On Monday 7th February 2022 Minister of Finance & Economic Development will deliver the 2022/23 budget speech. It will be the first time ever in history of Botswana’s 55 years of independence a budget Speech delivered by a female minister. Peggy Serame, an Economist by training, in an unprecedented move, rose to the helm of the country’s treasury, following a cabinet reshuffle by President Dr Mokgweetsi Eric Masisi in April 2021.
The President removed the then Minister Dr Thapelo Matsheka in an unpopular move, the shift was however hailed in some quarters as a bold woman empowerment decision by His Excellency.
THE BUDGET DEFICITS
Minister Serame will deliver a deficit underpinned budget for the year 2022/23, the trend for the past three (3) financial years suggests. In the financial year 2019/20 the preliminary budget outturn for the year shows that total revenue and grants amounted to P55.81 billion, while total expenditure and net lending has increased to P65.39 billion. This resulted in a budget deficit of P9.6 billion or 4.9 percent of GDP, compared to the original budget deficit of P7.3 billion.
The higher deficit was mainly due to a large fall in revenues combined with a smaller reduction in expenditure, as capital spending was reprioritised to recurrent spending, following the 2019/2020 public service salary adjustments. The preliminary outturn for 2020/2021 indicates that Total Revenue and Grants stood at P51.25 billion, which is P2.9 billion higher than the revised budget of P48.33 billion presented in the February 2021 Budget Speech.
The significant difference between preliminary budget outturn and the revised budget is largely driven by mineral revenue, which accounted for P9.56 billion, compared to the revised budget figure of P6.56 billion.
Customs and excise revenue amounted to P16.46 billion, slightly lower than the revised budget figure of P16.50 billion. Contrary to expectations, given the outbreak of COVID-19 and measures taken by Government to defer tax payments by domestic companies during the last half of 2020/2021 financial year, Non-Mineral income tax amounted to P12.49 billion, higher than the revised figure of P11.84 billion by 5.5 percent.
On the expenditure side, the preliminary budget outturn indicates that total expenditure and net lending stood at P65.80 billion, which is P3.56 billion less than the revised budget figure of P69.36 billion. The lower level of spending during the Financial Year 2020/2021 was driven mainly by the development budget, which amounted to P10.22 billion, P2.01 billion less than the revised budget figure of P12.23 billion, representing underspending of 16 percent.
Underspending of the development budget is in part a reflection of slowed construction activities during lockdowns, which impacted heavily on construction and other development projects. Budget deficit for the year stood at around P14 billion. For 2021/22 financial year total revenues and grants are anticipated to reach P63.06 billion in 2021/2022, an increase of 23.2 percent from the 2020/2021 preliminary budget figure of P51.25 billion.
The projected increase is largely attributed to the anticipated recovery in mineral revenue, as a result of increase in sales of rough diamonds. Total Expenditure and Net Lending is forecast to reach P70.98 billion, an increase of P5.18 billion from the 2020/2021 figure of P65.80 billion. The increase in total expenditure during the 2021/2022 financial year is largely attributed to the increase in Development expenditure by P2.46 billion to P12.67 billion.
Over the same period, the recurrent expenditure is expected to reach P58.41 billion, compared to P55.59 billion recorded in the previous financial year. Specifically, personal emoluments for 2021/2022 is forecast to reach P28.77 billion, a slight increase by P70.45 million, when compared to the 2020/2021 figure of P28.70 billion. Budget deficit for the year 2021/2022 the is expected to clock past P7 billion.
For the coming financial year 2022/23 Ministry of Finance and Economic Development had projected in its long term forecast a budget deficit of around P4 billion, however this was before the COVID pandemic which has since disrupted government revenue stream and slowed down some economic activities. The medium-term fiscal projections released along with the 2021 Budget Speech in February 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, given the fact that COVID-19 is persisting for longer than anticipated, and continues to weigh heavily on both domestic and global economic performance, Total Revenue and Grants for 2022/2023 were revised downwards by P3.19 billion and were estimated to reach P63.06 billion in September last year.
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 was projected to reach P24.08 billion, a downward revision of P1.66 billion from the initial estimate of P25.74 billion. For 2022/23, total expenditure and net Lending is expected to reach P71.55 billion, compared to the initial estimate of P71.07 billion.
Recurrent expenditure is estimated to reach P57.43 billion, while the development budget is estimated at P14.22 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 (3.7percent 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 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 Bank of Botswana, whether through borrowing or returning to budget surpluses.
DOMESTIC RESOURCE MOBILIZATION
To finance the budget deficits government had embarked on massive domestic resource mobilization, something expected to continue in the next financial years Historically, Botswana’s national budget has been primarily funded by financial resources generated mostly from outside of the countries, including mineral and SACU revenues.
At the Budget Pitso late last year Minister Serame said going forward, the focus will be on domestic resource mobilization as a key source of Government revenue. “This will mean taking measures to broaden the tax base, ensuring efficiency in our tax collection mechanisms and seeking other avenues to raise revenues, such as in fees and charges,” she said.
Furthermore it was highlighted that efficiency of Government spending will be prioritised, especially by speeding up the necessary public sector reforms and improving the roll-out of public e-services. “This is critical, as we do not have sufficient financial buffers in the Government Investment Account, which declined during 2020,” Minister Serame explained. She added that additional resources, if required, may need to be raised through domestic and foreign borrowing, while ensuring that Botswana remain within the statutory debt limit of 40% of GDP.
Domestic inflation has been on the rise for the last three months, surpassing the Bank of Botswana range of 3-6 percent. The economy is faced with low growth rates, increasing inflation rates and high unemployment rate, especially among the youth. In an effort to address the challenge of revenue collection and hence, boost domestic revenue, several strategies are being developed, including broadening of 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 of 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.
African Scientists and Experts Call for the adoption of a Harm Reduction in approach in Public Health Strategies and Tobacco Control. Media have a critical role to play in accelerating Harm Reduction efforts by informing and sensitizing cigarette smokers on the availability and benefits of alternative, potentially lower risk products to cigarretes. Traditional cessation and smoking prevention norms are not the only ways that smokers who cannot or donâ€™tâ€™ want to quit can make healthier choices that cause less harm to themselves and those around them.
This was said during the 2nd Harm Reduction Exchange conference for African journalists held in Nairobi, Kenya on the 1st of December 2022. Speaking at the Harm Reduction Exchange Conference, Integra Africa Principal Dr. Tendai Mhizha emphasized the role that journalists and media houses should play in handling misinformation and disinformation in tobacco harm reduction discourse that is actually perpetuating the death and disease caused by people continuing to smoke combustible cigarettes. â€śThere has been a lot of disinformation surrounding the topic of nicotine and the alleged negative effects that e-cigarettes have on public health.
This has led to policies that disfavour risk reduces products and narratives that completely deny their benefits. The media have the difficult responsibility to curb the scourge of disinformation and misinformation on harm reduction just like on other socio-political stances that are prescriptive and do not uphold consumersâ€™ right to healthier lifestyle choices,â€ť Dr Mhizha said.
The Harm Reduction Exchange cast a spotlight on alternative ways to reduce harm among tobacco smokers. Held under the theme Harm Reduction: Making a difference in Africa, the conference focused on the progress being made through harm reduction strategies in all fields related to public health such as drug and alcohol abuse, excessive sugar consumption, skin lightening and other addictive and behavioral practices. A wide array of harm reduction strategies and initiatives that are deployed towards reducing unnecessary deaths through non-communicable diseases were presented and discussed.
It applies to areas where there is a need to reduce the harm associated with a practice or consumption of a substance that is overused in society leading to increased morbidity and mortality. â€śInnovative Harm Reduction initiatives will help to keep more Africans alive. Tobacco Harm Reduction initiatives, including the use of popular e-cigarettes, nicotine patches and chewing gums, have continued to generate a lot of misunderstanding in both the public health community and in the media. However, there is evidence that the use of potentially less harmful alternatives than cigarettes for those who are not willing or cannot give up smoking with currently approved methods may be a solution, not necessarily the best for everyone but by far better than continuous smoking.
Tobacco Harm Reduction was introduced to mitigate the damage caused by cigarette smokingâ€”the most dangerous form of tobacco use, and the leading cause of preventable diseases, including cardiovascular disease, lung cancer, and chronic obstructive pulmonary disease. â€śNicotine has an addictive potential but plays a minor role in smoking-related morbidity and mortality. Across the world, there is growing interest among experts in novel approaches towards tobacco control and there is an ongoing discussion that reducing the negative effects of smoking can be also achieved by tobacco harm reduction,â€ť Dr. Kgosi Letlape, an ophthalmologist and President of Africa Medical Association and the president of the Association of Medical Councils of Africa, said.
Tobacco cessation is a key factor in the prevention of cardiovascular diseases and cancer. Abstinence from tobacco smoking is one of the primary goals for health promotion and management globally but it is unachievable in a huge amount of cases. This task remains unaccomplished despite extensive public campaigns on the health dangers of tobacco smoking. Thus, the development of novel strategies to reduce smoking is imperative. Moreover, the use of innovations in smoking products has been currently adopted by several smokers to reduce the health risks of smoking.
â€śThe Harm Reduction approach prevents drug-related deaths and overdose fatalities and is the only way out for addicts. In the same way these alternative technologies can reduce tobacco harm and accelerate the journey to a smoke-free world as they reduce exposure to toxicants,â€ť Bernice Apondi, A Policy Manager at Voices of Community Action and Leadership Kenya (VOCAL-Kenya), said.
During the Harm Reduction Exchange, journalists drawn from Southern, West and East African countries, including: Nigeria, Botswana, Ethiopia, Kenya, Lesotho, Malawi, Mozambique, Namibia, Rwanda, Eswatini, Tanzania, Uganda, South Africa, Zambia, and Zimbabwe debated and set forth several resolutions in regards to the present and future as well as the challenges and progress made in Harm Reduction,and science-led regulation.
The Harm Reduction Exchange brought together high-level policy makers, physicians, scientists and health policy experts with media stakeholders from Africa in a lively mix of speeches, presentations, and panel discussions. The key note speakers included Prof Abdoul Aziz Kasse, Ms Bernice Opondi, Joseph Magero, Jonathan Fell, Chimwemwe Ngoma, Clive Bates, Dr. Kgosi Letlape, Dr. Vivian Manyeki and Dr. Tendai Mhizha.
Over 2,000 civil servants in the public sector have been interdicted for a variety of reasons, the majority of which are criminal in nature.
According to reports, some officers have been under interdiction for more than two years because such matters are still being investigated. Information reachingÂ WeekendPostÂ shows that local government, particularly councils, has the highest number of suspended officers.
In its annual report, the Directorate on Corruption and Economic Crime (DCEC) revealed that councils lead in corrupt activities throughout the country, and dozens of council employees are being investigated for alleged corrupt activities. It is also reported that disciplined forces, including the Botswana Defence Force (BDF), police, and prisons, and the Directorate of Intelligence and Security (DIS) have suspended a significant number of officers.
The Ministry of Education and Skills Development has also recorded a good number of teachers who have implicated in love relationships with students, while some are accused of impregnating students both in primary and secondary school. Regional education officers have been tasked to investigate such matters and are believed to be far from completion as some students are dragging their feet in assisting the investigations to be completed.
This year, Mmadinare Senior Secondary reportedly had the highest number of pregnancies, especially among form five students who were later forcibly expelled from school. Responding to this publicationâ€™s queries, Permanent Secretary to the Office of the President Emma Peloetletse said, â€śas you might be aware, I am currently addressing public servants across the length and breadth of our beautiful republic. Due to your detailed enquiry, I am not able to respond within your schedule,â€ť she said.
She said some of the issues raised need verification of facts, some are still under investigation while some are still before the courts of law.
Meanwhile, it is close to six months since the Police Commissioner Keabetwe Makgophe, Director General of the Directorate on Corruption and Economic Crime (DCEC) Tymon Katlholo and the Deputy Director of the DIS Tefo Kgothane were suspended from their official duties on various charges.
Efforts to solicit comment from trade unions were futile at the time of going to press.
Some suspended officers who opted for anonymity claimed that they have close to two years while on suspension. One stated that the investigations that led him to be suspended have not been completed.
â€śIt is heartbreaking that at this time the investigations have not been completed,â€ť he toldÂ WeekendPost, adding that â€śwhen a person is suspended, they get their salary fully without fail until the matter is resolvedâ€ť.
Makgophe, Katlholo and Kgothane are the three most high-ranking government officials that are under interdiction.
Botswana Democratic Party (BDP) and some senior government officials are abuzz with reports that President Mokgweetsi Masisi has requested his Vice President, Slumber Tsogwane not to contest the next general elections in 2024.