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Delusions Dis-Illusions

David Magang’s latest literary offering reprises his earlier Magic

Delusions of  Grandeur is David Magang’s second plunge into the literary collosseum. The first, his biographical sketch – titled The Magic of Perseverance – came off the presses in 2008.


The two works are uncannily similar, which in itself is not odd anyway  coming as they do from the pen  of  the same, punctilious  chronicler.  Both are meticulous and encyclopaedic in their vista. Both are eloquent and riveting. Both are frank and forthright. Both are rousing and provocative in a positive way.  


Both are classics no doubt. They are sui generis.
Delusions  of  Grandeur is venturesome. Through it, Magang, a lawyer by training, treads on not-so-familiar ground notwithstanding his relatively brief stint as  the 2iC at the Exchequer.  Indeed, he makes a point of  underlining from the very outset that he is not a Keith Jefferis, Roman Grynberg, or Brothers Malema.  He is simply a commentator.


Well, if he is a mere discussant, then he is of a special breed.  Ordinarily lay people do not engage a specialised subject and argue  with such a flourish.  If any faculty of economics anywhere  endorsed the book as standard text for a development economics course on Botswana, they would not be going beyond the pale.  


Magang is good at  a whole host of things but more so at laying insuperable markers. In  The Magic of Perseverance, he set a benchmark that is yet to be bettered, let alone equalled, on the domestic literary scene.   In Delusions of  Grandeur, he has scaled another height which is every bit non pareil. Economists must be scratching their heads and wracking their brains as to just how  the great Son of  Kgabo can be one-upped.


The Universe of Discourse
Essentially, Magang’s bone of contention is that for an economy of  its tantalising promise once upon a time, Botswana has grossly under-performed. In bolstering his argument, Magang points to the Asian Tigers, basically, as the archetype. 

Singapore, Taiwan, Hong Kong, South Korea – none had a headstart  off  the  blocks: they began on practically the same economic footing as  Botswana. All were anonymous, backwater economies with absolutely nothing to write about. In terms of that popular but questionable economic performance indicator known  as GDP, Botswana did in fact pip the four to the post.

It outperformed them by two to three points for 30 straight years or thereabouts. But look at where the Tigers are today. They have long broken into the First World mould  whilst Botswana remains stuck in that vast dust bowl dismissively referred to as the Third World. In Delusions of  Grandeur, Magang ventures an explanation why, reasoning more from a a posteriori standpoint than a nonchalant a priori   posture.


Magang’s thesis is that Botswana would have made greater economic strides but for a malady its economic planners suffer from and which seems to have metastasised throughout the entire bureaucracy. This morbidity,  which informs the title of  his two-volume tome, he calls delusions of grandeur and fingers it as the cause, fundamentally,  of the economic stasis  which  presently ails  the country. 

Magang charges that deeply ingrained in the psyche of folk in government structures is an incorrigible and incurable superiority complex that makes them deaf to all common-sense entreaties. It seems to them that Botswana need not emulate best practice from elsewhere on the globe: it is self-contained and as an economy is impregnably fortified.  This insularity, this hubris, has the effect that its economic policies are way out of kilter and militate against the symbiosis characteristic of the global economic village that is the world today.


Magang wonders why the policies of various departments of government are scarcely synchronised or concerted, why they seem to work  at  cross-purposes with each other. For example, he says, one gets the impression that the mandate of  the department of  labour and migration is to ensure as many spanners as are conceivable are strewn in the way of the Ministry of Trade and Industry.

What seems lost to the people in charge of these ministries, Magang regrets, is that when two such elephants collide, the grass, that is, the investors, suffer untold adversity and to the extent where those who are prospecting are made to think twice about setting up here. Ultimately, the collateral casualty are the citizenry, who are deprived of those potential, vital jobs FDI helps engender, and the Internal Revenue Service we call BURS.


Trading Punches with Fundis
Although Magang explicitly voices the disclaimer that he is no economist, that he does, apparently, with tongue in cheek. In his book, the  entrepreneurial colossus  does not shrink from lacing up the gloves to slug it out with aficionados in the discipline of economics.

Certainly,  cases bound in the book where Magang goes off at a tangent from  orthodox economic thought and yet argues so cogently and masterfully that one really has to strain to marshal a viable countervailing argument.  
Opining on GDP per capita, for example, Magang contends that as an indicator of the overall economic wellbeing of a nation, it falls far short of a veritable litmus test. 

“The implicit assumption of  GPD per capita is that the wealth generated by the economy is shared equally within the population when in real life income disparities are of Grand Canyon proportions,” Magang submits, citing a whole phalanx of countries that band about  stratospheric GDP per capita  numbers but whose people in the main continue to reel from abject and endemic poverty.


On the tread-of-the-mill question of economic diversification, Magang shares the truistical view that Botswana indeed has dismally failed to make a quantum leap on that  score. He cautions, however, that the accent on diversification should not be such that it dismisses mining as a spent, inconsequential force. That would be tantamount to throwing the baby together with the water,  for given our vast mineral resource endowment, mining will continue to be a significant plank in our economic platform for the foreseable future.

His take is that,  “Diversifying away from minerals does not mean relegating mining to the fringes. It simply means an engendering of a multifaceted economic base. We are what we are today thanks to mining anyway. What is fraught with peril is relying on only one industry that is sustained by a non-renewable resource or a set of such in perpetuity and not the industry itself per se.”


Magang does have a point there. Take Australia. It is mining that has underpinned the  country’s  economic dynamism and resilience for 150 years and it is mining that helped the country weather the ravages of the 2008/09 global economic meltdown literally unscathed. Australia is a reasonably diversified economy but it is not turning its back on mining yet. All this we learn from Magang’s painstakingly researched book and whose copious source notes attest to this rigour.


Curse Did Strike
Granted, Botswana did escape the Resource Curse that has been the bane of many a Third World Country. In other words, its surfeit of resource riches did not boomerang back at the country to turn it into the proverbial basket case. Magang, however,  is adamant  that Botswana by no means steered clear of the resource curse. It too did incur the resource curse only in its case, the curse took a subtler form – that of the Diamantine Curse.

Magang argues that because the rents emanating from diamond revenues were so prodigious, government became complacent. It became so besotted with its skyscraping cash chest that efforts at economic diversification  were not pursued with proportionate vigour.

It explains why when Magang relentlessly  belted solo ballads on diamond beneficiation, his colleagues in Cabinet just stopped  short of  dubbing him a psychopath.  Government was so flush with cash  mineral resource beneficiation was not deemed imperative.   


Years  back on the sidelines of  some function, Magang recalls, Central Bank Governor Linah Mohohlo angrily lashed out at him “headmaster-style” for passing what she regarded as snide comments  on the competence of the monetary authorities. To the consternation of onlookers,  the “Empress” wondered  aloud where Magang got the temerity to venture into territory of which he was a rank ignoramus.


Reading Delusions of Grandeur, one is apt to wonder whether the venerable custodian of the national fiscus will not be forced into a revised estimate of the man who she so apoplectically laid into. For Delusions of Grandeur is so resoundingly percipient there is no way its author would fit the stereotype of a no-nothing in the field of  even monetary economics.

Magang picks off so many illusions about our economy that by the time one  finishes reading the book, he or she cannot help marvel at how dis-illusioned they now are. The book is superfragilisticexpialidocious and that is an understatement!


DELUSIONS OF GRANDEUR, 560 pages, is published by Print Media Consult and is available at Exclusive Books, Bala Books, and Books Botswana at P250 per copy.

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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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