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Billionaire advice to Botswana

Billionaire English business man, bestselling author, philanthropist, founder and Chairman of a conglomerate of multinational companies, Virgin Group, Richard Branson graced the 2017 Global Expo organized by the BITC. He specifically gave a talk at a special event dubbed ‘Conversations with Sir Richard Branson’.  

Before sharing his entrepreneurial experiences to an audience of captains of industries, expo exhibitors, senior government officials and young entrepreneurs, Branson paid a courtesy call on President Lt Gen Dr Seretse Khama Ian Khama and Vice President Mokgweetsi Masisi at the office of the President. Branson who has been in Botswana before on private visit commended Botswana for its sound environmental conservation and natural resources preservation policy and management system.  

Of his various exploits around the world Sir Branson maintains that his best African holiday trip was in Botswana. “The Okavango Delta, according to me, is amongst the top 10 best things to have happened to planet earth, the place is so incredible.” The filthy rich diverse entrepreneur showered Botswana with praises for its good ratings by the international oversight bodies on good governance and busting corruption.

However he cautioned against the high unemployment rate among young people who constitute the majority of Botswana population. He said this was a sad reality that must be addressed. “It is a sad because young people are the most vibrant and active. In order for jobs to be created people need to take deliberate steps of entering into entrepreneurship and starting sustainable businesses,” Sir Branson said.  

Sir Branson who started his first business after dropping out of school at the age of 16 explained that to become a successful entrepreneur one has to be a good listener who can always observe existing opportunities and must be ready to learn. ”You have to ask yourself a question on how you can do something better than other people who have done it before,  because entrepreneurship is not always about what hasn’t been done, if there is an opportunity to complement or do something  better,  that is a gap for a business,” he said.

Sir Richard Branson advised that Botswana should venture into clean energy: “You have a lot of coal, that is wrong timing as the world is shifting to green energy, but for jobs and GDP’s sake you can extract the coal and export to more industrial countries overseas; but for sustainability, start taking a leap into green energy,” he said. The over $5 billion worth English tycoon lectured Botswana on the unexplored diamond this country is sitting on – the natural hot climate conditions. Sir Branson said solar energy can be Botswana‘s multimillion Dollar sector that can create jobs.

“You can even import the chips, cells, the solar silicon cells from China and assemble them here and someone can set up a solar power station,” he said. According to Sir Richard Branson, people must start thinking big business ideas and implement them at a young age while they still have no commitments. “To run a sustainable business is highly dependent on among other things the people you have hired and how you treat them. Good business leaders are always looking at getting the best out of people they lead.”

Sir Branson further shared that people must be comfortable at the workplace in order for them to carry out their mandate fully. He stated that the workspace must not dictate to workers what to wear and how long to work as long as the job is done. Sir Richard Branson who has various charity projects around the world which are aimed at humanitarian work in undeveloped countries and unstable nations believes that people must be given a chance in life.

“At Virgin Active we hire ex-convicts fresh from prison and none of them has ever reoffended.” He also shared his thoughts on drugs: “People who sell drugs are entrepreneurs, they possess a skill, it is just that they are using it in an illegal dealership which also has negative health consequences. We just need to give people another chance in life.” According to Sir Branson drug dealers and offenders can become great entrepreneurs if they are rehabilitated and given another chance to follow the right path in pursuit of their dreams.

HOW HE MADE IT TO THE TOP

Sir Richard Charles Nicholas Branson, born 18 July 1950, founded Virgin Group in 1966 when he left school to run a business and lifestyle magazine called Student. In 1970, he set up a mail-order record business which was followed by a chain of recording stores under the label Virgin Records.

His fast growing business Group expanded rapidly in the 1980’s. One of his major business segments is Virgin Atlantic, a multinational airline that fought brutally with British Airways to gain establishment. When answering a question from Specially Elected Member of Parliament, Bogolo Kenewendo, Sir Branson said that startups must do whatever it takes to survive the wrath of already established business.

He shared that when British Airlines wanted to swallow his startup Airline and pushed his brand out of the game, he exposed their ill intension with the help of the media. He advised local media to support startups in order to realize significant growth of the economy. Sir Richard Branson also runs an entrepreneurship program termed Branson entrepreneurship school headquartered in London with outreaches worldwide. In March 2000 Branson was knighted at Buckingham Palace for "services to entrepreneurship”, particularly for his work in retail, music and transport as well his humanitarian work. He has partnered with Desmond Tutu, Koffi Anan, and the late Nelson Mandela on a number humanitarian undertakings aimed at bringing peace worldwide.

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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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