Economists have expressed contradicting views on Botswana’s economic performance for the rest of the year. However, what is clearer about their opinions is that while the economy might exit troubled waters experienced in 2016, it will not expand by what has been projected by government. This will further put pressure on government which faces an expanded budget deficit, rising numbers of the jobless due to closure of mines as well as increased budget for social safety programmes.
Minister of Finance and Economic Development, Kenneth Matambo and his boss, President Ian Khama have forecast that the mineral-led economy will increase at a rate of 4, 1 and 4, 3 percent during their budget and state of the nation address speeches last year. In particular, treasury minister Matambo based his predictions on the recovery of the mining industry which had sunk the economy into a technical recession for the first half of last year. “At First National Bank Botswana (FNBB), we forecast a lower growth rate of 3.3 percent for 2017, slightly higher than our forecasted growth of around 2 percent in 2016 and much lower than the forecasts from the ministry of finance and economic development,” said FNBB research manager and economist, Baboloki Sebabole.
A cut in rate growth puts the landlocked-country in the spotlight as this means reduced revenues, budget deficits in the coming financial years as well as poor ratings from credit rating agencies such as Moody and S&P. Moreover, World Bank has already slashed the country’s growth forecast for 2017, citing weak commodity prices. The Washington-based company which offers credit to developing nations made the revelation in a yearly report, which also painted a gloomy picture for the Sub-Saharan region, which Botswana is part of.
The FNBB economist, who is a former finance lecturer at the University of Botswana (UB), has also forecast subdued economic expansion in the medium term. “We remain cautiously optimistic on medium-term growth prospects with our forecasted average growth rate of 3.8 percent to 2023 (compared to the Ministry of Finance and Economic Development’s forecast of 4.4 percent to fiscal year 22/23),” commented Sebabole. “We believe that attaining these growth rates would require an acceleration in FDI in Special Economic Zones and more efficient management and delivery of projects through much-anticipated public private partnerships (PPPs). Furthermore, subdued private sector employment prospects and the freeze on government headcount will also continue to constrain growth in household consumption, with consumers also pressured by high levels of debt,” he said.
Government has established Special Economic Zones Authority (SEZA) which will be responsible for establishing special economic zones around the country that will leverage on specific resources that are found in those regions. Investors in the region will be given preferential treatment when it comes to taxes, company registrations and other incentives. Head of Research at Motswedi Securities, Garry Juma said there are several factors which are going to make ‘the year tough for us’. Top in the list is the closure of BCL mine which had more than 5000 employees under its belt. The mine and its subsidiaries have been closed due to factors within and outside their sphere of control such as the weak commodity prices. BCL liquidator, Nigel Dixon Warren this week told reporters in Selibe Phikwe that there is no way the BCL mine could be saved from the dead. It will be sold by winter, either after being stripped or being sold as a whole. Suitors are already knocking on the office door of minister responsible for minerals, Sadique Kebonang with a view to acquire the assets of the closed mine and its subsidiaries.
As a mineral-led economy, Botswana depends on minerals such as copper to survive. The closed mine basically means revenue from its copper and nickel exports have been reduced to zero. “Challenges to growth in the current year may stem from base metal pressures (copper and nickel); low consumer spending; low business confidence and global demand dynamics,” added Sebabole.The domestic economy contracted by 0, 8 percent quarter on quarter for the period to September 2016. This is according to data released by Statistics Botswana two days before last Christmas. However, Sebabole is optimistic that the good times are here for the economy as diamonds, the biggest export revenue earner have bounced, possibly for good. “Diamond sector improved in 2016, with year-on-year sales increasing by over 30 percent and we expect the momentum to remain positive in line with global prospects of more stable currencies, recovery of major economies like the US – which will be supportive for diamond demand,” said Sebabole in response to Botswana Guardian questions on Wednesday.
Chief Executive of De Beers, Bruce Cleaver on Tuesday told site holders that for the industry to grow there must be increased collaboration by players. “We have made some good steps in this direction, with greater collaboration across the value chain to stimulate demand, to share industry insight and to support pipeline efficiency. But we must continue on this path and increase the impact of our combined efforts to grow industry value,” said Cleaver, who is in his second year of leading the world’s biggest diamond producer by value.
De Beers sells Botswana’s diamond abroad. While Sebabole is optimistic of the diamond recovery, Juma is of the opinion that there is ‘too much uncertainty He cited the somewhat unpredictable relation with China, the world’s second biggest economy. “When bulls fight, it is the grass that suffers,” he explained. Elsewhere, there appears to be good news coming from the agricultural sector, which is likely to post improved output as a result of below average rains experienced in the past weeks. “Improvement in rainfalls might alleviate droughts,” stated Sebabole. Botswana has experienced droughts in recent years which necessitated bigger budgets for social safety programmes across most sectors of the economy.
Juma said that even if the agricultural sector will improve, ‘its contribution to GDP will still be little’. The sector contributed 1, 7 percent of total Gross Domestic Product in the three months to September 2016(Q3: 2016). The improvement in agriculture will lead to increased supply in grain, both Sebabole and Juma agree. Manufacturing- cited among sectors that can lead the economic diversification drive - has improved from 0,4 percent in the second quarter of 2016 to 1,7 percent in the quarter to September last year.
“Manufacturing has the potential to be boosted by several initiatives like AGOA, but will be dependent on accelerated implementation of policies that are favourable for the sector’s prospects to make it more competitive in real terms,” said Sebabole.
The switching of political parties has increasingly become the dominant feature in the Botswana political arena. We continue to witness political defections of activists from one party to the other with surprising alacrity. This article endeavors to analyse this experience of political deviance in conjunction with the theory of prevailing politics in Botswana. I have written this article in reminiscence of revolutionary political study circles of the International Socialists Botswana.
The jibe of this article is to a relative extent, preoccupied with the individuals who held key leadership positions during their reign in the opposition and also played active role in frontal attack of BDP political ideology. Their energetic function in the legitimisation, championing of opposition politics and contestation of the BDP rule portrayed them as individuals who had conformed to the opposition out of morality and social conscience, and not coercion. Such individuals attracted accolades like party firebrands and political stalwarts whilst in the opposition. It would seem to me that to be showered with such praiseworthiness, one would have gone through a thorough initiation of political consciousness for his or her in-depth clarity regarding fundamental ideological differences between adversarial parties i.e. BDP vis a vis Opposition.
On the contrary, we are experiencing a different situation. The then political deviants have switched their political conviction as if they had never pioneered opposition politics. They behave as if the social and economic underpinnings of the poor and disadvantaged have all of a sudden evaporated. The former so – called opposition “firebrands” have chosen to ignore the appalling misery and poverty affecting the majority of Batswana. Whilst, it has been established that the BDP uses utilitarian power (use of money) for its recruitment drive, it is also evidently clear that the opposition activists have become calculative on incentives they perceive to gain for having to jump into the BDP bandwagon.
The truth is that these political defectors have been blinded by their opportunistic greed and immorality that they are so determined to worm their way into the BDP`s ruling liberal social clique to the extent of even being used as ‘victims‘ to be saved and liberated by the BDP ‘superior’ leadership. In return the BDP “superiors” fashionably use these economically-marginalised ‘peasants to robotically propagate the BDP government palliative programs which are only useful in curing the symptoms of poverty and not the root causes of poverty. Yet the socio-economic status of majority of these opportunistic defectors has not changed much. The only jobs these poor “ignoramuses” can find include; mowing the lawns of the privileged, picking up their garbage, unplugging their sinks, transporting and delivering so many of their expensive lifestyle furniture, being nominated as specially elected councilors, getting appointed as campaign managers and serving as public - rally rousers.
This new political sensibility ultimately expresses and celebrates a paradoxical lifestyle of self interest. Defectors to BDP from opposition are victims of opportunistic ignorance. In their inquisitive spirit of idle curiosity, they juggle political interests for economic goals. By abandoning sympathy of the poor in preference of ascribing themselves to the ruling class, these former opposition leaders have been ‘mystified’ into conforming enthusiastically to a political system that exploits and their instincts have been contaminated by their vile selfish-interests.
The main reason why we are experiencing this hype of political deviancy is that our politics has become stagnant and is going through a process of degeneration and pollution because all parties are trying to find the cheapest way of galvanising the electorate. The increasing lack of political education and clarity across parties, especially over where they stand on fundamental economic issues and the well being of the electorate at large, suggest that they have all succumbed to the temptation of playing for short-term gains. Sadly, Botswana politics have been subjected to cheap phrase-mongering “election” cry for winning common people votes.
For a fact the BDP state does not have much that it can deliver to the masses. BDP is a party which is not truly serious about using the state as a means of improving the well being of Batswana. The party has failed to ensure ample economic opportunities for Batswana to live a happy and a poverty free life. Its perverse backwash of welfare colonialism has specialised in sustaining poverty and preventing personal autonomy of Batswana. After half a century of its rule, majority of Batswana are either unemployed or underemployed, underpaid and overexploited. The BDP leadership has demonstrated how violent and cruel they are. Their use of police brute force to donkey - whip young graduates with ‘sjamboks’ for their rightful demand of job security, and the closure of Tati Nickel and BCL Mines in the most unscrupulous fashion, are recent cases in point. In a nutshell, BDP`s empty slogan “DOMKRAG” accurately defines its identity.
Conversely, the Botswana opposition lacks the utmost thoroughness in giving true answers to the concrete political crisis brought by BDP. It seems the compulsions and imperatives of finding alliances (UDC+) have become the only alternative driving choice rather than considered political convictions of opposition parties. Some of the leadership in the opposition are allegedly questioning and considering to turn their back on their party`s best instincts, and willing to sacrifice their party`s long-term political and economic interests for short-term gain. In essence they seek to uproot working class politics from opposition. By so doing the opposition will have resolved to launch a ferocious ideological offensive against the oppressed and to assert that capitalism is a natural and permanent form of society. This does not augur well for Botswana politics.
The abandonment of working class politics by opposition will be to drift into the morass of unbelievably disgraceful confusion in the preference of bourgeois democracy. The working class does not only possess a numerical muscle in terms of voting power, but they are the most oppressed and enslaved people under BDP rule. Their miserable condition is the most justification for regime change and therefore it will be disappointingly and flippantly scandalous in the increasing monstrous oppression of the working class by BDP if the Opposition can choose to be opportunistic.
Truth of the matter is that the Opposition describes its politics in a liberal pompous fashion and most of the time without content. The political agitation adopted by opposition exposes its fear to break irrevocably with the petty - bourgeois democracy and therefore countering BDP in a spirit of sentimental romanticism. Practically, the opposition seems to have accepted that BDP must be overthrown but emotionally being attracted by its predatory bourgeois democracy and its perpetual exploitation of the poor. Yet to prune politics to such an extent means to reduce it not only to opportunism, but to ram it into public`s perception in the most shallowest form and therefore imperceptibly falsifying the opposition core political programme: social – democracy.
This character of politics has consequently resulted in the opposition adoption of the tactics of despair in providing alternative solutions to the prevailing conditions bedeviling the masses. The approach has blunted and vulgarised the politics of opposition in that they now push to the foreground and extol what appears to be the same BDP political agenda – the neo-liberal utopia. To put it in Karl Marx words “such a panegyric is by no means a mere impulse, a mere declamation, or a political sally. It is a folly of despair.” This has consecutively caused the state of Botswana political arena to smack of nothing but venal political opportunism and atrocious vulgarism. No wonder all parties across the political divide do claim to be in alliance with tenants of social – democracy.
The failure to adopt the revolutionary boldness by Opposition will cost them a prolonged struggle against the BDP because it now increasingly becomes difficult for the electorates to gauge the difference between opposition and BDP. This even creates a potentially disastrous uncertainty about the future of regime change. For it to appeal in a more resounding way, Opposition has to instill into the minds of the masses, that it is really capable of realising the interests of Batswana, especially the working class and peasants. Opposition politics should mark a new and qualitatively different stage of human development as the question of bringing about a new regime that is capable of serving the exploited instead of exploiters is acquiring practical importance.
This requires the opposition to introduce political education that will strip its members of every shadow of ideological ignorance. The opposition should demonstrate the stronger will, the greater organisation and the most skilful and resolute leadership to deal with the concrete crisis emerging under BDP rule so as to compel the electorates to recognise that indeed the “era of regime change” has set in.
2016 was a monumental year for Botswana. Not only did Botswana celebrate 50 years of independence, it also made history with a move towards controlling the HIV epidemic through the adoption of a new and progressive treatment policy called “Treat All.” Today, on World AIDS Day, I am optimistic this will be our best shot at finally ending the long struggle against HIV.
On June 3, President Khama launched this important new policy. Botswana is now among the first countries to offer free antiretroviral therapy to any citizen living with HIV, regardless of their white blood cell count (CD-4 count), a measure previously used to determine a person’s need for treatment. This will ensure more Batswana live longer, healthier lives and help prevent more than 120,000 new HIV infections, 55,000 deaths over the next 15 years, and significantly decrease new tuberculosis cases.
These projections come with many caveats, and the bold adoption of this policy has to be followed with even bolder implementation. An inclusive, vigorous Treat All policy will only work if testing services are readily available, and those that need it are quickly linked to treatment without delay. Drugs and other commodities need to be in clinics and pharmacies on time and without the threat of running out. I would also encourage Botswana to debate the merits of providing free treatment to non-citizens who can’t pay for themselves to ensure no one is left behind.
Most of all, for this policy to work, we need to convince our friends, family and loved ones our health and protecting the health of others is the most important thing in life. We must all know our HIV status and do everything we can to prevent the further spread of this disease.
My government, through the President’s Emergency Plan for AIDS Relief (PEPFAR), is supporting Botswana’s move to Treat All with the goal of helping this nation reach epidemic control in the next three years. Over the last decade, PEPFAR committed more than $750 million to Botswana in the response to HIV. We are investing another $48 million in 2017 to support community programs, health facilities and for the purchase of drugs. With the Government of Botswana, civil society, development partners, and dedicated responsible individuals like you, we will reach our goal of an AIDS free generation together.
We must all do our part. On World AIDS Day, the U.S. government would like to recognize 12 individuals who over the last year have gone above and beyond to ensure a healthy future for the youth of Botswana. Some of them are young people who have made a difference, others work directly with youth, or advocate on their behalf. All of them are heroes. Among those nominated by their peers and featured in a 2017 calendar are counselors, students, radio personalities and a tribal chief. Included in this exclusive list of achievers is 33-year-old Gaborone Mayor Kagiso Calvin Thutlwe, one of the youngest mayors in Africa.
The Mayor tested for HIV publicly and was appointed to lead Southern Africa mayors in the “Mayor’s HIV Test Drive” as part of the United Nation’s 90-90-90 Strategy seeking to diagnose 90% of people living with HIV, enroll 90% of those with HIV on antiretroviral treatment, and ensure 90% on treatment maintain viral suppression.
His energy and outspoken leadership on HIV/AIDS issues has been refreshing and inspiring. I would like to congratulate every one of the 12 individuals being honored as PEPFAR heroes, including Osego Winnie Ramotsisi (24); Kagiso David Morebodi (32); Mpule Kgetsi (25); Pilot Mathambo (37); Kagoyarona Kakanyo (27); Thulaganyo Chirwah Mahloko; Stompie Sehularo Makolobe (36); Thabiso Titus Paul (25); Onalethata Mpebe (34); Kgosi Reuben Masie (36); and Yvonne Motshabise (41).
Achieving an AIDS free generation in Botswana, once an unlikely dream, is now within our reach. It will not happen automatically, or easily, but we will get there. The selfless inspiring work of our PEPFAR heroes will help us get there. Bold policy commitments like the one that brought us Treat All will help us get there. Together, we will get there, giving our children and grandchildren the greatest gift one generation can pass to another: a healthier, safer, brighter future.
Only a handful of companies namely Bankers, Lawyers and Accountants firms stands to benefit in the liquidation and subsequent closure of the BCL mine, Botswana Guardian Investigations have established.
It’s always been an open secret that one day, the mine would close as it has always been producing low grade ore since its establishment. The mining of low grade ore became a costly exercise when the hole got deeper over the years. The sad reality became evidently clear when one of the shareholders and a mining company of repute - Anglo American- which has invested in and exploited many African countries, opted out early in 2000 stating that BCL would never be profitable. This led to government inheriting a debt of over P8 billion from Anglo.
However, insiders say it was government’s decision to introduce Mining Development Company Botswana (MDCB) whose mandate is to manage government’s interest in the mining Industry as well as the appointment of South African, Paul Smith as Chief Executive Officer, that influenced the current situation. Government’s sudden decision to close the mine’s gates was allegedly based on the advice of MDCB.
Sources say it has always been clear that Smith is a man on a mission. He is reported to have clashed with the old BCL Board members that he found upon arrival. At one stage he allegedly walked out of a board meeting after allegedly failing to answer questions. The establishment of MDCB which came with its own board is said to have automatically rendered the BCL board dormant. The move led to the resignation of board Chairman Dr Akolang Tombale and his deputy, Dora Moremi mid this year.
Sources attribute the recent cabinet reshuffle in which one of the best performing ministers, and President Ian Khama’s confidante, Kitso Mokaila was redeployed from a ministry where he was performing well to the Ministry of Transport and Communications, to the establishment of MDCB and appointment of Smith.
It is said that even though Mokaila had appointed Smith, of late they were not in good terms. Apparently the bone of contention was Mokaila’s attempt to bring Smith to order for bypassing him in many of his decisions.
The unending debt
The story of the BCL mine and its unending debts date back to the establismentof the mine through government funding as well as a grant from the European Union (EU). The EU grant was conditional. The key condition was that BCL must put a certain percentage of interest accrued into a local bank account to use it to devise programmes to sustain the mine at the end of its lifespan, which was projected to be 40 years. It is said the money was used and continues to be used to finance the establishment of Selibe Phikwe Economic Diversification Unit (SPEDU) with an initial capital injection of P13m.
Anglo bolts out
In 2000 government forked out P700 million to bail out BCL, which decision led to one of the shareholders, Anglo American company, opting out in 2003 citing non-profitability of the mine. Anglo had apparently realised that the money was unrecoverable and there is no future in BCL mine. At the time when Anglo opted out, the mining area was already deep and the costs of mining were extremely high. At the time, Anglo were owed P8bn. They transferred their debt to government. And this marked the beginning of an endless spending exercise by government in order to keep the mine afloat. Experts say that before inheriting the debt, government asked Anglo to give them another strategic partner, whereupon LionOre was brought on-board and took over their share of the Tati Nickel mine which Anglo owned 85 percent. This is when the government became majority owner of BCL and there was no longer pressure from anyone to pull the plug at BCL.
Save BCL strategy
In order to save BCL from going down the drain, the then Ministry of Minerals Energy and Water Resources engaged the RSK Consultants, an engineering company to review the operations and suggested what ought to be done. RSK’s strategy review recommendations led to many unprofitable projects being cancelled or shelved, which helped to improve BCL debt burden. Among the restructuring recommendations was that government enter into negotiations with a German company called KFW who owned and had funded the construction of the houses accommodating all BCL employees.
The government successfully negotiated for the release of debt owed to private companies and KFW agreed to release the houses after government had paid a small portion. This opened many gates as another financing company, IDC of South Africa who were owed, asked for a small portion of payment and called off the debt.
BCL ore low grade
Realising that they have endless debts and their ore which is expensive to mine is of a very low grade BCL management came up with an investment strategy named Polaris I which was to explore the ore around the BCL mine. BCL management was advised to look elsewhere for mineral deposit, using similar model like those used by former partners, Anglo. It was at this stage that they came up with Polaris II. At that time LionOre also opted out and sold Tati Nickel Mine to Norilsk International of Russia. In 2014, Norilsk who at one stage were the biggest mine owners in the world decided to sell their mines.
The Nkomati deal
Being in the BCL board, Norilsk were amongst the first to know. BCL seized the moment and approached Norilsk with offers to buy Nkomati mine in South Africa. Unlike BCL mine, Nkomati produced high quality ore.
The agreement was it would be transferred to the Phikwe Smelter for processing. Nkomati purchase was going to be funded through loans obtained by BCL. Government conceded because the proceeds from the Nkomati deal were going to be good enough to pay the loans.
However, there was delay in the transaction. Speaking on condition of anonymity, authorities say the delay was a result of a South African mining company called Rainbow Mine South Africa who are partners of Norislk in Nkomati wanting clarification on how their interests will be served. When that happened metal prices around the world went down, a matter that forced BCL to go back to Norilsk to renegotiate the payment of the purchase price. It is said
there was goodwill with both sides willing to work together.
Introduction of MDCB
But before the deal could be completed, MDCB was established with Paul Smith as CEO early this year. Subsequent to his arrival, Smith indicated that he wants or will transfer the government shares in all the mining companies to the MDCB. His plan was to start with BCL copper and nickel mines as well as the Morupule Colliery mine. At the time when Paul Smith’s regime was ushered in the process of negotiating the purchasing agreement was being carried out, but the funds had not yet been disbursed. The move led to the collapse of the Nkomati purchase process since Smith and his regime were, without BCL, an unknown entity.
Botswana Guardian has reliably learnt that it will only be a matter of time before BCL or Botswana government is served with a lawsuit by Norilsk for time delayed and failure to honour the agreement that is if the much preferred MDCB does not go ahead with the Nkomati purchase.
President Ian Khama has promised the private sector that his government would create a conducive environment for private sector growth and positive economic growth by maintaining and improving its policies and the regulatory framework.
Officiating at the 14th National Business Conference in Francistown this week Khama said it’s important to realise that the government or private sector alone cannot position Botswana on a high, stable non-inflationary and diversified economic growth. “We have been consistent as government in our view that the private sector has a central role in our pursuit of economic transformation. We firmly believe that the business of producing goods and services through meaningful and productive utilisation of our natural endowments, information and technology, human capital, as well as entrepreneurial capabilities can best be handled by the private sector, hence the true notion that the private sector is the engine of growth for the economy,” he said.He reiterated that government initiated the Economic Diversification Drive (EDD) in 2010 to primarily accelerate economic diversification which had proved to be a challenge since independence.
“EDD emphasises export-led growth while developing productive capacity of enterprises for both domestic and external markets.” The initiative is driven on a Short Term and Medium Term strategy. In the short term, government leverages on its purchasing power through the use of preference margins to promote the production and consumption of locally produced goods and services, explained Khama. He noted that the value of cumulative total purchases since inception in 2010 amounts to P22 billion. Out of this figure, the value of purchases from local manufacturers and service providers is P11 billion. Khama revealed that so far a total of 1 625 enterprises have been registered. These companies have created 44 337 jobs. He said that the Long Term Strategy aims to develop Botswana enterprises to become nationally and globally competitive with little or no government intervention. “The main aim is to diversify the economy into sectors that will continue to grow long after minerals have run out,” said Khama.
He explained that government was also facilitating the use of locally manufactured building and road construction materials by contractors in all Economic Stimulus projects. “To-date, 74 locally-based manufacturers of building and road construction materials have been registered in the Roads, Building and Construction Manufacturer’s Database,” said Khama who added that assessments were currently being undertaken to ascertain their capacity and capabilities to produce the required materials in the right quantities and quality. “These companies offer great potential in our pursuit for employment creation,” he stated.
Khama also revealed that his government will promote effective business regulations and private property rights to ensure that businesses are not hobbled by excessive regulations and red tape. “In this regard, government is implementing a Doing Business Reforms Roadmap and Action Plan with a view to addressing administrative, legal and structural bottlenecks,” said Khama, adding that government has in its quest to modernise the economy and position it as a global competitor, opened up the provision of water and power, as well as delivery of road infrastructure projects to private capital.
The performance of sectors not related to mining will continue to grow below trend in the medium term, further putting pressure on the country which celebrates its Golden Jubilee at the end of this month (September). This is the message that is being sent out by Bank of Botswana in its latest mid-term Monetary Policy Statement issued to the market. According to the paper, uncertainty in the supply of water, electricity and poor agricultural performance will pull back the non-mining sector, which government has hoped to look to for growth on the backdrop of disappointing numbers from mining.
The agricultural sector, the country’s biggest sector during pre-colonial era is currently on its lowest ebb. This is because of sporadic rains and heat waves which have caused persistent droughts in recent years. In fact, President Ian Khama who this week handed over the SADC Chairmanship to King Mswati of Swaziland, has already declared the country drought-stricken. A number of drought relief programmes have been announced to mitigate hunger which is expected to hit mostly the non-working class and rural dwellers.
Before handing over the baton to Africa’ last absolute Monarch, Khama had also declared the Southern African region drought-hit. $2, 4 billion is needed to save the region’s millions of people from El Nino induced drought. The fact that Botswana’s non-mining sector will continue to grow at slow pace spells doom for an economy which is expected to grow by 4,2 percent this year. Perhaps sensing that the non-mining sector will grow at a sluggish pace, FNB Botswana, Chief Executive, Steven Bogatsu said his bank forecasts that the economy will leapfrog by 3,1 percent.
The banking sector, in which FNBB is a market leader, is struggling to grow sustainably as a result of low interest rates and poor general economic outlook. The diamond sector, the main economic driver, is faltering. Consumer confidence in major markets of diamond such as United States and Japan are down, hence lower sales for the world’s most precious stones. As for lower output in electricity and water, the two sectors are expected to stabilise in the coming years. For example, Morupule B power station is being expanded. Most of the major dams are now complete. However, sporadic rainfalls have led to unstable supply of water, especially in the South and Western parts of the landlocked country.
On the other hand, the construction sector is expected to pick up in the coming months. The renewed confidence in the sector will mainly come from the much-touted Economic Stimulus Programme (ESP). The ESP is short to medium term project that is expected to create jobs and diversify the economy. Bank of Botswana also announced in the same report that, the non-mining sector is down because of restrained growth in major trading partners. South Africa, Africa’s most advanced economy and Botswana’s biggest trading partner is experiencing its worst economic performance ever. The Jacob Zuma-led country is expected to grow by less than 1 percent this year. Most of South African companies have branches here. The fall in that country’s economy means possibility that the branches will scale down expansion in Botswana and in the process hurt sectors such as retail and banking.
A standoff between South Africa’s finance minister Pravin Gordhan and crime busting agency-The Hawks is also not helping the situation as the Rand has also declined considerably. In Botswana, as the Rand falls, small time traders who normally buy new and second-hand items from South Africa will likely benefit. As the South African economy falters, non-mining sectors such as manufacturing are also expected to decline.
The country sources most of its supplies from the region’s biggest economy. Meanwhile, the central bank said not all is lost. “However, gradual recovery is expected in the medium term in response to the projected loose monetary conditions,” said the BoB statement. In an attempt to jack up the economy, the central bank’s Monetary Policy Committee has reduced key lending rate to 5,5 percent from 6 percent. Even then, the bank is wary of disruptions in the supply of water and electricity which can have an adverse impact on the economy.
Ahead of the SADC Heads of State summit billed for Swaziland on August 30, a Roman Catholic clergy - Cardinal Wilfred Napier of Durban, South Africa – has slammed SADC leaders for not showing any commitment to regional integration.
Napier was attending the Southern African Conference Bishop Conference (SACBC) composed of 33 Bishops from Botswana, South Africa and Swaziland in Gaborone which ended this week Wednesday. Speaking to Botswana Guardian, Napier said: “If there is a common vision, then one has to ask a question about the commitment to that vision. President Ian Khama has stood out as an exception. I hope he continues in that vein.” He said many of the presidents in the region seem to be looking at their own interests rather than that of their own countries and by extension of the region as well.
Church fails South Africa
Napier said that unlike during the apartheid era when the church was vocal, currently it has lost an opportunity to guide our governments. “I would say after 1994, the churches in general, made the mistake of believing that the people we have been negotiating with and accompanying along towards independence, that we knew these people, we could trust them and therefore we could step back and not be as quite sharp and incisive in our analysis when things went wrong, as a result I think we have lost an opportunity to guide our government.”
On Zuma and ANC
Napier dominated the debates at the beginning of the Nkandla and Gupta-gate scandals in his twitter page. He reiterated his position to Botswana Guardian: “I do not think anyone not President Jacob Zuma nor the leadership of the ANC has actually seen anything wrong with spending that amount of public money on a private individual’s property. They do not see anything wrong and that amazes and worries me. It means then that they seem to identify the individual and the party with the state so much so that the people do not matter.”
He said the results of the recent local government elections were a very good lesson for the ANC. As for Zuma and ANC’s refusal to have him step down after the ruling by South African Constitutional court that he failed to uphold and protect the constitution, Napier reacted: “They both lost their moral compass; they do not understand the seriousness of the trust that the country has entrusted them with its future. They do not seem to understand that they have a responsibility to answer and to be accountable to what is going on.”
Napier criticised Zimbabwean President Robert Mugabe for staying for too long in power. He said although he is democratically elected, it is worrisome when a president changes the constitution for his own purpose – he has lost the idea of being the servant of his nation. “When I look back at Mugabe’s history at one time I would have said, apart from the time of the Matabeleland Massacre, the Fifth Brigade if you take out that for 15 years Mugabe led his country very well. But then came that point when he started fiddling with the constitution, from there Zimbabwe started going on a downward trend.”
On mushrooming of charismatic churches
“I think they come under the umbrella of promoting the kingdom of Lord Jesus, but in many ways they do not know what the kingdom of Jesus is. For instance, their whole emphasis on wealth and prosperity really cuts across what we understand as Jesus’ kingdom”
President Ian Khama is said to have rejected a proposal by Botswana Democratic Party (BDP) Members of Parliament to have their salaries increased before they could support the Presidential retirement package Bill.
Information reaching this publication is that the president has told his party MPs to their faces that ‘it would never happen.’ The BDP MPs had wanted to take advantage of the Bill to have their pensions and gratuities reviewed by way of increasing their monthly salaries. The President’s (Gratuity, Pensions and Retirement Benefits) Bill was expected to be debated in the current Parliament session and possibly made to pass but due to this development it had to be delayed with the hope that the MPs would one day during their party caucus be able to convince the president.
Parliament will go for recess next week and the Bill will possibly only return next year during the winter session which is specifically for Bills unless there is an opportunity to squeeze it during the State of the Nation Address in November this year or during the Budget speech session in February next year.
The Bill, which opposition MPs have vowed to reject states among other things that the President shall upon the dissolution of Parliament, or immediately upon ceasing to hold office as such be entitled to receive a gratuity equal to 30 percent of his or her current monthly basic salary multiplied by the number of months completed by him or her as President. The President would also receive a tax free monthly pension equivalent to monthly basic salary attached to the office of President at the time that he or she ceases to hold office, or 80 percent of the incumbent President’s salary, whichever is greater.
During BDP Parliamentary Caucus meeting last week Tuesday, the MPs confronted the President requesting that Minister for Presidential Affairs and Public Administration be directed to draft a Bill that would increase the salaries together with those for Councillors and Dikgosi. The issue was supposed to be further discussed this week, however, Botswana Guardian can safely confirm that it was not discussed at the party caucus meeting, as Khama was not in attendance due to “other official engagements.”The MPs according to insiders tried to push Khama against the wall but the president wouldn’t budge. “He has told us that it would be impossible to grant what we wanted. He told us to our faces that if that is the case then we could also drop the Presidents’ retirement package Bill. We want to continue to engage him on the matter so the Bill might have to be moved to the next session while we dialogue with him”, said a BDP MP who attended the meeting.
Another MP revealed that the President made it clear that he would not buy into the idea because there are no funds. “He told us that it would be wrong to make increment for politicians while the public servants have for long not been given increment. As a straight talker he made it clear that if we want to ride on the Presiden’ts Retirement Bill, it is better the Bill is scrapped off. He indicated that as for him, he is okay with the current arrangement for presidents vacating office and would not be held to ransom over the proposed Bill”, said the MP who is also a Minister.
Government Chief Whip Liakat Kably said the President’s Retirement Bill was discussed at the meeting but could not shed more light on the issue. “Look at the caucus we discuss a lot of things that affect the party and the country because we are the government of the day. We discuss Parliament issues, that is questions, motions and Bills but it is not for media consumption”, Kably said adding that if the party feels what was discussed should be shared with the media proper arrangement would be made for such to happen.
BDP Deputy Secretary General, Shaw Kgathi said as BDP MPs they are ready to debate the Bill once tabled in Parliament. He indicated that there is no way they would sabotage the Bill because according to their understanding the Bill allows the country to save a lot of money. “The Presidents retirement package Bill is lined up for debate in Parliament. If you put value to it there would be much funds spending reduction.
It is also for the dignity of the presidents’ wives and families. Under the current arrangement when the president dies, the widow is vacated from the house because it is state property but if we build for them it is much better and goes a long way proving that we love and respect our presidents”, stated Kgathi. Kgathi who is also the Minister of Defence Justice and Security said as to what transpired during the party’s caucus meetings he would leave it to the media for their continued speculation. “With what was discussed at the caucus I would let you carry on with what you have been reporting about the Bill”.
Botswana Democratic Party (BDP) is yet to finalise and decide on the reforms that were introduced by party Secretary General, Botsalo Ntuane.
Ntuane introduced the reforms during his campaign for the office in 2015 which he termed BDP Reform Agenda Conversation; 22 Discussion Points’. Ntuane has been criticised within the party for failing to ensure that the reforms see the light of the day. He has however indicated that the reforms are not his but belong to democrats. No decision has been taken ever since the reforms were introduced.
This week Ntuane revealed that the reforms were part of the agenda during the party’s special congress held in Mogoditshane recently. He said the reforms are a work in progress and there is engagement between the party leadership and experts who have been roped in to interrogate the reforms. In the reforms, the former Gaborone Bonnington South MP cautioned the party to understand that it would not rule forever but in his view, BDP can still retain office for two more terms (10 years) either on its own or in a coalition.
“Should our tenure in power come to an end without having introduced key electoral reforms such as Proportional Representation and party funding, we will go the way of the dodo because the new rules will have no incentive to oblige us on,” he said. He called for a strong activist Central Committee and this means recalibrating their relations with government and reclaiming the party authority over government.
Responding to a question about progress on the reforms, Ntuane stated that when party leader President Ian Khama briefed the congress he indicated that they are still working on the reforms. “We are working with experts in different fields to advise accordingly. They would then produce a document that would be brought to the central committee for interrogation. There is a lot going on internally in this exercise. There has been an engagement between the experts and President Khama and different party committees where robust debates are undertaken on the reforms”, revealed Ntuane who added that once the process is concluded the outcome would be shared with the party membership.
In the reforms Ntuane reiterated the need for the enactment of the law on declaration of assets and liabilities. This he said would demonstrate the BDP’s commitment to good governance and zero tolerance for corruption and abuse of public office. Ntuane said the BDP had suffered a political backlash due to unfinished mega projects but no action was taken. He called for an activist Central Committee which must demand accountability and for heads to roll when wasteful expenditure occurs.
The sole reason of operating a business is to get sustained profits, nothing else. This does not matter if government or a private investor owns the business. I am compelled to reiterate this statement because of the current tightrope that government is currently walking through in a desperate attempt to save BCL copper mine.
Looking from a distance, it will appear the executive arm of government is having limited options. However, some four hundreds of kilometers, north of the capital city, more than 4500 workers trek to BCL copper mine in Selibe-Phikwe to make a fortune for the company and a meal for their families. However, in recent months, workers and indeed management have become increasingly jittery and restless. The fear? They might just wake up and discover the government had closed the mine, for good! For sometime now, BCL has dominated high-leveled closed-door meetings at the government enclave. The agenda items centred on how the copper mine should operate sustainably and profitably.
Two weeks ago, a local business weekly made chilling death knell to miners with its article titled ‘Finished and Klaar’. In the article, the paper said cabinet has taken a decision to close the mine as it is not sustainable to run. The determination on whether to shut down the mine or not remains a very challenging decision to make by cabinet. However, what is key is what government should do with a profitable future BCL. The mine is currently operating at a loss and it has a mountain of debts to descend from. However, the mine is currently not producing anything to generate revenue, let alone pay its numerous creditors. It will seem BCL top executives these days spend more time discussing how they could sweeten their funding proposals for impactful responses.
However, what is becoming clearer by the day is that the same government is running impatient that BCL has now become more of a burden, competing with other equally important national projects, with its piling financial proposals on the back rock of drying state coffers.
It’s a precarious situation for President Ian Khama’s government, which is expected to post a P6 billion deficit in its current budget (2016-17). The choice to close the mine will not be helpful for now, as government has to first recover the invested billions of Pula. Government has also made guarantees to BCL mine, including the recent $100 million from Barclays bank. Any solution must ensure the mine returns to profitability in the medium term. This of course, is if the global commodity crunch was to end and prices for copper warrant sustained mining.
While government’s top officials are still in deep thoughts about how to deal with BCL, the critical matter that should be lingering on their heads is how to deal with the mine’s shareholding structure. It is a decision that could have been made some years ago, but unfortunately it was not to be. Currently, government is the sole shareholder at BCL. This has become increasingly knotty, as whatever demand BCL makes government has to bear it alone. In the modern business world, this kind of business model is eroding fast. It is even problematic for Botswana government, which surprisingly but forthrightly speaking, seems not to truly understand the art of mining.
I strongly believe that to solve this menace, once and for all, government should just sell part of BCL once the mine is profitable. The share sale will prove vital during unprofitable and unsustainable periods. If government had partnered with other investors shareholders at BCL, it could have acted as fallback and even more importantly, as a measure to spread risk in the highly volatile mining business. De Beers and Botswana have had a largely successful partnership with their Debswana.
For example, when Jwaneng was facing possible closure in the foreseeable future, the two shareholders quickly jumped in and invested P24 billion in a project known as Cut 8. The project is expected to prolong the life of the mine by at least a decade or so. When the Russian company, Norilsk sold its minority stake at BCL some few years ago leaving government as the sole shareholder, an expression of interest should have been opened immediately to invite strategic investors on board. At the current time, BCL’s aging equipment and mining underground become expensive; the deeper the mine, the more expensive and risky to run it.
Recent loss of lives at the mine can attest to this. The Vice President Mokgweetsi Masisi admitted, as Bloomberg recently reported from Kigali, that the mine is costing them dearly. “It's unprofitable, unsustainable and expensive,” he said this on the sidelines of the African Union elective meetings two weeks ago. Further, the republic’s number two said they will continue to inject P1, 4 billion on the mine to keep it afloat every year, even when the company was to stop mining.
This perhaps shed some light on the imminent closure of the mine. To save taxpayers from further paying more for BCL problems alone, government should at the earliest possible time part sell the mine. This will not be for the first time that a government does this. In Russia, Vladimir Putin’s government has sold part of its stake at Alrosa to plug its budget deficit. For now, government is likely to come with a workable solution to keep the mine running. However, to avoid falling into the same pit year in and year out, government should sell part of its shareholding at the Selibe Phikwe mine. The money raised would be thrown in the economic diversification efforts.