The Ministry of Investment, Trade and Industry is once again on a collision course with South African retailers – this time warning them that they risk revocation of their licenses should they continue pricing their goods in foreign currencies.
Peggy Serame, the Ministry of Trade Permanent Secretary issued a statement yesterday (Friday) stating that government will review their licences if they do not comply. There have been complaints in recent years that locals are being cheated by retailers by being forced to pay more than they should owing to the exchange rate between foreign currencies, especially the South African rand and the Pula. This situation usually involves South African retailers, who dominate Botswana’s retail sector.
Botswana’s Pula has always been a stronger currency compared to the South Africa’s Rand. In recent years, the owing to the political development in the country the pula has become even stronger. The exchange rate as of Friday, 1 Pula was equivalent to 1 Rand 32 cents. This means for every pula in any purchase Batswana have been paying extra P0.32 thebe. “This could mean consumers are made to pay in Pula currency without taking the exchange rate differential into consideration,” said Serame.
Serame said the Bank of Botswana Ac provides that the legal tender in Botswana is Pula and Thebe, and further noted that the Section 20 of the Act, permits payment for goods and services in foreign currency provided that prices are in pula and any change resulting from the transaction should be in the domestic currency. “Businesses are, therefore, directed to price goods destined for the domestic market in Pula and Thebe, as failure to do so may result in their trade licenses being reviewed,” she warned.
This is not the first time government officials clashed with the South African retailers over doing business in Botswana. Recently government of Botswana have issued an ultimatum to South African retailers that they would not be given new licences for both start-ups and expansion unless they are in partnership with the locals. The hard-line stance taken Minister Vincent Seretse has been supported by locals, but it has not impressed South African retailers who have wanted the government to relax its stand.
Although it was feared that the perceived hard line stance on SA retailers will soil relation between the two governments, that has proved not to be the case. In his visit to Botswana in April this year, African National Congress (ANC) Secretary General Gwede Mantashe gave thumbs up to Ministry of Investment, Trade and Industry’s policy to reserve certain retail businesses for Batswana, which has seen the dominant South African retailers being put on the sidelines.
The policy has seen the clash between property owners and South African retailers, who feel hard done by the policy. “I do not have a problem with that if it is meant to empower the citizens [of Botswana]. In South Africa we have localisation policy which we encourage businesses to buy from our people. If you have a small farmer where do you expect them to sell?” he said. Property developers who own mall developments in Botswana have been making efforts to lobby for a further softening of a Trade Act that compels South African chain stores to partner 51 percent with locals if they are to be granted trading licences.
Government is currently sitting on 4 400 vacant posts that remain unfilled in the civil service. This is notwithstanding the high unemployment rate in Botswana which has been exacerbated by the recent outbreak of the deadly COVID-19 pandemic.
Just before the burst of COVID-19, official data released by Statistics Botswana in January 2020, indicate that unemployment in Botswana has increased from 17.6 percent three years ago to 20.7 percent. “Unemployment rate went up by 3.1 percentage between the two periods, from 17.6 to 20.7 percent,” statistics point out.
Leading commercial bank, First National Bank Botswana (FNBB), expects the central bank to sharpen its monetary policy knife and cut the Bank Rate twice in the last quarter of 2020.
The bank expects a 25 basis point (bps) in the beginning of the last quarter, which is next month, and another shed by the same bps in December, making a total of 50 bps cut in the last quarter. According to the bank’s researchers, the central bank is now holding on to 4.25 percent for the time being pending for more informed data on the economic climate.
An audit of the accounts and records for the supply of food rations to the institutions in the Northern Region for the financial year-ended 31 March 2019 was carried out. According to Auditor General’s report and observations, there are weaknesses and shortcomings that were somehow addressed to the Accounting Officer for comments.
Auditor General, Pulane Letebele indicated on the report that, across all depots in the region that there had been instances where food items were short for periods ranging from 1 to 7 months in the institutions for a variety of reasons, including absence of regular contracts and supplier failures. The success of this programme is dependent on regular and reliable availability of the supplies to achieve its objective, the report said.
There would be instances where food items were returned from the feeding centers to the depots for reasons of spoilage or any other cause. In these cases, instances had been noted where these returns were not supported by any documentation, which could lead to these items being lost without trace.
The report further stressed that large quantities of various food items valued at over P772 thousand from different depots were damaged by rodents, and written off.Included in the write off were 13 538 (340ml) cartons of milk valued at P75 745. In this connection, the Auditor General says it is important that the warehouses be maintained to a standard where they would not be infested by rodents and other pests.
Still in the Northern region, the report noted that there is an outstanding matter relating to the supply of stewed steak (283×3.1kg cans) to the Maun depot which was allegedly defective. The steak had been supplied by Botswana Meat Commission to the depot in November 2016.
In March 2017 part of the consignment was reported to the supplier as defective, and was to be replaced. Even as there was no agreement reached between the parties regarding replacement, in 51 October 2018 the items in question were disposed of by destruction. This disposal represented a loss as the whole consignment had been paid for, according to the report.
“In my view, the loss resulted directly from failure by the depot managers to deal with the matter immediately upon receipt of the consignment and detection of the defects. Audit inspections during visits to Selibe Phikwe, Maun, Shakawe, Ghanzi and Francistown depots had raised a number of observations on points of detail related to the maintenance of records, reconciliations of stocks and related matters, which I drew to the attention of the Accounting Officer for comments,” Letebele said in her report.
In the Southern region, a scrutiny of the records for the control of stocks of food items in the Southern Region had indicated intermittent shortages of the various items, principally Tsabana, Malutu, Sunflower Oil and Milk which was mainly due to absence of subsisting contracts for the supply of these items.
“The contract for the supply of Tsabana to all depots expired in September 2018 and was not replaced by a substantive contract. The supplier contracts for these stocks should be so managed that the expiry of one contract is immediately followed by the commencement of the next.”
Suppliers who had been contracted to supply foodstuffs had failed to do so and no timely action had been taken to redress the situation to ensure continuity of supply of the food items, the report noted.
In one case, the report highlighted that the supplier was to manufacture and supply 1 136 metric tonnes of Malutu for a 4-months period from March 2019 to June 2019, but had been unable to honour the obligation. The situation was relieved by inter-depot transfers, at additional cost in transportation and subsistence expenses.
In another case, the contract was for the supply of Sunflower Oil to Mabutsane, where the supplier had also failed to deliver. Examination of the Molepolole depot Food Issues Register had indicated a number of instances where food items consigned to the various feeding centres had been returned for a variety of reasons, including food item available; no storage space; and in other cases the whole consignments were returned, and reasons not stated.
This is an indication of lack of proper management and monitoring of the affairs of the depot, which could result in losses from frequent movements of the food items concerned.The maintenance of accounting records in the region, typically in Letlhakeng, Tsabong, and Mabutsane was less than satisfactory, according to Auditor General’s report.
In these depots a number of instances had been noted where receipts and issues had not been recorded over long periods, resulting in incorrect balances reflected in the accounting records. This is a serious weakness which could lead to or result in losses without trace or detection, and is a contravention of Supplies Regulations and Procedures, Letebele said.
Similarly, consignments of a total of 892 bags of Malutu and 3 bags of beans from Tsabong depot to different feeding centres had not been received in those centres, and are considered lost. These are also not reflected in the Statement of Losses in the Annual Statements of Accounts for the same periods.