Will Peggy Serame deliver the magic?
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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.
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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 BTCâs commitment to community upliftment and corporate social investment. He stated that âthe 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 Francistownâ. He congratulated all the beneficiaries for having been nominated to receive the donations, adding that âthe donation of proceeds from the 2023 marathon aims to highlight BTCâs commitment and heart for Batswana and our continued impact in the different industriesâ.
He further stated that through this marathon, âwe 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 societyâ. Â He concluded by stating that âBTC looks forward to another successful marathon that will leave a lasting positive influence on the greater Francistown community and the country at largeâ he said.
Giving welcome remarks, the Councillor for Donga, Honourable Morulaganyi Mothowabarwa stated that âhe is ecstatic that BTC is collaborating with the City of Francistown on yet another installment of the Marathonâ. He continued to offer his support to BTC to enable this marathon to continue over the coming years, stating that the âCSI element is a welcome development that helps empower our communitiesâ, 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 Masisiâs 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.