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BTO to intensify development of domestic market post COVID-19

COVID-19 has affected all sectors of economy, international travel restrictions and global lockdown has halted trade and businesses across the world.

The travel and tourism industry is one of the worst hit industries, receiving the heaviest blow in ZERO earnings and bookings cancellation. Botswana has not been spared of this catastrophe.

As early as February this year, uncertainty was already engulfing global economies, eroding business sentiments and reversing all new year positive growth prospects. Travel and tour operators started receiving cancellations of bookings as COVID-19 spread across the world.

On Friday Minister of Finance & Economic Development, Dr Thapelo Matsheka revealed that the trade, hotels & restaurants sector which houses much of travel and tourism business will contract by 32 % during the year 2020.

This week Myra Sekgororoane, Chief Executive Officer of Botswana Tourism Organization (BTO), the country’s national tourism promotion agency said the sector would shrink by an estimate of between 30-50 %, subject to when the pandemic will be contained.

“Due to the fact that we are dealing with a moving target and also having had a higher monetary contribution from overseas markets despite their lower volumes, our industry is also dependent on when and how the international markets recover and start to travel,” she said when briefing members of the media on Monday.

She noted that the 30 to 50% contraction could be a minimum impact scenario. “I wish not to speculate on the worst scenario at this stage but while we must remain optimistic, we must as well start to internalize worse final impacts than currently predicted.”

Earlier this year, World Travel and Tourism Council (WTTC) warned that COVID-19 pandemic would put up to 50 million jobs in the global travel and tourism sector at risk, with travel likely to slump by a quarter this year. WTTC said in its statement early March that once the outbreak is over, it could take up to 10 months for the industry to recover.

“The equivalent to a loss of three months of global travel in 2020 could lead to a corresponding reduction in jobs of between 12% and 14%,” the WTTC said, also calling on governments to remove or simplify visas wherever possible, cut travel taxes and introduce incentives once the pandemic is under control.

However, according Sekgororoane, Global Tourism has historically been a resilient industry and has survived other disasters. “What we need to bear in mind is that recovery can be slow especially with the current disaster.

When this pandemic is over, because it will come to pass, we will need to be patient and persevere as our tourists recover at different times financially as well as recover from possible fear of travelling especially to far away and unknown places,” she said.

In response to the catastrophic impact of the pandemic on the local industry which has resulted in ZERO income, Sekgororoane said BTO as the custodian of the country’s tourism business has come up with short term strategies to cushion the industry; as well as mid – long term strategies to catalyze recovery of the industry post corona and build resilience going forward.

The BTO Chief said the strategies going forward will as has always been be formulated through engagement with the tourism private sector bodies or associations with a common drive to revive the industry. She underscored that much of focus will be on intensifying development of domestic market to augment international arrivals into building a resilient industry that can stand against any global shocks.

Latest statistics indicates that Botswana registers around 1.7 million tourist arrivals per year .According to 2017 arrivals, 84 % were from the African Continent primarily the Sub-Saharan Region. Only 16% were overseas visitors. The top three overseas tourist markets for Botswana are the United States of America, followed by Germany and the United Kingdom at third.

“We are keenly following what is going on around the world and what other countries are experiencing with their tourism industries. What is obvious is that recovery, enough to travel is going to be varied with some markets taking one to two years,” said Sekgororoane.

She revealed that BTO is already developing strategies geared towards the Regional Market i.e. Sub-Saharan Africa and the Domestic Market being Botswana as the country starts to intensify its inward looking approach.

Stimulation of domestic market will include events put together to encourage Botswana nationals to visit other geographic places within Botswana. Sekgororoane added that some of the events would be also geared towards enticing neighbouring countries to attend thus developing the nearer regional market.

“Yes, we have postponed our BTO major events such as the Khawa Dune Challenge and Cultural Event, the Toyota 1000km Desert Race, the Makgadikgadi Epic and other events to 2021,  but this does not mean that we cannot re-direct the budgets and effort towards new events for stimulation of our domestic and regional markets with new doable events in the medium term,” she said.

BTO says going forward E-Marketing and Social media presence will play a more prominent role in its campaign as it intensified development of domestic and regional market.

The agency intends to cultivate more interest from millennials and young travelers “ We will focus on regional Media, including regional TV’s , more technology will be utilized to communicate, including webinars to discuss industry issues, input into strategies and keep up to date with global reaction and learnings,” said the CEO on Monday.

Sekgororoane said sustainable tourism has been a core demand especially from Botswana long-haul markets prior to corona. “This will become even more so post corona. Therefore, our renowned and unwavering Policy on Sustainable Tourism to ensure preservation of our natural resources for future generations will become even more pronounced in our strategies.”

In the long term BTO indicated that Botswana needs an overarching and implementable Travel and Tourism Disaster Management Policy and actionable Plans that would kick in as soon as any disaster of significant magnitude hits the country. This would be for any disaster such as financial, diseases, impact of any form on the country’s key natural resources.

Furthermore Sekgororoane said individual Travel and Tourism companies would need to develop their own Disaster Management Policies and Plans.SMME’s in particular would need to be mentored in ideal Insurance Coverage for their businesses e.g. Business Interruption and Continuity.

“We all optimistically expect all tourism categories to recover. With Government Interventions and the tourism industry’s own resilience, reinforced by how the industry can help itself for survival, the travel and tourism industry needs to introspect, learn from current experiences and re-engineer how the industry needs to work in the future compared to the past and adapt where necessary,” she said.

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P230 million Phikwe revival project kicks off

19th October 2020
industrial hub

Marcian Concepts have been contracted by Selibe Phikwe Economic Unit (SPEDU) in a P230 million project to raise the town from its ghost status.  The project is in the design and building phase of building an industrial hub for Phikwe; putting together an infrastructure in Bolelanoto and Senwelo industrial sites.

This project comes as a life-raft for Selibe Phikwe, a town which was turned into a ghost town when the area’s economic mainstay, BCL mine, closed four years ago.  In that catastrophe, 5000 people lost their livelihoods as the town’s life sunk into a gloomy horizon. Businesses were closed and some migrated to better places as industrial places and malls became almost empty.

However, SPEDU has now started plans to breathe life into the town. Information reaching this publication is that Marcian Concepts is now on the ground at Bolelanoto and Senwelo and works have commenced.  Marcian as a contractor already promises to hire Phikwe locals only, even subcontract only companies from the area as a way to empower the place’s economy.

The procurement method for the tender is Open Domestic bidding which means Joint Ventures with foreign companies is not allowed. According to Marcian Concepts General Manager, Andre Strydom, in an interview with this publication, the project will come with 150 to 200 jobs. The project is expected to take 15 months at a tune of P230 531 402. 76. Marcian will put together construction of roadworks, storm-water drains, water reticulation, street lighting and telecommunication infrastructure. This tender was flouted last year August, but was awarded in June this year. This project is seen as the beginning of Phikwe’s revival and investors will be targeted to the area after the town has worn the ghost city status for almost half a decade.

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IMF projects deeper recession for 2020, slow recovery for 2021

19th October 2020

The International Monetary Fund (IMF) has slashed its outlook the world economy projecting a significantly deeper recession and slower recovery than it anticipated just two months ago.

On Wednesday when delivering its World Economic Outlook report titled “A long difficult Ascent” the Washington Based global lender said it now expects global gross domestic product to shrink 4.9% this year, more than the 3% predicted in April.  For 2021, IMF experts have projected growth of 5.4%, down from 5.8%. “We are projecting a somewhat less severe though still deep recession in 2020, relative to our June forecast,” said Gita Gopinath Economic Counsellor and Director of Research.

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Botswana partly closed economy a further blow of 4.2 fall in revenue

19th October 2020

The struggle of humanity is now how to dribble past the ‘Great Pandemic’ in order to salvage a lean economic score. Botswana is already working on dwindling fiscal accounts, budget deficit, threatened foreign reserves and the GDP data that is screaming recession.

Latest data by think tank and renowned rating agency, Moody’s Investor Service, is that Botswana’s fiscal status is on the red and it is mostly because of its mineral-dependency garment and tourism-related taxation. Botswana decided to close borders as one of the containment measures of Covid-19; trade and travellers have been locked out of the country. Moody’s also acknowledges that closing borders by countries like Botswana results in the collapse of tourism which will also indirectly weigh on revenue through lower import duties, VAT receipts and other taxes.

Latest economic data shows that Gross Domestic Product (GDP) for the second quarter of 2020 with a decrease of 27 percent. One of the factors that led to contraction of the local economy is the suspension of air travel occasioned by COVID-19 containment measures impacted on the number of tourists entering through the country’s borders and hence affecting the output of the hotels and restaurants industry. This will also be weighed down by, according to Moody’s, emerging markets which will see government losing average revenue worth 2.1 percentage points (pps) of GDP in 2020, exceeding the 1.0 pps loss in advanced economies (AEs).

“Fiscal revenue in emerging markets is particularly vulnerable to this current crisis because of concentrated revenue structures and less sophisticated tax administrations than those in AEs. Oil exporters will see the largest falls but revenue volatility is a common feature of their credit profiles historically,” says Moody’s. The domino effects of containment measures could be seen cracking all sectors of the local economy as taxes from outside were locked out by the closure of borders hence dwindling tax revenue.

Moody’s has placed Botswana among oil importers, small, tourism-reliant economies which will see the largest fall in revenue. Botswana is in the top 10 of that pecking order where Moody’s pointed out recently that other resource-rich countries like Botswana (A2 negative) will also face a large drop in fiscal revenue.

This situation of countries’ revenue on the red is going to stay stubborn for a long run. Moody’s predicts that the spending pressures faced by governments across the globe are unlikely to ease in the short term, particularly because this crisis has emphasized the social role governments perform in areas like healthcare and labour markets.

For countries like Botswana, these spending pressures are generally exacerbated by a range of other factors like a higher interest burden, infrastructure deficiencies, weaker broader public sector, higher subsidies, lower incomes and more precarious employment. As a result, most of the burden for any fiscal consolidation is likely to fall on the revenue side, says Moody’s.

Moody’s then moves to the revenue spin of taxation. The rating agency looked at the likelihood and probability of sovereigns to raise up revenue by increasing tax to offset what was lost in mineral revenue and tourism-related tax revenue. Moody’s said the capacity to raise tax revenue distinguishes governments from other debt issuers.  “In theory, governments can change a given tax system as they wish, subject to the relevant legislative process and within the constraints of international law. In practice, however, there are material constraints,” says Moody’s.

‘‘The coronavirus crisis will lead to long-lasting revenue losses for emerging market sovereigns because their ability to implement and enforce effective revenue-raising measures in response will be an important credit driver over the next few years because of their sizeable spending pressures and the subdued recovery in the global economy we expect next year.’’

According to Moody’s, together with a rise in stimulus and healthcare spending related to the crisis, the think tank expects this drop in revenue will trigger a sizeable fiscal deterioration across emerging market sovereigns. Most countries, including Botswana, are under pressure of widening their tax bases, Moody’s says that this will be challenging. “Even if governments reversed or do not extend tax-easing measures implemented in 2020 to support the economy through the coronavirus shock, which would be politically challenging, this would only provide a modest boost to revenue, especially as these measures were relatively modest in most emerging markets,” says Moody’s.

Botswana has been seen internationally as a ‘tax ease’ country and its taxes are seen as lower when compared to its regional counterparts. This country’s name has also been mentioned in various international investigative journalism tax evasion reports. In recent years there was a division of opinions over whether this country can stretch its tax base. But like other sovereigns who have tried but struggled to increase or even maintain their tax intake before the crisis, Botswana will face additional challenges, according to Moody’s.

“Additional measures to reduce tax evasion and cutting tax expenditure should support the recovery in government revenue, albeit from low levels,” advised Moody’s. Botswana’s tax revenue to the percentage of the GDP was 27 percent in 2008, dropped to 23 percent in 2010 to 23 percent before rising to 27 percent again in 2012. In years 2013 and 2014 the percentage went to 25 percent before it took a slip to decline in respective years of 2015 up to now where it is at 19.8 percent.

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