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SADC experiences another year of food shortage

Botswana and her neighbours are still to conduct national crop yield assessments while there are already signs that the dry spell is most likely to affect food production in the region again this year.

The Southern African Development Community (SADC) Food Security Early Warning System Agromet report, observes that October to December 2015 was the driest in several southern parts of the region in Botswana, Namibia, Mozambique, South Africa and Zimbabwe although the extent of the impact in each country is yet to be determined.
The report says there has been large decreases in planted area are expected in some areas, as planting windows close. Maize crops in parts of Botswana, South Africa, Zambia and Zimbabwe were observed to be highly moisture stressed, and significant rainfall is required to avoid widespread permanent wilting as the rainy season comes to a close.

The Department of Crop Production in the Ministry of Agriculture would not immediately provide information as to what the situation looks like in Botswana.
However, recent reports and qualitative assessments indicate that the SADC region may be facing a difficult year in terms of food crop production.

Crops in some areas are reported to have already reached permanent wilting point. The report notes that dry spell occurred when many crops were in the flowering stage, a time when yields can be significantly reduced by moisture stress. In South Africa farmers are battling the  HYPERLINK "http://www.weathersa.co.za/images/documents/299/CLS-CI-GEN-INFO-109%201%20SA%20Annual%20Total%20Rainfall.pdf" o "South Africa total annual rainfall – South African Weather Service" t "_blank" worst drought on record, which has transformed parts of the country’s agricultural lands into what looks like desert, says Wandile Sihlobo, grains economist at the national farmers’ association Grains SA.

Last week Zimbabwe appealed to local businesses and charities for US$1.5bn in aid to save more than a quarter of the population from starvation due to drought. The Zimbabwean Vice President Emmerson Mnangagwa said the government of Zimbabwe requires a total of $1,572,009,953 with effect from February to December 2016.

“Reports indicate that the delayed planting has affected several countries, including Lesotho, South Africa, Swaziland, Zambia and Zimbabwe. In some cases the delays are at least 60 days (2 months). The delays may result in reduced yields, as the seasonal cessation of rains can occur before crops have reached maturity. The large delays also result in reduced area planted, as more farmers abandon planting intentions due to the greatly reduced chances of a successful harvest,” reads the report.

The report warns that crop land, rangeland and pasture are likely to have been affected, particularly in those areas where the dryness stretches as far back as December.

South-eastern Angola, much of Botswana, Lesotho, southern Mozambique, Namibia, South Africa, Swaziland, appear to be amongst the worst affected in terms of vegetation, according to satellite imagery. Reports indicate approximately 20,000 cattle have died in Swaziland due to effects of the drought, while in Zimbabwe over 8,000 cattle have died.

Regional harvests last season were also badly affected by drought conditions, raising the specter of back-to-back production declines of key cereal crops such as maize.

“In 2015 maize production, accounting for nearly 80  percent of the total cereal output, declined by 27 percent on account of adverse weather,” the Food and Agriculture Organisation said.

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Botswana on high red alert as AML joins Covid-19 to plague mankind

21st September 2020
Botswana-on-high-alert-as-AML-joins-Covid-19-to-plague-mankind-

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.

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Finance Committee cautions Gov’t against imprudent raising of debt levels

21st September 2020
Finance Committe Chairman: Thapelo Letsholo

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.

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Gov’t Investment Account drying up fast!  

21st September 2020
Dr Matsheka

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”

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