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‘COVID-19 has not materially affected pensions’

Pensioner

Indications are that during the period February 2020 to April 2020, markets experienced extreme pressure because of the effects of the COVID-19 pandemic, but a ray of hope in the mould of vaccine trials have injected life back into the markets.

Markets are rebounding and it is expected that Pension Funds will not be materially affected, this according to Minister of Finance and Economic Development, Dr Thapelo Matsheka.

Briefing Parliament on pensions recently the Minister said the Non-Bank Financial Regulatory Authority (NBFIRA) is closely monitoring the industry for the possible effects of the ongoing COVID-19 pandemic hence there has been no major negative impact recorded so far. “However the Regulator will maintain close supervision and take appropriate actions, where necessary, to ensure, safety, soundness and sustainability of the Pension industry,” said Matsheka.

Dr Matsheka’s brief to Parliament was as a result of a question from Member of Parliament for Selibe Phikwe West, Dithapelo Keorapetse who had engaged the Minister on the performance of pensions amid the COVID-19 pandemic.

“Some people are worried by what appears to be a slump in the performance, in fact, some observe inconsistencies, a rollercoaster if you may, in the performance and they are worried that they may be losing out. This has caused much anxietyand the perturbed workers wonder whether they will retire into poverty with the pension eaten out,” observed Keorapetse.

According to the Minister Botswana has 75 stand-alone Funds and 6 umbrella Funds with 320 sub-funds. These funds have 230 588 members, 21 310 deferred members and 12 693 pensioners. The income of the Funds in 2019 amounted to P11.8 billion, of which P7 billion was investment income and P4.6 billion was both employer and employee contributions. The total expenditure for the Funds for the corresponding period was P3.7 billion, of which P3 billion was benefit payments.

“Pension Funds account for the largest portion of the assets of the non-bank financial institutions in Botswana. The latest audited figures as at the end of December 2019 show that total assets of Pension Funds represented 42 percent of GDP. In 2018, the ratio was 42 percent, which confirms the growth of the pension funds industry.”

In the past 10 years Pension Funds experienced growth of 171 percent, nearly doubling their size. The growth was achieved through contributions inflows and investment returns.

Pension Funds are currently mandated to invest 30 percent of their assets locally, but of late Pension Funds have been investing an average of 40 percent of their assets locally. “This confirms that Pension Funds are free to invest more locally,” said Matsheka.

However the Minister said his Ministry is currently doing some work with the view to review the30/70 guideline in line with the prevailing and prospective economic and financial conditions in the country.

In the last six years Pension Funds have made decent returns averaging 7 percent annually. The offshore investments contributed the largest portion of the returns recorded by pension funds.

“While Pension Funds have done relatively well to date, in terms of investment returns and total growth assets, the governance of the Pension Funds requires improvement in terms of timely submission of reports to the regulator and up-to-date members’ records to enable efficient and timely distribution of benefits and member statements. In this regard, NBFIRA’s latest Directive on minimum standards for trustees is an effort to enhance governance and management of Pension Funds,” said Dr Matsheka

According to NBFIRA March 2020 Annual report, the top five performing retirement funds had the Botswana Public Officers Pension Fund (BPOPF) at the head with total assets of P58 520 760, 284; Investment income stood at P3 227 430 389. The total contributions at BPOPF were P2 532 297 306.00.

ARRF had total assets pegged at P1 135 830 081 with an investment income of P52 247 511 from total contributions amounting to P192 470 141.00. Debswana Pension Fund (DPF) is third in the list with total assets recorded at P7 048 070 026 and an investment income of P515 290 328 from total contributions of P289 225 656.00. Bank of Botswana Pension Fund has total assets of P812 227 442 with an investment income of P71 023 327 from total contributions of P35 036 628.00. The University of Botswana Pension Fund punctuate the top five list with total assets of P1 900 647 463 and an investment income of P69 167 034 from total contributions of P99 604 236.00.

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Civil Service volatility: Democracy vs Bureaucracy

19th April 2021
President Masisi

Here is how one Permanent Secretary encapsulates the clear tension between democracy and bureaucracy in Botswana: “President Mokgweetsi Masisi’s Government is behaving like a state surrounded with armed forces in order to capture it or force its surrender. The situation has turned so volatile, for tomorrow is not guaranteed for us top civil servants.

These are the painful results of a personalized civil service in our view as permanent secretaries”. Although his deduction of the situation may be summed as sour grapes because he is one of the ‘victims’ of the reshuffle, he is convinced this is a perfect description of the rationale behind frequent changes and transfers characterising the current civil service.

The result of it all, he said, is that “there is too much instability at managerial and strategic levels of the civil service leading to a noticeable directionless civil service.” He continued: “Changes and transfers are inevitable in the civil service, but to a permissible scale and frequency. Think of soccer team coach who changes and transfers his entire squad every month; you know the consequences?”

The Tsunami has hit hard at critical departments and Ministries leaving a strong wave of uncertainty, many demoralised and some jobless. In traditional approaches to public administration, democracy gives the goals; and bureaucracy delivers the technical efficiency required for implementation. But the recent moves in the civil service are indicative of conflicting imperatives – the notion of separation between politicians and administrators is becoming blurred by the day.

“Look at what happened to Prisons and BDF where second in command were overlooked for outsiders, and these are the people who had sacrificially served for donkey’s years hoping for a seat at the ladder’s end. The frequency of the changes, at times affecting the same Ministry or individual also demonstrates some level of ineptitude, clumsiness and lack of foresight from those in charge,” remarked the PS who added that their view is that the transfers are not related to anything but “settling scores, creating corruption opportunities and pushing out perceived dissident and former president, Ian Khama’s alleged loyalists and most of these transfers are said to be products of intelligence detection.”

Partly blaming Khama for the mess and his unwillingness to let go, the PS dismissed Masisi for falling to the trap and failing to outgrow the destructive tiff. “Khama is here to stay and the sooner Masisi comes to terms with the fact that he (Masisi) is the state President, the better. For a President to still be making these changes and transfers signals signs of a confused man who has not yet started rolling his roadmap, if at all it was ever there. I am saying this because any roadmap comes with key players and policies,” he concluded.

The Ministry of Health and Wellness seems to be the most hard-hit by the transfers, having experienced three Permanent Secretaries changes within a year and a half. Insiders say the changes have everything to do with the Ministry being the centre of COVID-19 tenders and economic opportunities. “The buck stops with the PS and no right-thinking PS can just allow glaring corruption under his watch as an accounting officer. Technocrats are generally law abiding, the pressure comes with politically appointed leaders racing against political terms to loot,” revealed a director in the Ministry preferring anonymity.

The latest transfer of Kabelo Ebineng she says was also motivated by his firm attitude against the President’s blue-eyed Task Team boys. “The Task Team wants to own the COVID-19 pandemic and government interventions and always cry foul when the Ministry reasserts itself as mandated by law,” said the director who added that Masisi who was always caught between the crossfire decided on sacrificing Ebineng to the joy of his team as they (Task Team) were in the habit of threatening to resign citing Ebineng as the problem.

Ebineng joins the Office of the President as a deputy Coordinator (government implementation and coordination office).The incoming PS is the soft-spoken Grace Muzila, known and described by her close associates as a conformist albeit knowledgeable.

One of the losers in the grand scheme is Thato Raphaka who many had seen as the next PSP because of his experience and calm demeanour following a declaration of interest in the Southern African Development Community (SADC) Secretary post by the current PSP, Elias Magosi.

But hardly ten months into his post, Raphaka has been transferred out to the National Strategy Office in what many see as a demotion of some sort. Other notable changes coming into OP are Pearl Ramokoka formerly with the Employment, Labour and Productivity Ministry coming in as a Permanent Secretary and Kgomotso Abi as director of Public Service Reforms.

One of the ousted senior officers in the Office of the President warned that there are no signs that the changes and transfers will stop anytime soon: “If you are observant you would have long noticed that the changes don’t only affect senior officers but government decisions as well. A decision is made today and the government backtracks on it within a week. Not only that, the President says this today, and his deputy denies it the following day in Parliament,” he warned.

Some observers have blamed the turmoil in the civil service partly to lack of accountable presidential advisers or kitchen cabinet properly schooled on matters of statecraft. They point out that politicians or those peripheral to them should refrain from hampering the technical and organizational activities of public managers – or else the party (reshuffling) won’t stop.

In the view expressed by some Permanent Secretaries, Elias Magosi, has not really been himself since joining the civil service; and has cut a picture of indifference in most critical engagements; the most notable been a permanent secretaries platform which he chairs. As things stand there is need to reconcile the imperatives of democracy and democracy in Botswana. Peace will rein only when public value should stand astride the fault that runs between politicians and public managers.

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Morupisi fights for freedom in court

19th April 2021
morupisi

Former Permanent Secretary to the President, Carter Morupisi, is fighting for survival in a matter in which the State has charged him and his wife, Pinnie Morupisi, with corruption and money laundering.

Morupisi has joined a list of prominent figures that served in the previous administration and who have been accused of corruption during their tenure in office. While others have been emerging victorious, Morupisi is yet to find that luck. The High Court recently dismissed his no case to answer application.

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Pressure mounts on Biden to suspend Covid-19 vaccine patents

19th April 2021
Joe Biden

United States President, Joe Biden, is faced with a decision to make relating to the Covid-19 vaccine intellectual property after 175 former world leaders and Nobel laurates joined the campaign urging the US to take “urgent action” to suspend intellectual property rights for Covid-19 vaccines to help boost global inoculation rates.

According to the world leaders, doing so would allow developing countries to make their own copies of the vaccines that have been developed by pharmaceutical companies without fear of being sued for intellectual property infringements.

“A WTO waiver is a vital and necessary step to bringing an end to this pandemic. It must be combined with ensuring vaccine know-how and technology is shared openly,” the signatories, comprising more than 100 Nobel prize-winners and over 70 former world leaders, wrote in a letter to US President Joe Biden, according to Financial Times.

A measure to allow countries to temporarily override patent rights for Covid related medical products was proposed at the World Trade Organization by India and South Africa in October, and has since been backed by nearly 60 countries.

Former leaders who signed the letter included Gordon Brown, former UK Prime Minister; François Hollande, former French President; Mikhail Gorbachev, former President of the USSR; and Yves Leterme, former Belgian Prime Minister.

In their official communication, South Africa and India said: “As new diagnostics, therapeutics and vaccines for Covid-19 are developed, there are significant concerns [about] how these will be made available promptly, in sufficient quantities and at affordable prices to meet global demand.”

While developed countries have been able to secure enough vaccine to inoculate their citizens, developing countries such as Botswana are struggling to source enough to swiftly vaccine their citizens, something which world leaders believe it would work against global recovery therefore proving counter-productive.

Since the availability of vaccines, Botswana has been able to secure only 60 000 doses of vaccines, 30 000 as donation as from the Indian government, while the other 30 000 was sourced through COVAX facility.  Canada, has pre-ordered vaccines in surplus and it will be able to vaccinate each of its citizens six times over. In the UK and US, it is four vaccines per person; and two each in the EU and Australia.

For vaccines produced in Europe, developing countries are forced to pay double what European countries are paying, making it more expensive for already financially struggling economies.  European countries however justify the price of vaccines and that they deserve to buy them cheap since they contributed in their development.

It is evident that vaccines cannot be made available immediately to all countries worldwide with wealthy economies being the only success story in that regard, something that has been referred to as a “catastrophic moral failure”, head of the World Health Organisation (WHO), Tedros Adhanom Ghebreyesus.

The challenge facing developing countries is not only the price, but also the capacity of vaccine manufactures to be able to do so to meet global demand within a short time. The proposal for a patent waiver by India and South Africa has been rejected by developed countries, known for hosting the world leading pharmaceutical companies such US, European Union, the United Kingdom, and Switzerland.

According to the Financial Times, US business groups including pharmaceutical industry representatives, have urged Biden to resist supporting a waiver to IP rules at the WTO, arguing that the proposal led by India and South Africa was too “vague” and “broad”.

The individuals who signed the letter, including Nobel laureates in economics as well as from across the arts and sciences, warned that inequitable vaccine access would impact the global economy and prevent it from recovering.

“The world saw unprecedented development of safe and effective vaccines, in major part thanks to US public investment,” the group wrote. “We all welcome that vaccination rollout in the US and many wealthier countries is bringing hope to their citizens.”

“Yet for the majority of the world that same hope is yet to be seen. New waves of suffering are now rising across the globe. Our global economy cannot rebuild if it remains vulnerable to this virus.”
The group warned that fully enforcing IP was “self-defeating for the US” as it hindered global vaccination efforts. “Given artificial global supply shortages, the US economy already risks losing $1.3tn in gross domestic product this year.”

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