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Matsheka laments ‘unsustainable’ fiscal path

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Matsheka laments ‘unsustainable’ fiscal path

The Minister of Finance and Economic Development, Dr Thapelo Matsheka has poured scorn on the country’s fiscal path, calling it unsustainable.

When presenting the 2020/2021 Budget Speech earlier in the week, Matsheka noted that whereas the National Development Plan (NDP) 11 had environed a moderate cumulative budget surplus, the six-year Plan’s mid-term review anticipates cumulative deficits.

During the upcoming financial year, a budget deficit of P5.22 billion is projected, which amounts to 2.4 percent of the GDP.

The Minister noted the predicted deficit comes amid expected huge investments in economic infrastructure to support the transformation agenda.

Renowned economist and former Bank of Botswana Deputy Governor, Dr. Keith Jefferis agrees with Matsheka’s assessment that the fiscal path is not sustainable.

“He is right. For a long time, the government has been depending on diamonds for revenue and obviously the diamond sector is not growing,” reflected Jefferis, a Managing Director at Econsult, a local economic consultancy firm.

Matsheka laments ‘unsustainable’ fiscal path
NUMBERS MAN: Jefferis

Despite the tight fiscal position government finds itself in, Matsheka says his Ministry is determined to restore fiscal sustainability in the medium term to build budget surpluses in the last two years of NDP 11, which runs until 31 March 2023.

The Minister explained this is part of the effort to rebuild the country’s financial buffers, which he says were seriously eroded over the past few years.

“A number of initiatives will be undertaken on the revenue and expenditure sides, both in the short term and in the long term, in order to achieve the stated objectives,” he revealed.

Government revenues have recently been under pressure mainly due to the subdued diamond market and declining of Southern African Customs Union (SACU) receipts.

In view of this, and in order to boost revenue, Matsheka says government will adjust a number of fees and charges, some of which were last altered over a decade ago.

These adjustments will come into effect at the start of April and will subsequently be adjusted annually.

The taxman is also expected to enhance revenue collection and increase inspections on imported goods in order to curb non-compliance by importers at ports of entry.

Botswana Unified Revenue Services (BURS) has recently gone all out to lodge war against importers of grey import vehicles, predominantly sourced from Asia and the United Kingdom.

In the past, economists have advised that government should consider increasing tax rates in order to broaden its revenue base as well as including other forms of taxes such as the Financial Transactions Tax.

However, Matsheka this week ruled out any possibility of adjustments in tax rates or the introduction of any new taxes.

“While there is a scope to adjust tax rates, considering their levels relative to the region, priority would, in the interim, be on improving efficiency in the collection of existing taxes, rather than adjusting tax rates,” reiterated the Finance Minister.

Nevertheless, Jefferis feels in the long-term government will have no choice but to increase rates. However, he is confident the short-term solutions put in place, like adjusting fees and charges, will work for the moment.

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Battling for booze

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Battling for booze

Liquor industry wants alcohol sale ban lifted

Botswana Alcohol Industry Association (BAIA) is lobbying for government to follow the example of neighbouring countries and lift the ban on alcohol sales.

Their main reasoning being that citizens who live close to the border may be tempted to sneak out of the country in their desperation to buy liquor. They note this would be detrimental to the economy as well posing a serious health hazard.

The Association Chairman, Mothusi Molokomme told Voice Money they believe the ban – in place since 27 March – should be lifted to allow the public to purchase alcohol and consume it at home.

As much as the main focus is for bottle stores and wholesalers to open for trade, Molokomme revealed they also want bars to be opened, noting they are the only centres of distribution in some of the country’s remoter areas.

He stressed that bars should be allowed to operate on a ‘takeaway’ basis but only after they satisfy Covid-19 prevention protocols.

“The main worry is that there will be loitering around the bars. But it is our belief that operators will strictly adhere to the regulations and allow for takeaways only,” stated Molokomme.

The Chairman pointed to the recent surge in homebrews as indication that the ban should be lifted.

During the period of lockdown, the police have recorded escalating cases of homebrews, which in some instances have even led to the loss of drinkers’ lives.

“There is also a regional factor because South Africa has announced it will be opening next week. Namibia is opening as well and Zambia has always remained opened and because of our porous borders, we may see the illegal coming in of liquor,” continued Molokomme.

He said areas located along the borders of these countries pose a threat to liquor contraband.

While the association advocates for the ban to be lifted, he says as the industry, they will also intensify their message for safer consumption and promote good behaviour among consumers to exercise precautionary measures.

“We are hoping that we will reach an agreement. It will be difficult to convince government when it comes to opening of bars, but we cannot sideline the bars because, in some areas they are the only available points of sale,” reiterated Molokomme, who doubles as the Managing Director of Distell Botswana.

The association was scheduled to meet with the Minister of Investment, Trade and Industry (MITI), Peggy Serame this week to map a way forward regarding the sale of alcohol.

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Crafting a new life

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Crafting a new life

The Enterprising Welder Me and My Business

Absorbed and happy in his work as a car mechanic, an unlikely request from a client three years ago changed the course of 35-year-old Bokamoso Selthabi’s life forever.

The self-taught welder now designs and makes various products from metal, including troughs, trailers, cages, kraal fences and other farm implements.

Having initially set-up shop in the North West of South Africa, his home of three years, the Morwa native retraced his steps back to Botswana to continue Bucha Rest Welding.

Recalling the meeting that altered his existence, Setlhabi told Voice Money he was working as a mechanic when a customer asked him to build a trailer for him.

“I made the product for him. After that he brought two more guys wanting my services. From there it grew into a fully-fledged business,” he explained.

“The business has now been running for two years based in South Africa. It is only at the beginning of this year that we relocated to Botswana,” continued the multi-talented craftsman, adding he briefly explored the Namibian market as well.

While he is still new to the local market, with much of that time blanketed by Covid-19 restrictions, Selthabi admits he is yet to reach a point where he can say business is as good as it was in South Africa.

“So far it has been a bit difficult locally. Some of the products that we do like metal kraals are still not highly rated here but we are working hard to market such products as a good alternative to wooden kraals,” he noted, a steely determination evident in his tone.

Setlhabi explained that one of the perceived disadvantages of products like metal kraals is because the metal conducts heat.

However, he points out that this can be overcome by simply applying paint.

“The good thing about it is that it is durable and lasts longer than other materials used to construct kraals,” he highlighted.

Despite the current low uptake of his products, the enterprising welder is optimistic his fortunes will soon turn around.

“It is promising because, when you work with customers who are not used to what you are doing, you have to carry out extensive marketing of your products. We hope when life goes back to normal after the pandemic there will be some improvement,” he said, adding that items such as feeding containers have proved popular and are in demand.

“We also have customers waiting across the country,” he added.

Other challenges – and the one Setlhabi describes as his biggest – is copycats who attempt to duplicate his work ‘but often fail to match my skills’.

“We have social media pages where we post our products. People would want to do exactly the same but often do not succeed because our designs are unique and the quality is top-notch,” said the National Craft Certificate (NCC) holder proudly.

As the business is still at infancy stage, he has engaged one person to assist but hopes as the enterprise grows he will be able to employ more.

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