Gov’t’s rising wage bill
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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Nigerians, Zimbabweans apply for Chema Chema Fund
Fronting activities, where locals are used as a front for foreign-owned businesses, have been a long-standing issue in Botswana. These activities not only undermine the government’s efforts to promote local businesses but also deprive Batswana of opportunities for economic empowerment, officials say. The Ministry of Trade and Industry has warned of heavy penalties for those involved in fronting activities especially in relation to the latest popular government initiative dubbed Chema Chema.
According to the Ministry, the Industrial Development Act of 2019 clearly outlines the consequences of engaging in fronting activities. The fines of up to P50,000 for first-time offenders and P20,000 plus a two-year jail term for repeat offenders send a strong message that the government is serious about cracking down on this illegal practice. These penalties are meant to deter individuals from participating in fronting activities and to protect the integrity of local industries.
“It is disheartening to hear reports of collaboration between foreigners and locals to exploit government initiatives such as the Chema Chema Fund. This fund, administered by CEDA and LEA, is meant to support informal traders and low-income earners in Botswana. However, when fronting activities come into play, the intended beneficiaries are sidelined, and the funds are misused for personal gain.” It has been discovered that foreign nationals predominantly of Zimbabwean and Nigerian origin use unsuspecting Batswana to attempt to access the Chema Chema Fund. It is understood that they approach these Batswana under the guise of drafting business plans for them or simply coming up with ‘bankable business ideas that qualify for Chema Chema.’
Observers say the Chema Chema Fund has the potential to uplift the lives of many Batswana who are struggling to make ends meet. They argue that it is crucial that these funds are used for their intended purpose and not siphoned off through illegal activities such as fronting. The Ministry says the warning it issued serves as a reminder to all stakeholders involved in the administration of these funds to ensure transparency and accountability in their disbursement.
One local commentator said it is important to highlight the impact of fronting activities on the local economy and the livelihoods of Batswana. He said by using locals as a front for foreign-owned businesses, opportunities for local entrepreneurs are stifled, and the economic empowerment of Batswana is hindered. The Ministry’s warning of heavy penalties is a call to action for all stakeholders to work together to eliminate fronting activities and promote a level playing field for local businesses.
Meanwhile, the Ministry of Trade and Industry’s warning of heavy penalties for fronting activities is a necessary step to protect the integrity of local industries and promote economic empowerment for Batswana. “It is imperative that all stakeholders comply with regulations and work towards a transparent and accountable business environment. By upholding the law and cracking down on illegal activities, we can ensure a fair and prosperous future for all Batswana.”
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Merck Foundation and African First Ladies mark World Health Day 2024
Merck Foundation, the philanthropic arm of Merck KGaA Germany marks “World Health Day” 2024 together with Africa’s First Ladies who are also Ambassadors of MerckFoundation “More Than a Mother” Campaign through their Scholarship and Capacity Building Program. Senator, Dr. Rasha Kelej, CEO of Merck Foundation emphasized, “At Merck Foundation, we mark World Health Day every single day of the year over the past 12 years, by building healthcare capacity and transforming patient care across Africa, Asia and beyond.
I am proud to share that Merck Foundation has provided over 1740 scholarships to aspiring young doctors from 52 countries, in 44 critical and underserved medical specialties such as Oncology, Diabetes, Preventative Cardiovascular Medicine, Endocrinology, Sexual and Reproductive Medicine, Acute Medicine, Respiratory Medicine, Embryology & Fertility specialty, Gastroenterology, Dermatology, Psychiatry, Emergency and Resuscitation Medicine, Critical Care, Pediatric Emergency Medicine, Neonatal Medicine, Advanced Surgical Practice, Pain Management, General Surgery, Clinical Microbiology and infectious diseases, Internal Medicine, Trauma & Orthopedics, Neurosurgery, Neurology, Cardiology, Stroke Medicine, Care of the Older Person, Family Medicine, Pediatrics and Child Health, Obesity & Weight Management, Women’s Health, Biotechnology in ART and many more”.
As per the available data, Africa has only 34.6% of the required doctors, nurses, and midwives. It is projected that by 2030, Africa would need additional 6.1 million doctors, nurses, and midwives*. “For Example, before the start of the Merck Foundation programs in 2012; there was not a single Oncologist, Fertility or Reproductive care specialists, Diabetologist, Respiratory or ICU specialist in many countries such as The Gambia, Liberia, Sierra Leone, Central African Republic, Guinea, Burundi, Niger, Chad, Ethiopia, Namibia among others. We are certainly creating historic legacy in Africa, and also beyond. Together with our partners like Africa’s First Ladies, Ministries of Health, Gender, Education and Communication, we are impacting the lives of people in the most disadvantaged communities in Africa and beyond.”, added Senator Dr. Kelej. Merck Foundation works closely with their Ambassadors, the African First Ladies and local partners such as; Ministries of Health, Education, Information & Communication, Gender, Academia, Research Institutions, Media and Art in building healthcare capacity and addressing health, social & economic challenges in developing countries and under-served communities. “I strongly believe that training healthcare providers and building professional healthcare capacity is the right strategy to improve access to equitable and quality at health care in Africa.
Therefore, I am happy to announce the Call for Applications for 2024 Scholarships for young doctors with special focus on female doctors for our online one-year diploma and two year master degree in 44 critical and underserved medical specialties, which includes both Online Diploma programs and On-Site Fellowship and clinical training programs. The applications are invited through the Office of our Ambassadors and long-term partners, The First Ladies of Africa and Ministry of Health of each country.” shared Dr . Kelej. “Our aim is to improve the overall health and wellbeing of people by building healthcare capacity across Africa, Asia and other developing countries. We are strongly committed to transforming patientcare landscape through our scholarships program”, concluded Senator Kelej.
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Interpol fugitive escapes from Botswana
John Isaak Ndovi, a Tanzanian national embroiled in controversy and pursued under a red notice by the International Criminal Police Organization (Interpol), has mysteriously vanished, bypassing a scheduled bail hearing at the Extension 2 Magistrate Court in Gaborone. Previously apprehended by Botswana law enforcement at the Tlokweng border post several months earlier, his escape has ignited serious concerns.
Accused of pilfering assets worth in excess of P1 million, an amount translating to roughly 30,000 Omani Riyals, Ndovi has become a figure of paramount interest, especially to the authorities in the Sultanate of Oman, nestled in the far reaches of Asia.
The unsettling news of his disappearance surfaced following his failure to present himself at the Extension 2 Magistrate Court the preceding week. Speculation abounds that Ndovi may have sought refuge in South Africa in a bid to elude capture, prompting a widespread mobilization of law enforcement agencies to ascertain his current location.
In an official communiqué, Detective Senior Assistant Police Commissioner Selebatso Mokgosi of Interpol Gaborone disclosed Ndovi’s apprehension last September at the Tlokweng border, a capture made possible through the vigilant issuance of the Interpol red notice.
At 36, Ndovi is implicated in a case of alleged home invasion in Oman. Despite the non-existence of an extradition treaty between Botswana and Oman, Nomsa Moatswi, the Director of the Directorate of Public Prosecution (DPP), emphasized that the lack of formal extradition agreements does not hinder her office’s ability to entertain extradition requests. She highlighted the adoption of international cooperation norms, advocating for collaboration through the lenses of international comity and reciprocity.
Moatswi disclosed the intensified effort by law enforcement to locate Ndovi following his no-show in court, and pointed to Botswana’s track record of extraditing two international fugitives from France and Zimbabwe in the previous year as evidence of the country’s relentless pursuit of legal integrity.
When probed about the potential implications of Ndovi’s case on Botswana’s forthcoming evaluation by the Financial Action Task Force (FATF), Moatswi reserved her speculations. She acknowledged the criticality of steering clear of blacklisting, suggesting that this singular case is unlikely to feature prominently in the FATF’s assessment criteria.