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Financial illiteracy remains a concern

A financial advisory and wealth management company, Key Wealth, has two weeks ago undertaken its first annual financial education conference in Gaborone.

The event themed: unlocking your financial success attracted over 150 participants from government, parastatals and private sector. Key Wealth Marketing Executive Phalana Gaotilwe explained in her welcome remarks that Key Wealth is a financial advising and wealth management company specializing in financial education, financial planning and portfolio management.

“The company trades as an investment adviser licenced by Non-Bank Financial Institutions Regulatory Authority (NBFIRA) and also provides training consultancy accredited by BQA,” she told the participants. The opening speaker, a life coach Ntombi Setshwaelo, in her topic dubbed ‘emotional intelligence as a key to success,’ which was part of several topics discussed, also highlighted that the topic has been ignored for too long hence the challenges we see in our society today.  

She said human beings, spiritual, physical and emotional being have to be intact in order to avail a healthy financial relationship. She challenged the audience to grow and strengthen their emotional intelligence in order to be in a position to express the right emotion for any situation they may face.

Another speaker, Calvin Phokontsi, who is a Motivational Speaker and Financial Educator at Calvin Investments, lectured the participants on money and emotions. He said 3% of the human life is based on academics, 7 % on natural motivation while 90% builds the human emotions. He continued to insist that: “money is all about emotions, if one is emotional weak they will be financially weak.”

Phokontsi encouraged the partakers to learn how to effectively manage little amounts of cash so they will be in a better position to handle bigger amounts. Moreover he stressed that money should be used to generate more income and that Batswana should refrain from overloading their salaries to a point where they use all of it.  “Madi ke letlhabegwa” he said in native meaning that “it (money) should be multiplied.”

Meanwhile Botswana Stock Exchange (BSE) Finance and Administration Manager, Mpho Mogasha also advised Batswana in general to be diverse on their investments and break away from the normal wealth creation plan of owning cattle, property and cash savings.
She stressed that “Batswana should not shy away from investing in stock markets; they should get to understand and take on new ways of investment.”

For his part the Founder and Director of Khumo Horizons, who is also the author of the book titled ‘succeeding on Purpose’ Sibusiso Kgosikhumo, urged Batswana to be “very vigilant” and notice the opportunities surrounding them, saying “we were all created for a global market, therefore we are citizen of the world before a country.” He therefore appealed to the entrepreneurs to be decisive to endure the path in an effort to create wealth and add value to others on purpose.

When he took to the podium, Isaac Molefinyana, the Executive Director of Match Makers Properties also appealed to the audience to seek advisory on property issues before making any purchase, saying “one can go very wrong if they do not acquire the accurate information before making a purchase.” 

Still at the event, another speaker Mogomotsi France, a Founder and Managing Director at Key Wealth pointed out that Batswana should live a life driven by purpose with a full understanding that their decisions and choices will affect generations after them. “Avoid being a statues slave, giving others an impression in order to fit in,” he said. France added that “Botswana’s education system has failed the nation as all business related subjects at junior schools were made optional therefore robbing the nation of future entrepreneurs.”

According to another presenter; a Social Entrepreneur, Property Investor and speaker in the field of Financial Literacy, Nicolette Mashile, the audience should be intentional about their actions, saying they should be keen to learn and develop time management skill as time is a commodity we all have. 

“You are your greatest asset, you need to do self-introspection and you will realize where you make poor decisions. It is imperative for one to create financial goals and be true to them, and most importantly implementing the set action plans.” She also said Africans should come together in building a legacy for generations to come. 

All speakers’ emphasised that Botswana has to urgently change the way financial literacy is being addressed.  They gave an example that Botswana has mineral resources and still can learn and lend a leaf from countries like Singapore which gained independence just a year before Botswana (1965) but while has no minerals it is currently ranked within top five in the world richest countries.

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Botswana on high red alert as AML joins Covid-19 to plague mankind

21st September 2020

This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.

The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.

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Finance Committee cautions Gov’t against imprudent raising of debt levels

21st September 2020
Finance Committe Chairman: Thapelo Letsholo

Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.

He was speaking in  Parliament on Tuesday delivering  Parliament’s Finance Committee report after assessing a  motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.

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Gov’t Investment Account drying up fast!  

21st September 2020
Dr Matsheka

Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.

The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.

The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.

The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.

This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.

Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.

Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.

However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.

Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.

When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.

This  as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.

Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.

The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.

Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.

In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.

Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.

Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.

Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.

Acknowledging the need to draw down from GIA no more, current Minister of Finance   Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”

He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”

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