Member of Parliament for Selibe Phikwe West, Dithapelo Keorapetse has dismissed President Lt Gen Dr Seretse Khama Ian Khama’s State of the Nation Address (SONA) saying the president should have instead acknowledged that the closure of BCL mine was a mistake on government’s part. According to Keorapetse, SONA was just hopeless arrangement of words and pronouncement of questionable figures.
“SONA offers no hope for the unemployed former BCL workers and people of Phikwe, Khama should have acknowledged that liquidating BCL was a mistake,” he said, citing that its impact on the people and economy is huge.
Keorapetse observed that the government was ill-advised by the Mineral Development Corporation and called for reopening of BCL Mine.
“Government has to accelerate diversification of the town’s economy yes, but in the mean time, P2 billion in recapitalization and restructuring including non core activities and good management, BCL is a profitable venture for the next 7 years or so,’’ he explained.
When delivering the State of the Nation Address (SONA) before legislators in Parliament this past Monday, President Khama had, contrary to expert views and specialists’ analysis, said that the closure of BCL mine will not cease billions of national economic activities, saying that the mine closure will in fact have less negative impacts on the country’s economy.
However, Keorapetse, who is also BCP spokesperson, said President Khama did not provide assurance for the people of Phikwe following the trauma of having their lives turned upside down by government’s ill advised decision to shut down the mine.
“Khama doesn’t say what he plans to do with the jobless former workers, people are leaving Phikwe empty handed with banks and other lenders taking a big share of their small terminal benefits, the pitiable benefits are so depressing that some are committing suicide,” he said.
According to Keorapetse, Khama‘s failure to acknowledge the socio-economic impacts of the mine closure proves beyond reasonable doubt how insensitive and his government is. “The President says BCL demise will have no impact on fundamentals of the economy but fails to acknowledge the enormity of the problem, he just glosses over the issue and understates the problem.”
Keorapetse told WeekendPost that it is unclear how Khama intends to create jobs in Phikwe, noting that the President is just ambiguous about revitalizing the economy and has no clear targets and set timeframes and easily assessable progress tracking mechanism.
In his SONA, President Khama also said that government treasury will be less affected by the decision to put the eastern bloc economic nucleus on provisional liquidation.
“We anticipate an overall domestic growth rate of 3.5% for this year and 4.1% in 2017. In this respect, while the liquidation of the BCL Group of companies will continue to have economic and social implications, particularly in the area of employment, it is anticipated that it will have limited direct impact in terms of our exports, Government revenues and overall growth,” President Khama said.
Khama however noted that they shall continue keeping a closer eye on the situation surrounding the dissolution of the former copper nickel giant, “Government shall, nonetheless, continue to closely monitor developments with respect to the BCL liquidation process with the view of updating our macro-economic projections as may be necessary.’’
He however acknowledged that a harsh liquidation aftermath may arise in due time. “The negative effects of the liquidation of the BCL Group may reduce this figures ,its medium to long term impacts on the economic growth , export and government revenue should be manageable,’’ he noted.President Khama further said that Phikwe would not be left to relegate into a ghost town.
“Madam Speaker, a Board for the Special Economic Zone Authority (SEZA) has been appointed and is already engaging a Technical Advisor for the rollout of the zones. Priority is now being given to the development of the mixed use Special Economic Zone at Selibe Phikwe.”
Further emphasizing on the Phikwe revitalization strategy unveiled two weeks back under the coordination of Linah Mhohlo, Khama added that the Phikwe localized diversification vehicle SPEDU has engaged with communities in the Region to resuscitate and support development projects in such areas as piggery, fish farming through co-operatives and development trusts.
“SPEDU is also facilitating the establishment of a Regional Chamber of Commerce and the development of the strategy to incorporate the SMME’s into the mainstream economy in partnership with Business Botswana,” he said.
Khama further revealed that SPEDU is facilitating the allocation of land for the establishment of an air separation plants and an aloe Vera farm and plant. “These businesses are expected to be fully operational before the end of the 2016/17 financial year, while plans to facilitate dam tourism are also underway.”
For his part, Policy Specialist at Ministry of Youth Empowerment, Sports and Cultural Development, Lawrence Ookeditse cautioned against implementation failure.
Ookeditse who continues to gain respect in policy crafting and impactful undertakings after pioneering the Job Summit and Youth Business Expo observed that the President should have stated how the issue of poor project implementation and monitoring was going to be different with Phikwe recovery. When responding to the SONA Ookeditse observes, “A chunk of money is allocated to SPEDU, the revitalization strategy is encored on SPEDU undertakings, and the same SPEDU has been there for almost 10 years and they failed dismally,” he said.
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.”
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.
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.”