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The mystery of UB financial crisis

There is a famous African proverb which says when a hyena wants to eat its children; it first accuses them of smelling like goats. The expression could not have been more fitting in describing the conundrum in which the University of Botswana (UB) finds itself in — having to fight a mysterious battle to rediscover its value and where it stands in government future plans, writes ALFRED MASOKOLA.


Assistant Minister of Tertiary Education, Research, Science and Technology Fidelis Molao was probably showing just how far government would go to bury the University of Botswana a few months back. The unapologetic Minister stated rather harshly that: “UB should adapt or die.”


The doctor’s prescription, in the opinion of the Assistant Minister, is what the Human Resource Development Council (HRDC) has put on the table as what the country needs in the tertiary education sector; and if the UB does not satisfy that prescription, government would look elsewhere; the most obvious route being privately owned tertiary institutions.


This has infuriated the UB provost. The bitter words to swallow for Vice Chancellor Professor Thabo Fako was being told out of the blue, that the country’s most prestigious learning institution is offering programs which the economy does not desire. Again they were told, vaguely so, to adapt or die.


The first hint of Professor Fako’s aggravation with how things are turning out for UB was last year when he summoned all political parties to a forum at the institution. It is not common that the strategic issues of institutions such as UB could be discussed through such a forum. But Professor Fako, having run out patience and desperate for a solution was convinced it was the most perfect thing to do. Present at the meeting were    Mpho Balopi, the ruling Botswana Democratic Party (BDP) then Secretary General; Dr Phenyo Butale of the Umbrella for Democratic Change (UDC) and also Member of Parliament for the area and Dr Kesitegile Gobotswang representing Botswana Congress Party (BCP).


Fako’s revelations signalled that the UB was facing a crisis in future and pleaded for an honest apolitical debate on the future of the institution fearing that in the absence of such, the institution would fold, as result of mushrooming private institutions. Prof Fako was not impressed by the discriminatory gesture of offering Botswana International University of Science and Technology (BIUST) preferential treatment at the detriment of UB.


Even the BDP vanguard, Balopi was shocked by the state of affairs at UB. His mainstay promise was that he will compile a report and have it submitted to the party leadership with the view of amending the situation. Almost two years later, UB is in a worse crisis than it was a year ago. It is still a mystery what happened to Balopi’s promise. In the absence of that answer, the most two obvious scenarios are that; Balopi compiled the report, submitted to the leadership and it was largely ignored, or marked as not urgent. The second scenario is that Balopi didn’t bother to compile the report at all.


This week, Prof Fako made a daring statement before the parliamentary committee on Statutory Bodies and Enterprises that government should be bold enough to state whether it wants to shut down UB or not, and even said whatever decision government wants to take, it should do so openly, boldly and honestly.


But at government enclave, everyone seems to think that Fako is living in the world of phantasm or has paranoia emanating from the boom in private tertiary institutions. Molao hears no evil and sees no evil in the new government relationship with UB, and to him, Fako is just creating a storm in a tea cup.  He pointed out before that UB should not be heavily reliant on government alone at this point but should have in place self- sustenance mechanisms.


“There is nothing wrong with government no longer giving 100 percent subvention. UB should attracting international students, and our view is that they should be self-sustaining now,” Molao told WeekendPost a few weeks ago. The platitude of Molao’s statement however contrasts how the private institutions having been surviving, with government sponsored students being the only source of income for the institutions -the same model UB is expected not to use. Strictly speaking, a lot of them will close shop if the government was to stop sponsoring students at the institutions.


While government has envisaged increasing access to tertiary education, enrolment numbers at the country’s highest learning institution have been dwindling, and Fako has attributed this to the way government chooses to do business. A report, titled “Tertiary Education at a Glance” published by the HRDC earlier this year, indicates that government’s decision through its policy to sponsor students in registered private tertiary institutions in the country has resulted in significant involvement of the private sector in the provision of tertiary education.


The report stated that the enrolment at tertiary level has almost doubled, rising from 31 129 in the 2007/08 financial year to 60 583 in the 2014/15 financial year. During the 2014/15 financial year, out of the 60 583 students enrolled in tertiary institutions, private tertiary institutions accounted for 42.6 percent of the students. A drastic growth experienced by almost all private institutions.


The projections also indicated that the private sector will be enrolling more students than public schools. Amid the rise in enrolment at private tertiary institutions, owners and directors have been laughing all the way to the bank, as the education sector has now been turned into a dread for profit sector.


The ownership of the institutions, their accreditation and accrediting has been at the centre of debate, and so has been their credibility. Early this year, the ministry of Tertiary Education, acting in cohort with HRDC reached a decision that effectively meant that the following courses; Bachelor of Business Administration (Marketing), Bachelor of Business Administration (Management), Business Information Systems, BEd Adult Education, Diploma in Adult Education, BA Humanities, BA Chinese Studies, BA Pastoral Studies, Diploma in Library and Information Studies, BIS Computer Information Systems, BSc Information Technology, Diploma in Population Studies and Diploma in Social Work would not attract government sponsorship this year.


In Fako’s view, the development means, the ministry is signalling the university should completely shut down some faculties, which could mean unplanned loss of jobs for teaching staff. According to him, government should be able to state what it expects from UB as a public institution, without making isolated decisions which impact negatively on the operations of the university.


“My belief is that, if the government no longer wants the university to offer a certain program, that should be an act of policy, and then we phase out the programme in a gradual manner, not just to pullout the plug,” said Fako. Fako said government should understand that the university has already made some commitments by signing contracts with academic staff and such decisions by government continue to sink the university in crisis.


Apart from the dwindling number of students being enrolled at UB as a result of the sponsorship cessation by government for some courses, Ministry of Tertiary Education has also failed to pay University of Botswana tuition fees for three consecutive financial years.  Prof Fako also indicated that the major challenge faced by UB is government’s decision not to meet the budget as requested by the institutions. The institution requires over P1 billion to cover operational costs, but in the last three years the institution has received less than what they have requested forcing it to exhaust its reserves. In the last three years, the university received P776 million, 714 million and 703 million in the financial year under review.


Fako has openly stated that some private institutions have been given an illusion of being a ‘university’ while in actual fact they are not, given their capacity, resources and the learning environment. “To me a university is a prestigious institution, and the name ‘university’ should be protected. What we are doing is giving children the hope that they are something which they are not,” he said.


The chairman of the committee parliamentary committee, Samson Guma said the confusion caused by the ministry also means that the submissions by the ministry in the National Development Plan 11 is wrong, given that what is allocated to the UB could be inadequate to meet its operational costs in the next coming years.


Fako informed the committee he is preparing a report to be submitted to the ministry, detailing the gravity of the decision taken by government in the last few years and its impact on the university.

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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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