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Travel & Tourism to boost economy

Visitor exports to increase by 4%

A rapid growth of the travel and Tourism sector in Botswana has had a positive impact on the country’s economy. The sector is expected to add 500 more jobs to the economy in 2015. It currently creates 32 000 jobs.

According to a recent report released by World Travel and Tourism Council (WTTC) 2015, the sector has contributed percentage growth in Botswana’s Gross Domestic Product (GDP), employment creation, visitor exports and capital investment. The increased percentage contribution is also forecast to double up in a decade to come (2025).

Employment Creation

The sector reportedly generated 32 000 direct jobs (4.6% of total employment) in 2014. It is estimated that it will grow by 2.6% to 32500 in 2015. The contribution includes employment by hotels, travel agents, airlines and other passenger transportation services (excluding commuter services). It also includes the activities of the restaurant and leisure industries directly supported by tourists. The WTTC shows that Travel and Tourism will account for 42,000 jobs directly by 2025, an increase of 2.6% p.a over the next ten years.

Its total contribution to employment including wider effects from investment, the supply chain and induced income impacts was 69,500 jobs in 2014 (10.1% of total employment).  The report shows this is forecast to raise by 2.6% in 2015 to 71,500 jobs (10.2% of total employment). According to WTTC, Travel and Tourism is forecast to support 87,000 jobs (10.9% of total employment), an increase of 2.0% pa over the period in 2015.

Gross Domestic Product

According to the report, in 2014 direct contribution of Travel and Tourism to the country’s GDP was BWP6, 154.1mn (3.3% of GDP). This is forecast to rise by 5.0% to BWP6, 459.0mn in 2015.

The report highlighted that this primarily reflected the economic activity generated by industries such as hotels, travel agents, airlines and other passenger transportation services (excluding commuter services). The report also includes the activities of the restaurant and leisure industries directly supported by tourism.
According to WTTC, direct contribution of Travel and Tourism to GDP is expected to grow by 5.2% pa to BWP10, 709.5mn (3.8% of GDP) by 2025.

Direct contribution of Travel and Tourism to GDP reflects the ‘internal’ spending on Travel and Tourism (total spending within a particular country on Travel and Tourism by residents and non-residents for business and leisure purposes) as well as government 'individual' spending which is directly linked to visitors, such as cultural (museums) or recreational (national parks).

The contribution is calculated to be consistent with the output, as expressed in National Accounting of tourism-characteristic sectors such as hotels, airlines, airports, travel agents and leisure and recreation services that deal directly with tourists.

The total contribution of Travel and Tourism to GDP, wider effects from investment, the supply chain, and induced income impacts included was BWP15, 842.4mn in 2014 (8.5% of GDP).

The report indicates that this is expected to grow by 5.2% to BWP16, 672.0mn (8.6% of GDP) in 2015. It is also forecast to rise by 5.3% pa to BWP27, 906.9mn by 2025 (10.0% of GDP).

Visitor Exports and Investment

According to WTTC, Botswana generated BWP10, 132.2mn in visitor exports in 2014.  Visitor exports, refers to money spent by foreign visitors in Botswana. In 2015, this is expected to grow by 4.0%, and the country is expected to attract 2,693,000 international tourist arrivals. By 2025, international tourist arrivals are forecast to total 4,065,000, generating expenditure of BWP16, 715.8mn, an increase of 4.7% pa.

Travel and Tourism is reported to have attracted capital investment of BWP1, 896.9mn in 2014.  The investment is expected to rise by 4.6% in 2015, and by 4.0% p.a over the next ten years to BWP2, 936.9mn in 2025.

The World Travel and Tourism Council (WTTC) is the global authority on the economic and social contribution of Travel and Tourism. For 25 years, WTTC has been quantifying the economic impact of Travel and Tourism. The 2015 Annual Economic Reports covered 184 countries and 25 regions of the world, including, for the first time, the Pacific Alliance.

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

21st September 2020

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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