Due to adverse impacts of COVID-19 on the economy, Botswana finds herself in a tight corner, and is forced to revisit the initial budget allocations for the year 2020/21, and suspend some projects to free up funds and redirect money to more pressing issues such as massive spending on public institutions to reconfigure spaces for new normal health protocols.
This is in addition to hundreds of millions of pulas spent on fighting the pandemic itself, that is in terms of procurement of medical supplies and testing equipments, incurring costs on quarantine and isolation facilities in addition to logistical expenditures from contact tracing and curbing the spread of the virus.
On Monday, the Minister of Finance and Economic Development, Dr Thapelo Matsheka told parliament that government prioritization exercise has released over P910 million from deferring and suspending some expenditures planned for this financial year.
Dr Matsheka explained that aside reduced spending from little to zero international travels, cancelled physical meetings and conferences government has put some projects on hold to give way for high priority development projects.
Minister Matsheka shared that much of the freed funds across government budgeting system would be consumed by COVID -19 related projects such as building ablutions, installing health protocol apparatuses for the new normal.
Matsheka further revealed that Government has taken a decision to accelerate national projects under Public Investment Programme contained in the Mid-Term Review of National Development Plan 11.
The Minister noted that the projects have also been amplified by the Economic Recovery and Transformation Plan (ERTP), which is intended to catapult Botswana out of economic downturn caused by COVID-19 pandemic.
When putting Mid-Term Review before Members of Parliament on Monday Minister Matsheka explained that the Public Investment Programme will move swiftly to implement massive development projects with significant economic stimuli, major infrastructure projects in rail and road construction as well as agriculture.
The Minister added that a number of projects associated with the digital transition have been included along with those focused on energy independence and energy exports.
The novel corona virus whose origins are traced to China in the city of Wuhan in December 2019 has restricted international travel for the larger part of 2020 first half, muting global trade and eroding business sentiments across world economies.
Growth projections by World Bank and International Monetary Fund (IMF) for Global Economy stood at -3 % from initial growth rate of 3 %.
In Botswana authorities projected that the economy would shrink by 13 % against the initial projected growth of 4 % for the 2020/21 financial year. Government however later revised growth rate to a contraction of 8 %.
Minister of Finance & Economic Development, Dr Thapelo Matsheka revealed in April that against initial projected revenue of P62.4 billion, Botswana‘s economy would only generate a projected revenue of about P48 billion.
Government then moved to trim its 2020/21 budget from P67.6 billion to P59.6 billion. Budget deficit would now shoot up from initial P5.2 billion, 2.4 % GDP to over P10 billion which would be over 5 % of GDP, well over government threshold of 4%.
The Minister announced then that Government would therefore do away with some planned expenditures and projects. He revealed that conferences and meetings would be cancelled, especially international travels by government, state funded institutions and parastatals.
Funding to parastatals and quansi-governmental institutions would be significantly reduced. “No luxury of attending international conferences but rather we are going to be a destination of conferences as a country,” he said in April.
The decline in government revenue will be attributable to a massive reduction in Mining & Mineral revenue which is anticipated to shrink by over 33 %. The drop in mining and mineral revenue is predominately as a result of halt in rough diamond sales due to travel restriction and stand still in trading across the industry.
The diamond industry is Botswana‘s key foreign income earner and largest contributor to GDP. It was projected that diamond revenue will bring to the table a total of P20 billion ,Dr Matsheka revealed that Government experts revenue from mineral revenue to only be around P6 billion.
Botswana’s diamond business partner De Beers Group last week released their half year results, figures are showing significant declines in earnings, as well as reduced production owing to depressed demand across global markets.
The UK based research entity, Fitch Solutions Group recent forecasts indicate that household spending in Botswana could increase, following the recent decline in inflation.
In the recent statement Bank of Botswana Monetary Policy Committee (MPC) noted that headline inflation decreased significantly from 4.6 percent in June to 1.5 percent in July 2023, breaching the lower bound of the Bankâ€™s medium-term objective range of 3 â€“ 6 percent and added that the fall in inflation was mainly due to the dissipating impact of the earlier increase in domestic fuel prices in the corresponding period in 2022. â€śFurthermore, inflation fell on account of the downward adjustment in domestic fuel prices effected on June 21, 2023. Inflation is forecast at 1.2 percent for August 2023 and the MPC projects that inflation will remain below the lower bound of the objective range temporarily and revert to within the objective range from the first quarter of 2024 into the medium term.â€ť
In the recent forecasts Fitch Solutions Group noted that easing food and transport costs are expected to support strong demand for goods and services over the second half of 2023 and 2024 and boost consumer spending. â€śOur outlook for consumer spending in Botswana over 2023 is positive, with downward food and transport price pressures supporting easing inflation over H223 and presenting tailwinds to spending. Over 2024, we believe the Bank of Botswana will begin its rate cutting cycle due to inflation returning to a downward trajectory over Q423 and Q124, driving spending over the year.â€ť
According to the entity household spending is expected to grow by 5.1 percent. â€śWe forecast real total household spending (2010 prices) will grow by 5.1% y-o-y over 2023, an acceleration from 4.8% y-o-y growth in 2022. This will take real total spending up to BWP62.4bn. We project the positive growth trajectory to continue over 2024, with consumer spending growing by 4.4% y-o y.â€ť
Researchers from the entity indicated that inflation in Botswana has begun easing due to declining food and non-alcoholic drinks, as well as transport price pressures. â€śIn June 2023 inflation slowed to 4.6% y-o-y in June 2023, down from 12.7% y-o-y in June 2022. We believe the lagged impact of central bank monetary policy will feed through to downward inflationary pressures over the remainder of H223 and into Q124, presenting tailwinds to spending. Our Country Risk team forecasts inflation to average 6.3% y-o-y over 2023, before ending the period at 4.2% y-o-y. Over 2024, inflation will average 4.1% y-o-y, returning to the central bank’s target rate of 3-6%.â€ť
The researchers stated that 2023/24 national budget shows that around BWP15.0bn (USD1.15bn) will be allocated towards strengthening human capital and skills development in the country, while BWP10.3bn (USD792.3mn) will be allocated for health. â€śThis decreases the need for consumers to pay for these services out of their wages. The effects that increasing level of investment by the government into skills development and improving the health of citizens on the disposable income outlook is threefold. Firstly, the investment decreases the need for consumers to pay for these services out of their wages, and thus boosts the level of disposable income. Secondly, citizens enter the workforce with a higher level of skills and can thus command a higher wage/salary, and thirdly, with improving levels of health and access to health services, workers are able to return to work quicker and overall this improves their wage prospects and the general productivity of the labour force. These factors will provide a boost to the longer-term employment outlook in Botswana.â€ť
Fitch Solutions Group meanwhile noted that unemployment, high interest rates and income inequality is a key risk to the consumer outlook during the second half of 2023 and 2024. â€śHigh unemployment, elevated interest rates and persistent income inequality will, however, present downside risks to demand, limiting spending growth.â€ť
The research entity noted that the level of unemployment in Botswana remains high, at 23.8% of the labour force in 2023 and added that this is slightly below the 24.1% average in 2022. â€śHowever, despite decreasing from a peak of 24.9% and 24.7% in 2020 and 2021 respectively, unemployment has not returned to the pre-pandemic level of 22.6% in 2019. Weak investments in agriculture and manufacturing will keep employment limited with low economic diversification and high-income inequality exacerbating the risk of social stability.â€ť
Minergy Limited, the Botswana Stock Exchange listed mining company operating Masama Coal Mine in Medie near Lentsweletau, has decided to part ways with mining contractor Jarcon, the company announced on Tuesday.
In a circular to the market Minergy revealed that it has issued a notice to terminate its mining contract with Jarcon Opencast Mining Botswana (Pty) Ltd. In the notice, Minergy Coal will terminate the mining contract in 30 days.
The company, financial backed by state owned Mineral Development Corporation (MDC) and Botswana Development Corporation (BDC), said termination of the mining contract is “in line with the strategic intent of the Board of Directors and the financiers of Minergy, to stabilise operations and bring the business to sustainable profitability”.
During this transition period, arrangements have been made to ensure business continuity and minimal disruption in coal supply to clients, by inter alia using stock holdings available.
The market was further informed that the process of appointing a new mining contractor is at an advanced stage and a final decision will be communicated in due course.
Minergy operates a privately developed coal mine in Medie near Lentsweletau, the company has been facing financial challenges recently leading to operational slow down early this year due to unsettled debt to mining contactor. MDCB later came to the rescue, bailing out the company to ensure business continuity.
According to letters to employees dated 25 August 2023, seen by this publication, Jarcon, Masama’ s mining contractor has warned its employees of possible job cuts as Minergy financial challenges persists, citing reduction in demand for coal and fall in prices for the product.
Minergy said du Plessis tendered his resignation to pursue other interests. Mr. du Plessis will however remain available and dedicated to Minergy during his notice period ending 30 November 2023.
Bagopi is tasked with ensuring augmented management capacity at the mine and ensure business continuity.
An alumnus of Camborne School of Mines, Mr. Bagopi is described as a seasoned mining professional with over 30 years of experience in the industry in various mining commodities, starting his career at graduate level and ascending to executive management.
Mr Bagopi has been instrumental and at the leading edge of developing coal markets for Botswana coal at Morupule Coal Mine in the region as well as internationally.
He brings forth a well-established network of strategic partnerships and collaborations in the industry, ranging from operations, technical, commercialÂ and business development, projects development, having paved the path for the development of MCM corporate strategy, before joining the MDCB as Chief Technical Officer, overseeing technical aspects of MDCBâ€™s mining investment.
Masama has capacity to produce 1.5 million tonnes of coal per year and is the smaller of two coal mines currently in operation in Botswana, the other being the state-owned Morupule Coal Mine, with 4.2 million tonne capacity.
Minergyâ€™s latest annual report shows that as of June 2022, the company owed the mining contractor 79 million pula after a debt restructuring exercise. It also owed BDC 125 million pula and MDCB some 295 million pula.
Strong demand, mostly from Europe due to the fallout from Russia’s invasion of Ukraine, drove Minergyâ€™s exports up 53% in the half-year to Dec.31, boosting its earnings and helping it to reduce debt.
However, weakening coal prices and logistical challenges it faces when hauling coal from landlocked Botswana to export markets have impacted Minergy’s earnings.
Â Dr. Malebogo Kebabonye, Bomaid Chief Clinical Services Officer
The healthcare system is a crucial and yet fragile one, in any scenario we look at it within. The reality we face is an overburdened healthcare system, taking an even greater toll since the COVID-19 pandemic. The pressure gaps and issues we face are now clearer than ever before to see, and the time to act is now. At the same time, as we look at this healthcare crisis, we recognise it is not for Botswana alone to experience, not to solve â€“ this is a global phenomenon we are seeing in many markets. But how are we solving for it? And is the onus on healthcare providers alone?
The concept of value-based healthcare is fast becoming a go-to, and with good reason. However, it is not new. Indeed, it has been around for some time and has been a primary focus for work delivered by, for example, the World Economic Forum (WEF) and even the World Health Organisation (WHO). Value-based care ties the amount health care providers earn for their services to the results they deliver for their patients and aims at promoting quality of care over the quantity of services. There is less focus on frequency of healthcare interventions or doctor visits, and rather, priority is placed on the quality of care and the progress experienced for the customer or patient. Ultimately, this approach improves overall health and wellbeing of the population and has proven effective in such markets as Kenya, the US, the UK, and in the public sector of Botswana.
According to the World Economic Forum, â€śThe widely accepted definition of value in healthcare is the health outcomes that matter to patients relative to the resources or costs required to deliver those outcomes.Â Value-based healthcareÂ is an approach that aligns industry stakeholders (payers, providers, pharma/MedTech and policymakers) around a shared objective of improving patient health outcomes, providing autonomy and accountability to providers to pursue the best way to deliver healthcare for the money spent. The transition fromÂ volume-basedÂ toÂ value-basedÂ healthcare will inevitably lead to more healthy societies while optimising resources
As Bomaid, we have adopted the Value Based Care approach locally, it is in line with one of our key strategic pillars of improving holistic wellness which is patient centred and anchored in Primary Health Care. It helps better manage healthcare costs which are ultimately borne by customers through annual subscription increases and other out of pocket expenses, recognising that medical providers alone are not the only agents of change in this space â€“ medical aid providers are crucial to supporting the wider ecosystem growth and betterment.
Patient centered care or personalised care, on the other hand, focuses on the individual’s particular healthcare needs. The goal of patient-centered healthcare is to empower patients to become active participants in management of their care. Core to the principles of patient centred care is personalisation and individual accountability towards one’s own health. Value-based healthcare focuses on maximising patient healthcare outcomes and harnessing resources to better deliver on this while reducing inequity in health outcomes and promoting high impact interventions. This is, ultimately, what Bomaid strives to do in working towards delivering, first things first, health, happiness and holistic wellbeing.
So how do we deliver on a value-based healthcare sustainably and meaningfully?
It begins with mindset, yes. But this is swiftly followed by many tangible factors too: the right systems; the right infrastructure; the right resources; The right regulatory environment. It means putting holistic patient wellbeing and health first, as well as removing inefficiencies that would otherwise result in cost burdens on patients, as well as unimproved health outcomes â€“ always being ill, never seeing real recovery.
The WEF further notes, â€śThis high-cost burden can, in part, be the consequence of inefficiencies in the healthcare system, such as fragmented and uncoordinated care delivery, poor data governance, workforce shortages and underinvestment in preventive care. The OECD estimates that up to 20% of healthcare spending across its member countries is unnecessary or ineffective. Accordingly, spending more doesnâ€™t always lead to improved patient outcomes. So, addressing these inefficiencies would help reduce costs and make healthcare more equitable and accessible.â€ť
As we strive for healthier, happier people across the nation, how do we help leverage value-based care to ensure better healthcare outcomes are the only acceptable result, and that we help ensure quality and relevant, appropriate healthcare is equitable, accessible, and inclusive?
It is not for us to suggest our approach is by any means a silver bullet, but it is one worth exploring, because the global results speak for themselves. Now, how do we collectively mobilise in recognition of the fact that some discomfort for the industry now means progress for our patients and customers? This, after all, remains our priority.
Aligned to the Botswana Government through the Ministry of Health strategic agenda for Primary Health Care Revitalisation, the time is now to refocus the Private Health Care system towards a value based care to create sustainability and resilience in our health sector as a country.
Dr. Kebabonye ( Bomaid Chief Clinical Services Officer) is a public health specialist who joined Bomaid in 2023 as Chief Clinical Services Officer. In this role, she is mandated to develop and implement clinical strategies and policies which support the business in providing healthcare solutions, finding access to affordable leading-edge healthcare and innovations. This works to help enable healthier, happier lives through proactive and preventative products to attract younger healthier clients, whilst still providing reactive rehabilitation healthcare solutions.Â Â