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Lesotho Water Transfer scheme feasibility study commences

The much anticipated Lesotho Water Transfer scheme in which three countries, Botswana, Namibia and South Africa collaborate under the Orange –Senqu River Commission (ORASECOM) to draw water from the abundant Lesotho supply to feed their demands is finally taking shape.

Lesotho has surplus water owing to the mountains that easily trap terra cubic meters of water from the Senqu River, Vaal and Orange rivers amongst other water streams. The four countries represented by the ministers responsible for water supply recently met in Kasane to approve the commencement of a feasibility study that will guide the design, engineering and construction of one of Africa’s largest dams in Lesotho and a Pipeline running from the Kingdom of Lesotho through South Africa into Botswana.

Minister of Land Management, Water and Sanitation Services Prince Maele briefed members of the press this week that the four countries involved reached an agreement to source funds from the African Development Bank for the study. According to Maele the feasibility study will inform the size of the dam to be constructed considering the environmental assessment and the quantity of water to supply to countries in demand hence also informing the budget of the actual dam construction and the transfer pipeline.

“For now we can only say it will be a very large dam considering the demand of water we want to meet in both Namibia and Botswana” he said. The feasibility study is expected to cost around US$2.3 million (P23million) and is targeted to be complete within a period of 24 months. The detailed objective of the study is also to determine the viability of water resource development options for the entire water transfer by gathering and assessing engineering, costing, social, legal, environmental, economic and financial information.

The study findings will provide an important input in support of the broader assessment and analysis of potential impacts associated with climate change in the Orange-Senqu River basin. It links to the ongoing analytical work addressing the Climate Vulnerability of Africa’s Infrastructure’ that is focused on river basins across Africa using a climate lense to build on the Africa Infrastructure Country Diagnostic. “This will ensure that we develop a sustainable project with global standards taking into consideration all environmental and socio-economic aspects,” Maele further explained 

He said that Botswana wanted to source water that would not be expensive for the country. According to Maele, the implementation of the entire project will benefit inhabitants of the villages and settlements that the pipeline traversed. “The residents will benefit in terms of the water supply and employment creation during pipeline construction as well as maintenance and services of the mini monitoring facilities throughout the pipeline. The pipeline drawing water into Botswana will be just over 600 kilometres and will stream water into the greater Gaborone area and villages in the southern part of Botswana.

Once complete the entire water transfer undertaking which is expected to commence immediately after the feasibility study is also expected to alleviate shortage of water supply in Botswana. Minister Maele added that government would construct the North-South pipeline in the near future because the aging infrastructure was responsible for water shortages because of the leaks that consume about 40% of the water that is distributed in the country.

Government has been pumping money into developing an infrastructure and facilities to ensure efficient national water supply. The Masama East and Masama West wells are reported to be complete and would be pumping water into the North-South Water Carrier to supply the Greater Gaborone by next year. The Chobe-Zambezi Stampriet Aquifer which will supply the Kgalagadi North is expected to be complete by 2020.

The rational of the Lesotho water transfer scheme also goes beyond the need to augment local water supply, Minister Maele explained that Botswana had run out of space for construction of new large dams also because of exhausted water streams saying financial institutions now also prefer to provide funding for cross border projects instead of those carried out by individual countries. WeekendPost also established that the provision of engineering, procurement and construction as well as management will be awarded on the basis of benefiting companies from all the four countries.

Lesotho has abundant water and currently supplies South Africa with water under the The Lesotho Highlands Water Project (LHWP). The LHWP is an ongoing water supply project with a hydropower component, developed in partnership between the governments of   Lesotho and South Africa.

It comprises a system of several large dams and tunnels throughout Lesotho and delivers water to the Vaal River System in South Africa. In Lesotho, it involves the rivers Malibamatso, Matsoki, Sequnyane and Senqu. It is Africa's largest water transfer scheme. The Botswana Transfer Scheme will also be amongst the largest water tunnels in the continent.

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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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