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Tourism Levy: A step in the right direction

Botswana has as of 01 June 2017, effected the Tourism Development Levy, that will levied to all Non-SADC visitors. The USD30 will accrue an estimated USD 5,7 million at ports of entry.
 


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, resultantly improving the lives of the people of Botswana. Payments are done at the ports of entry through electronic payment machines through cash (US Dollars), debit and credit card.


After the payment, a unique receipt corresponding to the passport will be automatically generated. The receipt should then be presented to Immigration Officials. The passport and the receipt will be stamped and handed back to the traveller. The receipt will valid for a 30 day period and can be used for multiple entries.


As a tourism lecturer at the Tshwane University of Technology, I support this levy as it will increase the resources that the government of Botswana has to drive tourism development. The tourism industry is primarily private sector driven, whilst the state creates an enabling environment for tourism to growth.


The private sector is not responsible for maintaining the roads, airports and other forms of infrastructure. The creation of an enabling environment requires the state to build the necessary infrastructure and super-structure that will enable tourism to grow such as airports, roads infrastructure, water supply, and electricity that tourism commerce requires in producing the highly sought after tourism experiences.


There would be resistance from the private sector, but the private sector must be playing a leading role in working with government, so that the spirit of collaboration wins. The private sector must identify priority investments that should be done by the state, to drive economic growth. Marketing must also be undertaken to ensure that Botswana increases its share of global tourism receipts. South Africa experienced an increase of 13% in tourist arrivals, and Botswana can also achieve this, if the growth trajectory is achieved.


The spirit of collaboration between the public and private sector was very evident from Team Botswana that sold Botswana during the Tourism Indaba in Durban. African countries during the year 2017, must ensure they the Single Aviation Market for Africa becomes a reality. Skills development in the tourism industry is imperative, especially foreign language training that will ensure that tourists are responded in their own languages.

The focus of foreign language training is to focus on languages such as French, German and Mandarin, considering that China will produce the greatest number of outbound tourists. The growth of tourism will be supported by aviation, and aviation demands airport infrastructure which is expensive to finance.

 

The growth of airport infrastructure and domestic aviation market regulation can lead to the entry of low cost carriers that would make use of secondary airports. The benefits of secondary airports translate into faster travelling time, benefiting commerce and industry. In addition, the benefit to society is shorted travelling time and stronger social bonds between families and communities. The entry of low cost carriers, means that domestic tourism will enter a new growth trajectory.


The attraction of flying schools to Botswana would be necessary, considering that South Africa cannot be dependent on. The Chinese are buying out privately owned flying schools, to supply exclusively the Chinese aviation market that is growing around 100%. These are other pressing investments that the private sector needs for tourism to grow, and the spirit of collaboration must triumph between the public and private sector. Unathi Sonwabile Henama teaches tourism at the Tshwane University of Technology and writes in his personal capacity.

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

21st September 2020
Botswana-on-high-alert-as-AML-joins-Covid-19-to-plague-mankind-

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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