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Budget Review: P50 billion at stake


The Minister of Finance and Development Planning, Kenneth Matambo presented a fairly ‘neutral’ Budget for the 2015/16 financial year. Total Revenues and grants are forecasted at P55.38bn, a 10% increase from the revised FY14: P50.18bn. Mineral revenue is forecast to contribute 34.4% of the total revenue, Customs & Excise, 29.5%; Non Mineral 17.5%.

Mineral revenue continues to be the main contributor towards total revenue and this is a cause of concern as any negative developments on the global economic landscape may impact negatively on our mineral exports and hence reduce revenue. This brings to the fore the need to speed up the diversification of the country’s economy. Total expenditure and net lending is projected at P54.1bn, a 6% increase from the revised FY14: P51.26bn.

Accordingly, a budget surplus of P1.23bn (0.8% of GDP) is projected, an increase from the revised FY14: P280mn. The recurrent budget was allocated P36.7bn (68% of total expenditure), with the education ministry taking the biggest share of 33% (5% increase from 2014).

The education ministry has been enjoying the largest share of the recurrent budget in recent years but we are of the view that more emphasis should be placed on improving the quality of the education system. The government should also prioritise the alignment of the education system especially at tertiary level so as to meet the changing and dynamic needs of the private sector.

The development budget stood at P12.93bn. (23% of total expenditure), with the Ministry of Minerals, Energy & Water taking the biggest share of 28% in line with our expectations. Major projects that will be funded includes; the North-South Water Carrier ii (P500mn) and Morupule A refurbishment (P100mn).

The North-South Water Carrier project will go a long way in the provision of adequate water supplies especially towards the southern parts of the country following the almost drying up of Gaborone dame. Water is one of the key resources needed by the business sector and its availability will go a long way in creating a conducive and enabling environment for the business sector. The allocation towards the refurbishment of Morupule A is also vital as it will ensure the provision of adequate energy supplies which is vital for the business sector and the growth of the economy.

One of the major highlight that came out of the budget is the extent to which some of the major projects are not properly implemented. Between 2011/12 – 2013/14, around 17.3% of the development budget was under spent. This is an area of concern as it compromises the growth of the economy.

In some cases, the government has had to allocate more funds towards the refurbishment of some projects which becomes too costly to the economy, whereas the funds could have been used for other key projects. Going forward it is our view that more attention should be given toward the implementation of the projects to ensure that the funds are utilised more effectively and efficiently. We are still to see how the newly established implementation unit will be effective in ensuring that projects are implemented and completed on time.

The Minister also announced the setting up of the Cluster and Value chain in selected sectors ie; Diamonds, Tourism, Cattle, and Mining comprising of coal and other minerals except diamonds. The idea is to encourage private sector participation in the growth of the economy while at the same time diversifying the economy.

In China this concept has a long history and has been a huge success, with significant contribution towards its growth and economic transformation. It is estimated that these Clusters in China (including all types of industrial parks and zones) accounted for about 22% of national GDP, about 46% of FDI, and about 60% of exports and generated in excess of 30 million jobs in 2007.

It is vital to note that the success of these Clusters is based in among others; availability of economies of scale, funding, supplies of inputs, ready market for finished products, good infrastructure, productivity advantages, presence of anchor firms etc.

It is our firm believe that the ‘Cluster’ and Value Chain approach will go a long way in supporting the private sector contribution to the country’s economy as well as create employment provided the concept is adequately financed and conducive. However, we note that the budget was silent on the budget allocation for this noble project.

Going forward, we are of the view that more focus should be channelled towards the agriculture sector given its importance in the economic diversification and the development of the rural economy and ultimately poverty eradication. Adequate resources are needed to mechanise the sector and provide adequate farmer training to increase productivity and hence food security. We can take a leaf from Israel, which is predominantly a desert country with more than half of the land area a desert while the climate and lack of water do not favour farming.

Its agriculture sector is mechanised, highly developed and produce 95% of its own food requirements, while contributing 3.5% towards total exports. The agricultural sector is based almost entirely on Research & Development, while diversification and growth in types of plant crops and livestock breeding has increased over time. Methods of cultivation have also improved, and Israel continues to develop more efficient forms of irrigation, greenhouses, and mechanical equipment for processing and harvesting crops.

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Gambling Authority tender dangles as a jittery lottery quandary

30th November 2020

Lucrative and highly anticipated national lottery tender that saw several Batswana businessmen partnering to form a gambling consortium to pit against their South African counterparts, culminates into a big power gamble.

WeekendPost has had a chance to watch lottery showcase even before the anticipated and impending national lottery set-up launches. A lot has been a big gamble from the bidding process which is now set for the courts next year January following a marathon legal brawl involving the interest of the gambling fraternity in Botswana and South Africa.

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The uncertainty of getting the next meal in Botswana

30th November 2020
uncertainty of getting the next meal

Households representing more than half of Botswana’s population-mostly residing in rural areas- do not know where their next meal will come from, but neither do they take into consideration the quality and/or quantity of the food they consume.

This is according to the latest Prevalence of Food Insecurity in Botswana report which was done for the 2018/19 period and represents the state of food insecurity data even to this time.
The Prevalence of Food Insecurity was released by Statistics Botswana and it released results with findings that the results show that at national level 50.8 percent of the population in Botswana was affected by moderate to severe food insecurity in 2018/19, while 22.2 percent of the population was affected by severe food insecurity only.

According to the report, this translates to 27 percent of the population being food secure that is to say having adequate access to food in both quality and quantity. According to Statistician General, Burton Mguni, when explaining how the food data was compiled, Food and Agriculture Organization of the United Nations (FAO), is custodian of the “Prevalence of Undernourishment (PoU)” and “Prevalence of moderate or severe food insecurity in the population based on the Food Insecurity Experience Scale (FIES)” SDG indicators, for leading FIES data analysis and the resultant capacity building.

“The FIES measures the extent of food insecurity at the household or individual level. The indicator provides internationally comparable estimates of the proportion of the population facing moderate to severe difficulties in accessing food. The FIES consists of eight brief questions regarding access to adequate food, and the questions are answered directly with a yes/no response. It (FIES) complements the existing food and nutrition security indicators such as Prevalence of Undernourishment.

According to the FIES, with increasing severity, the quantity of food consumed decreases as portion sizes are reduced and meals are skipped. At its most severe level, people are forced to go without eating for a day or more. The scale further reveals that the household’s experience of food insecurity may be characterized by uncertainty and anxiety regarding food access and compromising the quality of the diet and having a less balanced and more monotonous diet,” says Mguni.

The 50.8 percent of the population in Botswana which was affected by moderate to severe food insecurity are characterized as people experiencing moderate food insecurity and face uncertainties about their ability to obtain food. These people have been forced to compromise on the quality and/or quantity of the food they consume according to the report on food insecurity.

Those who experience severe food insecurity, the 22.2 percent of the population, are people who have typically run out of food and, at worst, gone a day (or days) without eating. According to the statistics, rural area population experienced moderate to severe food insecurity at 65 percent while urban villages were at 46.60 percent and cities/town were at 31.70 percent. Those experiencing the most extreme and severe insecurity were at rural areas making 33.10 percent while urban villages and towns were at 11.90 percent and 17.50 respectively.

According to a paper compiled by Sirak Bahta, Francis Wanyoike, Hikuepi Katjiuongua and Davis Marumo and published in December 2017, titled ‘Characterization of food security and consumption patterns among smallholder livestock farmers in Botswana,’ over 70 percent of Botswana’s population reside in rural areas, and majority (70%) relies on traditional/subsistence agriculture for their livelihoods.

The study set out to characterize the food security situation and food consumption patterns among livestock keepers in Botswana. “Despite the policy change, challenges still remain in ensuring that all persons and households have access to food at all times. For example, during an analysis of the impacts of rising international food prices for Botswana, BIDPA reported that food prices tended to be highest in the rural areas already disadvantaged by relatively low levels of income and high rates of unemployment,” said the study.

According to the paper, about 9 percent of households were found to be food insecure and this category of households included 6 percent of households that ranked poorly and 3 percent that were on the borderline according to the World Food Programme’s (WFP) definition of food security.

Media reports state that the World Bank has warned that disruption to production and supply chains could ‘spark a food security crisis’ in Africa, forecasting a fall in farm production of up to 7 percent, if there are restrictions to trade, and a 25 percent decline in food imports.

Food security in Botswana or food production was also attacked by the locust pandemic which swept out this country’s vegetation and plants. The locust is said to have contributed to 25 percent loss in production.

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Solid demand for diamonds towards the ‘gift’ season

30th November 2020

Global lockdown have been a thorn in diamonds having shiny sales, but a lot of optimism shows with the easing of Covid-19 restrictions, the precious stones will be bought with high volumes towards festive season. The diamond market is however warned of the resurgence of Covid-19 in key markets presents ongoing risks amid the presence and optimist about the new Covid-29 vaccines.

The latest findings published as De Beers Group’s latest Diamond Insight ‘Flash’ Report, which looks at the impact of the pandemic on relationships and engagements, has revealed that in the US that more couples than ever are buying diamond engagement rings. Bridal sales is mostly the primary source of diamond jewellery demand in recent months, De Beers said.

According to De Beers, interviews with independent jewellers around the US revealed that the rate of couples getting engaged has increased compared with the period when Covid-19 first had an impact in the US in the spring.

“In addition, despite challenging economic times, consumers were spending more than ever on diamond engagement rings – often upgrading in colour, cut and clarity, rather than size. Several jewellers speculated that with consumers spending less on elaborate weddings and/or honeymoons in the current environment, they had more to spend on choosing the perfect ring,” said De Beers.

According to De Beers, a national survey of 360 US women in serious relationships, undertaken in late October in collaboration with engagement and wedding website, The Knot. This survey is said to have found that the majority of respondents (54%) were thinking more about their engagement ring than the wedding itself (32%) or the honeymoon (15%), supporting jewellers’ hypothesis that engagement ring sales were benefiting from reduced wedding and travel budgets in light of Covid-19 restrictions.

When it came to researching engagement rings, online was by far the predominant channel for gaining ideas/inspiration at 86% of consumers surveyed, with 85% saying they had saved examples of styles they liked, according to De Beers. According to the survey, only a uarter of respondents said they had looked in-store at a physical location for design inspiration.

“For many couples, the pandemic has brought them even closer together, in some instances speeding up the path to engagement after forming a deeper connection while experiencing lockdown and its associated ups and downs as a partnership. Engagement rings are taking on even greater symbolism in this environment, with retailers reporting couples are prepared to invest more than usual, particularly due to budget reductions in other areas,” De Beers CEO Cleaver said.

According to De Beers Group, its Diamond Insight Flash Report series is focused on understanding the US consumer perspective in light of Covid-19 and monitoring how it evolves as the crisis evolves. Also, the company said, it is augmenting its existing research programme with additional consumer, retailer and supply chain touch-basis to understand the pain points and the opportunities for stakeholders across the diamond pipeline.

Demand for diamonds is as hard and resilient as the precious stone itself. De Beers pocketed US$ 450 million in its recently held ninth rough diamond sales cycle, and the company says it is more flexible approach to rough diamond sales during the ninth sales cycle of 2020, with the Sight event extended beyond its normal week-long duration.

“Steady demand for De Beers Group’s rough diamonds continued in the ninth sales cycle of the year, reflecting stable consumer demand for diamond jewellery at the retail level in the US and China, and expectations for reasonable demand to continue throughout the holiday season. However, the resurgence of Covid-19 infections in several consumer markets presents ongoing risks,” said De Beers CEO Bruce Cleaver recently.

High expectations are on diamonds being a sentimental gift for holiday season or as the most fetished gift. However the ninth cycle was lower than the eighth which registered US$ 467 million. For the last year period which corresponds with the current one, De Beers managed to raise US$ 400.

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