Botswana continues to impress a global civil society organisation leading the fight against corruption, the Transparency International (TI).
TI is based in Berlin, Germany, and was founded in 1993 purely to assist combat corruption and crime prevention around the world. According to a newly released Corruption Perceptions Index (CPI) this week by the organisation, Botswana has maintained its top spot as the least corrupt in Africa. Botswana is ranked number 1 in Sub Saharan Africa which places her on number 34 in the whole world.
Out of 100, Botswana scored 61 in 2017. The score is an increase from 60 in 2016. In 2015 and 2014 Botswana scored 63 while in 2013 they attained 64 from 65 scored in 2012. Botswana has been regarded as the most corrupt by the organisation although corruption still remains an issue in some quarters in the country. The Corruption Perceptions Index states that despite being the worst performing region as a whole, Africa has several countries that consistently push back against corruption, and with notable progress like Botswana.
In fact, it states that such African countries score better than some countries in the Organisation for Economic Co-operation and Development (OECD). The index report continues: “specifically, Botswana, Seychelles, Cabo Verde, Rwanda and Namibia all score better on the index compared to some OECD countries like Italy, Greece and Hungary. In addition, Botswana and Seychelles, which score 61 and 60 respectively, do better than Spain at 57.”
The CPI also highlights that the key ingredient that the top performing African countries have in common is “political leadership that is consistently committed to anti-corruption.” While the majority of countries already have anti-corruption laws and institutions in place, the CPI insists that these leading countries go an extra step to ensure implementation.
The index report points out that “from President Paul Kagame’s strict enforcement of compliance with the leadership code in Rwanda, to President Jorge Fonseca’s open promotion of institutional transparency in Cabo Verde or President Ian Khama’s innovative approach of ‘mainstreaming anti-corruption’ across ministries in Botswana, these countries learned what works best in their communities and pursued these tactics with commitment. These countries score 55, 55 and 61 respectively on the CPI.”
Equally positive, the report added apart from Botswana and few others that in Mauritius also, which scored 50 on the index, Prime Minister Pravind Jugnauth courageously embarked on a programme to improve its country score by 16 points within the next ten years. This is notwithstanding that this year’s Corruption Perceptions Index highlights categorically that the majority of countries are making little or no progress in ending corruption.
The index also this year found that more than two-thirds of countries score below 50, with an average score of 43. Unfortunately, compared to recent years, this poor performance is nothing new, it continues. In the whole world, New Zealand and Denmark rank highest with scores of 89 and 88 respectively. Syria, South Sudan and Somalia rank lowest with scores of 14, 12 and 9 respectively. The best performing region is Western Europe with an average score of 66. The worst performing regions are Sub-Saharan Africa (average score 32) and Eastern Europe and Central Asia (average score 34).
Since 2012, several countries significantly improved their index score, including Côte d’Ivoire, Senegal and the United Kingdom, while several countries declined, including Syria, Yemen and Australia. Further analysis of the results indicates that countries with the least protection for press and non-governmental organisations (NGOs) also tend to have the worst rates of corruption. Every week at least one journalist is killed in a country that is highly corrupt. The analysis, which incorporates data from the Committee to Protect Journalists, shows that in the last six years, more than 9 out of 10 journalists were killed in countries that score 45 or less on the index.
The index, which ranks 180 countries and territories by their perceived levels of public sector corruption according to experts and businesspeople, uses a scale of 0 to 100, where 0 is highly corrupt and 100 is very clean. Despite improved anti-corruption efforts in some countries, the situation continues to worsen in a few others. The lowest-scoring countries on the index are often those where there is conflict or war. Reducing corruption in these contexts is particularly challenging.
The fragile nature of governments in these situations presents a real challenge to making meaningful changes. In addition, some countries that perform poorly on the index are led by African leaders that run for office on an anti-corruption ticket, but never live up to their pledges to deliver corruption-free services to their citizens.
This scenario is all too common across the continent and makes it difficult to combat corruption effectively. For example, since 2012, Liberia declined 10 points on the CPI. In her final state-of-the-nation address, former President Sirleaf Johnson admitted that her administration did not deliver on its anti-corruption pledge. Her tenure was marred by accusations of nepotism, illegal contracts and impunity for her cabinet ministers.
In the quest to win the fight against corruption, the AU will need to call for visible commitment to anti-corruption from all of its leaders. In addition, the AU should consider investment in countries that historically struggle with anti-corruption efforts and show little to no progress. This includes countries like Malawi and Guinea Bissau that continue to decline significantly, as well as countries like Somalia and South Sudan, which fall at the very bottom of the index and face significant governance challenges.
Meanwhile with regards to Botswana, corruption is still perceived by others as rampant although seen as lower than other countries in Africa and the world. The country is currently plunged in perhaps the worst financial corruption scandal in its history involving more than 320 million pula (which is perceived to have grown to 600 million) scrupulously accrued from the National Petroleum Fund (NPF).
The landmark case that rocked the country towards the end of last year, implicate one Bakang Seretse, and two other co-accused, Botho Leburu and Kenneth Kerekang who are alleged to have between September, 05, 2017 and November, 27, 2017 in Gaborone, illegally received over P320 million from the National Petroleum Fund (NPF) hence charged with money laundering. The case continues.
Another marathon corruption case involved former Debswana Managing Director Louis Nchindo who was said to be involved in corruption scandal relating to acquiring large chunks of land throughout Botswana, which included in Gaborone – for purposes of tourism development.
Some Ministers were also at some point investigated for corruption including Vincent Seretse the Minister of Investment, Trade and Industry, former minister of Juctice, Defence and Security Ramadeluka Seretse, Minister of Finance and Development Planning Kenneth Matambo and Minister of Land Management, Water and Sanitation Services Prince Maele – more often than not, high ranking members of society implicated in corruption cases get cleared by the courts.
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.”