Govt’s rising wage bill
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In the next financial year, the Government is confronted with a ballooned wage bill that continues to exert far-reaching implications on the country’s fiscus.
A budget strategy paper forecasting the composition of the country’s treasury for the 2022/2023 financial year has revealed a bigger projected budget deficit emanating mainly from a rise in government salaries expenditure levels.
Experts at the Ministry of Finance & Economic Development anticipates the wage bill to rise by over P700 million next year. Specifically, the 2022/2023 figure for personal emoluments has been revised upwards by P731.56 million, to reach P27.98 billion, compared to the February 2021 estimate of P27.25 billion.
In February, the medium-term fiscal projections and the 2021 Budget Speech indicated that Total Revenue and Grants were anticipated to reach P66.25 billion in 2022/2023, 2.6 percent higher than the 2021/22 budget figure of P64.56 billion.
However, since COVID-19 has been persisting for longer than anticipated and continues to weigh heavily on domestic and global economic performance, Total Revenue and Grants for 2022/2023 have been revised downwards by P3.19 billion and are now estimated to reach P63.06 billion.
This downward revision partly reflects a reassessment of prospects for the mining sector, given continued uncertainty over market prospects in the diamond industry.
As a result, mineral revenues are projected to be P24.08 billion, a downward revision of P1.66 billion from the initial estimate of P25.74 billion.
Customs and excise revenue are forecast at P8.98 billion, slightly lower than the initial forecast of P9.10 billion, primarily due to changed exchange rate assumptions.
The low level of revenue from SACU primarily reflects the adjustment (repayment) of P7.0 billion in 2022/23 because the agreed distribution in 2020/21 turned out to be too high, given the impact of COVID-19 and the slowdown in regional trade on actual SACU receipts in that year.
Furthermore, the continued economic and political uncertainty in South Africa, and slow economic growth, may exert downward pressure on the allocation to Botswana from the SACU revenue pool.
Projections of revenue from VAT and Non-mineral income tax have also been revised downwards, despite measures introduced by Government to increase tax collection.
The downward revision of both income tax and VAT reflects updated data on economic growth and fiscal revenues.
VAT and Non-Mineral Income Tax are forecast to reach P11.78 billion and P14.94 billion respectively in 2022/2023, representing downward revisions by P693.60 million and P647 million from the initial estimates of P12.47 billion and P15.58 billion.
Expenditure commitments by Government are projected to increase again in 2022/2023, despite the commitment to contain recurrent expenses, particularly personal emoluments and pensions, through managing the wage bill.
Ministry of Finance & Economic Development says the anticipated rise in the wage bill primarily reflects a higher base effect from the actual budget figure for 2020/2021, the impact of the substantial upward adjustments in Government wages and salaries in 2019/2020 and 2020/2021, and the “creep” from annual increments related to salary scales.
The revision of personal emoluments is anticipated to increase Total Expenditure and net Lending to P71.55 billion, compared to the initial estimate of P71.07 billion.
Overall, the deficit is expected to increase in 2022/2023, after an expected decline between 2020/2021 and 2021/2022.
Notwithstanding this increase, the trend is expected to be reversed in the next two years and the beginning of NDP 12.The 2022/2023 fiscal deficit is anticipated to reach P8.50 billion (4.0 percent of GDP), compared to P7.22 billion (3.7 percent of GDP) in 2021/2022.
The main reason for the reversal is the sharp drop in SACU revenues, which was expected due to the overpayment in 2020/2021; however, this drop is anticipated to be a once-off.
Nevertheless, the increased deficit in 2022/2023 adds to the need for debt financing in the coming financial year. A longer-term objective is to rebuild the GIA held at the Bank of Botswana, whether through borrowing or returning to budget surpluses.
Meanwhile, the Government Investment Account (GIA) opening balance stood at P4.9 billion at the beginning of the 2021/2022 financial year.
It is projected to decline slightly to P4.6 billion by the end of the 2021/2022 financial year and remain similar through the 2022/2023 financial year.
To address the challenge of revenue collection and hence, boost domestic revenue, several strategies are being developed, including broadening the tax base by considering taxation of the digital economy; introducing electronic billing/invoicing platforms to improve VAT tax compliance.
Furthermore, Government plans to introduce a business intelligence and data analytics function to gain a deeper understanding of the behavioural patterns of taxpayers to apply targeted interventions; strengthening the tax audit function and focusing on sector-specific audits based on risk management and introducing the track and trace system to combat smuggling of excisable goods.
In August, Minister of Presidential Affairs, Governance and Public Administration Kabo Morwaeng told Parliament that Botswana’s Public service is way too big, too expensive to maintain and not sustainable.
Minister Morwaeng revealed that the Government spends over P2.3 billion on public servant salaries monthly, which he referred to is not sustainable.
The total number of people employed in the public service stands at 143 050 with 125, 203 employed by the Central Government and 17 847 employed under local authorities and councils.
Parliament was told that in the month of July alone Government spent a total of P2.36 billion on public servants salaries, with P2.17 billion settling wages of those in the Central Government and P193 million local government employees.
“This wage bill is too big; we are spending much money on public servants salaries. It is not sustainable,” Minister Morwaeng said.
The Minister, who is in charge of the civil service as the political head reporting directly to the President, revealed that Government is currently restructuring the public service and government machinery to align it to President Masisi’s reset agenda to enhance efficient, professional service delivery.
“We are also encouraging our public servants to go for early retirement so that they can explore other avenues while still fit do; as Batswana, we should understand that there are many other ways we could serve our country. It’s not all about working for the Government,” he said.
For many years Bretton Woods institutions criticised the size of Botswana Public Service, advising the Government to shrink and give way for the private sector to grow.
The Government implemented sizeable public wage increases agreed in 2019. The IMF advised Botswana against rising wage bill in its latest assessment of the country’s fiscus last year
“Fiscal reforms are needed to lock-in consolidation efforts. They include civil service reform, acceleration of plans to rationalise the parastatal sector and improve its governance, and strengthening the fiscal framework to anchor fiscal policy better and increase credibility,” advised the IMF.
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BTC launches the 3rd Francistown Marathon 2024 and handover proceeds to the 2nd Francistown Marathon beneficiaries
Botswana Telecommunications Corporation Limited (BTC) has announced that its 3rd Francistown Marathon will be held on Saturday 20th April 2024 at Obed Itani Chilume Stadium in Francistown. The BTC Francistown Marathon is officially recognised by World Athletics and a Comrades Marathon Qualifier will offer race categories ranging from 42.2km, 21.1 km, 10km, 5km fun run, 5km peace run for children and has introduced a 5km and 10km categories for wheelchairs athletics.
BTC also used this opportunity to announce beneficiaries who received donations from proceeds made from the 2nd BTC Francistown Marathon that was held on April 23rd 203. BTC donated a play area, plastic chairs and wooden tables for pupils worth a total of thirty eight thousand, one hundred and three pula, fifty thebe each (P38, 103.50) to Monarch Primary School, Tatitown Primary School, Mahube Primary School and Gulubane Primary School. Ditladi and Boikhutso clinics each received a donation of benches, television sets and 10, 000 litre water tanks worth thirty seven thousan, eight hundred and ninety eight pula (P 37, 898.00). Additionally, BTC also donated seventy thousand pula (P70,000.00) to their marathon technical partner, Francistown Athletics Club (FAC) which will be used for daily operations as well as to purchase equipment for the club.
The BTC Francistown Marathon aligns seamlessly with BTC’s corporate social investment programme, administered through the BTC Foundation. This programme is a testament to BTC’s dedication to community development, focusing on key areas such as health promotion. The marathon, now in its third year, not only promotes a healthy lifestyle but also channels all proceeds to carefully chosen charities as part of BTC’s commitment to impactful and sustainable projects.
Speaking at the launch, the BTC Managing Director Mr Anthony Masunga stated that the marathon underscores BTC’s commitment to community upliftment and corporate social investment. He stated that “the annual event which has been in existence since 2016, having taken a break due to the covid and other logistical issues, is instrumental to the economic upliftment of the city of Francistown”. He congratulated all the beneficiaries for having been nominated to receive the donations, adding that “the donation of proceeds from the 2023 marathon aims to highlight BTC’s commitment and heart for Batswana and our continued impact in the different industries”.
He further stated that through this marathon, “we demonstrate our steadfast commitment to having a good influence on our communities, this event is a manifestation of our dedication to promoting education and a healthier, more active society”. He concluded by stating that “BTC looks forward to another successful marathon that will leave a lasting positive influence on the greater Francistown community and the country at large” he said.
Giving welcome remarks, the Councillor for Donga, Honourable Morulaganyi Mothowabarwa stated that “he is ecstatic that BTC is collaborating with the City of Francistown on yet another installment of the Marathon”. He continued to offer his support to BTC to enable this marathon to continue over the coming years, stating that the “CSI element is a welcome development that helps empower our communities”, he said.
The 3rd BTC Francistown Marathon is officially open for registrations and athletes may use the following platforms to register and pay; through Smega by dialling *173# and choosing opton 5, then choose Option 3 for the Francistown marathon, at any BTC store or by visiting the BTC website and clicking on the BTC Francistown Marathon and choosing the relevant options.
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Letsholo lauds President Masisi’s digitization in fight against corruption
Thapelo Letsholo, Member of Parliament for Kanye North, delivered a moving speech at the United Nations International Anti-Corruption Day commemoration, praising President Dr. Mokgweetsi Eric Keabetswe Masisi’s digitalization initiative in the fight against corruption. Letsholo highlighted the importance of embracing digitalization in governance as a crucial step in curbing corrupt practices.
According to Letsholo, the implementation of digital systems in government services can significantly reduce direct interactions between citizens and officials, which often serve as fertile grounds for corruption. By minimizing these opportunities for illicit activities, the efficiency and transparency of public services can be enhanced. Letsholo pointed to Estonia’s success in digital governance as an example, where public services have become more transparent, accessible, and efficient.
The MP commended President Masisi’s commitment to digitalization and E-Governance, emphasizing that it aligns with global anti-corruption standards. He called for full support and active participation from all sectors to ensure the success of this initiative.
Letsholo also stressed the importance of improving detection methods and refining whistleblower laws to effectively combat corruption. He highlighted the unseen and unspoken facets of corruption as its lifelines, emphasizing the need for robust detection mechanisms and a system that encourages and protects whistleblowers.
Addressing the societal role in fighting corruption, Letsholo focused on the crucial role of everyday citizens and civil servants who often witness corrupt practices firsthand. He acknowledged the existing reluctance to report corruption due to the perceived risks of repercussions. To change this narrative, Letsholo advocated for creating an environment where staying silent is deemed more detrimental than speaking out. He called for a cultural shift where the potential benefits of exposing corruption outweigh the risks, ensuring that whistleblowers are protected and feel secure in coming forward.
Letsholo called for collective responsibility and action in creating a system that not only detects and reports corruption but also supports those who stand against it. He expressed hope that under President Masisi’s digitalization initiatives, the future of governance in Botswana will be characterized by integrity, transparency, and accountability. Letsholo’s speech resonated with the sentiments of hope and determination that permeated the commemoration, emphasizing the need for unity in the fight against corruption.
In summary, Letsholo lauded President Masisi’s digitalization initiative in the fight against corruption, highlighting its potential to curb corrupt practices, enhance efficiency and transparency in public services, and align with global anti-corruption standards. He emphasized the importance of improving detection methods, refining whistleblower laws, and creating an environment where speaking out against corruption is encouraged and protected. Letsholo called for collective responsibility and action in creating a future characterized by integrity, transparency, and accountability in governance.
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FaR property assets value clock P1.47 billion
FaR Property Company (FPC) Limited, a property investment company listed on the Botswana Stock Exchange, has recently announced its exceptional financial results for the year 2023. The company’s property asset value has risen to P1.47 billion, up from P1.42 billion in the previous year.
FPC has a diverse portfolio of properties, including retail, commercial, industrial, and residential properties in Botswana, South Africa, and Zambia. The company owns a total of 186 properties, generating rental revenues from various sectors. In 2023, the company recorded rental revenues of P11 million from residential properties, P62 million from industrial properties, and P89 million from commercial properties. Overall, the company’s total revenues increased by 9% to P153 million, while profit before tax increased by 22% to P136 million, and operating profit increased by 11% to P139 million.
One notable achievement for FPC is the low vacancy rate across its properties, which stands at only 6%. This is particularly impressive considering the challenging trading environment. The company attributes this success to effective lease management and the leasing of previously vacant properties in South Africa. FPC’s management expressed satisfaction with the results, highlighting the resilience of the company in the face of ongoing macroeconomic challenges.
The increase in profit before tax can be attributed to both an increase in income and effective control of operating expenses. FPC managed to achieve these results with fewer employees, demonstrating the company’s efficiency. The headline earnings per linked unit also saw an improvement, reaching 26.92 thebe, higher than the previous year.
Looking ahead, FPC remains confident in its competitiveness and growth prospects. The company possesses a substantial land bank, which it plans to develop strategically as opportunities arise. FPC aims for managed growth, focusing on consumer-driven developments and ensuring the presence of supportive tenants. By maintaining this approach, the company believes it can sustainably grow its property portfolio and remain competitive in the market.
In terms of the macroeconomic environment, FPC noted that inflation rates are decreasing towards the 3% to 6% range approved by the Bank of Botswana. This is positive news for the company, as it hopes for further decreases in interest rates. However, the fluctuating fuel prices, influenced by global events such as the war in Ukraine and oil output reductions by Russia and other Middle Eastern countries, continue to impact businesses, including some of FPC’s tenants.
FPC’s property portfolio includes notable assets such as a shopping mall in Francistown with Choppies Hyper as the anchor tenant, Borogo Mall located on the A33 main road near the Kazungula ferry crossing, and various industrial and commercial properties in Gaborone leased to Choppies, Senn Foods, and Clover Botswana. The company also owns a shopping mall in Mafikeng and Rustenburg in South Africa.
The majority of FPC’s properties, 85%, are located in Botswana, followed by 12% in South Africa and 3% in Zambia. With its strong financial performance, competitive position, and strategic land bank, FPC is well-positioned for continued growth and success in the property market.