Create enabling business setting for local authorities to thrive

Koobonye Ramokopelwa
Friday, 20 April 2018
Create enabling business setting for local authorities to thrive

Over the years, government has made calls for local authorities to look for other income generating streams so as to supplement existing subventions that they receive on an annual basis. 

This has always been a welcome development from the onset. The world over, local authorities play a bigger role in supporting their respective development programmes financially. Secondly, the central government is also pressed with other competing interests and challenges which forces government to reduce financial resources it channels towards local authorities such as councils and land boards.  

Thirdly, it has now become more pertinent for local authorities to play an even bigger role in supporting their respective budgets because government revenues are declining at an increased rate on the backdrop of subdued economic growth. The successive budget deficits are there for all to see. This explains why local government and rural development budget has declined proportionally over the years, forcing the same ministry to reduce budget allocation for councils and other local authorities on a yearly basis.  

It must be pointed out clearly that; government proposition that local authorities should raise more of their funding will go a long way on ensuring councils meet the expectation of the society. Nonetheless, we are of the opinion that, if government wants local authorities to meet the national government halfway, there has to be an improved business environment in local authorities so that they can attract investors of their own. 

It is the same investors who in the end will pay council rates and other levies which can prop-up revenue at a local level, a development which will cut dependency on central government. First and foremost, government has been slow in creating incentives which can compel investors, whether local or external, to skip cities and towns in preference to local authorities.

Government has over the years concentrated too much on improving infrastructure and other necessary features that can improve ease of setting up a sustainable business in towns and cities at the expense of districts. Infrastructures in most local authorities are not fully developed to force investors to choose such localities for investments.

Government should, as a matter of urgency, encourage local authorities to set up investment companies which can look into business opportunities for investment within respective localities. Currently only a few councils such as Kweneng District Council (KDC) have investment arms. Investment units of councils are important in the sense that they operate more or less like private firms with the single motive of making maximum profits at every opportunity. 

Right now some councils complain every year that their subventions are declining, but they are not being asked to show what they are doing to up their revenue streams away from normal council rates. The new minister of local government, Pelonomi Venson-Moitoi needs to do something here. We know she has the zeal to help councils in this regard as she is the architect of the Venson Commission on decentralisation. 

Government should also use its investment and economic development agencies such as Botswana Investment and Trade Centre (BITC) to help councils attract investors. Annually, millions of Pula are channeled towards BITC investment promotion exercises. Executives with tailor-made suits from the authority crisis cross the globe in search of investors. 

We know for fact that they put the name Botswana forward in their bid to woo investors. However, it does not stop them from also canvassing for investors to invest in specific local authorities in the country from the word go. In fact, BITC and the trade ministry should have a more detailed database of various economic opportunities for each district which will be easier for investors. 

If government is indeed serious about encouraging local authorities to pick up their revenue, there should also be serious overhaul of existing laws which govern revenue collections. For example, government should also make sure some of the service fees charged on citizens and foreigners at a district level by various government departments are retained at the same district so that they can be used locally. This will encourage them to work even more mindful of the fact that they are also up to benefit.

Business Talk is hopeful that government will use the Special Economic Zones to further propel local authority’s economies, which can free some national government’s funds needed for pressing matters. By nature, councils do not have the complete capacity to ramp up their economic activities. Our hope is that, SEZs Authority will work hard to capacitate councils in this regard. It is the SEZA, which will be key in determining economic zones which can enjoy incentives such as reduced taxes, financial grants, distributions and storage facilities among others. 

All these are important in attracting foreign investments into local authorities. It is these investments which in the end reduce local authorities’ heavy reliance on the national government for funding on a yearly basis. The main point being raised here is that, for government to have a sustained national budget there is need to come up with policies and initiatives which can ensure local authorities are economically independent to a large extent. 

This will give the national government ample resources to fund other equally important needs of the economy and its citizens. 

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