Gov’t reviews NDP 10, compiles NDP 11
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.
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Batswana owe banks P79 billion
The Minister of Finance, Peggy Serame, has disclosed that the total bank credit extended by commercial banks amounted to P79 billion, out of which P53.4 billion was retail loans and advances to households.
Parliament was informed this week in response to a question by the Member of Parliament for Selibe-Phikwe West and Leader of Opposition (LOO), Dithapelo Keorapetse.
â€śAs at 31st December 2022, loans and other advances extended to households by banks constituted the largest share of bank-lending at 67.6 percent, the majority of which was unsecured personal loans at P36.2 billion (67.8%),â€ť said Serame.
She added that the total household Debt to GDP ratio was 21.9%, while the total private business credit to Gross Domestic Product (GDP) ratio was 10.8%.
On the other hand, it was noted that outstanding mortgage loans extended to households were P14.2 billion (26.6% of household debt) or 5.9% of GDP. Overall, total bank credit as a ratio of GDP stood at 32.7 percent.
It was acknowledged that there are 10 deposit-taking banks in the country, that is, nine commercial banks and one statutory bank (Botswana Savings Bank). This statistics excludes the National Development Bank (NDB), which is a development finance institution. The nine commercial banks include an indigenous bank, Botswana Building Society Bank Limited (BBSBL), which was issued with a commercial banking license by the Bank of Botswana in October 2022.
Still in December 2022, it was recorded that there were 376 non-bank lenders in Botswana consisting of 246 micro lenders, 66 finance companies, three leasing companies and 61 registered pawnshops.
According to Minister Serame, the loan book value representing the principal amount lent by these entities to individuals and to small, medium and micro Enterprises (SMMEs) is collated by the Non-Bank Financial Institutions Regulatory Authority (NBFIRA), which at 31stÂ of December 2021, the loan book values were P5.6 billion for micro lenders, P1.6 billion for finance companies, P225 million for leasing companies and P14 million for pawnshops.
Government policy is that price control is not effective or desirable, and, as such, interest rates are not regulated. Non-regulation may, among other things, result in an increase in non-interest rate fees and commissions, reduced price transparency, lower credit supply and loan approval rates.
â€śIt is important to note that, from a macroeconomic perspective, household debt in Botswana is neither a pandemic nor considered to be excessive. Indeed, the Bank of Botswanaâ€™s periodic and continuous assessments of household debt, including through the annual Household Indebtedness Surveys, suggest moderate household indebtedness and therefore, is of no apparent risk to the safety and soundness of the domestic financial system,â€ť said Serame.
She also alluded this assessment is validated by the recently concluded Financial Sector Assessment Programme (FSAP) on Botswana undertaken by the International Monetary Fund and the World Bank Group.
Keorapetse however rebuked the issue of debt not being excessive and noted the Minister thinks itâ€™s fine for Batswana to be debt burdened in a way that their debts diminishes their quality of life.
â€śA significant portion of Batswanaâ€™s salaries go to servicing debts and because she doesnâ€™t see this as a challenge, there can never be any intervention from her side.Â There is no price regulation on interest, which can go up to 30%+ a month.Â Â Since President Masisi ascended to the high office in 2018, 2 384 Batswana were put in prison for failure to pay debts, that is 467 Batswana every year. So, for us, debt problems are big and concerning,â€ť said Keorapetse.
He said they are worried because Batswana are drowning in debts because of relative poverty, slave wages and unemployment/underemployment, they buy basic needs and services with borrowed money and noted predatory and unethical lending has become a major problem in Botswanaâ€™s financial sector.
How to fleece P14 million from Chinese investor
The modus operandi of how five men allegedly swindled a Chinese national P14 million last week continue to unravel. Highly placed sources from the intelligence, the Directorate on Corruption and Economic Crime (DCEC) and Botswana Unified Revenue Services (BURS) revealed to this publication how the whole scam was concocted.
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ENVIRONMENT ISSUES: Masisi asks Virginia for help
President Mokgweetsi Masisi says the issue of sustainable natural resources management has always been an important part of Botswanaâ€™s national development agenda.
Masisi was speaking this week on the occasion of a public lecture at Virginia Polytechnic, under theme, â€śMerging Conservation, Democracy and Sustainable Development in Botswana.â€ť
Botswana, according to Masisi, holds the view that the environment is fragile and as such, must be managed and given the utmost protection to enable the achievement of Sustainable Development Goals (SDGs).
â€śIt is necessary that we engage one another in the interchange of ideas, perspectives, visualizations of social futures, and considerations of possible strategies and courses of action for sustainable development,â€ť said Masisi.
On the other hand, dialogue, in the form of rigorous democratic discourse among stakeholders presents another basis for reconfiguring how people act on their environments, with a view to conserving its resources that â€śwe require to meet our socio-economic development needs on a sustainable basis,â€ť Masisi told attendees at the public lecture.
He said government has a keen interest in understanding the epidemiology and ecology of diseases of both domestic and wild animals. â€śIt is our national interest to forestall the dire consequences of animal diseases on our communities livelihoods.â€ť
President Masisi hoped that both Botswana and Virginia could help each other in curbing contagious diseases of wildlife.
â€śWe believe that Virginia Tech can reasonably share their experiences, research insights and advances in veterinary sciences and medicines, to help us build capacity for knowledge creation and improve efforts of managing and containing contagious diseases of wildlife. The ground is fertile for entering into such a mutually beneficial partnership.â€ť
When explaining environmental issues further, Masisi said efforts of conservation and sustainable development might at times be hampered by the emergence and recurrence of diseases when pathogens mutate and take host of more than one species.
â€śWater pollution also kills aquatic life, such as fish, which is one of humanityâ€™s much deserved sources of food. In this regard, One Health Approach imposes ecological responsibility upon all of us to care for the environment and the bio-diversity therein.â€ť
He said the production and use of animal vaccines is an important space and tool for conservation, particularly to deal with trans-border animal diseases.
â€śIn Botswana, our 43-year-old national premier pharmaceutical institution called Botswana Vaccine Institute has played its role well. Through its successful production of highly efficacious Foot and Mouth vaccines, the country is able to contain this disease as well as supply vaccines to other countries in the sub-region.:
He has however declared that there is need for more help, saying â€śWe need more capacitation to deal with and contain other types of microbial that affect both animals and human health.â€ť