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SONA silent on assets disposal, Opposition MPs not amused

Opposition Members of Parliament are furious over President Lt Gen Dr Ian Khama’s silence on the state of government enterprises and parastatals. They observe that in his State of the Nation Address, President Khama failed to paint the true picture of the country’s state of affairs.  

 

Information gathered by this publication indicates that as of 2016 the Government is owed 1.6 billion pula by Parastatals and state owned enterprises which otherwise should be paying dividend and expanding government revenue if well managed.

 

According to the Minister of Finance and Economic Development, Kenneth Matambo, Botswana Meat Commission (BMC) owes government over half a billion pula followed by the electricity service provider, Botswana Power Corporation (BPC) at P425.4 million while state owned Development lender, National Development Bank (NDB) is failing to pay P300 million belonging to taxpayers; in addition, Botswana Post and Botswana Savings Bank account for over P240 million owed to Government.

 

Matambo further revealed that the most indebted State Owned enterprise, BMC is actually failing to service its loan. These loans were given out of the Public Debt Service Fund and each loan has a repayment schedule which is used to service such loans.

 

In his address, President Khama announced the formation of a number of parastatals confirming the setting up of Special Economic Zones Authority & Botswana Energy Regulatory Authority.

 

“The Botswana Energy Regulatory Authority, which should become operational the coming financial year, has been established to facilitate expansion and diversification in the energy sector,” he said.

 

Policy Specialist, Lawrence Ookeditse on the contrary dismisses the formation of new parastatals as stretching government coffers.  “We cannot be exited over formation of new parastatals and these regulatory bodies, while those already existing are failing to fulfill their establishment mandate,” he observed.

 

OPPOSITION IS NOT IMPRESSED

 

Leader of Opposition in Parliament and President of the UDC, Duma Boko observes that Khama’s control of economy and upholding of good corporate governance is one of his worst failure.

 

When responding to SONA on Wednesday, Boko indicated that:

 

“Khama’s administration is reluctant or unwilling to set any targets for itself. To date no one knows how many jobs the Administration hopes to catalyze each year during the 11th Development Plan period; no one knows how many engineers, artisans or technicians the Administration hopes to churn out; how many professionals, business people and other experts our Immigration system will grant residence to assist our economy to grow.

 

No one wants to commit to just how much and by what order of magnitude to diversify our economy as well as our export base. Such is the tragedy of the Khama Administration’s planning, coordination and governing posture. It is simply just muddling through!”

 

Opposition legislators also stressed that President Khama should attend Parliament after delivering the State of the Nation Address to hear and appreciate MPs’ responses and deliberations and further account to the Nation.

 

Member of Parliament for Selibe Phikwe West, Dithapelo Keorapetse, who is also BCP spokesperson, observes that Khama just passes over fundamental issues and stresses over lame issues of 18 000 temporary jobs by ESP.

 

“The reality on the ground is that state owned businesses are retrenching and closing shop, people are losing jobs, but the President fails to acknowledge that as the torch bearer person,” he said.

 

According to Keorapetse the purchasing power of an average Motswana has been eroded over the years because of rising prices of commodities in the market.  “SONA did not address these bread and butter issues concerning the economic welfare of our people,”said Keorapetse.

 

Meanwhile, Member of Parliament for Gaborone Central, Dr Phenyo Butale who is also UDC parliamentary caucus spokesperson argues that President Khama is completely silent on poor governance at Parastatals and corruption in state owned enterprises. According to Butale the sudden selling of public asserts without procedural processes raises eyebrows.

 

‘’This looting of taxpayer‘s properties and rushed privatization of the national economy is of great concern, it resembles the deeds of people in a rush to steal and crush the economy because they realize their time is up’’ notes the Gaborone Central Legislator citing the recent decision to dispose off part of Morupule power station .

 

“Khama further fails to acknowledge the obvious fact that Botswana‘s education is under threat, University of Botswana, the highest institution of learning in the land is in serious debt and the President goes silent on that and talks about target 20 000, an initiative that enriches fly by night private institutions that are owned by few political elites,” said Butale.

 

“The time has come for the President to sit in parliament and listen to MPs’ responses to SONA and field questions from MPs,” stated Keorapetse in an interview with Weekendpost this week.

 

The youthful and outspoken MP argues  that  the President cannot just deliver the speech and run away, citing that other new entrants to democracy  like South Africa have presidents sitting in parliament to account to MPs and be subjected to responses on SONA.

 

MP Butale shared the same sentiments: “We have a president who doesn’t want to be put to scrutiny and account, he delivers a huge speech that is defeated by the reality on the ground and then runs away.”

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Mowana Mine to open, pay employees millions

18th January 2022
Mowana Mine

Mowana Copper Mine in Dukwi will finally pay its former employees a total amount of P23, 789, 984.00 end of this month. For over three years Mowana Copper Mine has been under judicial management. Updating members, Botswana Mine Workers Union (BMWU) Executive Secretary Kitso Phiri this week said the High Court issued an order for the implementation of the compromise scheme of December 9, 2021 and this was to be done within 30 days after court order.

“Therefore payment of benefits under the scheme including those owed to Messina Copper Botswana employees should be effected sometime in January latest end of January 2022,” Kitso said. Kitso also explained that cash settlement will be 30 percent of the total Messina Copper Botswana estate and negotiated estate is $3,233,000 (about P35, 563,000).

Messina Copper was placed under liquidation and was thereafter acquired by Leboam Holdings to operate Mowana Mine. Leboam Holdings struck a deal with the Messina Copper’s liquidator who became a shareholder of Leboam Holdings. Leboam Holdings could not service its debts and its creditors placed it under provisional judicial management on December 18, 2018 and in judicial management on February 28, 2019.

A new company Max Power expressed interest to acquire the mining operations. It offered to take over the Mowana Mine from Leboam Holdings, however, the company had to pay the debts of Leboam including monies owed to Messina Copper, being employees benefits and other debts owed to other creditors.

The monies, were agreed to be paid through a scheme of compromise proposed by Max Power, being a negotiated payment schedule, which was subject to the financial ability of the new owners. “On December 9, 2021, Messina Copper liquidator, called a meeting of creditors, which the BMWU on behalf of its members (former Messina Copper employees) attended, to seek mandate from creditors to proceed with a proposed settlement for Messina Copper on the scheme of compromise. It is important to note that employee benefits are regarded as preferential credit, meaning once a scheme is approved they are paid first.”

Negotiated estate is P35, 563,000

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Councilors’ benefits debacle-savingram reveals detail

18th January 2022

A savingram the Ministry of Local Government and Rural Development sent to Town Clerks and Council Secretaries explaining why councilors across the country should not have access to their terminal benefits before end of their term has been revealed.

The contents of the savingram came out in the wake of a war of words between counselors and the Ministry of Local Government and Rural Development. The councilors through the Botswana Association of Local Authorities (BALA) accuse the Ministry of refusing to allow them to have access to their terminal benefits before end of their term.

This has since been denied by the Ministry.  In the savingram to town councils and council secretaries across the country, Permanent Secretary in the Ministry of Local Government and Rural Development Molefi Keaja states that, “Kindly be advised that the terminal benefits budget is made during the final year of term of office for Honorable Councilors.”  Keaja reminded town clerks and council secretaries that, “The nominal budget Councils make each and every financial year is to cater for events where a Councilor’s term of office ends before the statutory time due to death, resignation or any other reason.”

The savingram also goes into detail about why the government had in the past allowed councilors to have access to their terminal benefits before the end of their term.  “Regarding the special dispensation made in the 2014-2019, it should be noted that the advance was granted because at that time there was an approved budget for terminal benefits during the financial year,” explained Keaja.  He added that, “Town Clerks/Council Secretaries made discretions depending on the liquidity position of Councils which attracted a lot of audit queries.”

Keaja also revealed that councils across the country were struggling financially and therefore if they were to grant councilors access to their terminal benefits, this could leave their in a dire financial situation.  Given the fact that Local Authorities currently have cash flow problems and budgetary constraints, it is not advisable to grant terminal benefits advance as it would only serve to compound the liquidity problems of councils.

It is understood that the Ministry was inundated with calls from some Councils as they sought clarification regarding access to their terminal benefits. The Ministry fears that should councils pay out the terminal benefits this would affect their coffers as the government spends a lot on councilors salaries.

Reports show that apart from elected councilors, the government spends at least P6, 577, 746, 00 on nominated councilors across the country as their monthly salaries. Former Assistant Minister of Local Government and Rural Development, Botlogile Tshireletso once told Parliament that in total there are 113 nominated councilors and their salaries per a year add up to P78, 933,16.00. She added that their projected gratuity is P9, 866,646.00.

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Households spending to drive economic recovery

17th January 2022

A surge in consumer spending is expected to be a key driver of Botswana’s economic recovery, according to recent projections by Fitch Solutions. Fitch Solutions said it forecasts household spending in Botswana to grow by a real rate of 5.9% in 2022.

The bullish Fitch Solutions noted that “This is a considerable deceleration from 9.4% growth estimated in 2021, it comes mainly from the base effects of the contraction of 2.5% recorded in 2020,” adding that, “We project total household spending (in real terms) to reach BWP59.9bn (USD8.8bn) in 2022, increasing from BWP56.5bn (USD8.3bn) in 2021.”  According to Fitch Solutions, this is higher than the pre-Covid-19 total household spending (in real terms) of P53.0 billion (USD7.8bn) in 2019 and it indicates a full recovery in consumer spending.

“We forecast real household spending to grow by 5.9% in 2022, decelerating from the estimated growth of 9.4% in 2021. We note that the Covid-19 pandemic and the related restrictions on economic activity resulted in real household spending contracting by 2.5% in 2020, creating a lower base for spending to grow from in 2021 and 2022,” Fitch Solutions says.

Total household spending (in real terms), the agency says, will increase in 2022 when compared to 2021. In 2021 and 2022, total household spending (in real terms) will be above the pre-Covid-19 levels in 2019, indicating a full recovery in consumer spending, says Fitch Solutions.  It says as of December 6 2021 (latest data available), 38.4% of people in Botswana have received at least one vaccine dose, while this is relatively low it is higher than Africa average of 11.3%.

“The emergence of new Covid-19 variants such as Omicron, which was first detected in the country in November 2021, poses a downside risk to our outlook for consumer spending, particularly as a large proportion of the country’s population is unvaccinated and this could result in stricter measures being implemented once again,” says Fitch Solutions.

Growth will ease in 2022, Fitch Solution says. “Our forecast for an improvement in consumer spending in Botswana in 2022 is in line with our Country Risk team’s forecast that the economy will grow by a real rate of 5.3% over 2022, from an estimated 12.5% growth in 2021 as the low base effects from 2020 dissipate,” it says.

Fitch Solutions notes that “Our Country Risk team expects private consumption to be the main driver of Botswana’s economic growth in 2022, as disposable incomes and the labour market continue to recover from the impacts of the Covid-19 pandemic.”
It says Botswana’s tourism sector has been negatively impacted by the Covid-19 pandemic and the related travel restrictions.

According to Fitch Solutions, “The emergence of the Omicron variant, which was first detected in November 2021, has resulted in travel bans being implemented on Southern African countries such as South Africa, Botswana, Lesotho, Namibia, Zimbabwe and Eswatini. This will further delay the recovery of Botswana’s tourism sector in 2021 and early 2022.”  Fitch Solutions, therefore, forecasts Botswana’s tourist arrivals to grow by 81.2% in 2022, from an estimated contraction of 40.3% in 2021.

It notes that the 72.4% contraction in 2020 has created a low base for tourist arrivals to grow from.  “The rollout of vaccines in South Africa and its key source markets will aid the recovery of the tourism sector over the coming months and this bodes well for the employment and incomes of people employed in the hospitality industry, particularly restaurants and hotels as well as recreation and culture businesses,” the report says.

Fitch Solutions further notes that with economies reopening, consumers are demanding products that they had little access to over the previous year. However, manufacturers are facing several problems.  It says supply chain issues and bottlenecks are resulting in consumer goods shortages, feeding through into supply-side inflation.  Fitch Solutions believes the global semiconductor shortage will continue into 2022, putting the pressure on the supply of several consumer goods.

It says the spread of the Delta variant is upending factory production in Asia, disrupting shipping and posing more shocks to the world economy. Similarly, manufacturers are facing shortages of key components and higher raw materials costs, the report says adding that while this is somewhat restricted to consumer goods, there is a high risk that this feeds through into more consumer services over the 2022 year.

“Our global view for a notable recovery in consumer spending relies on the ability of authorities to vaccinate a large enough proportion of their populations and thereby experience a notable drop in Covid-19 infections and a decline in hospitalisation rates,” says Fitch Solutions.
Both these factors, it says, will lead to governments gradually lifting restrictions, which will boost consumer confidence and retail sales.

“As of December 6 2021, 38.4% of people in Botswana have received at least one vaccine dose. While this is low, it is higher than the Africa average of 11.3%. The vaccines being administered in Botswana include Pfizer-BioNTech, Sinovac and Johnson & Johnson. We believe that a successful vaccine rollout will aid the country’s consumer spending recovery,” says Fitch Solutions.  Therefore, the agency says, “Our forecasts account for risks that are highly likely to play out in 2022, including the easing of government support. However, if other risks start to play out, this may lead to forecast revisions.”

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