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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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Mowana Mine to open, pay employees millions

18th January 2022
Mowana Mine

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.”

Negotiated estate is P35, 563,000

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Councilors’ benefits debacle-savingram reveals detail

18th January 2022

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.

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Households spending to drive economic recovery

17th January 2022

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.”

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