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More Gov’t millions flow to Palapye

Member of Parliament (MP) for Palapye constituency, Moiseraele Goya who is also Assistant Minister of Basic Education has implored Minister of Defence, Justice and Security (MDJS) to rather pilot the billion pula Safer City program in his boom town area of Palapye rather than in Gaborone as planned.


Despite Palapye being a benefactor to multi-millions of Pula in new development funds in the new National Development Plan 11, Goya wants more for his constituency. He complained about all developments starting in the capital, stating: “I want to talk about the Safer City program which will start in Gaborone. I wonder why everything has to start in Gaborone. Why can’t it be piloted in Palapye? This is where I disagree with Mr Kgathi because Safer City has to start in Palapye.”


In his response to Minister Shaw Kgathi’s NDP 11 report tabled in parliament this week, Goya contended that, it would be much easier and faster to monitor the efficacy of the project in a smaller town like Palapye than a bigger city: “you should not be misled by the word ‘city’; this can be piloted in a village like Palapye, in a small environment, not big like Gaborone,” and further probed: “why can’t it start in Palapye so that we see if it works well before it comes to a bigger town like Gaborone? That is the advice I wanted to tender.” Goya stated.


Safer City program is a crime fighting concept that will see Closed Circuit Television (CCTV) paraphernalia mounted on the city streets. The CCTV devices will also be accompanied by rapid response teams of police officers. NDP 11 is a six-year development spending spree period starting from 2017 to 2023. In the half-dozen period, Palapye will share P18 million of funds with Ghanzi for the construction of Legal Aid Service centers. Legal Aid was initially established in NDP 10 as a pilot project by the Attorney General’s Chambers and has since become a statutory entity and a parastatal under the MDJS.


The office of Ombudsman will also be constructed in Palapye in the same development plan. Other developments billed for the central boom town from MDJS include upgrading the Palapye Magistrate Court as well as the establishment of a court case management system called Library Management Services.


In the waning NDP 10, a deluxe bus-terminal was also constructed in Palapye. Another one was constructed in Molepolole. Besides the terminal, a fire station was also constructed in Palapye. Other three areas that received the same facilities are Francistown, Kasane and Mochudi.


An Industrial Court, circuit court which sits frequently conducting week-long sessions was also introduced to the boom town in NDP 10. Furthermore, the Directorate of Public Prosecutions (DPP) also rented offices from the Palapye private sector where they now operate.
Palapye has been a destined boom town as far as NDP 9.


It has since surpassed the country’s third and fourth largest cities of Lobatse and Selebi Phikwe, in terms of volume of development. It currently hosts the country’s premier Botswana International University of Science and Technology (BIUST). Just recently, a Member of Parliament for Selebi Phikwe West, Dithapelo Keorapetse accused government of neglecting his town and instead focusing major projects on Parliament which is already a commercial centre. He had stated then, “When expects advised that the second university be built in Phikwe, it was instead taken to Palapye, an already commercial town.”


Palapye also plays host to the miscarried Morupule Power Station as well as the adjacent Morupule Colliery. Its rise from relative obscurity to an important central capital, albeit undeclared, has also not escaped the eye of big business. Majestic Five Hotel, a luxurious 4-star hotel also opened for business in the dusty river village in 2011.


Another state funded Palapye mega-project is the failed Fengyue Glass Plant which was sold for P10 million 5 months ago. Efforts by the Botswana Development Corporation (BDC) to sell the Fengyue Glass Plant at a much high value hit a snag as it failed to sell at a P58 million tag price. The highest bidder even failed to pay and the engaged auctioneer, KPMG had to run around searching for the best among under bidders to take over the failed plant’s equipment.


The Glass Project was awarded to Rudy Schuhardt of Makoro Bricks at P10 million after the highest bidders failed to pay. In the first planned auction in 2015 no buyers had shown interest in purchasing the BDC’s Fengyue Glass Manufacturing plant. The plant, was sold after the project went up in smoke amid allegations of corruption and was put under liquidation.


Observers believe BDC found it difficult to attract buyers for the plant because it appears there was no proper feasibility study done before it was started. The Fengyue glass project was expected to create employment for residents of Palapye and surrounding areas.


Amongst the company assets that were up for auction is a float glass plant and equipment. An advert on the sale indicates that the float glass is designed to have a daily melting capacity of 450 tonnes of molten glass and designed in compliance with the China Louyang Float Glass Standards.  The majority of the plant and equipment remained in its original packaging.


The plant also boasts of a 100 hectare piece of land close to the centre of Palapye and has a dedicated electricity substation with a railway spur. The Palapye Glass Project was 57 percent owned by China-based Shanghai Glass Manufacturing Company and 43 percent by BDC. At the time of total collapse the project was about 70 percent completed and approximately P410 million was disbursed.


Reports recently emerged that cabinet has also decided to sell the Morupule B project to China National Electric Equipment Corporation (CNEEC). The 600 MW Morupule Power Plant has officially failed after spending years faltering. The project went to tender at P7 billon but costs overran to reach P11 billion.

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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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