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MPs doubt Gov’t ICT system can handle Online Business Registration

Despite parliament this week giving a go ahead to the proposed Online Registration bill presented by Minister of Investment, Trade & Industry Bogolo Kenewendo; legislators are sceptical about the readiness of government’s Information Communication Technology (ICT) system.

Kenewendo proposed to law makers’ the Companies Re-Registration Bill of 2018 with one of the major reforms being  affording existing companies to migrate accurate and reliable data to a new online system through a seamless and conjoined process. When presenting the bill Kenewendo said the proposed change would among others facilitate the development of the Online Business Registration Systems (OBRS) that aims to improve the overall efficiency in business registration.

Inside the highly anticipated Bill are provisions such as companies’ exemption from paying accumulated outstanding annual return fees during the transition period of the Bill. Further provisions suggest that the minister will have powers to make regulations that will supplement the provisions of the new system as he /she sees fit and as need arises. 

This bill comes after the approved ease of doing business reform in 2014. Kenewendo told parliament that the bill was part of a larger legal framework envisioned under the doing business road map. “The objective of the bill is to provide for the re-registration of existing companies under the companies act,” she said. Members of parliament showered the bill with praises saying that it was long overdue for Botswana Company and business registration processes to evolve and catch up with global times and international standards as well as procedures of doing things.

Member of Parliament for Gaborone Bonnington South Ndaba Gaolathe noted that the Bill provisions would effectively govern the migration of existing companies into digitalized framework saying that was a welcome move. Gaolathe cited countries who have successfully put in place effective ease of doing business reforms and progressed to do well with wooing foreign capital including Rwanda and Mauritius. Gaolathe said this particular reform would restore investors and potential business people’s confidence.

Member of Parliament for Sefhare–Ramokgonami who is also Minister of responsible for permits and immigration issues Dorcus Makgatho said migration from manual registration was the way to go as many countries who have long implemented the latter were realizing positive impact on ease of doing business and consequently significant contribution on economic growth.

That notwithstanding, some Members of Parliament are also unconvinced the government ICT system, which is synonymous with ‘being down’ will help the process. The legislators argue that digitization of processes such as registration of data comes with causalities and its own complications.

Takatokwane Lawmaker, Ngaka Ngaka has advised that the Online Business Registration System be developed in a manner that would make it easy for the public to do online business registration rather than complicating things even further. Sharing the same sentiments as Ngaka is Member of Parliament for Ghanzi North, Noah Salakae who expressed concern that the government Information Communications System (ICT) could hamper the effectiveness of OBRS should it not be upgraded.

“I think we should ask the Minister of Transport and Communications to inform us about the state or the readiness of our ICT system to take over this job,” asserted Salakae. Legislators also added to Salakae‘s views, saying that upgrading of the government ICT system to enable successful implementation of e-government across various government departments was vital to proper and effective realization of reforms such as this one.

“If we could ease the registration of companies and company related processes, a lot of young Batswana would find it easier to register companies which would lead to employment creation,” added MP for Nata- Ngweta, Polson Majaga
It was also noted that institutions responsible for the implementation of the successful bill should guard against cyber errors such as duplication of names which might happen during the transition period. Propositions by legislators were that that there should be a contingency plan in place to guard against irregularities such as the aforementioned.

MPs also advised that Ministry of Investment Trade & Industry should invest adequately on raising awareness to Batswana on the changes once the implementation takes off. Meanwhile Companies and Intellectual Property Authority (CIPA) Registrar General Conductor Masena told the media on Monday that online registration of businesses will go live this year, “Our ultimate objective is to adopt modern management systems and practices that facilitate quick and effective decision making with the ideal of assuring service delivery and efficiency to the business community.”

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P230 million Phikwe revival project kicks off

19th October 2020
industrial hub

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.

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IMF projects deeper recession for 2020, slow recovery for 2021

19th October 2020

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.

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Botswana partly closed economy a further blow of 4.2 fall in revenue

19th October 2020

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.

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