As the National Development Plan (NDP 10) comes to a close, the main focus area for NDP 11 will be to institutionalise the planning, monitoring and evaluation of development impact/outcome system.
According to Ministry of Finance and Development Planning (MoFDP) policy paper for NDP 11, it highlights that it is critical that NDP 11 projects and programmes designed by Ministries should be in consonance with the requirements of the proposed Monitoring and Evaluation (M&E) policy infrastructure.
“It is therefore critical that a robust M&E be fully implemented in NDP 11, as part of the result-based approach to development planning in the country,” MoFDP policy paper reads.
NDP 10 review relative to M&E:
The lack of emphasis on impact and outcomes of projects and programmes, coupled with the absence of a strong monitoring and evaluation system have made it difficult to analyse and diagnose alternative sources of growth for the economy during NDP 10, states the MoFDP policy paper.
Although the monitoring and evaluation system was first introduced in NDP 10, and a comprehensive system was to be implemented through the establishment of project management offices in ministries to, amongst others, manage periodic evaluation studies.
According to the policy paper, despite the strategic need and the usefulness of the establishment of the National Monitoring and Evaluation Systems (NMES) in NDP 10, there were challenges that led to very limited success in establishing the system. Some of the challenges arose from lack of a systematic measurement of the expected results, it states.
“The absence of evaluation programmes and policies coupled with unavailability of trained personnel in monitoring and evaluation rendered a further blow to the implementation of the programme. Lack of a common understanding of M&E issues and the absence of a robust institutional infrastructure to support the system was yet another cause for failure of the scheme to take off.”
As such to address the matter, it is understood that the National Strategy Office (NSO) has since developed a national monitoring and evaluation system (NMES) based on readiness assessment performed by the office.
The paper states that the proposed NMES policy infrastructure will consist of the internal M&E units housed at respective ministries, with the central M&E unit located at NSO.
“The monitoring and reporting of results will take place at ministerial level, while rule setting, facilitation of measuring and reporting of results will be done by NSO in collaboration with Thematic Working Groups (TWGs) and the MFDP,” it posits.
Meanwhile, the Mid-Term Review of NDP 10 showed that the domestic economic performance withstood the global financial crisis underpinned by the performance of the non-mining sectors. However, the country’s external and fiscal balances were adversely affected by the crisis, due to their direct exposure to the diamond mining.
According to the policy paper, while the global financial crisis is officially over, slow recovery in major economies of the US and Europe continues to pose serious economic challenges for Botswana, as these economies remain the main markets for the country’s exports. As a result, it says the country should brace for slow growth scenarios, which underscores the need for new initiatives to transform the economy during NDP 11.
Economic outlook for NDP 11
According to the ministry document, the economic outlook for the NDP 11 period is that the three major sources of government revenues namely; diamond revenues, SACU revenues and income from taxes and fees, do not portray a possible increase in the available resources for the Plan.
NDP 11, therefore, it submits that needs to aim at a high Gross Domestic Product (GDP) growth rate to bolster government revenues. The policy paper submits that, this can be achieved through appreciable productivity improvements, identification of and pursuit of alternative sources of growth, investments in productive human capital development, improved quality of public investments and a focus on results/impacts through “monitoring and evaluation.”
“Since productivity is a key driver of economic growth, it is necessary for NDP11 to come up with a target rate of growth for this indicator. This will, amongst others, show how the nagging problem of unemployment will decrease should the target be met. Similarly, challenging but realistic targets should be set for unemployment (e.g. single digit) and eradication of abject poverty.”
Dependence on diamonds
The paper states that the heavy dependence of the Government budget on the exhaustible diamond resource also requires that a balance should be struck between short term fiscal policy objectives and the promotion of long term fiscal sustainability. The need, it says to allocate benefits from this resource between current and a future generation is critical for sustainable development to be achieved.
“In this respect, the implementation of NDP 11 will be guided by a fiscal rule that takes cognizance of the difference between the use of mineral revenues and non-mineral revenues to finance the development and recurrent budgets.”
To address this issue, the paper further points out that, “MFDP will propose a new fiscal rule for approval by Government. The fiscal rule will specify the amount of non-mineral revenues that should be used to finance the recurrent budget, as well as the apportionment of mineral revenues between financing the development budget and savings for future generations.”
Other key issues for NDP 11
Other key issues for NDP 11 identified in the keynote policy paper is the need to put in place policy initiatives to promote inclusive growth, whose dimensions are: efficiency in enlarging the size of the economy; increasing productive employment opportunities; and providing protection for the disadvantaged and marginalized groups from adverse shocks.
These dimensions of inclusive growth are linked to the mandates of the four Thematic Working Groups (TWGs), which would be expected to lead in proposing specific strategies and initiatives, as part of their input on the national priorities.
“The most critical issues for NDP 11 identified in the paper include: total factor productivity, human capital development, quality of public investment, and need for monitoring and evaluation system. These, in turn, form the national priorities for the NDP 11.”
The list of critical issues in the policy paper is not exhaustive, it says and others will be identified during the preparation of the Plan. However, it emphasizes that there will be need for clear and innovative policy initiatives on each of these focal areas in NDP 11, if the country is to achieve the economic transformation needed to tackle the three development challenges of unemployment, poverty eradication and income inequality.
On the fiscal front, the MoFDP document highlighted that the country continues to face the challenge of the uncertainty over its main revenue sources of mineral and customs. The diamond mining outlook in NDP 10, it states, was that the current open cast mining will be replaced by underground mining in the next 10-15 years. In that event, it further states that this would happen in the third year of NDP 11.
“The latest information indicates that this scenario has changed and as a result the life of the diamonds mines will be extended by a few decades. This notwithstanding, the policy stance of promoting non-mining private sector driven growth should be continued. This means that any surpluses that may result from increased mineral revenues should be used to rebuild the country’s net foreign assets. Moreover, experience from the recent economic and financial crisis has demonstrated that there is merit in building up significant amounts of reserves for purposes of managing economic shocks.”
Similarly, the paper purports that the future of customs revenues remains uncertain due to the protracted negotiations over the revenue sharing formula. The renegotiations of the Southern African Customs Union (SACU) revenue sharing arrangement have been going on for some time now. Whereas the guiding principle for the negotiations is that, no member state should be worse off, there is a real danger that customs revenue may experience a precipitous fall should the on- going SACU negotiations collapse.
This, coupled with the occasional volatility of diamond prices, presents the Government with a challenge to put in place measures for future fiscal sustainability; hence the adoption of the fiscal rule for the country. An equally important component of the fiscal rule would be expenditure management in terms of both quantity and quality.
“This means that, strict criteria for prioritization of programmes and projects to be included in NDP 11 will have to be adopted, while the implementation of projects should be based on a rigorous appraisal of their socio-economic returns to the country,” policy paper posits.
The road to implementation of NDP 11
The paper states that preparation of NDP 11, therefore, comes at a time when the country is at crossroads with respect to its development model of prudent economic management and rapid real GDP growth.
“This is because, despite the rapid economic growth over the past four decades after its independence, the country continues to face development challenges such as unemployment, poverty, income inequality and a relatively undiversified economy.”
Addressing these challenges, it says in the context of the recent slowdown in economic growth will therefore become even more challenging; hence an urgent need to adopt policies and strategies that can structurally transform the economy during NDP 11.
Meanwhile Minister of Finance and Development Planning Kenneth Matambo has told parliament last week that the government has extended the commencement of NDP 11 from the original date of April 2016 to April 2017, to allow for completion of the next national Vision beyond 2016 – as the new vision essentially will inform the finalisation of NDP 11.
Stanbic Bank Botswana Quarterly Economic Review indicates that Botswana will fail to meet some of its Vision 2036 targets, particularly unemployment reduction and reaching high-income status.
The report says this is mainly due to the slow economic growth that the country is currently experiencing. This Quarterly Economic Review focuses on the 2020 Budget Speech.
The first paper reviews the entire budget with its key observations being that this budget is prepared as prescribed by the Public Finance Management Act; the priorities it seeks to address are drawn from Vision 2036 and the eleventh
The 2020 budget Speech, which was the maiden speech by the Minister of Finance and Economic Development, Dr. Thapelo Matsheka, and the first after the 2019 general elections, was delivered to Parliament on the 4th of February 2020.
It has been well received by the labour unions, business community, and the public at large as well as international organisations such as the International Monetary Fund (IMF).
It mainly derived its support from key facets including, emphasis on changing the business-as-usual approach to development; outlining the transformation agenda; fiscal reform that minimizes the negative impact on economic development and human welfare, competiveness and the decision to implement the 2019 negotiated and agreed public sector.
The budget’s progress review shows that economic growth was consistent with the NDP 11 projections, with growth of around 4 percent. At this growth rate, the country would neither ascend to a high-income status nor reduce unemployment towards the Vision 2036 target of a single digit.
Simple calculations of this review confirm that the economy will need to grow the Vision 2036’s target of 6 percent over the next 16 years for per capita income to increase from around USD 8,000.00 to above USD 12,000.00 in current prices.
Further, the population is anticipated to grow by only 2 percent per annum.
For this reason, the focal areas for the forthcoming FY’s budget include measures to increase economic growth towards an average of 6 percent per annum.
Economic diversification is reportedly progressing fairly well. The report says, the share of the non-mining private sector in value added has risen to 66 percent in 2018 from to 63 percent in 2015.
The sectoral pattern of growth showed that the performance of services sector (particularly transport & communications, trade, hotels & restaurants, and finance & business services) has been the silver lining and that of mining sector was subdued whilst the utility sector disappointed.
The drive towards the service sector of the economy, especially to low-productivity activities (tourism, public administration, wholesaling and retailing) does not bode well for the country’s development aspirations.
In the previous versions of this Quarterly Review, it was noted that there is need for the rethinking of economic diversification. Since the country’s domestic market is small, it is inevitable that economic diversification not only focus on broadening the product mix, but also the composition of exports and markets.
This understanding of economic diversification has not been embraced by this year’s budget. Consequently, Botswana’s exports are still overwhelmingly diamonds, which means that the rest of economic sectors are still highly dependent on foreign-exchange earnings from diamonds. Thus, “the transformation programme requires a review of the country’s entire ecosystem”.
The budget review of the economic context also depicts that an economy with positive medium-term prospects, with growth expected to recover to 4.4 percent in 2020 from the expected growth of 36 percent in 2019 largely due to faster growth of services sectors and, thereafter, to slow-down to 4 percent in 2021.
These projected growth rates are comparable to those of the IMF staff’s baseline scenario of 4.2 percent in 2020 and 4 percent in 2021. Thus, the business-as-usual scenario produces growth rates that are still too low to achieve Botswana’s development objectives and create enough jobs to absorb the new entrants into the labour market.
Trade tensions between the two major markets for diamond exports, viz., the United States of America and China, is one of the factors that are cited as contributing to, indeed, undermining not only the domestic growth, but also the fiscal position.
Another notable downside risk to both global and domestic growth is outbreak of the coronavirus in China around January 2020. This has been declared as a global health emergency. In an attempt to contain the spread of the novel coronavirus pneumonia, the Chinese authorities have ordered city lockdowns and extended holidays, of course, at the expense of near- term economic growth, according to the new Stanbic Bank Botswana report.
According to Nomura Holdings Inc., fewer migrant workers returned for work than in previous years and business activities have been slow to pick up. The havoc wreaked by the virus on the world’s second largest economy is likely to spill over to the global economy. In fact, it has resulted in a glut in crude oil and, thereby placed oil markets into a contango, i.e., a market structure where near-term prices trade at a discount to future contracts.
It also presents significant risks one of Botswana’s main drivers of economic growth, diversification and foreign exchange earnings. According to the Financial Times (February 13, 2020), Chinese tourists spent $130 billion overseas in 2018. Regardless of whether the growth materializes, the projected domestic growth rate would not transform the economy to a high-income one.
Progress towards reduction of unemployment, to a target of single digit, and poverty and achieving inclusive growth has also been relatively slow, the Stanbic Bank Botswana Review says.
Ministry of Presidential Affairs, Governance and Public Administration (MOPAGPA) has through the Office of the President (OP) proposed to avail Orapa House for use by private training institutions as well as research institutions involved in the area of technology development.
For a very long time the monumental building located in the heart of the city has been a white elephant, despite government purchasing it for nearly P80 million from De Beers in 2012.
However, government has now identified a productive use for the iconic building. “The overall vision is for the building to be transformed into a hub for digital technology research and development to be carried-out by institutions, such as; Limkokwing University, BIUST, BITRI and other relevant stakeholders.”
The decision was taken as government traverse a new path of transforming the economy from a mineral led economy to a knowledge based economy through the promotion of research and innovation. However, the facility will need major maintenance to be carried-out in order to meet the requirements of the proposed change in use.
“The work will include provision of laboratories, work stations, production areas and seminar rooms; audio visual centre, high speed internet connectivity, exhibition areas and offices,” reads the proposal note for the development.
These developments will be done through the refurbishment and maintenance of the main building, workshop, and ablution block, gate house, parking area, grounds, and access control and security service.
“There will be minimal modifications to the structure as it stands. The project is estimated to cost approximately P50, 000, 000,” says the report. In this regard, it is said, the initial scope of the OP facility will be modified to accommodate the envisaged digital technology research and development hub.
With funds needed to improve the building, OP has requested that; “the 2020/21 annual budget provision for Orapa House will need to be increased by P37,500,000 from P2,500,000 to P40,000,000 to kick start the maintenance works.” Funds will be sourced from the projects that have been delayed due to Covid-19 protocols during the 2020/21 financial year.
The building has been a thorny issue for government for years. Initially, OP was expected to move there but the move never materialised. At one point it was a question of whether the Office of the President and the Ministry of Finance and Economic Development were planning to override a decision by Parliament which rejected the proposal to buy Orapa House under the belief that government may be buying its own property. The building was to be bought at a negotiated cost of P79 million.
Again in 2012, Government had wanted to buy Orapa House for a negotiated P79m but the Finance and Estimates Committee of Parliament had rejected the request because of the inconsistencies realised in the supporting documents of the proposed procurement. The valuation of the building was put at P74 million.
The Ministry of Lands and Housing had initially offered De Beers P73, 000,000 as the purchase price. However, De Beers countered with P85, 000,000. On negotiation and converging of the minds, the selling price was finally agreed at P79, 000,000.
Auditor General, Pulane Letebele, has expressed discontentment at the worrying and deteriorating state of brigades in the country.
In an audit inspection which was carried out at Tshwaragano Brigade in Gabane, a number of observations showed weaknesses and shortcomings in the conduct of the financial affairs of the institution.
According to Letebele’s report, former students of the brigade had been engaged to carry out maintenance works on the school premises, comprising of painting, tiling, plumbing and electrical works, which covered the period from July 2017 to June 2018.
Although the agreed maintenance period had elapsed, the works had not been completed because of unavailability of funds and this situation had persisted up till the time of inspection in November 2019.
Auditor General says arrangements should have been made in time for funds to be available to complete these relatively minor works even before the works commenced.
Various contractors had been engaged for clearing the bush and for the supply of concrete stones, pit and river sand and hiring equipment for digging the trench towards the construction of an auto mechanics workshop, the report said.
It stated that the cost of services and supplies provided totalled P117 949.80. However, despite the services and the supplies having been paid for, the construction works had not commenced for a long period afterwards, resulting in the trench filling back in.
The audit inquiries had not elicited satisfactory responses as both the institution and the Ministry had not accepted the responsibility for the project, although orders for the provision for the supplies had been made. For their part, the Ministry had stated that they had sub warranted funds for the purchase of porta cabins.
Letebele indicated that it is therefore confusing that a project which is critical to the functioning of an institution such as this one would commence without a well-defined plan.
Furthermore, the accounting and maintenance of records for the supplies items were not of the standard prescribed by the Supplies Regulations and Procedures in that the supplies ledger cards, the main accounting records for Government assets, were not properly maintained for the recording of receipts and issues.
This had resulted in significant discrepancies between physical and ledger balances, while in other instances the supplies items had not been recorded at all.
The report says 24 of the 91 new computers found in the computer laboratory at Kumakwane ABC campus were not recorded anywhere, as were the other computers in the storeroom which could not be counted due to the disorderly storage conditions.
The institution had entered into a contract agreement with a security company for the provision of security services at Tshwaragano Brigade, ABC and Horticulture campuses at Kumakwane for a 2-year period which ended in June 2018, WeekendPost learnt.
After the contract expired in June 2018, an extension was granted till the 30th September 2018. Since then, there has been no security service coverage for the institution to-date. According to Auditor General, in the face of prevailing crimes, it is of paramount importance that government properties be protected by provision of security services at all times.
At Tlokweng Brigade, it was noted that the kitchen staff were working under difficult conditions as the kitchen facilities and equipment, such as the cold room, tilting pot, food warmers and solar power for hot water were dysfunctional. The kitchen roof was leaking and men’s restrooms was not working. All these need to be brought to a reasonable and functional state of repair.
The kitchen staff should use a purpose-designed Rations Ledger for the recording of receipts and issues of foodstuffs to reflect the usage of those items. As far back as 2014 the Department of Buildings and Engineering Services had found that the house occupied by the bursar was uninhabitable on account of structural defects, the report said.
A site visit during the audit had established that the house was indeed unfit for occupation as there were cracks on the walls, power switches were not working and the roof was leaking. On a sadder note, there were a number of finished items of clothing, such as dresses, shirts, and jackets from students’ practical exercises from the Fashion Design Textiles Workshop.
Auditor General shared her take on this, saying: “I have not been able to ascertain the policy on the disposal of products from these practicals. A trace of 103 green acid-proof overalls which had been purchased in August 2018 had indicated that there was no record of these items having been recorded or issued, nor were they available in stock. I was not able to obtain any explanation for this situation.”
Kgatleng brigade was also audited and inspected by Auditor General who observed that the brigade has 26 institutional houses at Bokaa, both old campus and new campus. Some of these houses are very old and dilapidated, with two declared uninhabitable. The condition of the houses is a clear indication of lack of care and maintenance of these properties.
At the time of the audit, there was no contractor engaged for the provision of security guard services at the new campus, after expiry of the previous one in July 2019. It is hoped that steps would be taken to safeguard the security of the premises and government properties against any acts of hooliganism.
In August 2019, there was a break-in at the electrical and at the plumbing maintenance workshops and a number of high value items, such as drilling machines, bolt cutters, spanners and cables, were stolen. The break-in and theft were reported to the police.
“However, at the time of writing this report I was not aware of the outcome of the police investigation, nor of any loss report submitted in terms of the Supplies Regulations and Procedures,” Letebele said.