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BDC could lead the economic revolution


For a country that is seen as an economic success on the continent, Botswana is still far off in terms of bridging the income gap, ensuring food security, economic participation by the larger populace.


After many years of being an exemplar of good governance, political stability and steady economic growth, some of the novelty has worn off as other countries catch up. Peace and stability can no longer be used as trump cards to woe investors and those who can drive innovation; this is because the continent has largely ceased to be a war zone. Other countries such as Rwanda, Mauritius and Gabon have caught up on the economic front. Some have embraced innovation much faster than Botswana.


Despite its middle-income status, Botswana continues to grapple with significant social challenges including unequal distribution of wealth, high levels of poverty, unemployment and HIV/AIDS prevalence. The latest Human Development Index released by the United Nations Development Program (UNDP) in July 2014, Botswana with an index of 0.683, comes 6th in Africa (109th in the world), after Lybia, Tunisia, Liberia and Mauritius and Seychelles.

This rating gives Botswana the top position among the Medium Development classification as for countries like South Africa, Ghana, Namibia and others. The Lower Development Index rated countries include the bulk of African countries, among them; Kenya, Lesotho, Swaziland and Cameroon Mauritania and Zimbabwe.


The country is yet to reap the fruits of a privatisation drive that has taken longer than anticipated; the Private


At a gala dinner held hosted by the Botswana Confederation of Commerce and Manpower (BOCCIM) in Francistown recently, the Botswana Development Corporation (BDC) Managing Director, Bashi Gaetsaloe, shared a vision for this country that can only be described as an economic revolution. Gaetsaloe shared a presentation titled Private Sector Led Economic Growth – Lessons and Suggestions.


But can the Corporation, with Gaetsaloe at the helm, achieve such a feat, totally independent of political power? That is as question that an observer would ask given that political decision makers often have precedence over technocrats and their expertise. But that question will, for now remain food for thought.


Gaetsaloe sees the Botswana Development Corporation as a panacea for the socio-economic problems that Botswana faces; the Corporation will be more relevant under the control of the brilliant young with a colourful curriculum vitae.


 “We need a private sector that can say “Why Not?” and then deliver on that challenge. We need a private sector that can create businesses that have operations in New York, London, Singapore, Australia. Why Not?”


Gaetsaloe’s position is that the country has groomed its people for administrative roles, somewhat at the expense of innovation and diversification. The resource blessing, often referred to as a curse, caught up with Botswana whereby the country latches onto the revenues gained from one main stream; diamonds. Efforts to diversify away from diamonds have been slow but evident.


What is different now?


“We have higher unemployment and are challenged to get it down; Mining revenues are not only in decline – but are also contributing a smaller share to GDP; Botswana is more dependent on services than on mining for fiscal income; Botswana is not exporting enough and we have enough administrators – but not enough creators.”

“We need businesses that can patent innovations and sell them to global giants such as Microsoft and Dell. Why Not?

“We need businesses that can reduce our dependencies on exports for oil, sugar, light bulbs? Why Not? We need a private sector that can conquer not just Africa but the world. Why not? We need businesses that can ensure that – not 100 or 200 – but 10, 000 Batswana can participate in the diamond industry in Botswana and beyond. Why not? We need business that don’t just dream. They do it? Why Not?”

One has to critically look at the reasons why Botswana is not industrialized  

The diamonds are sorted, polished and to some extent sold from Botswana after the landmark relocation of De Beers Global Sales to Botswana in late 2013. Experts put the possible economic potential at

Gaetsaloe seems to be galvanized by some of the success of the BDC in the past; some of these include partnerships on projects of various sectors, funded by the Bank namely, Gaborone Sun Hotel and Conference Centre, Metropolitan, Sechaba Holdings, Cresta Marakanelo Hotels and Mashatu. “These businesses may have changed owners and changed names but all of them were started in partnership with BDC,” says Gaetsaloe.


Formed in 1970, BDC has helped to form and to grow over 300 businesses in the last 45 years. Every year, through its assistance of equity, direct loans, preference shares, and indirect support, the Corporation disburses between P50 million and P100 million directly to the business community.


But Gaetsaloe wants to see more being done; he wants the Corporation to give answers to the socio-economic questions that arise in the country.


 Gaetsaloe asks very pertinent questions: “Why can’t we feed 2 million people with cabbage and spinach? We will answer this question? Why can’t we serve a glass of milk for 2 million people. We will answer this question? Why can’t we invest more in the region? We will answer this question?”

ECONOMIC REVOLUTION?
Research done by the Ministry of Trade and Industry has revealed that there are niches and gaps in various  sectors which could be exploited, provided all backward and forward linkages are mobilized to monetize them effectively.

Agro-processing (dairy, horticulture, meat); Coal, Diamond and Other Minerals Beneficiation; Recycled Material Products –Paper, Plastic and others; Arts and Crafts; Construction/Building Materials; Textiles and Clothing; Leather and Leather Products; Renewable Energy; Banking, Finance and Insurance; Services/Support Sectors and Primary Production (grains, livestock, etc)

An economic revolution is a rapid change in the economic system of a society. For example in Cuba, when Castro took over the government he nationalised all the industry in the country. Cuba went from a mostly free market economic system to a government operated economy.

The Industrial Revolution which took place in Great Britain and spread to Western Europe and the United States, in the period from about 1760 to sometime between 1820 and 1840. This transition included going from hand production methods to machines, new chemical manufacturing and iron production processes, improved efficiency of water power, the increasing use of steam power, and the development of  machine tools. This was probably a classic example early example of public private partnerships, whereby the governments were pushing for industrialisation.

Despite its middle-income status, Botswana has to contend with challenges emanating from its narrow economic structure and the attendant over-dependence on the mining sector, in particular diamonds.

While the government has a reputation for the prudent management of mining revenues and also boasts a good governance record and stable democracy, the need for diversification remains critical.

On the social front, the distribution of resources and level of development remain major concerns. With a Gini coefficient of 0.61, Botswana portrays a relatively unequal distribution of wealth.

The incidence of poverty is also high, with 18.4 percent of the population living below the poverty line. Other challenges include a high unemployment rate of 17.8 percent, and relatively low Human Development Index (HDI) ranking and score mainly due to the high HIV/AIDS prevalence of 23.4 percent that drags down life expectancy.

Yet opportunities for economic activity and job creation lie in many different sectors among them;

Can Botswana see her coming out of the closet and become an innovative economic powerhouse in the region and beyond? Bashi Gaetsaloe says it can and should be done.

SOME CURRENT EFFORTS
There are many interventions that have been set up, mostly by government. Government’s business development body, Local Enterprise Authority (LEA), has teamed up with Indian firm, National Small Industries Corporation (NSIC) to set up a Rapid Incubation Center to impart technical and business skills.


The Incubation centre will be constructed at a plot in the Old Industrial Site that was rendered to LEA by the former International Financial Services Centre (IFSC) at its dissolution.
The training will be conducted for graduate and non graduate incubates.


Based on an assessment of both NSIC and LEA teams, based on the raw materials as well as skills available in Botswana.


The Indian firm has NCIS is said to have a wealth of expertise and experience from around the world and in the. Government has set P20 million to set up the Rapid Incubation Center.
The Ministry of Trade and Industry has also at some point played with the idea of promoting cooperatives and growing them.


The cooperative format of ownership for means of production strongly associated with communism. However, as governments embrace hybrid systems that are not strictly capitalist or socialist, it is conceivable that cooperatives can work in any country; cooperatives could solve economic gap and indeed the social gap. Industry experts have alluded to the infinite possibilities of cooperatives in nearly every sector imaginable.


POLITICAL WILL
In a paper titled Public Enterprises’ Performance Is A Significant Function Of Government’s Behaviour, University of Botswana academic, Prof. Brothers Malema makes a case for better governance structures at parastatals and posits that political will is very integral in the success of a public institution in achieving their mandate. “Parastatal sector’s performance is largely influenced by Government,” concludes Malema.


“The delisting of Botswana Meat Commission (BMC) from the European Union market and the outbreak of foot and mouth disease have played a part in the losses incurred by the enterprise. However, BMC has also been embroiled in possible cases of sabotage. It is not surprising that they incurred losses. The Minister responsible according to some media reports failed to act in the best interests of commendable corporate standards as he seems to have failed to reign over his board. The Minister is said to have exercised some form of favouritism in the affairs of BMC. This is further aggravated by the President’s remarks that he cannot fire the Minister over the underperformance of the board,” said Malema, in buttressing his argument.


“The levels of possible corruption within Government and the lack of political will to stamp out such practice is a threat to the success of SOEs (Statutory Owned Enterprises) and the subsequent improvement of welfare gains to a country whose poverty levels rank amongst some of the poorest countries in the world. Therefore, instead of privatising public enterprises, the Government needs to strengthen governance structures.”


“I wish to conclude by pointing out that the parastatal sector’s performance is largely influenced by Government. Furthermore, the mixed performance of the public enterprises was mainly a governance issue; those that adhered to good governance practices performed well while others didn’t.

The cases of BMC, BPC and to some degree BDC points to a lapse on the side of the Government to ensure adherence to International standards of corporate governance by these organizations.

These questionable sub-standards have also been pointed out by one of the Legislators who is (or was) the Chairman of the Parliamentary Committee on Statutory Bodies. There is therefore a need for political will at the highest level to reign on these possible corrupt tendencies,” writes Malema in closing his argument.


Bashi Gaetsaloe’s vision could therefore go a long way in helping to industrialise Botswana and tap into solutions for the economy. However, political will can galvanise him or pour cold water on his ambitions.

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BONELA speaks on same-sex decriminalization case

18th October 2021
BONELA

In June 2019, a case involving the Attorney General was brought before the High Court, in which the applicant Letsweletse Motshidiemang challenged Sections 164 (a) and 167 of the Penal Code. The applicant contended that these sections are unconstitutional because they violate the fundamental rights of liberty and privacy. 

The applicant argued that these sections violated his right and freedom to liberty as he was subject to abject ignominy. These laws subjected the LGBTIQ community to brutal and debasing treatment through social control and public morality. On the 1st of November 2017, the Botswana High Court further allowed Lesbians, Gays and Bisexuals of Botswana (LEGABIBO) to join the case as amicus curiae.

However, in July 2019, the respondents, in this case, i.e. the Government, filed an appeal against this iconic High Court ruling seeking re-criminalization of homosexuality. Human Rights Group has criticized this move of the Government all over the world.  The appeal was heard before five judges at the Court of Appeal on Tuesday. The State was represented by Advocate Sidney Pilane, while LEGABIBO and Letsweletse Motshidiemang were represented by Tshiamo Rantao and Gosego Rockfall Lekgowe, respectively.

Non-Governmental Organizations advocating for the LGBTIQ+ community joined the two parties at the Court of Appeal during this case. They argue that the minority group should enjoy their rights, especially the right to privacy and health. Botswana Network on Ethics, Law and HIV/AIDS (BONELA) Chief Executive Officer, Cindy Kelemi says the issues being raised by LEGABIBO are that as individuals belonging to the LGBTIQ community, they have and must share equal rights, including the right to privacy, which also speaks to being able to involve in sexual activities, including anal sex.

“Those rights are framed within the constitution, and therefore a violation of any of those rights allow them to approach the courts and seek for redress. We do not need the law to be regulating what we do in the privacy of our homes. The law cannot determine how and when we can have sex and with who, so the law does not have any business in that context. What we are saying is that the law is violating the right to privacy,” she said on the sidelines of the decriminalization case in Gaborone on Tuesday.

The first case involving the homosexual act was the Utjiwa Kanane vs the State in 2003. Contrary to section 164(c) of the Penal Code, Kanane was charged with committing an unnatural offence and engaging in indecent practices between males, contrary to section 167. The conduct at issue involved Graham Norrie, a British tourist, and occurred in December 1994. (Norrie pleaded guilty, paid a fine, and left the country.)

Kanane pleaded not guilty, alleging that sections 164(c) and 167 both violated the constitution. The High Court ruled that these sections of the Penal Code did not violate the constitution. Kanane then appealed to the Court of Appeal. BONELA CEO recalls that in its judgment then, the High Court indicated, Batswana were not ready for homosexual acts. Twenty years later, the same courts are saying that Batswana are ready, she says.

“They gave the explicit example that shows that indeed Batswana are ready. There are policies and documents in place that accommodate people from marginalized communities and minority populations. The question now is that why is it hard now to recognize the full rights of an individual who is of the LGBTI community?” She further says intimacy is only an expression. The law that restricts homosexuality makes it hard for LGBTIQ members to express themselves in a way that affirms who they are.

“We want a situation where the law facilitates for the LGBTIQ community to be free and express themselves. The stigma that they face in communities is way too punitive. They are called names; some have been physically violated and raped at times. It shows that the law doesn’t not only prevent them from expressing themselves, it also exposes them to violence.” The law on its own, Kelemi submits, cannot change the status quo, adding that there is a need for more awareness and education on human rights and what it means for an individual to have rights.

“As it is now, it is very tough for some to do that because of a legal environment that is not enabling. We also want to see a situation where LGBTIQ+ people can access services and be confident that they are provided with non-discriminatory services. It is challenging now because health care providers, social workers and law enforcement officers believe that it is illegal to be homosexual. What we are saying is that if you have an enabling law, then that will facilitate for people to be able to express themselves, including accessing health services,” Kelemi said.

“As we are doing this advocacy work, one of the issues that we picked up is that there is lack of capacity, especially on the part of healthcare workers. We noted that when we provide services or mobilize Men who have sex with other men (MSM) to access health facilities, health care workers are not welcoming, forcing them to hideaway. We must put an end to this to allow these people the freedom that they equally deserve.”

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Masisi warns Gov’t officials

18th October 2021
President Masisi

The President, Dr Mokgweetsi Masisi, has declared as an act of corruption the attitude and practice by government officials and contractors to deliver projects outside time and budget, adding that such a practice should end as it eats away from the public coffers.

For a very long time, management problems and vast cost overruns have been the order of the day in Botswana, resulting in public frustrations. Speaking at the commissioning of the Masama/Mmamashia 100 Kilometres project this week, Masisi said: “There is a tendency in government to leave projects to drag outside their allocated completion time and budget. I want to stress that this will not be tolerated. It is an act of corruption, and I will be engaging offices on this issue,” Masisi said.

In an interview with this publication over the issue, the Director-General of the Directorate on Corruption and Economic Crime (DCEC), Tymon Katholo, says, “any project that goes beyond its scope and budget raises red flags.” He continued that: “Corruption on these issues can be administrative and criminal. It may be because government officials have been negligent or been paid to be negligent by ignoring certain obligations or procedures. “This, as you may be aware has serious implications on not only of the economy but even the citizens who use these facilities or projects,” Katlholo said, adding that his agency is equally concerned.

According to the DCEC director, the selection, planning and delivery of infrastructure or projects is critical. In most cases, this is where the corruption would have occurred, leading to a troubled project. A public finance expert at the University of Botswana (UB), Emmanuel Botlhale, attributes poor project implementation to declining public accountability, lack of commitment to reforming the public sector, a decline in the commitment by state authorities and lack of a culture of professional project management.

In his research paper titled, ‘Enhancing public project implementation in Botswana during the NDP 11 period,’ Botlhale stated that successful implementation is critical in development planning. If there is poor project implementation, economic development will be stalled.
Corruption is particularly relevant for large and uncommon projects where the public sector acts as a client, and experts say Megaprojects are very likely to be affected by corruption. Corruption worsens both cost and time performance and the benefits expected from such projects.

Speaking during this week’s Masama/Mmamashia pipeline commissioning, Khato Civils chairman said Africans deserve a chance because they are capable, further adding that the Africans do not have to think that only Whites and Chinese people can do mega projects.  During his rule, former president Ian Khama went public to attack Chinese contractors for costing the government a move that ended up fuelling tensions between China and Botswana after Khama dispatched the then Minister of Foreign Affairs, Pelonomi Venson Moitoi, to China to register Botswana’s complaints with Chinese government-owned construction companies.  Botswana had approached the Chinese government for help in its marathon battle with Chinese companies contracted to build, among others, the failed controversial Morupule B power plant and refurbishment of Sir Seretse Khama International Airport (SSIK).

 

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Guma’s battle for millions of Pula give Court headache

18th October 2021
Guma Moyo

A legal battle between former Botswana Democratic Party (BDP) legislator Samson Moyo Guma and First National Bank (FNB) over a multimillion oil refinery project intensified this week with Justice Zein Kebonang referring the matter to Court of Appeal for determination.  The project belongs to Moyo Guma’s company called United Refineries which he has since placed under judicial management.

The war of words between Moyo Guma and FNB escalated after the company’s property worth millions of Pula were put up for sale in execution by the bank and scheduled to take place on 8th October. It emerges from Court papers that the bank had secured an order from the High Court to place the company’s property under the hammer.

Moyo Guma then also approached the High Court seeking among others that the public auction scheduled for 8th October 2021 be stayed. He contended that the assets that were to be sold belonged in reality to United Refineries and that as the company had been under judicial management at the time of the attachment, the intended sale in execution was unlawful.

He also sought the Court to declare that the writs of execution against the properties of guarantors and sureties of United Refineries Botswana Holdings Propriety Limited (the company) are unlawful.  Moyo Guma also sought a stay of the execution against the property known as Plot 43556 in Francistown, that is, the land buildings, plant and machinery which make up the property and any all immovable or movable property belonging to the guarantors and sureties of the company pending finalization of the winding up of United Refineries.

But FNB disputed Moyo Guma’s assertions and submitted that the properties in question belonged to TEC (Pty) Ltd and not United Refiners. TEC Pty Ltd which is one of the shareholders in United Refineries is one of the sureties and co-principal debtors of a debt amounting to P24 million owed by United Refineries to FNB.  FNB argued in papers that the properties belonged to TEC because it was TEC which had passed a covering mortgage bond in its favour over the property it now sought to execute.

Moyo Guma submitted that the covering mortgage bond passed in favour of FNB did not tell the full story as the property in question was in truth and fact owned by United Refineries and not TEC Pty Ltd. He maintained that the shares had been had been passed by the company in exchange for the properties in question and that the parties had always been guided by the spirt of the share agreement in dealing with each other despite delays in the change or transfer of ownership of plots 43556 and plot 43557 in Francistown.

Kebonang said it was clear to him that the two plots (43556 and 435570 belonged to United Refineries notwithstanding that TEC (Pty) Ltd had passed a mortgage bond over them in favour of FNB.  “For this reason the properties were immune from attachment or sale in execution so long as the judicial management order was in place,” he said.

The background of the case is that Moyo Guma together with five other investors, namely Elffel Flats (Pty) Ltd; Mmoloki Tibe; TEC (Pty) Ltd; Profidensico (Pty) Ltd and Tiedze Bob Chapi, each bound themselves as sureties and co-principal debtors in respect of a debt owed by a company called United Refineries Botswana Holdings (Proprietary) Limited (the Company), to First National Bank Botswana (FNBB) (1st Respondent).

FNB had extended banking facilities to the company in the amount of P24 million which was then secured through the suretyship of Moyo Guma and other shareholders.  Court records show that Moyo had on the 11th February obtained a temporary order for the appointment of a provisional judicial manager in respect of United Refineries and it was confirmed by the High Court on 24th September 2019.

In terms of the final court order by the High Court issued by Justice Tshepho Motswagole all judicial proceedings against the company, execution of all writs, summons and process were stayed and could only proceed with leave of Court. Court documents also show that First National Bank had sued the company and the sureties for the recovery of the debt owed to it and through a consent order, the bank withdrew its lawsuit against the company.

But FNB later instituted fresh proceedings against Moyo Guma and did not cite the company in its proceedings.  “There is no explanation in the record as to why the Applicant was now reflected as the 1st Defendant and why the company had suddenly been removed as the 1st Defendant. There was no application either for amendment or substitution by the bank,” said Justice Kebonang.

FNB had also argued that it sought to proceed to execute against Moyo Guma and other sureties on the basis of the suretyship they signed and that by signing the suretyship agreement, Moyo and other sureties had renounced all defence available to them and could therefore be sued without first proceedings against the principal debtor (United Refineries).  The question, Kebonang said, was that can FNB proceed to execute against Moyo Guma and other sureties on the basis of the suretyship contracts they signed?

“The starting point is that the Applicant (Moyo Guma) and others by binding themselves as sureties became liable for debts of the principal debtor and such liability is joint and several. He said the consequences of placing the company under judicial management means that every benefit extended to it should also extend to sureties.

“If the company is afforded more time to pay or its debt is discharged, reduced or compromised or suspended the obligation of sureties is to be likewise treated. It follows in my view that where judicial proceedings are suspended or stayed against the company, then any recourse against the sureties is similarly stayed or suspended,’ said Kebonang.

He added that “In the circumstances of this case, it seems to me that so long as the company is under judicial management, the moratorium that applies to it must also apply to its sureties/guarantors and no execution of the writs should be permitted against them. Any execution would be invalid.”

“Mindful that there is judicial precedent on this point in Botswana, at least none that I am aware of, and given its significance, I consider it prudent that the Court of Appeal must provide a determinative answer to the question whether a creditor can proceed against sureties where a company is under judicial management,” said Kebonang.

Pending the determination of the Court of Appeal, he issued the following order; the execution of writs issued in favour of FNB against Moyo and other sureties/guarantors of United Refinery are hereby stayed pending the determination of the legal question referred to the Court of Appeal.

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