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Botswana approaches World Bank for P6.8 billion loan

Dr Matsheka

Botswana Government has approached the World Bank Group for a debt facility to augment available financing options as the country pulls its economy out of unprecedented traditional revenue decline occasioned by the novel corona virus.

Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka confirmed to international media house, Reuters that Government has set up a team comprising of experts from the Ministry, Bank of Botswana and Attorney General’s Chambers, amongst others to move swiftly in securing the much needed funding.

Botswana was, like many other resource based economies across the world adversely impacted by the COVID-19 pandemic which put life and business to stand still in the first half of 2020.

With particularity to the landlocked 54 year old Republic, COVID-19 froze diamond trade, the country’s economic nucleus, wiping out billions of pulas in projected revenue for the 2020/21 fiscal year and ballooning deficit to levels never seen before.

In June Government  released a  65 paged  economic recovery and transformation plan, a blueprint crafted to resuscitate Botswana’s economy out of COVID-19 mess – an estimated total of P40 billion will be needed, according to projections.

This is P20 billion first to cover the projected deficit for the next two financial years; and another P20 billion to finance stimulus projects aimed at re-energizing and catapulting the economy back to growth trajectories.

The projected  deficit figures were later revised as diamonds markets slowly  recovered beginning of 3rd quarter of the year , however  Ministry of Finance still projects a whooping P13 billion as budget deficit for the remaining part of National Development Plan 11 which ends in 2023.

“No quantum in place yet but ideally if we can get about 50 % of the expected P13.6 billion deficit for the reminder of the development plan , that should give us a smoother landing into the next development plan,” said Minister Matsheka.

The World Bank Office in Botswana has also confirmed that talks with Government regarding the matter are ongoing.

Country Representative Guido Rurangwa said, “The government and the World Bank are currently discussing details of the support, including the amount.”


Earlier this year in an interview with BusinessPost the World Bank Botswana Country Representative and Special Envoy to SADC said the bank was  aware of Botswana‘s recovery plans post COVID-19 economic shocks.

“We understand that the Government of Botswana has been preparing a Recovery and Transformation Plan. If the Plan has a financing gap, a request for World Bank funding could be requested.”

Rurangwa told BusinessPost that should a funding request be made, the World Bank would consider the request favorably.  “The World Bank has informed the Government of available financial support which the country can access,” he said.

World Bank Botswana Communications Officer, Oarabile Moilwa said The World Bank Group (WBG) has actively been sharing knowledge and providing technical assistance to the Government, Botswana COVID-19 National Coordinator and his team, and Business Botswana on policy measures to address COVID-19 and reforms to help Botswana achieve resilient, inclusive and sustainable recovery.

“This has included hosting virtual knowledge sharing sessions where the WBG shared experiences from other countries; shared research papers; and commented on several drafted Botswana COVID-19 response plans,” she said.

In addition to external debt Government intends to finance its budget deficit with local borrowing. In September Parliament approved a proposition from Ministry of Finance to increase Government bond program ceiling from P15 Billion to P30 billion.

When advocating for the increase, Minister of Finance & Economic Development Dr Matsheka explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.

In terms of this law, total public debt is permissible up to 40 % of GDP where 20 % is from local capital market while the other 20 % is external borrowing.

The Minister explained that additional spending pressures have been put on the fiscus arising from implementation of economic recovery and transformation plan at a time when government revenue has significantly declined due to the slowdown in global and domestic economies.

“As a result larger budget deficits are expected in the short term to medium terms, that is this current financial year , 2020/21  and 2021/22 -23.”

Minister Matsheka noted that unlike in previous economic crisis such as   that of 2008/09, the 2020 COVID-19 induced economic challenges comes at time when the country‘s net financial position is not strong.

Dr Matsheka said Government will need to make more use of borrowing to finance deficit in the short to medium term however with the current bond issuing limit it is constrained because the then ceiling of P15 Billion was reached in June 2020.

The COVID-19 crisis and budget deficits also come at a time when Government Investment Account (GIA) has been decreasing over the years.

Still in the last parliament sitting lawmakers were told that prior to financial crisis of 2008/9 Government Investment Account (GIA) amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at 18.3 billion (only 9 %  of GDP).

“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” said Dr Matsheka in September Reports indicated that the GIA has as of August 2020 stood at P10 billion.

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Gambling Authority tender dangles as a jittery lottery quandary

30th November 2020

Lucrative and highly anticipated national lottery tender that saw several Batswana businessmen partnering to form a gambling consortium to pit against their South African counterparts, culminates into a big power gamble.

WeekendPost has had a chance to watch lottery showcase even before the anticipated and impending national lottery set-up launches. A lot has been a big gamble from the bidding process which is now set for the courts next year January following a marathon legal brawl involving the interest of the gambling fraternity in Botswana and South Africa.

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The uncertainty of getting the next meal in Botswana

30th November 2020
uncertainty of getting the next meal

Households representing more than half of Botswana’s population-mostly residing in rural areas- do not know where their next meal will come from, but neither do they take into consideration the quality and/or quantity of the food they consume.

This is according to the latest Prevalence of Food Insecurity in Botswana report which was done for the 2018/19 period and represents the state of food insecurity data even to this time.
The Prevalence of Food Insecurity was released by Statistics Botswana and it released results with findings that the results show that at national level 50.8 percent of the population in Botswana was affected by moderate to severe food insecurity in 2018/19, while 22.2 percent of the population was affected by severe food insecurity only.

According to the report, this translates to 27 percent of the population being food secure that is to say having adequate access to food in both quality and quantity. According to Statistician General, Burton Mguni, when explaining how the food data was compiled, Food and Agriculture Organization of the United Nations (FAO), is custodian of the “Prevalence of Undernourishment (PoU)” and “Prevalence of moderate or severe food insecurity in the population based on the Food Insecurity Experience Scale (FIES)” SDG indicators, for leading FIES data analysis and the resultant capacity building.

“The FIES measures the extent of food insecurity at the household or individual level. The indicator provides internationally comparable estimates of the proportion of the population facing moderate to severe difficulties in accessing food. The FIES consists of eight brief questions regarding access to adequate food, and the questions are answered directly with a yes/no response. It (FIES) complements the existing food and nutrition security indicators such as Prevalence of Undernourishment.

According to the FIES, with increasing severity, the quantity of food consumed decreases as portion sizes are reduced and meals are skipped. At its most severe level, people are forced to go without eating for a day or more. The scale further reveals that the household’s experience of food insecurity may be characterized by uncertainty and anxiety regarding food access and compromising the quality of the diet and having a less balanced and more monotonous diet,” says Mguni.

The 50.8 percent of the population in Botswana which was affected by moderate to severe food insecurity are characterized as people experiencing moderate food insecurity and face uncertainties about their ability to obtain food. These people have been forced to compromise on the quality and/or quantity of the food they consume according to the report on food insecurity.

Those who experience severe food insecurity, the 22.2 percent of the population, are people who have typically run out of food and, at worst, gone a day (or days) without eating. According to the statistics, rural area population experienced moderate to severe food insecurity at 65 percent while urban villages were at 46.60 percent and cities/town were at 31.70 percent. Those experiencing the most extreme and severe insecurity were at rural areas making 33.10 percent while urban villages and towns were at 11.90 percent and 17.50 respectively.

According to a paper compiled by Sirak Bahta, Francis Wanyoike, Hikuepi Katjiuongua and Davis Marumo and published in December 2017, titled ‘Characterization of food security and consumption patterns among smallholder livestock farmers in Botswana,’ over 70 percent of Botswana’s population reside in rural areas, and majority (70%) relies on traditional/subsistence agriculture for their livelihoods.

The study set out to characterize the food security situation and food consumption patterns among livestock keepers in Botswana. “Despite the policy change, challenges still remain in ensuring that all persons and households have access to food at all times. For example, during an analysis of the impacts of rising international food prices for Botswana, BIDPA reported that food prices tended to be highest in the rural areas already disadvantaged by relatively low levels of income and high rates of unemployment,” said the study.

According to the paper, about 9 percent of households were found to be food insecure and this category of households included 6 percent of households that ranked poorly and 3 percent that were on the borderline according to the World Food Programme’s (WFP) definition of food security.

Media reports state that the World Bank has warned that disruption to production and supply chains could ‘spark a food security crisis’ in Africa, forecasting a fall in farm production of up to 7 percent, if there are restrictions to trade, and a 25 percent decline in food imports.

Food security in Botswana or food production was also attacked by the locust pandemic which swept out this country’s vegetation and plants. The locust is said to have contributed to 25 percent loss in production.

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Solid demand for diamonds towards the ‘gift’ season

30th November 2020

Global lockdown have been a thorn in diamonds having shiny sales, but a lot of optimism shows with the easing of Covid-19 restrictions, the precious stones will be bought with high volumes towards festive season. The diamond market is however warned of the resurgence of Covid-19 in key markets presents ongoing risks amid the presence and optimist about the new Covid-29 vaccines.

The latest findings published as De Beers Group’s latest Diamond Insight ‘Flash’ Report, which looks at the impact of the pandemic on relationships and engagements, has revealed that in the US that more couples than ever are buying diamond engagement rings. Bridal sales is mostly the primary source of diamond jewellery demand in recent months, De Beers said.

According to De Beers, interviews with independent jewellers around the US revealed that the rate of couples getting engaged has increased compared with the period when Covid-19 first had an impact in the US in the spring.

“In addition, despite challenging economic times, consumers were spending more than ever on diamond engagement rings – often upgrading in colour, cut and clarity, rather than size. Several jewellers speculated that with consumers spending less on elaborate weddings and/or honeymoons in the current environment, they had more to spend on choosing the perfect ring,” said De Beers.

According to De Beers, a national survey of 360 US women in serious relationships, undertaken in late October in collaboration with engagement and wedding website, The Knot. This survey is said to have found that the majority of respondents (54%) were thinking more about their engagement ring than the wedding itself (32%) or the honeymoon (15%), supporting jewellers’ hypothesis that engagement ring sales were benefiting from reduced wedding and travel budgets in light of Covid-19 restrictions.

When it came to researching engagement rings, online was by far the predominant channel for gaining ideas/inspiration at 86% of consumers surveyed, with 85% saying they had saved examples of styles they liked, according to De Beers. According to the survey, only a uarter of respondents said they had looked in-store at a physical location for design inspiration.

“For many couples, the pandemic has brought them even closer together, in some instances speeding up the path to engagement after forming a deeper connection while experiencing lockdown and its associated ups and downs as a partnership. Engagement rings are taking on even greater symbolism in this environment, with retailers reporting couples are prepared to invest more than usual, particularly due to budget reductions in other areas,” De Beers CEO Cleaver said.

According to De Beers Group, its Diamond Insight Flash Report series is focused on understanding the US consumer perspective in light of Covid-19 and monitoring how it evolves as the crisis evolves. Also, the company said, it is augmenting its existing research programme with additional consumer, retailer and supply chain touch-basis to understand the pain points and the opportunities for stakeholders across the diamond pipeline.

Demand for diamonds is as hard and resilient as the precious stone itself. De Beers pocketed US$ 450 million in its recently held ninth rough diamond sales cycle, and the company says it is more flexible approach to rough diamond sales during the ninth sales cycle of 2020, with the Sight event extended beyond its normal week-long duration.

“Steady demand for De Beers Group’s rough diamonds continued in the ninth sales cycle of the year, reflecting stable consumer demand for diamond jewellery at the retail level in the US and China, and expectations for reasonable demand to continue throughout the holiday season. However, the resurgence of Covid-19 infections in several consumer markets presents ongoing risks,” said De Beers CEO Bruce Cleaver recently.

High expectations are on diamonds being a sentimental gift for holiday season or as the most fetished gift. However the ninth cycle was lower than the eighth which registered US$ 467 million. For the last year period which corresponds with the current one, De Beers managed to raise US$ 400.

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