More than half of Botswana’s population is under the age of 15 or over the age of 65. This demographic implies that the working population is increasingly responsible to cover expenditure for themselves and the aging population dependent on them.
In a new report published by Global Entrepreneurship Monitor (GEM), it was found that the rising number of entrepreneurs aged 50 and above can offer economic, social and environmental benefits for economies wrestling with aging (dependent) populations.
GEM’s Report spans a decade’s worth of research, citing examples from developing economies where citizens over the age of 50 have played a significant role in contributing to their economies. According to a 2015 report by the United Nations, 5.9% of Botswanan citizens are over the age of 60 and this is projected to increase to 15.7% by 2050. GEM’s global findings gives new hope, indicating that the number of self-employed older adults now outweighs that of young adults.
According to the GEM Special Report on Senior Entrepreneurship, 18% of adults between the ages of 50 and 64 and 13% between the ages of 65 and 80 worldwide are self-employed compared to just 11% of adults between the ages of 18 and 29. Eighteen percent of “middle-aged” entrepreneurs (aged 30 to 49) are self-employed.
Sub-Saharan Africa has the highest rate of senior entrepreneurship worldwide in terms of entrepreneurial intention and early-stage entrepreneurial activity, with a 35% and 19% split respectively. Latin America and the Caribbean comes in second with (27%/14%), followed by the Middle East and North Africa (23%/7%) and the European Culture Countries (6%/4%).
“Entrepreneurial success and prosperity has no age limits,” said Mike Herrington, Executive Director of GEM, whose report draws on data collected between 2009 and 2016 on entrepreneurial activity among more than 1.5 million people spread across 104 countries. “While the traditional perception of entrepreneurship is that it is a young person’s endeavor, the data are showing us that, in many aspects, older people are a significant entrepreneurial force. But this segment is largely an overlooked and undervalued resource.”
The numbers related to Sub-Saharan Africa are consistent with GEM findings that entrepreneurship levels are typically higher in factor-driven economies where the types of businesses started often require lower skills and less money to get off the ground. According to Thomas Schøtt, Professor of Entrepreneurship at the University of Southern Denmark and lead author of the report, senior entrepreneurs bring with them a host of benefits – economic, social and environmental – that the report labels “golden dividends”. These include relieving pressure of an ageing population on the state and job creation.
“Every older adult who is self-employed is less likely to place a financial burden on society and to contribute to the economy of that country through the payment of taxes and by remaining economically active,” he said. “Additionally, senior entrepreneurs are marginally more likely than their younger counterparts to employ more than five people so they are not only creating jobs for themselves but for others as well.”
Additional economic benefits come from fact that senior and older people who act as informal investors also tend to invest considerably more money compared to younger adults. Almost two thirds (63%) of older business angels worldwide invest more than the median of all investments. And elderly entrepreneurs across all phases of entrepreneurial activity report substantially higher levels of satisfaction with both their life and their job, compared to elderly routine employees. This translates into better health and fewer demands being placed on social service/entitlement programmes.
Schøtt added that these findings have particular significance for economies struggling with the perceived burden of an ageing population. “With approximately 16% of the world’s population 55 or older, the issues of entrepreneurial activity at these more advanced ages directly affect more than a 1.2 billion people,” he said. “The world is beginning to understand how senior entrepreneurs with their wealth of work and life experience, deep networks, and eagerness to remain productive are a huge untapped resource.
“It is time that we stopped thinking about this demographic as a liability and instead recognise them as assets and work across sectors to help break barriers and unleash their potential. It’s imperative for governments to create innovative, inter-agency frameworks to marshal resources, catalyze strategic thinking, prioritize new policy and create actionable research to advance this movement.”
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.
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.
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.