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200 billion Pula splash

The National Development Plan (NDP) 11 has been presented to Parliament and lawmakers are making their input accordingly in Parliament. It is evident that the next six years almost P200 billion will be spent during the six years of the NDP 11 which has been aligned to the new Vision 2036 aspirations.


The NDP 11 indicates that Botswana will spend heavily on security issues including territorial protection, infrastructure development, as well as maintenance of existing structures across ministries.  The 2019 general elections will also gobble a couple of millions between now and 2023.


A number of observers have called on the government to ensure that the NDP 11 focuses more on empowering citizens and leveraging the private sector. Several mega projects are included in the NDP 11 and as usual government has been urged to be more vigilant when it comes to implementation if the NDP 11 is to help propel this country into a high income bracket.


IEC NEEDS P439.9 MILLION FOR 2019 ELECTIONS
A total of P439.9 million will be spent on the Independent Electoral Commission (IEC) between 2018 and 2022. The bulk of the money P288.9 million will go towards the 2019 general elections while P147.8 million paying for the Electronic Voting Machines (EVMs) and P1.1 million being utilised on the review of the Electoral Process. 

The opposition has threatened to take government to court over the EVMs. It is no secret that the 2019 general elections are highly anticipated because of several factors, with the opposition aiming to topple the ruling Botswana Democratic Party (BDP) then.

Another twist is the expected change of guard in the Presidency of the country, with Lt Gen Dr Ian Khama’s term coming to an end in 2018, hence there is no doubt that Botswana will have a new president after the 2019 general elections. The IEC has already started preparing for the elections; in 2017 they will spend P1.1 million in the review of the electoral process; P100 million in the EVMs followed by P36.6 million in 2018/19 and P12.2 million in 2019/2020.  


DIS WILL SPEND OVER P1. 6 BILLION IN SIX YEARS
The Directorate on Intelligence and Security (DIS) will also see a substantial spending during NDP 11. It is evident that security is one of the top priorities of the current government. The DIS is expected to spend P1, 668.5 million in the next six years, with the amount spread evenly during the financial years. The money will be spent on DIS communications; Infrastructure; computer equipment, vehicles and other functionaries.


DCEC PALTRY SHARE
Only P69 million will be spent on the Directorate on Corruption and economic Crime (DCEC) in the next six years. The DCEC will only get a fleet expansion in starting inn 2020/21 to the tune of P4 million. Another P4 million will be availed in 2021/22 and another in 2022/23. P0.4 million will be allocated for organisational structure review during the 2020/21 financial year. More than half, P36 million, will be used for provision of staff residential accommodation and it will be availed in batches starting from 2020/21 financial year.

The DCEC technical works program will claim P18 million from the total budget. There is an additional P7 million budgeted for the DCEC case management system.


SOCIAL PROTECTION GETS OVER P2 BILLION
Government will continue to put emphasis on social protection. The Poverty Eradication Programme gets the large chunk in the budget, with P2, 172.8 million budgeted for this programme. An Emergency Operating Centre will be established at the tune of P30 million, with P5 million spent over the course of the six years. P8 million has been set aside for a Disability Economic Empowerment Programme.


CONSTRUCTION, MAINTENANCE PLENTY AT EDUCATION MINISTRY
Secondary education will see a number of projects being implemented. A Unified secondary School will be built in Tsabong at the tune of P100 million during the 2017/18 financial year and will be completed during the 2018/19 financial year. Another Unified Secondary School will be built in Takatokwane also at the tune of P100 million while Francistown and Maun will see construction of a Junior Secondary Schools at the tune of P80 million each.

P269 million has been budged and apportioned equally across the six years for expansion of junior secondary schools. P43.4 million will be used for maintenance of junior secondary schools. Secondary Schools staff housing has been allocated P654.9 million starting with P422.1 million budgeted for the 2017/18 financial year. A Centre for Severe and Multiple Disability is lined up for Maun to the tune of P200 million while Francistown will get a Learner Assessment Centre valued at P20 million.  


LOCAL GOVERNMENT INFRASTRUCTURE DEVELOPMENT
The Ministry of Local Government and Rural development will also spend heavily on social welfare programmes and infrastructure development. P5, 238.0million is reserved for social welfare programmes while there is a whooping P922.5 million for infrastructure development. The infrastructure includes internal roads among others. P928.4 million will be used for Primary Schools infrastructure backlog eradication in all districts. Local construction companies are expected to be bankrolled by these budget which available between financial years 2017/18 and 2019/20.


MORE SPENDING ON WATER AND ENERGY
Close to P9 billion will be spent on water infrastructure development.  The North South Water Carrier project Palapye-Mmashia will need about P5 billion over the next six years.  P700 million will be needed in the financial year 2017/18.  Kanye will be connected to the NSC during the 2018/19 financial year with a budget of P150 million in 2017/18 and P300 million in 2019/2020. P400 million is needed for the Gaborone-Mmamashia pipeline; Thune dam pipeline works need P590 million by 2023. Several other pipeline projects are expected to be implemented to the tune of millions of Pula. Sanitation works have also been budgeted for to the tune of P3 815.3 million.

Power generation and distribution will need P3, 865.6 million. Morupule A refurbishment needs P600 million between financial years 2017/18 and 2019/20. P814.6 million is reserved for Rakola substation during the financial years 2018/19 and 2020/21. Rural village electrification and network extension has P650 million budgeted for the next six years. Botswana Power Corporation (BPC) will be supported with P10 billion in the next six years.


BDF AND BOTSWANA POLICE SERVICE
Strengthening of Botswana Defence Force (BDF) capabilities has been given priority in the next six years. BDF will spend P14, 830.5 million in the next six years. Botswana Police Service will be strengthened during the next six years with P2, 420.0 budgeted. A number of police stations and posts will be constructed across the country. Police houses and maintenance of existing structures also dominate the budget

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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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