavirus crisis will lead to long-lasting revenue losses for emerging market sovereigns because their ability to implement and enforce effective revenue-raising measures in response will be an important credit driver over the next few years because of their sizeable spending pressures and the subdued recovery in the global economy we expect next year.’’
According to Moody’s, together with a rise in stimulus and healthcare spending related to the crisis, the think tank expects this drop in revenue will trigger a sizeable fiscal deterioration across emerging market sovereigns. Most countries, including Botswana, are under pressure of widening their tax bases, Moody’s says that this will be challenging. “Even if governments reversed or do not extend tax-easing measures implemented in 2020 to support the economy through the coronavirus shock, which would be politically challenging, this would only provide a modest boost to revenue, especially as these measures were relatively modest in most emerging markets,” says Moody’s.
Botswana has been seen internationally as a ‘tax ease’ country and its taxes are seen as lower when compared to its regional counterparts. This country’s name has also been mentioned in various international investigative journalism tax evasion reports. In recent years there was a division of opinions over whether this country can stretch its tax base. But like other sovereigns who have tried but struggled to increase or even maintain their tax intake before the crisis, Botswana will face additional challenges, according to Moody’s.
“Additional measures to reduce tax evasion and cutting tax expenditure should support the recovery in government revenue, albeit from low levels,” advised Moody’s. Botswana’s tax revenue to the percentage of the GDP was 27 percent in 2008, dropped to 23 percent in 2010 to 23 percent before rising to 27 percent again in 2012. In years 2013 and 2014 the percentage went to 25 percent before it took a slip to decline in respective years of 2015 up to now where it is at 19.8 percent.