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World Bank injects P1.5billion into water projects

The Ministry of Land Management, and Water & Sanitation Services has announced another remarkable water project – a loan facility from the World Bank Group to finance various water projects around the country.

The Botswana Emergency Water Security and Efficiency (BEWSE) project was officially launched this Tuesday by Minister Prince Maele at the Masa Square Hotel. When explaining the genesis of the project, Maele said that water was a driver of socio-economic developments anywhere in the world. “Its role in our livelihoods cannot be overemphasized because it provides for the basis of life, good health, hygiene, agriculture and physical infrastructure development,” he said.

Maele observed that the demand for water is growing; studies indicate that the global fresh water resources have, in recent years, been greatly affected by the effects of climate change, particularly in quantity and quality. Water supply systems and conservation strategies continue to experience a series of operational and structural problems, which has led to increasing challenges in coping with the increasing demands in water supply and sanitation services.

Botswana has not been spared from these global trends considering the fact that the latter is a naturally a dry country, relying on extremely limited sources of water, the Minister said. It is the response to these developments that has birthed the Botswana Emergency Water Security Project. In the recent years, 2014-2016 the country experienced serious water shortage which prompted the Government to seek external assistance to bring the situation under control.

“We approached the World Bank for a loan facility of One Hundred and Forty Five Point Five (US$145.5) million United States Dollars. The loan was approved by Parliament of Botswana during the winter session of 2017, specifically secured to address the emergency water security and efficiency,” he explained. The Minister reiterated that the loan will assist Botswana’s efforts to integrate and manage both surface and ground water resources.

It is estimated that the funds will enable Water Utilities Corporation (WUC) who are the technical implementers to conjure water supply systems which will benefit at least 460,000 people in 66 selected villages and towns while at the same time connecting at least 177,000 people to improved wastewater treatment and sludge management systems.

Thato Raphaka, Permanent Secretary in the Ministry of Land Management, Water and Sanitation Services highlighted that the projects will  be divided in three components – the first one being the improvement and availability of Water supply and efficiency of services. This first phase will need about P1.141 billion. Raphaka explained that the second component will be to improve wastewater and sludge management systems. This segment will cost around P216.5 million and will include projects such as the Letlhakane and Lobatse waste water treatment plants.

Another P207 million will be spent on Water Sector Reform and Institutional strengthening of which the permanent secretary said will entail case studies, reviews and development of new national water development strategies to ensure water security going forward. Raphaka said to ensure efficient and effective implementation of the project a Coordination Unit has been established comprising of all stakeholders as well as the monitoring & evaluation task team chaired by the Permanent Secretary’s office.

Representing the World Bank Group was Paul Um, SADC regional director who applauded Botswana’s commitment to ensuring that its people receive the basic need that is water. He said Botswana was heavily reliant on groundwater to service many communities. According to Paul the underlying challenges remain and will continue to threaten Botswana for many years to come.

“The World Bank is pleased to partner with the Government to address these priorities through this project worth $145.5 million to improve the availability of water supply in areas of Botswana vulnerable to drought, support the efficiency of the Water Utility Corporation, and strengthen waste water management systems,” he said. The World Bank representative said the project aims to benefit more than 550,000 beneficiaries (both men and women), contribute to jobs, as well as support longer-term sector reform and institutional strengthening.

“Planned activities are aligned to Botswana‘s National Development Plan as well as contributing to the overall World Bank strategy for Botswana agreed with the Government in 2015 as part of the NDP 11 planning process. Our strategy includes a pillar on ‘Improving Human and Physical Assets’ with an objective around ‘improving the efficiency and sustainability of water supply and sanitation services’. As such, we have a strong stake in ensuring that this new project is a success,” Paul Um said.

The project will support the Government’s efforts to address climate vulnerability, said Paul Um while emphasizing the importance of ensuring diligent attention to the environmental and social risks facing this project. He said ensuring high-quality attention to environmental and social safeguards is a priority for World Bank projects around the world. He advised that coordination amongst the various team members and across agencies will be essential to ensure that key elements, such as the Resettlement Action Plan, the Dam Safety Action Plan, the Vulnerable Communities Plan, and the Environmental and Social Management Plan receive the necessary attention.

“As we kick start this project, let me emphasize the critical importance of proactively identifying, addressing, and managing environmental and social risks. The Bank looks forward to supporting you in this regard, which is our joint priority,” he said
On his closing remarks, Mr Boniface Mphetlhe representing the Ministry of Finance & Economic Development said to get the return on investment from this loan all stakeholders needed to work together cordially.

He said from where they stand at the national treasury, implementing parties will have to put in place proper monitoring tools and frameworks to ensure no thebe is wasted as taxpayers will end up reimbursing the money borrowed from the Word Bank. The launch was followed by a two-day technical workshop attended by representatives from the Ministry of Land Management, Water and Sanitation Services, the Water Utilities Corporation, and the World Bank.

The purpose of the technical workshop is to ensure that all project stakeholders share a common understanding of the implementation arrangements, requirements, as well as the tools and support available from the World Bank to ensure the project is a success. These include discussions on social and environmental safeguards, financial management requirements, the results framework, as well as World Bank’s new procurement guidelines and framework.

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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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