Botswana economy at crossroads – World Bank Group
Botswana’s rapid growth during the first decades after independence that lifted most Batswana out of poverty still left the country with high inequality and subpar human capital indicators compared with peers. This has been contained in the Botswana Country Private Sector Diagnostic (CPSD) sponsored by World Bank Group released in June 2022.
The diagnostic says in many ways Botswana is a development paradox. Botswana stands out among countries in Africa for its successful development policy, economic performance, and long track record of macroeconomic stability. Successive governments used the country’s considerable diamond and mineral wealth to drive significant investments in infrastructure, education, health, and social protection, which resulted in its graduation to Upper-Middle-Income Country (UMIC) in 2004.
“However, the rapid growth during the first decades after independence that lifted most Botswana out of poverty still left the country with high inequality and subpar human capital indicators compared with peers,” says the study titled A Diamond in the Rough: Toward a New Strategy for Diversification and Private Sector Growth. It says diamonds have been at the center of Botswana’s growth miracle for decades – but the urgency to diversify is stronger than ever.
“Although diamond demand has been recovering during 2021 and 2022, the prospects for the industry remain volatile, underscoring the need to move away from diamond dependency and putting a greater urgency on the diversification reform agenda.” It noted that the limitations of Botswana’s public investment and diamond-reliant growth model were made apparent during the COVID-19 crisis.
Despite strong fiscal buffers, the crisis brought to the front both the high risk of continuing to rely on public investment to drive growth in the context of future fiscal vulnerabilities as well as the vulnerability of growth to declining external balances, mainly owing to lack of export diversification. The pandemic amplified those challenges and caused a sharp GDP contraction among the strongest in Sub-Saharan Africa, a widening in the current account deficit, and the biggest jump in the unemployment rate over the past 35 years.
In addition, it says Botswana’s high vulnerability to climate change, which affects all major sectors of the economy, underscores the need to strengthen Botswana’s response to climate factors as a basis for renewed, sustainable growth. Botswana ranked 94th out of 181 countries in the 2020 Notre Dame Global Adaptation Initiative Index, which measures a country’s political, geographic, and social factors to assess vulnerability to climate change, as well as its readiness to improve resiliency.
Agriculture, which is mostly rainfed, is especially vulnerable to drought exposure. The higher frequency and intensity of extreme droughts and floods threaten crops and livestock and consequently food security, employment (one-fifth of which is concentrated in the agricultural sector), and poverty rates.
The water sector, which is already struggling to meet demand, is expected to see a decline in water quality and availability. Botswana’s successful lowvolume, high-cost tourism model depends on water-based wildlife endowments, especially in the Okavango Delta, which is projected to have a decrease in stream flows.
At the same time, the energy sector will be transformed by climate-change mitigation requirements and related policies that call for a more sustainable and efficient energy mix while at the same time adapting to the impacts of emerging changes in climate and weather.
“The current context provides Botswana with an opportunity for a paradigm shift – to redirect the economy to a more resilient, green, and diversified growth model. The gradual sunset of diamonds, volatile global conditions due to the COVID-19 pandemic, and the impending effects of climate change have placed the Botswana economy at a crossroads.” This CPSD argues for a new strategy that puts the foundations for a greener and more sustainable growth model at its core, making diversification an outcome rather than a starting point.
This strategy would focus on leveraging and protecting Botswana’s natural resource endowments and driving new investment in high-potential sectors such as tourism to lay the groundwork for green competitiveness and growth. Meeting those goals would start with policies that tackle underlying and cross-cutting constraints, especially those that foster competition in sectors dominated by State Owned Enterprises (SOEs) and harness private sector participation to foster transitions to sustainability, efficiency, and affordability of key enabling sectors such as energy and water.
“The government should reduce the state’s presence and influence in sectors that are commercial, creating markets with competitive neutrality. This will create markets for entrepreneurs and Small and Medium Enterprises (SMEs) to address, private firms to grow, and foreign investors to participate in. These actions would be buttressed with policies to facilitate trade in environmental goods and services and reduce gaps in infrastructure, skills, and access to finance that hinder employment and productivity growth in firms.”
The government’s Economic Recovery and Transformation Plan, valued at approximately 7.8 percent of GDP, supports this transition with its climate agenda aimed at reducing Botswana’s dependence on carbon-intensive sectors, enhancing electricity generation capacity, and strengthening climate resilience.
The dominant role that the Government of Botswana still plays in large parts of the economy, particularly through its footprint as a shareholder in companies in the corporate sector, is a critical constraint that inhibits the entry and success of private sector participants, it is said. Gaps in infrastructure, access to finance, and skills are additional key constraints to employment and productivity growth. Despite relatively high public investment spending, Botswana’s quality of infrastructure has fallen, significantly lagging structural peers.
Trade barriers are another key cross-cutting constraint for the private sector, and a greener path for the economy could be unlocked by facilitating improved trade in environmental goods and services (EGS), the study says.
It says Botswana has relatively high costs for EGS despite its high potential for using EGS such as solar and other environmental technologies in energy production and in other industries such as tourism. Tariff and nontariff trade barriers undermine imports of EGS as well as preferential access agreements, which raises the costs of imported inputs for Botswana exports.
“For example, Sothern African Development Community rules of origin are relatively complicated to administer and to reach because they often follow a line-by-line approach with rules devised for a specific product or sector. Similarly, high tariffs on imported goods and import licenses raise the cost of manufacturing products dependent on imported inputs.
Beyond EGS, trade barriers affect all exporting sectors. For example, a 2016 United Nations Conference on Trade and Development (UNCTAD) report documents that Botswana systematically underperformed in all service exports in comparison with the rest of the world despite its high potential for trade in services.”
Restrictions placed on foreign investors by Botswana’s National Trade Policy, such as limits on foreign-owned capital, hinder the commercialization of some services. To improve trade in EGS and other sectors, the government should strengthen standards and certifications systems to raise the competitiveness of Botswana exporters.
It noted that Botswana faces water supply and sanitation issues. Botswana is already a water-stressed country and projected to become even more highly water stressed by 2040, with water supply shortages affecting all key sectors of the Botswana economy including mining, agriculture, manufacturing, and tourism. It suffers from chronic droughts that are becoming more severe due to climate change.
Local water supply is not enough to meet demand, and part of the water supply is imported from South Africa. Climate change, infrastructure deficiencies, and contamination of water sources threaten water supply reliability. Although the state-owned water and sanitation company, Water Utilities Corporation (WUC), performs well relative to many African utilities, it is facing serious headwinds to maintain and increase water supply.
WUC’s deteriorating infrastructure, inadequate collection rates, shortfall of revenue necessary to cover operating costs, challenges to access finance for water supply expansion, and low productivity of staff all hamper investment in water resilience. Because WUC’s revenue does not cover its operating costs, traditional lenders are hesitant to provide WUC with investment capital.
Introducing private sector participation in the water sector could help address weaknesses in the sector. This report identifies three main opportunities for private sector participation: (a) performance-based contracts for nonrevenue water reduction, collections, and energy efficiency; (b) concession for wastewater treatment and water recycling services; and (c) water savings performance contracts for large users.
Several actions can advance these opportunities for private sector participation. The WUC should be assisted to develop performance-based contracts to reduce nonrevenue water levels, improve energy efficiency, and improve customer collections. Public-Private Partnerships for wastewater treatment and recycling services should be implemented.
Large water users should be encouraged to implement water savings performance contracts. A legally or contractually bound regulatory mechanism should be created to define full-cost recovery tariff mechanisms for WUC and to mandate that WUC’s tariffs be set at that level.
“The government, working with WUC, should consider legally establishing a subsidy system to ensure affordability of low-income households while also providing a reliable source of revenue (that is, cross-subsidies or direct subsidies by the government).”
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DPP drops Kably threat to kill case
The Botswana Democratic Party (BDP) Chief Whip and Member of Parliament for Letlhakeng/Lephephe Liakat Kably has welcomed the Directorate of Public Prosecution (DPP)â€™s decision not to prosecute BDP councillor, Meshack Tshenyego who allegedly threatened to kill him. However, the legislator has warned that should anything happen to his life, the state and the courts will have to account.
In an interview with this publication, Kablay said he has heard that the DPP has declined to prosecute Tshenyego in a case in which he threatened to kill him adding that the reasons he received are that there was not enough evidence to prosecute. â€śI am fine and at peace with the decision not to prosecute over evidential deficits but I must warn that should anything happen to my life both the DPP and the Magistrate will have to account,â€ť Kablay said.
Connectedly, Kably said he has made peace with Tshenyego, â€śwe have made peace and he even called me where upon we agreed to work for the party and bury the hatchetâ€ť.
The DPP reportedly entered into a Nolle Prosequi in the matter, meaning that no action would be taken against the former Letlhakeng Sub-district council chairperson and currently councillor for Matshwabisi.
According to the charge sheet before the Court, councilor Tshenyego on July 8th, 2022 allegedly threatened MP Kably by indirectly uttering the following words to nominatedcouncilor Anderson Molebogi Mathibe, â€śMosadi wa ga Liakat le ban aba gagwe ba tsile go lela, Mosadi wame le banake le bone ba tsile go lela. E tla re re mo meeting, ka re tsena meeting mmogo, ke tla mo tlolela a bo ke mmolaya.â€ť
Loosely translated this means, Liakatâ€™s wife and children are going to shed tears and my wife and kids will shed tears too. I will jump on him and kill him during a meeting.
Mathibe is said to have recorded the meeting and forwarded it to Kably who reported the matter to the police.
In a notice to the Magistrate Court to have the case against Tshenyego, acting director of Public Prosecutions, Wesson ManchweÂ cited the nolle prosequi by the director of public prosecution in terms of section 51 A (30) of the Constitution and section 10 of the criminal procedure and evidence act (CAP 08:02) laws of Botswana as reasons for dropping the charges.
A nolle prosequi is a formal notice of abandonment by a plaintiff or prosecutor of all or part of a suit or action.
â€śIn pursuance of my powers under section 51 A (300 of the Constitution and section 10 of the criminal procedure and evidence act (CAP 08:02) laws of Botswana, I do hereby stop and discontinue criminal proceedings against the accused Meshack Tshenyego in the Kweneng Administrative District, CR.No.1077/07/2022 being the case of the State vs Tshenyego,â€ť said Manchwe. The acting director had drafted the notice dropping the charges on 13th day of March 2023.
The case then resumed before the Molepolole Magistrate Solomon Setshedi on the 14th of March 2023. The Magistrate issued an order directing â€śthat matters be withdrawn with prejudice to the State, accused is acquitted and discharged.â€ť
DPP seizes prosecution duties from Police
Directorate of Public Prosecution (DPP) has finally taken over prosecution from the Botswana Police Service (BPS). The police have been prosecuting for years, but the takeover means that they will now only focus on investigations and then hand over to the DPP for prosecution.
Talks of complete takeover began as far back as 2008, but for years it seemed implementation was sluggish. However, the Minister of Justice, Machana Shamukuni, revealed that the complete takeover is expected to be completed soon.
During a presentation to the Committee of Supply by Shamukuni this week, it was revealed that the project has been implemented in 22 police stations nationwide, including Maun, Selebi-Phikwe, Palapye, Francistown, and Kasane. He further stated that the project has been allocated P3,000,000 for the 2023/2024 financial year to facilitate the opening of more satellite offices for the DPP.
Shamukuni said the Lobatse station is scheduled for a complete takeover by the end of May 2023, while the Kasane DPP satellite office has been established and became operational as of February 1, 2023.
“As reported previously, preparations are at an advanced stage to open a satellite office in Tsabong to curtail expenses, as well as frequent long-distance trips to these areas, as it is currently serviced by the Lobatse DPP office,” Shamukuni said.
Shamukuni said that the takeover strategy is to enable a seamless and gradual takeover of prosecution from the BPS without overwhelming and overstretching the thin resources at its disposal.
According to Shamukuni, the implementation of the prosecution takeover project has increased the workload of the 211 prosecutors in the DPP establishment.
Furthermore, the Justice Minister said DPP statistics show that the DPP has a total of 11,903 cases and dockets as of January 2023. He indicated that this is a significant increase in the number of cases being handled by the DPP, considering that in November 2021, the DPP had just over 8,471 files.
â€śOut of the total case load, 8 382 are cases pending before various courts while 3521 are dockets received from law enforcement agencies of which 1 325 are awaiting service of summons while the rest are being assessed for suitability of prosecution or otherwiseâ€ť said Shamukuni.
He further stated that The DPP has consistently maintained an 80% success rate in matters completed at court.
â€śAs at the end of January 2023, the success rate stood at 82.3% against a target of 90% whilst the average performance in respect of turnaround time for conclusion of cases at court stood at 17.5 months against a target of 18 months,â€ť he said.
BACKLOG OF CASES â€“ LAND TRIBUNAL
Meanwhile, Minister Shamukuni has revealed that Gaborone land Tribunal is experiencing a backlog of cases. Before parliament this week, Shamukuni revealed that a total 230 appeals were completed for the period of April 2022- December 2022 and only 76.5% of them were completed within set time frame.
The minister said that the Gaborone division has experiencing a backlog of cases due to manpower constraints and he further indicated that presiding officers from other divisions have been brought in to expedite case disposal.
He further indicated that the land tribunal is a specialized court that has been empowered to resolve appeals arising from land boards. â€śIt has been mandated to determine appeals from the decisions of Physical planning committees of Districts Councilsâ€ť said Shamukuni.
Land Tribunal relocated to the Ministry of Justice from Ministry of Land and Water Affairs in November 2022.
â€śAn amount of P37, 842,670 is requested to cover salaries, allowance and other operational expenses for the Department of the land Tribunal,â€ť alluded Shamukuni
BCP, AP stalemate in 7 constituencies
When the Botswana Congress Party (BCP), Alliance for Progressives, Botswana Labour Party (BLP), and conveners reconvene next week, the controversial issue of allocation of the seven constituencies will be the main topic of discussion, WeekendPost can reveal.
Not only that, but the additional four constituencies will also dominate the talks. The idea is to finally close the “constituency allocation phase,” which has proven to be the most difficult part of the ongoing negotiations.
Earlier this year, the two parties announced that the marathon talks would be concluded by February. Even at a media briefing last month, BCP Secretary General Goretetse Kekgonegile and Publicity Secretary Dr. Mpho Pheko were optimistic that the negotiations would be concluded before the end of February.
However, it is now mid-March and the talks have yet to be concluded. What could be the reasons for the delay? This is a question that both Kekgonegile and Pheko have not responded to, as they have ignored the reporters’ inquiries. However, a senior figure within the party has confided to this publication as to what is delaying the highly anticipated negotiations.
“We are reconvening next week to finalize constituency allocations, taking into account the additional four new ones plus the outstanding seven,” he explained. It later surfaced that Gaborone Central, Gaborone North, Mogoditshane, Tswapong North, Francistown West, Tati West, and Nata Gweta are all contested by both BCP and AP. This is because the other 50 constituencies were allocated by December of last year.
The three parties have failed to find common ground for the Bosele Ward by-elections. Are these constituencies not a deal breaker for the talks? “None of the constituencies is a deal breaker,” responded a very calm BCP official.
In Bosele Ward, AP has yielded to BCP, despite most of its members disapproving the decision. On the other hand, BLP has refused, and it will face off with BCP together with Botswana Democratic Party (BDP) and Umbrella for Democratic Change (UDC).
The decision by BLP to face off with BCP has been labelled as a false start for the talks by political observers.