The vice president of Botswana Exporters and Manufacturers Association (BEMA), Michael Morapedi
Despite its massive potential to develop its manufacturing sector, Botswana is losing out to its neighbours in the competition for investors because of the red tape and lethargy in resolving issues around ease of doing business.
In a wide ranging interview with BusinessPost, the vice president of Botswana Exporters and Manufacturers Association (BEMA), Michael Morapedi, said that Botswana manucturing industries face a myriad of challenges on issues of ease of doing business.
“Our import bill far supercedes our exports, with 98 percent of our imports coming from South Africa; While we talk about building capacity to export, we should first determine our local consumption and be able to satisfy it,” he revealed.
“Our foreign traders, as a starting point, will always want to know what we have done locally and who we have supplied at home, before they can do business with us so that is critical,” said Morapedi.
Morapedi said that other countries in the region have made deliberate decisions to perk up their ease of doing business ratings, making it easier to arrive in the country and be allocated land, acquire licensing and start operating within a few days.
Morapedi said that the country’s circa 2,000 manufacturers leaving the country will mostly leave if the Government does not move fast to create incentives, citing South Africa as a destination for investors who are attracted by the no less than 22 incentives for the textile industry alone, before considering the rest of the manufacturing sector.
“To do business in South Africa, one needs to have a BEE (Black Economic Empowerment) certificate but here we do not require that, one does not even need to have EDD (Economic Diversification Drive) certification, to ensure that citizens are being empowered,” he decried.
Morapedi pointed out that as far as three years back, Government brought in experts to see how the sector can be developed and one of the developments was a 1 percent industrial upgrading and modernisation programme, a levy that would have helped the industry to train and develop skills of its employees. This idea of the levy was, according to the BEMA spokesperson, welcomed by the industry but the levy is seemingly still in the pipeline, even after more than three years.
He said that the industry is ready to help take up Ipelegeng workers and impart skills to them, if Government agrees and , adding that the lack of employment opportunities has pushed masters, bachelors degrees and diploma holders into simple menial work.
Morapedi also said that security vetting by the Directorate of Intelligence and Security Services (DISS) poses as a challenge for foreign applicants’ residence and work permits and attempts to renew their permits to continue staying in the country and doing business here. He said this creates uncertainties for the manufacturing sector as most rejections come from security reasons which the security arm does not even have to explain.
“We have a bright future, if only we could get rid of the red tape and galvanise our local markets,” he added that “security is very important but we are now too security conscious and we pick this up from our trade partners across the world who want to know what guarantees they can live in the country without being deported.”
“News travels fast and with our record for deportations, we possibly face trade embargoes in future because of what might be seen as human rights violations,” Morapedi noted, adding that this is turn could cause a chain reaction that could affect the whole supply chain in the manufacturing sector.
He said there is a skills mismatch in the country with industries failing to secure labour among locals because they are not being trained at vocational training schools for the skills required by industry.
The Botswana immigration process is too stringent, and has forced investors to leave the country for Zambia and South Africa, as they could not get residence and work permits for their families to join them in Botswana, even after staying in the country for many years and providing employment for hundreds of workers.
He said the policy direction will determine the success or failure of the sector, whether the country strategizes to empower locals.
On the issue of citizen empowerment, he said that the manufacturing sector needs a citizen empowerment law rather than just a policy, saying that contrary to popular belief, this would not chase away investors as they always know where opportunities are and how they can exploit them.
Morapedi cited the estimated 1,800 jobs that have been lost in the manufacturing sector, including 320 who were employed at Teemane Diamond Company, the Serowe based diamond manufacturer which closed its doors in early February this year; Discovery Metals’ Boseto mine , which closed abruptly last week Friday, and laid off 1,000 people, as signs of trouble.
Other challenges that threaten the sector are the shortage of water and electricity costs, an important input whose costs have increased by 75 percent in the last three years.
He said that Botswana should not see itself as being disadvantaged by being landlocked and instead see itself as ‘land surrounded’, meaning that the countries in the region alone present a market of 400 million people for products and services.
“Given our central location in the region, we can turn this country into a cargo hub, as we are an hours flight away from most main centres in region, said Morapedi, giving an example of one of the advantages of being surrounded by other countries.
The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.
Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.
According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.
The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.
Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.
Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.
Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana. The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.
African heads of state and global CEOs at the World Economic Forum Annual Meeting backed the launch of the first of its kind report on how public-private partnerships can support the implementation of the African Continental Free Trade Area (AfCFTA).
AfCFTA: A New Era for Global Business and Investment in Africa outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the AfCFTA, and illustrative examples from successful businesses in Africa to guide businesses in entering and expanding in this area.
The report aims to provide a pathway for global businesses and investors to understand the biggest trends, opportunities and strategies to successfully invest and achieve high returns in Africa, developing local, sub-regional and continental value chains and accelerating industrialization, all of which go hand in hand with the success of the AfCFTA.
The AfCFTA is the largest free trade area in the world, by area and number of participating countries. Once fully implemented, it will be the fifth-largest economy in the world, with the potential to have a combined GDP of more than $3.4 trillion. Conceived in 2018, it now has 54 national economies in Africa, could attract billions in foreign investment, and boost overseas exports by a third, double intra-continental trade, raise incomes by 8% and lift 50 million people out of poverty.
To ease the pain of transition to its new single market, Africa has learned from trade liberalization in North America and Europe. “Our wide range of partners and experience can help anticipate and mitigate potential disruptions in business and production dynamics,” said Børge Brende, President, and World Economic Forum. “The Forum’s initiatives will help to ease physical, capital and digital flows in Africa through stakeholder collaboration, private-public collaboration and information-sharing.”
Given the continent’s historically low foreign direct investment relative to other regions, the report highlights the sense of excitement as the AfCFTA lowers or removes barriers to trade and competitiveness. “The promising gains from an integrated African market should be a signal to investors around the world that the continent is ripe for business creation, integration and expansion,” said Chido Munyati, Head of Regional Agenda, Africa, World Economic Forum.
The report focuses on four key sectors that have a combined worth of $130 billion and represent high-potential opportunities for companies looking to invest in Africa: automotive; agriculture and agroprocessing; pharmaceuticals; and transport and logistics.
“Macro trends in the four key sectors and across Africa’s growth potential reveal tremendous opportunities for business expansion as population, income and connectivity are on the rise,” said Wamkele Mene, Secretary-General, AfCFTA Secretariat.
“These projections reveal an unprecedented opportunity for local and global businesses to invest in African countries and play a vital role in the development of crucial local and regional value chains on the continent,” said Landry Signé, Executive Director and Professor, Thunderbird School of Global Management and Co-Chair, World Economic Forum Regional Action Group for Africa.
The Forum is actively working towards implementing trade and investment tools through initiatives, such as Friends of the Africa Continental Free Trade Area, to align with the negotiation process of the AfCFTA. It identifies areas where public-private collaboration can help reduce barriers and facilitate investment from international firms.
About the World Economic Forum Annual Meeting 2023
The World Economic Forum Annual Meeting 2023 convenes the world’s foremost leaders under the theme, Cooperation in a Fragmented World. It calls on world leaders to address immediate economic, energy and food crises while laying the groundwork for a more sustainable, resilient world. For further information,