The Tourism Development Levy is destined to be the cash cow of the Ministry Of Environment, Natural Resources, Conservation and Tourism. After years of complaining about a small budget compared to other Ministries and a faltering levies such as the plastic levy, Mr Tshekedi Khama is determined to harvest from the newly introduced Tourism Development Levy.
But there is a small glitch, his attempt to squeeze through a Bill that would allow his Ministry to use funds from the Tourism Development Levy through a certificate of urgency hit a snag this week in Parliament as Members of Parliament from across the political divide prayed for time and understanding. The Levy is not without its fair share of controversy because in some quarters it has been branded ‘a quick money spinning’ scheme with the potential to scare away tourists.
Khama had wanted to move in terms of Standing Order 72.3 that the Bill and its stages be proceeded with, as a matter of urgency. He said the reason for his approach is that his Ministry has been afforded the opportunity to introduce a Tourism Development Levy, but up until now, they have not been able to use any funding other than which they had got from tourism other than for the Training Levy.
The Minister said it has become quite apparent in recent times that some of the ministry’s facilities have seen their conditions degrading, “but we have also wanted to develop some of our monuments and our heritage sites. We believe that as we have commitments coming towards the end of the year, we would therefore like that we be allowed to present this and proceed forthwith so that we can at least begin for now to start collecting the funding, and then we can start to develop each tourism site for local tourism as well as international tourism to better facilitate for those visitors that we have in the country.”
Minister Khama has in the past decried his Ministry’s inadequate budget and at some point opposed a supplementary budget from the Directorate on Intelligence Security (DISS) saying the money could be going to more deserving projects at his Ministry. The Tourism Development Levy could be the answer hence Khama and his troops want to speedily access it after it came into effect in June this year.
Khama’s Ministry introduced a $30 (about P330) tax on all tourists entering the country in an effort to raise money to support conservation in the safari hotspot. The Tourism Development Levy was on the nib of being introduced last year but stalled after opposition from the Hospitality and Tourism Association (HATAB). But as usual, Khama and his team got their way. The Botswana Tourism Organisation (BTO) is of the view that the fee will be owed by any visitor to Botswana’s airports and border posts from June 1, payable at the point of entry. Residents of countries within the Southern African Development Community (SADC), which counts 15 members, will be exempt from the charge.
"The levy is purposed to support the growth of the industry and broaden the tourism base, resultantly improving the lives of the people of Botswana,” the BTO has said. “The objective of the levy is to raise funds for conservation and national tourism development in order to support the growth of the industry and broaden the tourism base.” HATAB had complained last year that it nor other stakeholders had been consulted on the potential tax. Botswana, estimated to welcome some 1.6million visitors a year, stands to make around £34.1million a year from the tax, taking into account the 190,000 SADC visitors.
Gaborone South Member of parliament, Kagiso Molatlhegi was quick to reject Khama’s request, “I do not agree with the certificate of urgency my main reason being that we have never met before to discuss and correct where there should be corrections in this Bill. Still on that the Honourable Minister has never met us to explain to us the impacts that this levy will have on our tourism? My request is just for this Bill to be taken to General Assembly where the Minister would be able to explain its benefits and how we should be able help him sell it to the nation,” he said.
Pius Mokgware, Member of Parliament for Gabane-Mankgodi also had his reasons as to why the Minister’s plea should be rejected. He said as members of the Statutory Bodies committee “they have met with the Minister’s committee before and there were lots of pending issues which need to be addressed. We were not given the opportunity to go through this Bill, so it cannot just be tabled before this House as matter of urgency. Furthermore the Minister has never explained this Bill outside this House, my suggestion is just for him to take this Bill back to the general assembly where we would be able to discuss it and agree with him after his explanation.”
Francistown South legislator, Wynter Mmolotsi also denied the minister’s request. He said he is a Member of the Wildlife, Environment and Natural Resources Committee of Parliament. “This is where I was expecting to have come across a Bill like this, but it is unfortunate that the Minister or even his staff never bothered to come and consult us on a Bill that is likely to have very serious implications on the lives and businesses of our people,” he said. Mmolotsi told the Minister knows that in his ministry, there is yet another fund which was established many years ago called the Plastic Ley Fund, but even up to now businesses collect that particular fund, but the Government is not making any effort to recoup that money in anyway.
“That is not the only levy in that ministry, there are other levies that are there which are not understood, some of which have caused havoc within the ministry. We cannot allow yet another levy to be imposed before we are thoroughly consulted. That is why I am in agreement with those who are saying, “let us go to the General Assembly and discuss this matter.””
For his part, Selibe Phikwe West Member of Parliament, Dithapelo Keorapetse made an observation: “I have been looking at the Bill before us here, I do not think it is introducing any new levy, but what it seeks to do, I think is to expand the usage of the levy as is currently provided for. I think it is appropriate that the Minister goes to the General Assembly so that we discuss the matter further, so that he can unpack it for us, probably even bring his technocrats to also expand and help us understand.” Like other legislators Keorapetse observed that he was not consulted and those who advise them on Bills of this nature must also be consulted.
“I find it very difficult for me to support the certificate of urgency. I must say that I do not think this is a bad Bill, but we need to discuss it more,” he said. Botswana is popular with European tourists who come here seeking to spot the Big Five on safari, as well as for visits to the Okavango Delta, one of the Seven Natural Wonders of Africa. Botswana also boasts as one of the best safaris in Africa.
Stanbic Bank Botswana Quarterly Economic Review indicates that Botswana will fail to meet some of its Vision 2036 targets, particularly unemployment reduction and reaching high-income status.
The report says this is mainly due to the slow economic growth that the country is currently experiencing. This Quarterly Economic Review focuses on the 2020 Budget Speech.
The first paper reviews the entire budget with its key observations being that this budget is prepared as prescribed by the Public Finance Management Act; the priorities it seeks to address are drawn from Vision 2036 and the eleventh
The 2020 budget Speech, which was the maiden speech by the Minister of Finance and Economic Development, Dr. Thapelo Matsheka, and the first after the 2019 general elections, was delivered to Parliament on the 4th of February 2020.
It has been well received by the labour unions, business community, and the public at large as well as international organisations such as the International Monetary Fund (IMF).
It mainly derived its support from key facets including, emphasis on changing the business-as-usual approach to development; outlining the transformation agenda; fiscal reform that minimizes the negative impact on economic development and human welfare, competiveness and the decision to implement the 2019 negotiated and agreed public sector.
The budget’s progress review shows that economic growth was consistent with the NDP 11 projections, with growth of around 4 percent. At this growth rate, the country would neither ascend to a high-income status nor reduce unemployment towards the Vision 2036 target of a single digit.
Simple calculations of this review confirm that the economy will need to grow the Vision 2036’s target of 6 percent over the next 16 years for per capita income to increase from around USD 8,000.00 to above USD 12,000.00 in current prices.
Further, the population is anticipated to grow by only 2 percent per annum.
For this reason, the focal areas for the forthcoming FY’s budget include measures to increase economic growth towards an average of 6 percent per annum.
Economic diversification is reportedly progressing fairly well. The report says, the share of the non-mining private sector in value added has risen to 66 percent in 2018 from to 63 percent in 2015.
The sectoral pattern of growth showed that the performance of services sector (particularly transport & communications, trade, hotels & restaurants, and finance & business services) has been the silver lining and that of mining sector was subdued whilst the utility sector disappointed.
The drive towards the service sector of the economy, especially to low-productivity activities (tourism, public administration, wholesaling and retailing) does not bode well for the country’s development aspirations.
In the previous versions of this Quarterly Review, it was noted that there is need for the rethinking of economic diversification. Since the country’s domestic market is small, it is inevitable that economic diversification not only focus on broadening the product mix, but also the composition of exports and markets.
This understanding of economic diversification has not been embraced by this year’s budget. Consequently, Botswana’s exports are still overwhelmingly diamonds, which means that the rest of economic sectors are still highly dependent on foreign-exchange earnings from diamonds. Thus, “the transformation programme requires a review of the country’s entire ecosystem”.
The budget review of the economic context also depicts that an economy with positive medium-term prospects, with growth expected to recover to 4.4 percent in 2020 from the expected growth of 36 percent in 2019 largely due to faster growth of services sectors and, thereafter, to slow-down to 4 percent in 2021.
These projected growth rates are comparable to those of the IMF staff’s baseline scenario of 4.2 percent in 2020 and 4 percent in 2021. Thus, the business-as-usual scenario produces growth rates that are still too low to achieve Botswana’s development objectives and create enough jobs to absorb the new entrants into the labour market.
Trade tensions between the two major markets for diamond exports, viz., the United States of America and China, is one of the factors that are cited as contributing to, indeed, undermining not only the domestic growth, but also the fiscal position.
Another notable downside risk to both global and domestic growth is outbreak of the coronavirus in China around January 2020. This has been declared as a global health emergency. In an attempt to contain the spread of the novel coronavirus pneumonia, the Chinese authorities have ordered city lockdowns and extended holidays, of course, at the expense of near- term economic growth, according to the new Stanbic Bank Botswana report.
According to Nomura Holdings Inc., fewer migrant workers returned for work than in previous years and business activities have been slow to pick up. The havoc wreaked by the virus on the world’s second largest economy is likely to spill over to the global economy. In fact, it has resulted in a glut in crude oil and, thereby placed oil markets into a contango, i.e., a market structure where near-term prices trade at a discount to future contracts.
It also presents significant risks one of Botswana’s main drivers of economic growth, diversification and foreign exchange earnings. According to the Financial Times (February 13, 2020), Chinese tourists spent $130 billion overseas in 2018. Regardless of whether the growth materializes, the projected domestic growth rate would not transform the economy to a high-income one.
Progress towards reduction of unemployment, to a target of single digit, and poverty and achieving inclusive growth has also been relatively slow, the Stanbic Bank Botswana Review says.
Ministry of Presidential Affairs, Governance and Public Administration (MOPAGPA) has through the Office of the President (OP) proposed to avail Orapa House for use by private training institutions as well as research institutions involved in the area of technology development.
For a very long time the monumental building located in the heart of the city has been a white elephant, despite government purchasing it for nearly P80 million from De Beers in 2012.
However, government has now identified a productive use for the iconic building. “The overall vision is for the building to be transformed into a hub for digital technology research and development to be carried-out by institutions, such as; Limkokwing University, BIUST, BITRI and other relevant stakeholders.”
The decision was taken as government traverse a new path of transforming the economy from a mineral led economy to a knowledge based economy through the promotion of research and innovation. However, the facility will need major maintenance to be carried-out in order to meet the requirements of the proposed change in use.
“The work will include provision of laboratories, work stations, production areas and seminar rooms; audio visual centre, high speed internet connectivity, exhibition areas and offices,” reads the proposal note for the development.
These developments will be done through the refurbishment and maintenance of the main building, workshop, and ablution block, gate house, parking area, grounds, and access control and security service.
“There will be minimal modifications to the structure as it stands. The project is estimated to cost approximately P50, 000, 000,” says the report. In this regard, it is said, the initial scope of the OP facility will be modified to accommodate the envisaged digital technology research and development hub.
With funds needed to improve the building, OP has requested that; “the 2020/21 annual budget provision for Orapa House will need to be increased by P37,500,000 from P2,500,000 to P40,000,000 to kick start the maintenance works.” Funds will be sourced from the projects that have been delayed due to Covid-19 protocols during the 2020/21 financial year.
The building has been a thorny issue for government for years. Initially, OP was expected to move there but the move never materialised. At one point it was a question of whether the Office of the President and the Ministry of Finance and Economic Development were planning to override a decision by Parliament which rejected the proposal to buy Orapa House under the belief that government may be buying its own property. The building was to be bought at a negotiated cost of P79 million.
Again in 2012, Government had wanted to buy Orapa House for a negotiated P79m but the Finance and Estimates Committee of Parliament had rejected the request because of the inconsistencies realised in the supporting documents of the proposed procurement. The valuation of the building was put at P74 million.
The Ministry of Lands and Housing had initially offered De Beers P73, 000,000 as the purchase price. However, De Beers countered with P85, 000,000. On negotiation and converging of the minds, the selling price was finally agreed at P79, 000,000.
Auditor General, Pulane Letebele, has expressed discontentment at the worrying and deteriorating state of brigades in the country.
In an audit inspection which was carried out at Tshwaragano Brigade in Gabane, a number of observations showed weaknesses and shortcomings in the conduct of the financial affairs of the institution.
According to Letebele’s report, former students of the brigade had been engaged to carry out maintenance works on the school premises, comprising of painting, tiling, plumbing and electrical works, which covered the period from July 2017 to June 2018.
Although the agreed maintenance period had elapsed, the works had not been completed because of unavailability of funds and this situation had persisted up till the time of inspection in November 2019.
Auditor General says arrangements should have been made in time for funds to be available to complete these relatively minor works even before the works commenced.
Various contractors had been engaged for clearing the bush and for the supply of concrete stones, pit and river sand and hiring equipment for digging the trench towards the construction of an auto mechanics workshop, the report said.
It stated that the cost of services and supplies provided totalled P117 949.80. However, despite the services and the supplies having been paid for, the construction works had not commenced for a long period afterwards, resulting in the trench filling back in.
The audit inquiries had not elicited satisfactory responses as both the institution and the Ministry had not accepted the responsibility for the project, although orders for the provision for the supplies had been made. For their part, the Ministry had stated that they had sub warranted funds for the purchase of porta cabins.
Letebele indicated that it is therefore confusing that a project which is critical to the functioning of an institution such as this one would commence without a well-defined plan.
Furthermore, the accounting and maintenance of records for the supplies items were not of the standard prescribed by the Supplies Regulations and Procedures in that the supplies ledger cards, the main accounting records for Government assets, were not properly maintained for the recording of receipts and issues.
This had resulted in significant discrepancies between physical and ledger balances, while in other instances the supplies items had not been recorded at all.
The report says 24 of the 91 new computers found in the computer laboratory at Kumakwane ABC campus were not recorded anywhere, as were the other computers in the storeroom which could not be counted due to the disorderly storage conditions.
The institution had entered into a contract agreement with a security company for the provision of security services at Tshwaragano Brigade, ABC and Horticulture campuses at Kumakwane for a 2-year period which ended in June 2018, WeekendPost learnt.
After the contract expired in June 2018, an extension was granted till the 30th September 2018. Since then, there has been no security service coverage for the institution to-date. According to Auditor General, in the face of prevailing crimes, it is of paramount importance that government properties be protected by provision of security services at all times.
At Tlokweng Brigade, it was noted that the kitchen staff were working under difficult conditions as the kitchen facilities and equipment, such as the cold room, tilting pot, food warmers and solar power for hot water were dysfunctional. The kitchen roof was leaking and men’s restrooms was not working. All these need to be brought to a reasonable and functional state of repair.
The kitchen staff should use a purpose-designed Rations Ledger for the recording of receipts and issues of foodstuffs to reflect the usage of those items. As far back as 2014 the Department of Buildings and Engineering Services had found that the house occupied by the bursar was uninhabitable on account of structural defects, the report said.
A site visit during the audit had established that the house was indeed unfit for occupation as there were cracks on the walls, power switches were not working and the roof was leaking. On a sadder note, there were a number of finished items of clothing, such as dresses, shirts, and jackets from students’ practical exercises from the Fashion Design Textiles Workshop.
Auditor General shared her take on this, saying: “I have not been able to ascertain the policy on the disposal of products from these practicals. A trace of 103 green acid-proof overalls which had been purchased in August 2018 had indicated that there was no record of these items having been recorded or issued, nor were they available in stock. I was not able to obtain any explanation for this situation.”
Kgatleng brigade was also audited and inspected by Auditor General who observed that the brigade has 26 institutional houses at Bokaa, both old campus and new campus. Some of these houses are very old and dilapidated, with two declared uninhabitable. The condition of the houses is a clear indication of lack of care and maintenance of these properties.
At the time of the audit, there was no contractor engaged for the provision of security guard services at the new campus, after expiry of the previous one in July 2019. It is hoped that steps would be taken to safeguard the security of the premises and government properties against any acts of hooliganism.
In August 2019, there was a break-in at the electrical and at the plumbing maintenance workshops and a number of high value items, such as drilling machines, bolt cutters, spanners and cables, were stolen. The break-in and theft were reported to the police.
“However, at the time of writing this report I was not aware of the outcome of the police investigation, nor of any loss report submitted in terms of the Supplies Regulations and Procedures,” Letebele said.