Hardly a month into BCL provisional liquidation, President Khama who has been increasingly criticized for his silence on the BCL closure, has promised Selebi-Phikwe 7000 jobs.
Khama announced at a Kgotla meeting that the jobs would be created through former Bank of Botswana Governor, Linah Mohohlo who will coordinate and advice government on the future of the mining town. A communiqué from the office of the President indicated that Mohohlo will be serving under the Ministry of Investment, Trade and Industry, coordinating and advising the government on all Selebi-Phikwe economic resuscitation undertakings.
Mohohlo, who has 23 years experienced as a Central Bank executive is said to be remunerated around permanent secretary’s figures. Quoted in a Kgotla meeting as aired on the national broadcaster, President Khama stated that Mohohlo will create thousands jobs in Phikwe, “I am talking about someone who has already started her job and she is already contacting several investors to set up business in Phikwe to create over 7000 jobs,’’ said President Khama.
Permanent Secretary to the President, Carter Morupisi, also rubbished worries that Mohohlo‘s role would contradict that of SPEDU and other initiatives saying the economic and financial guru will act as the coordinator of all the private sector and government initiatives. “She will be the centre of all economic undertakings, unpacking alternative trade and investment opportunities from tourism, manufacturing, and agriculture,” Morupise stated.
Mohohlo’s appointment comes after the private sector federation Business Botswana set up a team of corporate governance and investment experts to undertake rigorous business scouting towards unearthing value chain investment opportunities in Phikwe. The team includes former BCL Managing Director, Montwedi Mphathi, who is currently the boss at the consistently profitable, Botswana Ash.
Mphathi is believed to have been the success story at BCL as sources reveal he left the company with over 4 billion pula in reserves before handing over the copper –nickel giant to the infamous Daniel Mahupela. Lekwalo Leta Mosienyane’s task team which is believed to be already coming up with significant propositions to the government also include Chief Executive Officer of Botswana Public Officers Pension Fund, Boitumelo Molefhe.
Molefhe who is former CFO of the once cash strapped Bokamoso Private Hospital and former CEO of Debswana Pension Fund is a shrewd investment magnet who has seen BPOPF grow to a magnificent investment billion pula institution which continues to accumulate wealth through acquisition of various profitable businesses. Other members of the Private Sector mouth piece task force are FNB Research Economist, Moathodi Sebabole, Botswana Chamber of Mines CEO, Charles Siwawa, and former BAC Boss, Mike Lesolle.
The national Business Botswana task team which works hand in hand with Selebi-Phikwe’s Business community task team presented a 500 million Pula business proposition to the Ministry of Investment, Trade and Industry last week. Speaking to WeekendPost this past week a representative from the team revealed that they want various government investment arms like CEDA and BDC to fast track cash injection into the region.
“We estimate an urgent need of more than 100 alternative business ventures which can absorb the just 5000 unemployed persons from BCL demise and that equates to over half a billion cash injection from financial lenders,” he said. Information gathered by WeekendPost also reveals that the Phikwe Business community wants subsidized rent and accelerated land allocation for investors.
SPEDU also revealed that though up against all the critics as a refurbished 18 month company and under a new corporate identity they have managed to attract investors. James Mathokgwane, Director-Community Economic Facilitation at SPEDU observes in his recent press release that amongst others, 200 jobs are coming through a multimillion Pula investment at Talana Farms, lashing out at Selebi Phikwe West member of Parliament, Dithapelo Keorapetse for his ignorance of SPEDU’s mandate.
Dithapelo had earlier accused government and SPEDU of failing Phikwe. However, BCL’s demise has been seen as a chance for the Special Economic Zones concept to take a significant roll out. Government passed the Special Economic Zones bill last year and saw the formation of the Special Economic Zones Authority which seeks to boost industrialization and Botswana’s competiveness in the global economy.
Selebi Phikwe has since been identified as one of the special economic zones. Analysts and economic experts observe that there could never be a better time to implement the initiative in Phikwe than now. Meanwhile, Minister of Minerals, Energy and Green Technology, Sadique Kebonang is to be working overtime trying to find new investors to inject billions into the liquidated BCL Group.
Contrary to his initial sentiments that BCL is better off closed, Kebonang who is only a month in as Minister is now of the view that it’s not over for the copper nickel mine. In fact, he told this publication last week that already 3 investors are showing interest in buying stakes in BCL Limited. Information gathered by this publication revealed that Kebonang is currently out of the country to meet Swedish magnets to discuss BCL resurrection.
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”