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Troubled Lesotho buckles under regional pressure

Minister Pelonomi Venson-Moitoi

Minister of Foreign Affairs and International Cooperation Pelonomi Venson-Moitoi has revealed that the Prime Minister of Lesotho Pakalitha Mosisili has averted possible sanctions by the regional bloc Southern African Development Community (SADC) on the tiny mountain kingdom by finally accepting the SADC commissioned report.

Venson-Moitoi said that the possibility of imposing sanctions on Lesotho had crossed the table of discussion as Lesotho had been reluctant to receive the report citing a court case currently underway at home.

She said that Lesotho would still not budge even though SADC advanced reasoning that the regional bloc was immune and protected against the courts of law of member states and that the treaties signed by member states would protect decisions of SADC as well as the decisions of the Commission against any ruling from the Lesotho courts.

The meeting according to Venson-Moitoi still ended without an agreement between Lesotho and the SADC troika.

Venson-Moitoi however said that, the “conclusion was neither the best conclusion nor a conclusion that members states favoured because everybody wishes to see SADC succeeding.”

She continued that member states had for quite a time pleaded with Lesotho to see rational reason before arriving at a dreaded end where they discussed the imposition of biting sanctions, restrictions, limitations and the exclusion of Lesotho from the regional bloc as a proposal for the next SADC summit.

She continued that she believes, President Ian Khama who is also the SADC chairperson, sensing the palpable mood of the member states tailed the issue further beyond the stalemate.  She also believes that Pakalitha Mosisili also sensing the sulk atmosphere among the regional headship did not immediately depart for home and joined the chairman for a private meeting the next morning.

Venson-Moitoi says that the meeting between SADC chairman Ian Khama and Mosisili fundamentally changed the complexion of the previous day’s hard line trajectory that had mulled over imposition of sanctions as well as the expulsion of Lesotho from the regional community, removing the likelihood of a suspension that would have been concluded.

She also says that Mosisili accepted the report on condition that as a head of state leading a coalition government, he would not unilaterally accept the report as he had to go back home to consult his coalition partners before reaching an agreement with the chairman to issue a response to the chairman of the organ and President of Mozambique Felipe Nyusi within 14 days. Nyusi is head of the SADC organ on Politics, Defence and Security.

Venson-Moitoi also said that had Lesotho not accepted the commission’s report SADC was to publicise the report but since it had accepted it the onus falls on Lesotho to publicise it after 14 days. The 14 days agreement also stipulates that Lesotho has to show how it intends to execute constitutional public sector and security sector reforms that came as recommendations from findings of a report by SADC facilitator and South African Deputy President Cyril Ramaphosa, for Lesotho to come back into proper democratic governance.

Justice Mpaphi Phumaphi of Botswana had led a 10 member strong commission to investigate among other things; the rupture of political stability in the mountain kingdom and the assassination of Lieutenant-General Maaparankoe Mahao who was killed on the 25th of June 2015. General Mahao was killed on his way from his farm in an operation to arrest soldiers suspected of being involved in a plot to topple Lesotho Defence Force (LDF) military command. Ironically, General Mahao was in 2010 posted at the SADC headquarters in Gaborone as Chief of Staff-SADC Standby Forces (SSF) where he worked for a couple of years. He was also the scion of an accomplished Lesotho family as a brother to National University of Lesotho Chancellor Professor Nqosa Mahao.

The Lesotho government had stalled accepting the Phumaphi Commission of Enquiry report citing a court case in which LDF’s Special Forces Commander Lieutenant-Colonel Tefo Hashatsi accuses the commission of being biased against him to the point that Justice Phumaphi had bordered on accusing him of participating in Mahao’s assassination. Mahao had survived at least one assassination attempt where his family dog was gunned down as the political situation in that country spiralled out of control.

The Lesotho political and state security sector had been severely fractured with the Lesotho Mounted Police Service (LMPS) and Gen. Mahao said to be allied to former Prime Minister Tom Thabane.

Thabane promoted Mahao to the rank of Lieutenant-General in the LDF after a failed military coup d’état resulted in the sacking of Lieutenant-General Tlali Kamoli who is said to be allied to incumbent Prime Minister Mosisili. Gen. Kamoli is also said to be a distant cousin to Prime Minister Mosisili. After winning power in a snap general election Mosisili reinstated Kamoli to the top military post defying SADC facilitator Cyril Ramaphosa who warned that his entry had the potential to spark further political instability in the country.

The Phumaphi commission report was completed on the 23rd of October 25 2015 and handed to SADC on the 6th of December of the same year. Unconfirmed reports indicate that that the Phumaphi commission urges SADC to call for strictly monitored elections in Lesotho, and further calls for the dismissal of some military chiefs in that country.  

This publication learns that Lesotho has been given fourteen days to study the report and comply. The Lesotho cabinet is said to have held an emergency meeting on Wednesday and they now realise the seriousness of SADC leaders.

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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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