Botswana’s retail sector which is worth over P15 billion annually had seen battle between the Minister of Investment, Trade and Industry, Vincent Seretse following his decision to demand citizen component in ownership of retail shops operating in various malls in the country.
Minister Seretse’s new thumb rule was a requisite for operation permit renewal and this irked retailers and part of the business community. But this week the Minister declared victory, saying the retailers were compliant and results have started showing. The reservation of certain trade activities for citizens and citizen owned companies was emphasized in 2015 and aggressive implementation followed in 2016 spearheaded by Minister Seretse. The Minister said results as far as Citizen Economic Empowerment is have started showing and the reservations are provided for in Section 15.1 of the Trade Act of 2003.
According to Seretse, the reservation of these trade activities was premised on the fact that some retail operations are easy to operate and do not need technical expertise, special technology or special skills and therefore could be operated by citizens. Some of the reserved business activities include general dealer, general clothing, fresh produce, take away, hair and beauty parlor, among others.
Seretse made the statements in Parliament when answering a question asked by Specially Elected Member of Parliament, Bogolo Kenewendo. Kenewendo wanted the Minister to inform parliament of the impact of the reservation policy in the retail sector on the economy of Botswana.
“I ask this question because the retail sector is extremely important in our economy. It has been one sector that has been grossing double digits growth numbers, and the retail sector as a sub sector of the trade sector has also been quite important in cross border trading. It has accounted to about thirty- two (32) per cent of the total trade sector and has grown at around 5.2 per cent in the last decades,” Kenewendo said.
She explained that Retail activity has been quite crucial for employment as well. “The combined impact of the retail sector and the wholesales sector has been around 48 to 50 000 when it comes to job creation which is around fourteen (14) per cent of total formal employment.’”
Kenewendo who is also a Trade and Financial Economics expert said that upon revising the Trade Act, it was outlined that some economic activities will be reserved for citizens, and therefore there cannot be any foreign participation, “but previously we would find that the Minister would exempt some foreign owned retail chains in particular for clothing; Markham’s, Woolworths, Mr Price, Pep and so forth.
We heard last year and the year before that this has changed a bit, and that some of these chains have been withdrawing or are threatening to withdraw their investment in Botswana and are looking elsewhere because this Reservation Policy is being implemented quite harshly, So, I ask for the Minister to brief us if there has been any study to look at the impact of this Reservation Policy in particular on the retail sector,” she enquired further.
The specially elected MP had also asked whether there was any success noted in relation to the policy being implemented; “why are we not seeing any more exemptions, or really just to clarify if there are some of those exemptions, and what has been the total impact on employment creation?”
Seretse, in response said the implementation of reservation and reducing exemption has opened opportunities for citizens to participate in the retail sector such as bakery, fresh produce which has been in the domain of chain stores. “The economic growth of the country is suitable when it is driven by its own citizens. This results in the development of entrepreneurial skills and consequently improvement in the wellbeing of the people. The profit generated from the reserved business activities are re-injected into the economy and hence reduce the leakages of income that goes to other countries,” said Seretse.
Parliament also learnt that the reserved businesses under the Economic Diversification Drive (EDD) include manufacturing services and agricultural production. According to the minister, procurement from producers in these sectors will in the medium to long term lead to competitiveness which will encourage retail sectors currently dependent on imports to source products locally.
Furthermore, Seretse who is also Member of Parliament for Lentsweletau explained that foreign retailers who are mainly South African were engaged and brought to the table pertaining to the new developments. “We gave them an opportunity when this came into force that they must, when they expand, involve Batswana, because we could not impose the Act retrospectively, if they want to be in that space.”
Seretse noted that for a number of years his ministry continuously gave them exemptions: “Upon realizing that, they are taking advantage of this Clause which gives them exemptions, we decided that we shall stop the exemptions and put to them that they must try and get Batswana involved.” Seretse, who was criticized by the Lekwalo Leta Mosianyane led private sector advocacy federation, Business Botswana, explained that the Act provides for 51 percent of partnerships for new outlets.
“When I stopped the exemptions, they raised these issues like their companies are listed, so it is very difficult to engage Batswana to be participating in this space. For me that argument did not make sense because I decided that I meet all of them, the owners of the businesses that are operating here, the real Directors not the rented people who are sometimes called Country Managers this side who do not make decisions.” Seretse further told parliament that arguments brought forward by South African retailers did not hold water.
“I will give you one reason that they used, they said, ‘no, our staff is in the pension fund, we have given them some 1 per cent.’ I said I am not interested in that, I want significant contribution that will contribute to the economy. They went all over to try and get the support. I stood my ground, and basically said, I am not saying give your companies away at 51 per cent, I am asking you as a responsible Government to do something that you will feel comfortable with which is contributing to the economy.”
The Minister observed that his argument was based on empowering locals and he noted some of the business he advanced for was manufacturing enterprises, “I told them that some of the things that they could do was to engage our local manufacturing companies to supply them with goods. The argument was that the local people are very expensive and they cannot meet their standards. I said then we have to do something about it. You have to make sure that they meet your standards,” the Letsweletau Legislator quipped. Adding that he won his argument by stressing that local suppliers were expensive because they were still growing and if that was to be used as a factor, it would mean that Botswana would never grow its manufacturing sector.
The minister further revealed that retailers, so far were holding their end of the deal with respect to terms and conditions agreed upon “They threatened that they will go somewhere else. I knew they would not go because their profit lines are supported by our industries and for their businesses to grow they need us to support them through our purchases,” he said.
To date, he emphasized, no retailer had left the lucrative 15 billion Botswana market space. “To date, since you asked, even though they had threatened to leave, not a single company has gone. They are still here,” he stated, in direct response to Kenewendo. He further added that one of the conditions of exemption was that there must be a good cause that is practical to the effect that indeed Batswana are engaged.
“First we said we want to see Batswana products in their shops,” he noted adding that they committed that they would provide 10 percent of their floor space for goods produced by Batswana.” There also is commitment that the retailers will join forces with Botswana Government in training the suppliers to meet their standards. According to him, the first workshop was held a fortnight ago by Edcon which operates 10 different stores locally.
“There were about 100 Batswana who have shown interest that they are able to supply them. There is a clear programme that is to be followed. We also said that because our people might be starting from the beginning, there must be progressive quantities that you would be able to get from these different suppliers so that if all goes well as I would wish, at a particular point in time, these shops must be supplied probably if not 100 per cent, more than 60 per cent with local products,” he explained highlighting that their efforts are progressively benefiting Batswana.
In June 2019, a case involving the Attorney General was brought before the High Court, in which the applicant Letsweletse Motshidiemang challenged Sections 164 (a) and 167 of the Penal Code. The applicant contended that these sections are unconstitutional because they violate the fundamental rights of liberty and privacy.
The applicant argued that these sections violated his right and freedom to liberty as he was subject to abject ignominy. These laws subjected the LGBTIQ community to brutal and debasing treatment through social control and public morality. On the 1st of November 2017, the Botswana High Court further allowed Lesbians, Gays and Bisexuals of Botswana (LEGABIBO) to join the case as amicus curiae.
However, in July 2019, the respondents, in this case, i.e. the Government, filed an appeal against this iconic High Court ruling seeking re-criminalization of homosexuality. Human Rights Group has criticized this move of the Government all over the world. The appeal was heard before five judges at the Court of Appeal on Tuesday. The State was represented by Advocate Sidney Pilane, while LEGABIBO and Letsweletse Motshidiemang were represented by Tshiamo Rantao and Gosego Rockfall Lekgowe, respectively.
Non-Governmental Organizations advocating for the LGBTIQ+ community joined the two parties at the Court of Appeal during this case. They argue that the minority group should enjoy their rights, especially the right to privacy and health. Botswana Network on Ethics, Law and HIV/AIDS (BONELA) Chief Executive Officer, Cindy Kelemi says the issues being raised by LEGABIBO are that as individuals belonging to the LGBTIQ community, they have and must share equal rights, including the right to privacy, which also speaks to being able to involve in sexual activities, including anal sex.
“Those rights are framed within the constitution, and therefore a violation of any of those rights allow them to approach the courts and seek for redress. We do not need the law to be regulating what we do in the privacy of our homes. The law cannot determine how and when we can have sex and with who, so the law does not have any business in that context. What we are saying is that the law is violating the right to privacy,” she said on the sidelines of the decriminalization case in Gaborone on Tuesday.
The first case involving the homosexual act was the Utjiwa Kanane vs the State in 2003. Contrary to section 164(c) of the Penal Code, Kanane was charged with committing an unnatural offence and engaging in indecent practices between males, contrary to section 167. The conduct at issue involved Graham Norrie, a British tourist, and occurred in December 1994. (Norrie pleaded guilty, paid a fine, and left the country.)
Kanane pleaded not guilty, alleging that sections 164(c) and 167 both violated the constitution. The High Court ruled that these sections of the Penal Code did not violate the constitution. Kanane then appealed to the Court of Appeal. BONELA CEO recalls that in its judgment then, the High Court indicated, Batswana were not ready for homosexual acts. Twenty years later, the same courts are saying that Batswana are ready, she says.
“They gave the explicit example that shows that indeed Batswana are ready. There are policies and documents in place that accommodate people from marginalized communities and minority populations. The question now is that why is it hard now to recognize the full rights of an individual who is of the LGBTI community?” She further says intimacy is only an expression. The law that restricts homosexuality makes it hard for LGBTIQ members to express themselves in a way that affirms who they are.
“We want a situation where the law facilitates for the LGBTIQ community to be free and express themselves. The stigma that they face in communities is way too punitive. They are called names; some have been physically violated and raped at times. It shows that the law doesn’t not only prevent them from expressing themselves, it also exposes them to violence.” The law on its own, Kelemi submits, cannot change the status quo, adding that there is a need for more awareness and education on human rights and what it means for an individual to have rights.
“As it is now, it is very tough for some to do that because of a legal environment that is not enabling. We also want to see a situation where LGBTIQ+ people can access services and be confident that they are provided with non-discriminatory services. It is challenging now because health care providers, social workers and law enforcement officers believe that it is illegal to be homosexual. What we are saying is that if you have an enabling law, then that will facilitate for people to be able to express themselves, including accessing health services,” Kelemi said.
“As we are doing this advocacy work, one of the issues that we picked up is that there is lack of capacity, especially on the part of healthcare workers. We noted that when we provide services or mobilize Men who have sex with other men (MSM) to access health facilities, health care workers are not welcoming, forcing them to hideaway. We must put an end to this to allow these people the freedom that they equally deserve.”
The President, Dr Mokgweetsi Masisi, has declared as an act of corruption the attitude and practice by government officials and contractors to deliver projects outside time and budget, adding that such a practice should end as it eats away from the public coffers.
For a very long time, management problems and vast cost overruns have been the order of the day in Botswana, resulting in public frustrations. Speaking at the commissioning of the Masama/Mmamashia 100 Kilometres project this week, Masisi said: “There is a tendency in government to leave projects to drag outside their allocated completion time and budget. I want to stress that this will not be tolerated. It is an act of corruption, and I will be engaging offices on this issue,” Masisi said.
In an interview with this publication over the issue, the Director-General of the Directorate on Corruption and Economic Crime (DCEC), Tymon Katholo, says, “any project that goes beyond its scope and budget raises red flags.” He continued that: “Corruption on these issues can be administrative and criminal. It may be because government officials have been negligent or been paid to be negligent by ignoring certain obligations or procedures. “This, as you may be aware has serious implications on not only of the economy but even the citizens who use these facilities or projects,” Katlholo said, adding that his agency is equally concerned.
According to the DCEC director, the selection, planning and delivery of infrastructure or projects is critical. In most cases, this is where the corruption would have occurred, leading to a troubled project. A public finance expert at the University of Botswana (UB), Emmanuel Botlhale, attributes poor project implementation to declining public accountability, lack of commitment to reforming the public sector, a decline in the commitment by state authorities and lack of a culture of professional project management.
In his research paper titled, ‘Enhancing public project implementation in Botswana during the NDP 11 period,’ Botlhale stated that successful implementation is critical in development planning. If there is poor project implementation, economic development will be stalled. Corruption is particularly relevant for large and uncommon projects where the public sector acts as a client, and experts say Megaprojects are very likely to be affected by corruption. Corruption worsens both cost and time performance and the benefits expected from such projects.
Speaking during this week’s Masama/Mmamashia pipeline commissioning, Khato Civils chairman said Africans deserve a chance because they are capable, further adding that the Africans do not have to think that only Whites and Chinese people can do mega projects. During his rule, former president Ian Khama went public to attack Chinese contractors for costing the government a move that ended up fuelling tensions between China and Botswana after Khama dispatched the then Minister of Foreign Affairs, Pelonomi Venson Moitoi, to China to register Botswana’s complaints with Chinese government-owned construction companies. Botswana had approached the Chinese government for help in its marathon battle with Chinese companies contracted to build, among others, the failed controversial Morupule B power plant and refurbishment of Sir Seretse Khama International Airport (SSIK).
A legal battle between former Botswana Democratic Party (BDP) legislator Samson Moyo Guma and First National Bank (FNB) over a multimillion oil refinery project intensified this week with Justice Zein Kebonang referring the matter to Court of Appeal for determination. The project belongs to Moyo Guma’s company called United Refineries which he has since placed under judicial management.
The war of words between Moyo Guma and FNB escalated after the company’s property worth millions of Pula were put up for sale in execution by the bank and scheduled to take place on 8th October. It emerges from Court papers that the bank had secured an order from the High Court to place the company’s property under the hammer.
Moyo Guma then also approached the High Court seeking among others that the public auction scheduled for 8th October 2021 be stayed. He contended that the assets that were to be sold belonged in reality to United Refineries and that as the company had been under judicial management at the time of the attachment, the intended sale in execution was unlawful.
He also sought the Court to declare that the writs of execution against the properties of guarantors and sureties of United Refineries Botswana Holdings Propriety Limited (the company) are unlawful. Moyo Guma also sought a stay of the execution against the property known as Plot 43556 in Francistown, that is, the land buildings, plant and machinery which make up the property and any all immovable or movable property belonging to the guarantors and sureties of the company pending finalization of the winding up of United Refineries.
But FNB disputed Moyo Guma’s assertions and submitted that the properties in question belonged to TEC (Pty) Ltd and not United Refiners. TEC Pty Ltd which is one of the shareholders in United Refineries is one of the sureties and co-principal debtors of a debt amounting to P24 million owed by United Refineries to FNB. FNB argued in papers that the properties belonged to TEC because it was TEC which had passed a covering mortgage bond in its favour over the property it now sought to execute.
Moyo Guma submitted that the covering mortgage bond passed in favour of FNB did not tell the full story as the property in question was in truth and fact owned by United Refineries and not TEC Pty Ltd. He maintained that the shares had been had been passed by the company in exchange for the properties in question and that the parties had always been guided by the spirt of the share agreement in dealing with each other despite delays in the change or transfer of ownership of plots 43556 and plot 43557 in Francistown.
Kebonang said it was clear to him that the two plots (43556 and 435570 belonged to United Refineries notwithstanding that TEC (Pty) Ltd had passed a mortgage bond over them in favour of FNB. “For this reason the properties were immune from attachment or sale in execution so long as the judicial management order was in place,” he said.
The background of the case is that Moyo Guma together with five other investors, namely Elffel Flats (Pty) Ltd; Mmoloki Tibe; TEC (Pty) Ltd; Profidensico (Pty) Ltd and Tiedze Bob Chapi, each bound themselves as sureties and co-principal debtors in respect of a debt owed by a company called United Refineries Botswana Holdings (Proprietary) Limited (the Company), to First National Bank Botswana (FNBB) (1st Respondent).
FNB had extended banking facilities to the company in the amount of P24 million which was then secured through the suretyship of Moyo Guma and other shareholders. Court records show that Moyo had on the 11th February obtained a temporary order for the appointment of a provisional judicial manager in respect of United Refineries and it was confirmed by the High Court on 24th September 2019.
In terms of the final court order by the High Court issued by Justice Tshepho Motswagole all judicial proceedings against the company, execution of all writs, summons and process were stayed and could only proceed with leave of Court. Court documents also show that First National Bank had sued the company and the sureties for the recovery of the debt owed to it and through a consent order, the bank withdrew its lawsuit against the company.
But FNB later instituted fresh proceedings against Moyo Guma and did not cite the company in its proceedings. “There is no explanation in the record as to why the Applicant was now reflected as the 1st Defendant and why the company had suddenly been removed as the 1st Defendant. There was no application either for amendment or substitution by the bank,” said Justice Kebonang.
FNB had also argued that it sought to proceed to execute against Moyo Guma and other sureties on the basis of the suretyship they signed and that by signing the suretyship agreement, Moyo and other sureties had renounced all defence available to them and could therefore be sued without first proceedings against the principal debtor (United Refineries). The question, Kebonang said, was that can FNB proceed to execute against Moyo Guma and other sureties on the basis of the suretyship contracts they signed?
“The starting point is that the Applicant (Moyo Guma) and others by binding themselves as sureties became liable for debts of the principal debtor and such liability is joint and several. He said the consequences of placing the company under judicial management means that every benefit extended to it should also extend to sureties.
“If the company is afforded more time to pay or its debt is discharged, reduced or compromised or suspended the obligation of sureties is to be likewise treated. It follows in my view that where judicial proceedings are suspended or stayed against the company, then any recourse against the sureties is similarly stayed or suspended,’ said Kebonang.
He added that “In the circumstances of this case, it seems to me that so long as the company is under judicial management, the moratorium that applies to it must also apply to its sureties/guarantors and no execution of the writs should be permitted against them. Any execution would be invalid.”
“Mindful that there is judicial precedent on this point in Botswana, at least none that I am aware of, and given its significance, I consider it prudent that the Court of Appeal must provide a determinative answer to the question whether a creditor can proceed against sureties where a company is under judicial management,” said Kebonang.
Pending the determination of the Court of Appeal, he issued the following order; the execution of writs issued in favour of FNB against Moyo and other sureties/guarantors of United Refinery are hereby stayed pending the determination of the legal question referred to the Court of Appeal.