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OBRS threatens jobs at CIPA

As the world goes digital and man power is replaced with the power of technology and its perks, the new bill presented and approved by parliament to facilitate for the online registration of  companies by Minister of Trade Investment and Industry Bogolo Kenewedo is set to come to live towards the end of the year.

While it is not evident as to how many employees will be trained for the use of new programme, The Chief Executive Officer, Conductor Masena of CIPA explained that it is too early to state on how many staff will be utilized. The Governments of Botswana and New Zealand are said to have signed a Memorandum of Understanding in 2016, in which a New Zealand Companies Office (NZCO) agreed to assist with the implementation of the online business Registration System (OBRS). The New Zealand Government will be providing the Software at no cost to CIPA, NZCO is noted to have appointed a company called Foster Moore to build the system that will reach CIPA’s specifications and requirements.

 The CIPA CEO explained that as a customer oriented organization it is in their interest to ensure that a sufficient number of employees will be deployed. This is to ensure that the turnaround target for their registration which is expected to be achieved in less than 24 hours is achieved for all customers.

 As a member of the Corporate Registers Forum (CRF) he highlights that they have had the benefit of riding off the experiences of similar sized organizations that have implemented similar systems. The CEO further highlighted that they have learnt that it is essential to re-deploy and re-train some officers to complete the back-end activities that are necessary to complete the registration process.

Out of a total of 91 employees, it is expected that some officers will remain in their current roles assisting customers that are not computer literate, whilst some may be redeployed to other related functions such as Compliance. “It is worth noting that CIPA would focus more on compliance to the Companies Act, by invoking previously less utilized provisions. This action though will need more human capital to do inspections and spot checks on companies at both their registered office and Principal place of business,” he noted.

OBRS which will be completely online will have customers performing many transactions from the comfort of their homes or businesses anywhere in the world. The online system will include but not limited to, registration of companies and business names, submission of annual returns, submission notices and changes. The new system will facilitate for Credit cards, debit cards, and mobile money services and also an engine that provides for an option to search for company information online at no cost.

The system will enable CIPA to register companies and business names in a matter of hours instead of the current 5 days. In addition to the above, the system will be integrated with Omang for verification purposes. Masena emphasizes that there will be no need for customers to certify their certificates since all certificates will be viewable online.

He added that there will absolutely be no need to visit CIPA offices for company related services, citing that they however appreciate that some customers may not have internet access, thus the provision for self-service kiosks within the now operating CIPA offices.  He added that they will in these kiosks have staff assisting those who are not computer literate.  Masena emphasized that this translates to a dramatic improvement in the ease of doing business for both local and foreign investors.

Even though there is introduction of doing the easy registrations, all companies and businesses will be expected to re-register once we roll out the system. “This will enable us to have relevant, up-to-date information on the new system – this is very important for procuring entities and any other parties that use our data to make business decisions.” As a registry, CIPA notes that it is important to assure the business community of the integrity of the data in the organization’s system.

As there will be need to re-register existing companies, CIPA has made a business decision that it will waive all overdue annual returns for companies that do re-register during the re-registration period. This though does not mean there will be no fees to be paid for re-registration he explained that the waiver is just there to encourage re-registration uptake. This is provided for in the Re registration Acts that were approved by Parliament this week.

Please note that the re-registration does not create a new legal entity as the company that re-registers shall continue to be in the register of companies; the re-registration does not affect the property, rights, or obligations of the company that existed prior to re-registration.
New companies therefore will pay for the application process while the please all companies that reregister would be exempted from payment and submission of annual returns hence a saving of P300.00 for companies that are reregistering.

It is explained that since the re-registration would be done through an online platform, companies would be able to validate the data preloaded on the system and be able to reregister at the comfort and convenience of their time, given the 12 months grace period for re-registration.

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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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