The Selebi Phikwe Economic Diversification Unit (SPEDU) which recently received over P600 million from the European Union Re-employment fund under the Phikwe Economic Revitalization strategy is determined to surge despite the negative reports on the organisation.
Last week Tuesday, (November 29th) SPEDU commenced a 12.8 million pula Motloutse farms electrification project. Speaking at the project ground breaking ceremony in Bobonong, European Union Policy Advisor, Kartenger Hangerman revealed that the EU reemployment fund is an aid from the Union which targets regions with dependence on the unreliable Mining Sector, with the aim of diversifying the region’s economy.
“This project will power over 800 hectares of agricultural land, improving production efficiency which was previously hindered by high production costs due to use of diesel powered water pump generators,” she said.
Hangerman further observed that pumping irrigation water from Motloutse River using fuel was very expensive for farmers, noting that with the electricity at the farmer’s disposal, turning SPEDU region into the bread basket of Botswana will be very much achievable.
Motloutse region farmers Association Representative, Moffat Mothudi added that for him, before pausing production he once quantified his profits to be only few hundreds of pula per annum due to fuel powered irrigation, something which was not good for business.
“In the past before I stopped production, all my proceeds would be consumed by diesel costs, I would make losses and the irrigation processes was cumbersome as I sometimes failed to purchase the fuel, now with electricity connected I will just press and my plants get watered,” he explained with delight.
The National Agro Processing plant Operations Manager, Ramogoma Kaisara could not hide his excitement about the development, observing that the project is anticipated to present a pool of raw material supply for their processing hence increase in their production output.
“We are currently just processing about 32 tonnes of tomato a month, that is a low intake ,and our view is that when the SPEDU region farmers are resourced and farming is enhanced by projects such as this we will definitely expand our plant and take in more raw materials,’’ he said.
Kaisara told WeekendPost that once the project is complete as well as many other enhancement undertakings by SPEDU, the plant will be able to asses supply availability and inform plant expansion better.
The Project, which is expected to be complete by January next year is under the contractual management of Botswana Power Corporation and BPC Project Manager, Thuto Mongalenyana revealed that there were no doubts of planned completion timeframe, “We will erect 17 kilometer line first and then get to mini dropping into farms and by the end of the year over 50 % will be done, completing the remaining by end of January 2017, we are in good progress.’’
According to SPEDU Director for Strategic Projects, Mr Jazenga Uezesa the electrification is designed in such a way that it will be very easy and less expensive for farmers to drop electricity into their plantations, “If we only provided the straight forward power line, the farmers would drop at a total cost over P500 000, but we designed the power connection in such a way that farmers will only drop at a cost of less than 15 000.’’
The project will power 44 horticultural fields along Motloutse River in the SPEDU region and is one of the investments under the much anticipated Selebi Phikwe Revitalization Strategy following the sudden closure of BCL mine.
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.
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.
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”