Botswana has thrown its weight behind the endeavor by Africa to create 100 million jobs through Small Medium Enterprises (SME) by 2025. This was revealed by President Mokgweetsi Masisi at the launch of Davos Friends of Africa Growth Platform (AGP) in Swirtzland last week.
This week, when addressing members of the Media about his Davos trip President Masisi further revealed that the Botswana has been selected amongst only three countries in Africa to implement the Growth Platform. He said the pilot initiative will be launched in April this year by Senior Officials of the World Economic Forum. “We are delighted for being selected because this gives us an opportunity to test our environment if it’s ready and enabling for the private sector to thrive, this is a real test for continental competitiveness,” he said.
Masisi further noted that the Africa Growth Plan will give Botswana an opportunity to crack unemployment and deliver much needed jobs. “This presents us with a chance to tap into our demographic profile and get our young people to participate into this SMEs growth agenda.” The initiative was launched as part of the Davos Manifesto 2020 to mobilize the global community for collective action to meet the ambition of this business-led initiative.
Undertaken by the World Economic Forum, in collaboration with the Forum’s Global Shapers and African start-ups community ,a 100-day social media campaign has been together to rally stakeholders to sign up African SMEs and start-ups that wish to join AGP. The goal is to reach 1 million jobs in 2020.
President Masisi alongside Ghanaian President Nana Akufo-Addo pledged their commitment to participate as member countries of the African Growth Platform. Sipho M. Pityana, Chairman of AngloGold Ashanti, has also pledged support to be Founding Partner of Davos Friends of AGP.
Africa Growth Platform was first launched at the World Economic Forum on Africa in Cape Town, South Africa late last year. The platform seeks to address the job creation crisis by creating100 million jobs in SMEs and start-ups by 2025. According to the World Economic Forum two thirds of Africa's 420 million young people are currently unemployed, which highlights a clear need for new solutions to drive employment growth.
“At the same time, Africa's young population is well-endowed with entrepreneurial spirit, with early-stage entrepreneurial activity 13% higher than the global average. However, due to insufficient support and infrastructure, the region's start-ups are 14% more likely to fail than those elsewhere in the world," said the WEF. At the Africa Forum last year, leaders underscored that Africa's entrepreneurs are its greatest economic asset. Experts however noted that spirit and resourcefulness alone are not always enough to help them succeed.
“Too often start-ups and innovative enterprises fail needlessly through lack of additional finance or overly burdensome regulations.” According to reports from Davos the AGP will bring together governments, investors and entrepreneurs to enhance funding prospects, create better enabling environments for business growth, and help Africa’s community of start-up enterprises grow and compete in international markets.
The founding members of the platform are Alibaba Group, A. T. Kearney, Dalberg Group, Export Trading Group, United States African Development Foundation, and Zenith Bank. “The Africa Growth Platform (AGP) recognizes that one of the most compelling ways to create new economic opportunities and support Africa’s digital transformation is to invest in the capacity building and empowerment of entrepreneurs and small businesses,” said Brian Wong, Vice-President of Global Initiatives for Alibaba Group.
“We are honored to serve as a founding member of the AGP as we work to enhance global cooperation among all stakeholders and to do our part to inspire, train and support entrepreneurs in Africa in order to achieve more inclusive growth.” Brian Wong says the African Global Platform will do this in three ways: first, by securing commitments from governments to implement policy reforms aimed at stimulating and accelerating business growth.
Secondly it aims to build a community of investors, whether private investors, foundations, multilateral institutions or corporate entrepreneurs to enable better coordination and pooling of resources that could facilitate larger subsequent rounds of funding. Furthermore the platform will create and sustain a community of start-up businesses themselves, promoting collaboration and sharing best practices.
On his part President Masisi said Botswana’s young population is an advantage that needs to be leveraged on to create value and transform Botswana’s economy, “With more than half of our population being under the age of 35, We aspire to address the unemployment challenge through, among others, entrepreneurship, support to SMMEs and start-ups,” he said.
President Masisi said the AGP’s objective to scale 100 million SMEs and start-ups by 2025 is a welcome ambition to Botswana “We look forward to being an active participant and beneficiary of the initiative,” he said. To strengthen the institutional support to deliver the AGP and other key initiatives in the region, the Forum has also established an Africa Regional Stewardship Board with Sipho M. Pityana, Chairman of AngloGold Ashanti, and Oby Ezekwesili, Richard von Weizacher Fellow, Robert Bosch Academy as the inaugural Co-Chairs for 2020.
“I’m honoured and humbled by the opportunity to Co-Chair the World Economic Forum’s new Regional Stewardship Board (RSB),” said Sipho M. Pityana. “I look forward to working with my fellow Co-Chair, Oby Ezekwesili, the team and like-minded stakeholders to achieve greater African economic integration and promoting peace and stability while addressing trade obstacles, climate change and opportunities and challenges of the Fourth Industrial Revolution.”
In a panel discussion with President of Senegal Macky Sall and Queen Máxima of the Netherlands in Davos last week President Mokgweetsi Masisi emphasized the power of African youth, its growing cities and economies, and the potential that a unified market under the African Continental Free Trade Agreement is poised to deliver.
“We have full confidence that when we increase the intra-African trade, it will be a means by which we grow and reach the world, in the same way we also want the world to reach us. Africa represents the most powerful workforce of a lifetime,” he said. While in Davos President Masisi met World Heads of State and Government, Global Chairs and Chief Executives, as well as Heads of International organizations, civil society and academia amongst them World Economic Forum Founder, Professor Klaus Schwab , CEO of Wilmar International (Pty), Petter Binde , CEO of the world's largest brewer, Anheuser-Busch InBev (AB InBev), Mr Carlos Brito.
This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.
The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.
Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.
He was speaking in Parliament on Tuesday delivering Parliament’s Finance Committee report after assessing a motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.
Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.
The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.
The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.
The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.
This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.
Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.
Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.
However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.
Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.
When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.
This as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.
Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.
The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.
Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.
In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.
Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.
Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.
Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.
Acknowledging the need to draw down from GIA no more, current Minister of Finance Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”
He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”