NEW BEGINNING: Business Botswana president and his CEO hug to mark the future
Business Botswana is the new name of what has, for the past 46 years, been known as BOCCIM (Botswana Confederations of Commerce and Manpower).
A special general meeting of BOCCIM met this week on Wednesday at Cresta Lodge, where the body resolved to effect a name change and to adopt a new constitution that would be in line with the expanded mandate of the organisation.
The thinking behind the name change and constitution, according to Maria Machailo-Ellis, is to bring greater functionality and as well as improved governance and efficiency at the giant employer association.
Business Botswana, the redressed new organisation was this week, inaugurated as the apex body of business associations in the country, carrying the mantle as an employer body and a chamber of commerce.
BOCCIM, a business association of employers representing all sectors of the Botswana economy in an advocacy capacity, was formed in 1971 and registered under the Trade Unions and Employers’ Act No. 23 of 1983.
During the fact finding process, it was found that members are unhappy with the organisation, for several reasons, including irregular information to them from BOCCIM. The members complained of no feedback on meetings with Government. Members also found it difficult to get hold of BOCCIM management and lobbyists.
It is felt in some quarters, that the reputation of the organisation suffered irreparable damage from the scandalous fracas that ensured in 2013, between the then president Alex Monchusi and the chief executive at the secretariat, Maria Machailo Ellis.
Some are not convinced by the effectiveness of the advocacy performed by BOCCIM saying that: “BOCCIM is not needed to push agenda of our members; we have direct access”
They say that even with the High Level Consultative Committee (HLCC), which is a brainchild of BOCCIM, the body still has limited influence on Government decisions.
Not enough advocacy on important issues such as work permit restrictions, while BOCCIM is spread too thin, with too many other functions, losing focus as a result.
BOCCIM was accused of not structuring collaboration with associations and not consulting, prior to meetings.
“BOCCIM does not ask what our priorities are,” was a member’s response during the fact finding exercise.
It was also alluded, by some members, that the business community is “too political.”
The situation with regards to existing business associations is that there are a few bigger ones, and many small bodies that often have no secretariat and are not always member of BOCCIM. These associations suffer challenges such as non payment membership fees. The associations mostly focus on lobbying but offer very little in the way of few services.
The body of experts recommended that the momentum of in the formation of an APEX body be used to bring forth a change of name. BOCCIM was advised to Create a new, shorter mission statement that is in line with role of an apex body. The constitution was to be brought in line with role as APEX body, to decentralise and give more weight to associations.
With regards to governance, Council members will now come from associations and Regions must be represented in Council. However, large corporations will be afforded the opportunity to be members without their associations.
However, it was recommended that there should be no rush in creating regional Chambers of Commerce, but need for nationwide presence.
BOCCIM notes some successes and achievements over the years, including: Organising the business sector to be a major player in the formulation of many national economic issues; Initiated the debate on the need for “A Long-Term Vision for Botswana”; Establishment and institutionalisation of the HLCC in 1996; initiating the Privatisation Policy for Botswana; getting Government to agree to the payment of a delayed payment penalty of 1.5 percent per month to the private sector and for nationalizing the debate on Citizen Economic Empowerment, among others.
HOW THE NAME WAS CHOSEN The name Business Botswana was in pitted against another shortlisted name in Botswana Chamber of commerce. However, a now defunct organization named Botswana Chamber of Commerce was formed and started to compete with BOCCIM but could not withstand the test of time.
Internal and external stakeholders were engaged to get their views, with BOCCIM feeling they were comfortable with the current name while the business community felt a name change was necessary.
Machailo Eliss also said Chambers of commerce are often run by Governments and BOCCIM has always done well to stay independent of Government and adopting the name would have cast aspersions on the independence of BOCCIM.
“The role of employer organisation still remains and need to be embraced. Chamber of Commerce is synonymous with the role of an oganisation that serves as a government agent.”
“Nowadays, the trend around the world is that business associations are aligning themselves to the mandate of business. There is more focus on competitiveness of member companies. They have rebranded and changed their names to reflect the focus on business; Business New Zealand, Business Unity South Africa, Business Africa and others,” said Machailo–Ellis.
Marcian Concepts have been contracted by Selibe Phikwe Economic Unit (SPEDU) in a P230 million project to raise the town from its ghost status. The project is in the design and building phase of building an industrial hub for Phikwe; putting together an infrastructure in Bolelanoto and Senwelo industrial sites.
This project comes as a life-raft for Selibe Phikwe, a town which was turned into a ghost town when the area’s economic mainstay, BCL mine, closed four years ago. In that catastrophe, 5000 people lost their livelihoods as the town’s life sunk into a gloomy horizon. Businesses were closed and some migrated to better places as industrial places and malls became almost empty.
However, SPEDU has now started plans to breathe life into the town. Information reaching this publication is that Marcian Concepts is now on the ground at Bolelanoto and Senwelo and works have commenced. Marcian as a contractor already promises to hire Phikwe locals only, even subcontract only companies from the area as a way to empower the place’s economy.
The procurement method for the tender is Open Domestic bidding which means Joint Ventures with foreign companies is not allowed. According to Marcian Concepts General Manager, Andre Strydom, in an interview with this publication, the project will come with 150 to 200 jobs. The project is expected to take 15 months at a tune of P230 531 402. 76. Marcian will put together construction of roadworks, storm-water drains, water reticulation, street lighting and telecommunication infrastructure. This tender was flouted last year August, but was awarded in June this year. This project is seen as the beginning of Phikwe’s revival and investors will be targeted to the area after the town has worn the ghost city status for almost half a decade.
The International Monetary Fund (IMF) has slashed its outlook the world economy projecting a significantly deeper recession and slower recovery than it anticipated just two months ago.
On Wednesday when delivering its World Economic Outlook report titled “A long difficult Ascent” the Washington Based global lender said it now expects global gross domestic product to shrink 4.9% this year, more than the 3% predicted in April. For 2021, IMF experts have projected growth of 5.4%, down from 5.8%. “We are projecting a somewhat less severe though still deep recession in 2020, relative to our June forecast,” said Gita Gopinath Economic Counsellor and Director of Research.
The struggle of humanity is now how to dribble past the ‘Great Pandemic’ in order to salvage a lean economic score. Botswana is already working on dwindling fiscal accounts, budget deficit, threatened foreign reserves and the GDP data that is screaming recession.
Latest data by think tank and renowned rating agency, Moody’s Investor Service, is that Botswana’s fiscal status is on the red and it is mostly because of its mineral-dependency garment and tourism-related taxation. Botswana decided to close borders as one of the containment measures of Covid-19; trade and travellers have been locked out of the country. Moody’s also acknowledges that closing borders by countries like Botswana results in the collapse of tourism which will also indirectly weigh on revenue through lower import duties, VAT receipts and other taxes.
Latest economic data shows that Gross Domestic Product (GDP) for the second quarter of 2020 with a decrease of 27 percent. One of the factors that led to contraction of the local economy is the suspension of air travel occasioned by COVID-19 containment measures impacted on the number of tourists entering through the country’s borders and hence affecting the output of the hotels and restaurants industry. This will also be weighed down by, according to Moody’s, emerging markets which will see government losing average revenue worth 2.1 percentage points (pps) of GDP in 2020, exceeding the 1.0 pps loss in advanced economies (AEs).
“Fiscal revenue in emerging markets is particularly vulnerable to this current crisis because of concentrated revenue structures and less sophisticated tax administrations than those in AEs. Oil exporters will see the largest falls but revenue volatility is a common feature of their credit profiles historically,” says Moody’s. The domino effects of containment measures could be seen cracking all sectors of the local economy as taxes from outside were locked out by the closure of borders hence dwindling tax revenue.
Moody’s has placed Botswana among oil importers, small, tourism-reliant economies which will see the largest fall in revenue. Botswana is in the top 10 of that pecking order where Moody’s pointed out recently that other resource-rich countries like Botswana (A2 negative) will also face a large drop in fiscal revenue.
This situation of countries’ revenue on the red is going to stay stubborn for a long run. Moody’s predicts that the spending pressures faced by governments across the globe are unlikely to ease in the short term, particularly because this crisis has emphasized the social role governments perform in areas like healthcare and labour markets.
For countries like Botswana, these spending pressures are generally exacerbated by a range of other factors like a higher interest burden, infrastructure deficiencies, weaker broader public sector, higher subsidies, lower incomes and more precarious employment. As a result, most of the burden for any fiscal consolidation is likely to fall on the revenue side, says Moody’s.
Moody’s then moves to the revenue spin of taxation. The rating agency looked at the likelihood and probability of sovereigns to raise up revenue by increasing tax to offset what was lost in mineral revenue and tourism-related tax revenue. Moody’s said the capacity to raise tax revenue distinguishes governments from other debt issuers. “In theory, governments can change a given tax system as they wish, subject to the relevant legislative process and within the constraints of international law. In practice, however, there are material constraints,” says Moody’s.
‘‘The coronavirus crisis will lead to long-lasting revenue losses for emerging market sovereigns because their ability to implement and enforce effective revenue-raising measures in response will be an important credit driver over the next few years because of their sizeable spending pressures and the subdued recovery in the global economy we expect next year.’’
According to Moody’s, together with a rise in stimulus and healthcare spending related to the crisis, the think tank expects this drop in revenue will trigger a sizeable fiscal deterioration across emerging market sovereigns. Most countries, including Botswana, are under pressure of widening their tax bases, Moody’s says that this will be challenging. “Even if governments reversed or do not extend tax-easing measures implemented in 2020 to support the economy through the coronavirus shock, which would be politically challenging, this would only provide a modest boost to revenue, especially as these measures were relatively modest in most emerging markets,” says Moody’s.
Botswana has been seen internationally as a ‘tax ease’ country and its taxes are seen as lower when compared to its regional counterparts. This country’s name has also been mentioned in various international investigative journalism tax evasion reports. In recent years there was a division of opinions over whether this country can stretch its tax base. But like other sovereigns who have tried but struggled to increase or even maintain their tax intake before the crisis, Botswana will face additional challenges, according to Moody’s.
“Additional measures to reduce tax evasion and cutting tax expenditure should support the recovery in government revenue, albeit from low levels,” advised Moody’s. Botswana’s tax revenue to the percentage of the GDP was 27 percent in 2008, dropped to 23 percent in 2010 to 23 percent before rising to 27 percent again in 2012. In years 2013 and 2014 the percentage went to 25 percent before it took a slip to decline in respective years of 2015 up to now where it is at 19.8 percent.