Spend more on research
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Botswana’s GERD or Gross domestic spending on research and development has dropped from 0.43 to 0.26 percent of the Gross Domestic Product (GDP) over the years. The low GERD is a significant factor that is contributing to the country’s slow diversification of the economy.
The Vice Chancellor of the Botswana International University of Science and Technology (BIUST), Professor Otlogetswe Totolo has advised that investment in research and development is a critical factor in driving diversification. Botswana has a very small S&T HR base which is estimated at about 2160 employees; while the Research and Development personnel as percentage of employment is below optimal at about 2.7 researchers for every 1000 people employed.
Gross domestic spending on R&D is defined as the total expenditure (current and capital) on R&D carried out by all resident companies, research institutes, university and government laboratories, etc., in a country. It includes R&D funded from abroad, but excludes domestic funds for R&D performed outside the domestic economy. This indicator is measured in million USD and as percentage of GDP.
According to Professor Totolo countries that have been successful at turning their economies from resource based to knowledge based invested significantly in research and development. “If we are to see results in the diversification area we must look at the research output, if there is nothing coming out, we will struggle to move significantly,” observed Professor Totolo.
Botswana per capita output in terms of research is at 0.4 percent which is very low when compared to that of Stellenbosch University at 1.2 percent. Professor Totolo said research is meant to influence industry. Botswana’s GERD or gross expenditure on Research and Development as a percentage of GDP is very low. Furthermore some research has focused on wrong areas that do not have long term high value such as agriculture and manufacturing, shared Professor Totolo. It is also evident that local universities are biased towards teaching as compared to research.
Totolo shared that “consensus is emerging among policy makers and economists that at least half, if not more, of the economic growth in countries is directly attributable to science and technology.” The BIUST VC said in a globalizing, knowledge driven world with increasing importance of service industries and technological competitiveness, this contribution can only become higher.
THE POSSIBLE BIG BREAK
He cited countries such as Malaysia and South Korea which use about 5 percent of their Gross Domestic Product on research and development. Professor Totolo opined that Botswana has a big opportunity to shift its gears because of her participation in the Square Kilometre Array project.
The Square Kilometre Array (SKA) project is an international effort to build the world’s largest radio telescope, with eventually over a square kilometre (one million square metres) of collecting area. The scale of the SKA represents a huge leap forward in both engineering and research & development towards building and delivering a unique instrument, with the detailed design and preparation now well under way. As one of the largest scientific endeavours in history, the SKA will bring together a wealth of the world’s finest scientists, engineers and policy makers to bring the project to fruition.
Professor Totolo, whose institution, BIUST has been chosen to spearhead the project on behalf of Botswana Government noted that Botswana could take advantage of being a partner in the SKA project and buy telescopes which could be used to harvest information and sell it to those who need it. “By so doing we will be moving from the natural resource based economy to a knowledge based economy,” he said. He emphasized the need to train more Batswana scientists so that the country could rip the benefits of being a host country to the SKA.
SKA Phase 2 will start mid-2020s and will see over 2000 dishes installed across 3500km of Southern Africa. National super-computing centres will also be set up in partner countries. Professor Totolo said as BIUST they are ready to accept the opportunities and challenges that will be presented to it so as to make a key contribution towards economic development, competitiveness and quality of life of the country, as well as making its mark regionally and globally.
Business
Stargems Group establishes Training Center in BW
Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.
The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.
“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.
In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices. Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.
“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.
Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy, Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.
“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.
Business
Food import bill slightly declines
The latest figures released by Statistics Botswana this week shows that food import bill for Botswana slightly declined from around P1.1 billion in November 2022 to around P981 million in December during the same year.
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Moody’s Reaffirms African Trade Insurance’s A3 Rating & Revises Outlook to Positive
Moody’s Investors Service (“Moody’s”) has affirmed the A3 insurance financial strength rating (IFSR) of the African Trade Insurance Agency (ATI) for the fifth consecutive year and changed the outlook from stable to positive.
Moody’s noted that the change in outlook to positive reflects the strong growth in ATI’s membership base – that has resulted in improved portfolio diversification, strengthened capital adequacy, and the good profitability despite the challenging operating environment. In addition, ATI benefits from its preferred creditor status (PCS) amongst sovereign member states which protects it from the risk of default by member sovereigns through securing recoveries against claims paid on guarantees.
The strong membership and equity growth are some of the key considerations for the consistent reinstatement of ATI’s A/Stable rating by Standard & Poor’s and Moody’s rating, over the years. Also supporting the rating affirmation are; consistent improvement in financial performance, commitment of its shareholders who continue to uphold the preferred creditor status, its high quality and conservative investment portfolio as well as strong relationships with a number of global reinsurers that provide significant risk-bearing capacity.
With the change in outlook to “positive”, ATI is now better placed to provide enhanced support to its member countries, attract additional shareholding and grow its portfolio. The positive outlook is an indication that if ATI continues to demonstrate its strong underwriting performance and ability to recover claims under the preferred creditor arrangements, among other factors, an upward pressure towards an upgrade may be generated. The Moody’s press release can be accessed from here
Commenting on the rating, Africa Trade Insurance Chief Executive Officer Manuel Moses said: “This positive revision is in line with our 2023 – 2027 strategic objectives in which we set to improve our rating outlook to positive in the first year, and achieve an upgrade of at least “AA”/Stable rating by both Moody’s and S&P within this Strategic Plan period. We aim to achieve this by doubling our exposures and increasing our capital to more than USD1 billion.”
ATI’s mandate is to provide trade-credit and political risk insurance, as well as other risk mitigation products to its member countries and related public and private sector actors. These insurance products not only directly encourage and facilitate foreign direct investment as well as local private sector investment in our member countries, but also contribute to intra- and extra-African trade.
About The African Trade Insurance Agency
ATI was founded in 2001 by African States to cover trade and investment risks of companies doing business in Africa. ATI predominantly provides Political Risk, Credit Insurance and, Surety Insurance. Since inception, ATI has supported US$78 billion worth of investments and trade into Africa. For over a decade, ATI has maintained an ‘A/Stable’ rating for Financial Strength and Counterparty Credit by Standard & Poor’s, and in 2019, ATI obtained an A3/Stable rating from Moody’s, which has now been revised to A3/Positive.