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Stagnant Public Expenditure on Agriculture worrisome

Botswana’s agriculture is constantly becoming a sunset industry, considering the sector’s stagnant budget allocation and overall performance over the years.

Despite its significant role in food security, rural development and poverty eradication, agriculture continues to receive the smallest share of Botswana’s National Budget compared to Ministries such as Defence, Justice and Security, Communication and Technology and Presidential Affairs, Governance and Public Administration.

This year’s allocation of 3 % or P1.34 billion of the Recurrent Budget to the Ministry of Agricultural Development and Food Security flouts the strategic thrust of this year’s national budget which is to promote growth, enhance economic diversification and create job opportunities.

The agricultural sector if prioritized, has the potential to be a major economic growth driver. Amid the potential that the sector has, it is worrisome that real agricultural expenditure has increased by merely 0.2 % from P1.10 billion in 2017 to P1.34 billion in 2018 after P1.07 billion in 2016.

Thus, a stagnant trend of agriculture expenditure as a proportion of total government expenditure over the years. This is despite the increase of agriculture gross value added to GDP in the third quarter of 2017 after declining from 2.8% in 2009 to 2.1% in 2016. The decline and stagnancy in total agricultural expenditure are causal factors to the fluctuating and insignificant agriculture gross value added to GDP.

This frustrates the country’s attainment of Sustainable Development Goals and nullifies the country’s commitment to Maputo Declaration on raising spending on agriculture to 10 % from the year 2008. Moreover, it sabotages the National Development Plan 11 and the country’s Vision 2036 which emphasis on agriculture as an area of consideration for sustainable economic growth.

The limited public expenditure on the sector also constrains the country’s ability to manage food prices volatility, unpredictable markets, the impact of climate change and other production hazards that are a constant threaten the country’s national security.

Botswana endures years of negative balance of agricultural trade, exposing the country to inflation of basic commodity prices of grains, oils and fresh produce. Adverse climatic conditions related to climate change (droughts and heatwaves) have not spared the agricultural sector, leading to poor yields and increased spending in subsidies of drought relief and programmes such Integrated Support Programme for Arable Agriculture Development (ISPAAD) and Livestock Management and Infrastructure Development (LIMID). Much of the allocated developmental budget will be spent in these programmes.

However, because of their neo-patrimonial nature, these programmes are evidently inefficient and unsustainable. Relative to this challenge is the perennial poor performance of agricultural State-Owned Enterprises, particularly National Development Bank which recorded a net loss of P168,2 million and Botswana Meat Commission with P229.7 million losses in 2017.

These programmes and enterprises have derailed the government investment in critical areas such as agricultural research and development (R&D), biosecurity and human capital. The Ministry of Agricultural Development and Food Security’s current expenditure on R&D is less than 2% of the total agricultural budget which is low compared other countries in the region.

This is despite that R&D is critical for high agricultural productivity and high returns on investment that will increase economic output (GDP output) and sustain the future of the sector. Biosecurity, particularly the protection of our national and internal borders from the spread of contagions such as foot and mouth, fruitful fly and evasive weeds and pests is strategically important as national security.

Our biotic economy is critical for other industries such trade and tourism (hotels and restaurants). In terms of human capital, the Ministry of Agriculture has a larger number of well-trained scientific officers who are unproductive due to a stressful work environment, limited resources and promotion and remuneration complaints which could be fully resolved by an increased budget share for the sector.  

The stagnancy and declining of the recurrent and developmental budget allocation to agriculture limits the sector’s potential. Increased government spending in agriculture has proved elsewhere to have positive returns to economic growth, poverty reduction and sustainable development.

Therefore, the government needs to prioritize agricultural expenditure, closely monitor and ensure effective management of the allocated funds to improve the state of the sector.  This can only be achieved from evidence-based policy supported by R&D, lobbying and participation by farmers through their organized associations. If agriculture continues to be neglected, it can have adverse effects on food security, which has implications for national security. Kgolagano Mpejane is a graduate of agribusiness and international development with interest in the Political Economy of Agriculture.

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China’s GDP expands 3% in 2022 despite various pressures

2nd February 2023
China’s Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.

The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The country’s fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.

In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.

Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.

China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.

Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.

On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.

According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry said.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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