Special Elected Member of Parliament, Peggy Serame who is also Minister of Investment Trade and Industry says Government should accelerate uptake of Public Private Partnership (PPPs) models for massive infrastructural projects that are proving too steep for fiscal financing alone.
When deliberating on Midterm Review put before parliament by Minister of Finance & Economic Development, Dr Thapelo Matsheka, Serame said PPPs could be used to develop major projects with significant economic stimuli like Railway lines, road networks and agricultural infrastructure.
Predominantly due to chronic fiscal stress since the 2008/9 global financial crisis, there have been calls for alternative ways of financing economic development. Public Private Partnerships (PPPs) have been identified as such alternatives.
On the other hand Professor Botlhale, a lecturer at the University of Botswana observes in one of his academic papers that there is an increasing understanding that the private sector is not a competitor but a strategic partner in the drive for economic development. Therefore, governments are leveraging on the benefits of PPPs.
In the recent past, PPPs have been used to procure public works and services all over the world . Although initially restricted to public infrastructure in the form of roads, railways, prisons, government buildings, power generation, or water and waste treatment facilities, PPP has increasingly moved into the provision of so-called “social infrastructure” such as schools, hospitals, and health services.
There is a reason to believe that PPPs will continue in their ascendancy and will overshadow the traditional/conventional public procurement model where the government provides the sole financing for projects. In a study on PPPs in Botswana undertaken in 2016, Professor Botlhale underscored that since 2008/9 financial crisis, Botswana’s revenue has been feeling pressure from depressed diamond business.
He noted that though PPP model has not been explored to the fullest there has been an upsurge in the uptake of PPPs as sufficiently instanced by the building of shopping malls, for example, Rail Park Mall in Gaborone and Mongala Mall in Kanye.
BR Properties (Pty) Ltd, a division of wholly Government owned Botswana Railways, partnered with Botswana Insurance Fund Managers (BFIM), Eris Botswana and Tredinnick to build the Rail Park Mall on September 2010 and the mall was opened on the 24 April 2012. The Mongala Mall is a PPP venture between the Southern District Council and Time Projects and was officially opened on 26 March 2014.
On Tuesday Minister Serame noted that that there was need to seriously explore PPP financing models as a way of resuscitating the economy post depressed government revenue caused by COVID-19 pandemic. “We need to engage capital markets, pension funds and the private sector at large and come up with winning partnership models in financing our big infrastructural projects such as bridges, railway lines and road networks,” she said.
Government established a PPP Unit within the Ministry of Finance & Economic Development. At a workshop organized by Business Botswana and Ministry of Finance in 2018, Orono Otweyo a privatization expert from Uganda described PPP as a commercial transaction between government entity and a private party.
In a PPP model, private party performs institutional functions, establishes or manages public property. The arrangement, substantial risk, financial, technical and operational are all passed to the private party and that private party is expected to benefit through payments from government or end user fees.
According to Otweyo, during the construction phase of a project under PPP, government does not incur any cost to the private party and only pays once the project is completed, the costs of construction resting with the private entity. Usually for big, high capital intensive projects private companies would form a consortium and incorporate a company that will enter into an agreement with government.
The company formed will be a Special Purpose Vehicle (SPVs) which shall solely exists for the purpose of implementation of that particular project and cannot undertake any business that is not part of the project. Government can also have nominal representation in the SPV which may be due to strategic, financial or economic interest. The SPV will in turn get funding from equity or any other form of financing to carry out the project.
Chinaâ€™s Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.
The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The countryâ€™s fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.
In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.
Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.
China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.
Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.
On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.
According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry said.
The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.
Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.
According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.
The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.
Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.
Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the companyâ€™s market capitalization.
Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana. Â The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.