Leader of Opposition in Parliament and Umbrella for Democratic Change (UDC) President, Duma Boko has proposed that in addition to the budget presented by Minister of Finance and Development Planning on Monday, a further P2 billion be added to engage in new projects that will enhance the country’s economic growth and create jobs.
Responding to the Budget Speech presented by Minister Matambo on Monday, Boko said government should set aside P500 million for land servicing; P200 million for Research and Development; P20 million for the Police Service as part of significantly enhancing its capabilities and capacity as a professional law enforcement agency.
Boko has also proposed for an additional expenditure of P800 million this year for spending on the development of vocational training and education in Botswana. He says government should consider proposal to finance the training of more than 10 000 citizens for six month and one year courses to equip the unemployed but trainable citizens for semi-skilled and skilled (depending on level) role jobs in the envisaged construction of the trans-Kalahari railway, Kazungula bridges, local area Government maintenance work and other community infrastructure projects.
The UDC also wants government to invest an additional P300 million in Public Private Partnerships (PPPS) for water drainage infrastructure/ technologies and solar/bio power technologies to harvest water and generate power effectively in communities.
UDC is of the view that there should not be any shortage of water in a place like Gaborone where there are occasional floods, and where if the water was harvested effectively, the country would not be under water-shortage strain. “We have noted the already existing investments in the north-south water carrier, but we believe much more can be done if resources were permitting,” he noted.
Boko holds that improving public sector efficiency is strongly linked with adoption of procurement policies that are derived from the creation of a Citizen Economic Law in this country.
The UDC president says privatization of public entities should be informed by a strong policy on who will own the privatized entity; how many jobs will be created as a result of such efficiencies and how privatization results in economic growth. Boko is of the view that citizen economic empowerment should be an integral part of sustained economic growth; and one of doing this should be through ensuring that Citizens participate in the privatization process.
Boko argues that for the privatization programme to be sustainable and beneficial to Batswana, government should come with a scheme that will ensure that Batswana participate and benefit from the privatization process. Boko says government should establish an Investment Fund, to allow Batswana to buy into state assets which are up for privatization.
“Although Citizen Economic Empowerment Law is critical for Botswana to create sustainable jobs, it has to be part of a broad industrial Policy Framework which under the UDC Government will provide a strategic direction to the economy,” said Boko.
Boko warned that without a citizen economic empowerment Law, Batswana shall remain poor; and Botswana will continue as the 3rd leading country in the world in terms of income inequality. Boko contends that to create jobs, there is a need for economic empowerment law that will support citizen SMME businesses through procurement.
Boko also took a swipe at the government’s failure to maintain efficiency in project implementation in Botswana, saying the country’s projects in recent years have not been completed on time and or on budget. Boko says the adoption of E-Procurement solution by PPADB will not help improve project implementation.
He noted that E-Procurement could only expedite allocation of projects; which is the whole objective of the solution. “What Botswana faces is poor implementation of projects which mainly causes cost overruns and failure to deploy the right human resource complement. E-Procurement solution will not address this,” he contended.
Boko says as a government which has ambition of being efficient and innovative, there is a need to invest in Research and Development to be spearheaded by Botswana International University of Science and Technology (BIUST) to develop commercial products based on our natural resources. Boko says Botswana should have been self-sufficient in beef and dairy products, and also be one the leading exporters of these products.
â€¨Boko, who is also Member of Parliament for Gaborone Bonnington North says foreign pharmaceuticals are securing patents based on indigenous medicinal herbs, contending that local pharmacists and medical researchers should also be given the means to do that. “This indigenous knowledge that has been accumulated over millennia should be harnessed, not lost. Botswana is renowned for developing and exporting animal husbandry vaccines. This achievement can be replicated in other areas,” he said.
Boko says government has failed on its mandate of providing affordable house saying the situation is even becoming worse with time. “Now more than ever before, housing is beyond reach for the majority of the working population. Late in the day, even the rolled programme does not meet the demand for low-cost housing,” he observed. “We would propose an additional P500 million to purchase more land and embark on Public Private Partnerships for the servicing of those land-parcels in-order to make more land available for housing needs of a large number of Batswana,” Boko said.
Boko wants the government to spend an additional P200 million for further PPP Research and Development, commercialization and joint ventures in potentially niche sectors of Botswana such as food (meat recipes, cheeses, chocolates, morula drinks, honies), medicines, material sciences, coal beneficiation, solar technology.
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.”
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.
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.”