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Finance Ministry moves to arrest imported inflation


Ahead of next week’s budget speech presentation by the Minister of Finance and Development Planning, the Ministry has effected a readjustment to the currency basket weights of the Pula.


The weights of the basket have been 55 percent South African rand and 45 percent   Internationals Monetary Fund’s Special Drawing Rights (SDR).


South Africa is a major trading partner to Botswana and again, the majority of imports both originate and pass through South Africa and thirdly, as a small open economy, the direction of causality between South Africa and Botswana is almost unidirectional in terms of price influence. Hence while Botswana’s prices have very limited influence, that of South Africa continue to exert pressure on price movements in Botswana.


Botswana imports fuel, food, beverages and tobacco, machinery and electric equipment, chemical and rubber products and vehicles. Its main imports partners are South Africa at 75 percent of total imports, as well as China, Israel, Namibia and Zimbabwe.


Imports in Botswana increased to 6080.10 Million BWP in August of 2014 from 5524.40 Million BWP in July of 2014. Imports in Botswana averaged 4489.69 Million BWP from 2005 until 2014, reaching an all time high of 9778.30 Million BWP in September of 2008 and a record low of 2458.30 Million BWP in February of 2009.


Botswana’s foreign exchange rate policy objectives is to maintain a stable competitive and competitive real exchange rate against basket of international currencies comprising of the South African rand, and the Internationals Monetary Fund’s Special Drawing Rights (SDR) which is made up of the United States dollar, the Euro, the British pound and the Japanese yen.


The pula basket has been crawling at a rate of 0.16 percent annually in 2014.


INFLATION DUE TO AN INCREASE IN THE PRICE OF IMPORTS

As the price of imports increase, prices of domestic goods using imports as raw materials also increase, causing an increase in the general prices of all goods and   services. Imported inflation may be caused by foreign price increases or depreciation of a country's exchange rate.

“Following consultation with the Bank of Botswana, pursuant to section 21 of the Bank of Botswana Act, His Excellency the President has approved the recommendation by the Minister of Finance of Finance and Development Planning’s recommendation to change the basket weights to 50 percent South African rand and 50 percent IMF SDR and a zero rate of crawl for 2015,” read a statement from Bank of Botswana this week.


“The changes are aimed at maintaining the stability of real effective exchange rates, which is critical for economic diversification and job creation.”

A communiqué from asset management firm African Alliance, in response to an enquiry from WeekendPost about the ramifications of the changes, states that:

“The recent changes in the basket weightings and the crawl rate are expected to ease domestic inflation as imported inflation would be reduced, aiding in maintaining the domestic inflation within the Bank of Botswana target range – and also likely making a rate hike unlikely this year.”

“The changes also help maintain transparency and stability of the domestic currency's real exchange rate which is positive for the economy as a destination for foreign direct investment as well as project planning for local based investment.  However, how meaningful the effect will be is debatable. In addition, the instability from severe water and power shortages may outweigh the positive effects from stability in the currency.”

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Botswana gets P2.750 billion loan from World Bank

14th June 2021
Peggy Serame

Botswana’s efforts to accelerate key economic reforms got a boost following the approval of a $250 million loan by the World Bank today. The Programmatic Economic Resilience and Green Recovery Development Policy Loan (DPL) will support the implementation of Botswana’s Economic Recovery and Transformation Plan and is designed to strengthen COVID-19 pandemic relief while bolstering resilience to future shocks.

This DPL is also designed to support reforms to strengthen private sector development and promote green recovery. It is the first-ever World Bank budget support operation for Botswana and the first of two planned operations.

“The COVID-19 pandemic has placed a great burden on the country’s economy, its people, and firms. With this operation, the World Bank will support the government’s reforms to ensure social spending reaches the poorest and assists Batswana who are most affected by the Covid-19,” says World Bank Country Director for Eswatini, Botswana, Lesotho, Namibia and South Africa, Marie Francoise Marie-Nelly.

“This operation will also support reforms to attract private sector investments, contribute to diversification of exports, and increase job opportunities towards a green economy”. The operation provides both financial and technical support for government reforms to implement a Single Social Registry and to improve targeting of social spending on the most vulnerable while strengthening systems for future shocks.

It will also help strengthen the business environment for increased SME-led job creation and economic diversification through improved access to finance for individuals and small and micro enterprises (SMEs). Furthermore, the program will help Botswana to build the foundations for sustainable, “green” growth by supporting reforms to increase production of renewable energy by independent power producers, promoting and regulating rooftop solar energy generation, and embedding climate change considerations in environmental assessments.

DPLs are used by the World Bank to support a country’s policy and institutional reform agenda to help accelerate inclusive growth and poverty reduction. The COVID-19 pandemic led to a real gross domestic product (GDP) contraction of 7.9 percent in Botswana in 2020 – the largest in the country’s history.

This has also led to a depletion of existing fiscal buffers and has constrained revenue collection, reduced Government’s capacity and resources needed to accelerate the implementation of structural reforms and threatened to reverse progress in poverty reduction.

World Bank Group COVID-19 Response Since the start of the COVID-19 pandemic, the World Bank Group has committed over $125 billion to fight the health, economic, and social impacts of the pandemic, the fastest and largest crisis response in its history.

The financing is helping more than 100 countries strengthen pandemic preparedness, protect the poor and jobs, and jump start a climate-friendly recovery. The Bank is also providing $12 billion to help low- and middle-income countries purchase and distribute COVID-19 vaccines, tests, and treatments.

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UB employees protest against Vice Chancellor

11th June 2021
Professor Norris

University of Botswana Vice Chancellor, Professor David Norris, has lost support of the university staff, with four unions joining forces to demand his removal from office.  

When he was appointed Vice Chancellor of the University of Botswana in December 2017, by the then Minister of Tertiary Education, Research, Science and Technology, Dr Alfred Madigele, Professor Norris was hailed as an angel sent from heaven.

Professor Norris succeeded Professor Thabo Fako, after the latter led the University during turbulent times — with the university experiencing financial challenges and dwindling enrolment numbers.

Four years down the line, Professor Norris’ presence at the University nauseates many. Academic staff together with manual workers want Norris shown the door as soon as yesterday.

University of Botswana Academic Senior Support Staff Union, (UBASSSU), University of Botswana Staff Union (UBSU) and University of Botswana Manual Workers Union, in a petition submitted to Minister of Tertiary Education, Research, Science and Technology, Douglas Letsholathebe, called for the dismissal of Norris. The unions said that under the leadership of the Professor, UB staff members suffered immeasurable pain, agony and frustration, and their welfare is entirely overlooked.

The unions petition Professor Norris on a number of issues: blurred roadmap, inflationary adjustments of salaries, security services, corporate governance, teaching and learning resources, deteriorating infrastructure, staff victimization as well as appointment of staff undemocratically.

In their entreaty, staff members say that Vice Chancellor has failed to provide a clear roadmap to guide a wide range of operations within the University. Prior to Norris’ arrival, they say, UB had developed a strategy using its own scholars, led by Prof Thapisa and Prof Moahi respectively.

“They executed the assignment efficiently with intricate insider knowledge of the institution and a global academic outlook. The result of the process was later subjected to external review by consultants, even though the process was later abandoned at huge cost to the University. The Vice Chancellor is three years into this post, but he has done nothing to show, and always blames staff or his predecessors for the problems at UB,” the unions said in their petition.

The petition signed by UBASSSU President, Motsomi Marobela, acting on behalf of Manual Workers Union President, Oneile Mpulubusi and Ghadzani Mhotsha (Staff Union President), argue that Norris relishes grand standing and cheap rhetoric to project a positive image of the University to outsiders while the institution faces monumental challenges.

“Even the so-called new strategy was imposed on the staff, since unions were never consulted. Staff in faculties were threatened and bullied into submission whenever they revealed flaws in the strategy. In short, this strategy lacks the critical ‘buy in’ from those charged with implementation, something which is crucial for any new strategy to succeed.”

Professor Norris, a renowned scholar, has been fingered in being reluctant to advance staff salaries, something which has been done four years ago. Unions claim that despite several shots to alter this status quo, efforts proved vain.

“The Vice Chancellor has dismally failed to bring about any meaningful action to ascertain that staff remunerations are adjusted to mitigate the effects of inflation, despite his attention being drawn to the erosion of the buying power of University staff. UB staff salaries have not been adjusted for a duration of four years, despite numerous attempts by the trade unions (UBASSSU, UBSU and Manual Workers Union) to appeal on behalf of the constituents for his intervention,” reads part of the petition.

University management are said to be relaxed when it comes to the security of the organization, petitioners claim. They stress that this has happened several times in recent years whereby management has allowed private security contracts, which augment the in-house UB security, to lapse before they can float a new tender.

The loan schemes that the University gets into on behalf of employees, is said to be another dare giving staff workers grief, perpetuated by Vice Chancellor Norris.

“It has happened several times that the contract between the financiers and the University lapses before anything is put in place for employees to continue getting financial assistance. Quite recently, it was communicated by a memo from Staff Welfare and Benefits Office that the loan scheme with FNB is coming to an end on the 30th April 2021 and this communication was made on the 29th, just a day before the end of such contract. This again shows lack of proactiveness on the part of management which is led by the VC,” said the petition.

The Vice Chancellor is said to be overreaching in UB administrative structures. Professor Norris, who chairs the Staff Appointment and Promotion Committee (SAPC), hosts illegal Pre-SAPC meetings, which are usually attended by Human Resources and Executive Management, and make decisions on who to appoint, promote or whose contract to renew before the substantive meeting of SAPC.

The Vice Chancellor, disgruntled petitioners say, uses SAPC to rubber stamp the executive decision – this amounts to corruption. “Three years in the institution he has virtually run the university alone. The core and critical Deputy Vice Chancellor posts of Academic Affairs; Finance and Administration; and Student Affairs, have not been filled. Instead he has appointed people on acting positions and he is shuffling them around as he pleases. Those he prefers have been acting for over two years, which is contrary to the Employment Act.”

Professor Norris is a researcher and lecturer, having served in different capacities in Botswana, the United States of America and South Africa.

Prior to joining UB, he was Deputy Vice Chancellor for Research and Innovation at the Botswana International University of Science and Technology (BUIST), a position he held since 2016. He is the sixth Vice Chancellor of UB.

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Gov’t slashes P16 million from YDF budget

11th June 2021
YDF

Ministry of Youth Empowerment, Sport and Culture Development has announced the return of the Youth Development Fund (YDF), after it was put on suspension by Government last year.

The fund however, has been slashed from P120 million to P104 million with the total number of projects expected to shrink. The YDF programme was temporarily suspended last year due to shortage of funds.

The programme introduced in 2009 by government, was a way of improving the lives of the youth as well as helping to fight unemployment.

When addressing the media, Minister of Youth Empowerment, Sport and Culture Development, Tumiso Rakgare said the ministry has resolved to start receiving applications for 2021/2022 Youth Development Fund from 09 June 2021 to 10 August 2021.

Rakgare said government was worried about the high numbers of unemployment hence the resolve to restart the YDF programme even in the midst of the pandemic.

He however revealed that due to budget challenges and the continued restrictive environment imposed by the Covid-19 pandemic, there would be some modifications to the implementation of YDF.

“Due to budget challenges the allocation for the fund in the current financial year has been reduced from P120 million to P104 million. Constituencies will thus be allocated less than the usual P2 million, which means that the number of funded projects will be significantly reduced,” he said.

He further said priority for funding shall be for businesses with the potential to create a higher number of jobs and those that address key government priorities.

The sectors to be prioritized include; Manufacturing, Agriculture, Tourism, Technology, Digitization and Innovation. Moreover, the threshold for YDF financing remains at P100 000.00 for individuals and P450 000.00 for youth industries or co-operatives.

In addition to funding youth projects, the Minister said P14, 393,066.77 will be reserved for completion and implementation of Special Projects such as development of Land-banks, mentorship partnerships and trainings.

All changes to the YDF programme are to apply only for this year while a comprehensive review is undertaken. The target is to have the revised programme implemented in the next financial year.

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