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SEZs to boost economy

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SEZs to boost economy

Special Economic Zones (SEZs) could potentially boost the national economy by facilitating export substitution, harnessing innovation and reducing dependence on the mining sector.

This is the view of Acting Chief Executive Officer (CEO) of the Special Economic Zones Authority (SEZA), ThatayaoneNdzinge.

Ndzinge believes SEZs can also generate spillover benefits to the rest of the economy, as export oriented multi-nationals will facilitate skills transfer and growth of domestic firms.

“Infrastructure developments in the SEZs will also spur regional growth and prosperity. With government support and robust private sector participation, I believe SEZs can significantly transform the economy,” said Ndzinge.

He highlighted leading economies like China, Singapore, Malaysia and Mauritius, which have all experienced rapid economic growth after using tax and business incentives to attract foreign investment and technology transfer in their SEZs.

“We have started the same project in Botswana and I am proud to announce that we recently awarded a number of multi-million Pula tenders for the development of key SEZs in Botswana,” revealed Ndzinge.

In Phase I of its strategic plan, SEZA has awarded masterplan tenders for the development of the Sir SeretseKhama International Airport (SSKIA), Fairgrounds, Lobatse and Francistown SEZs.

Local engineering and contracting firm Bothakga Burrow was awarded a P100 million tender for the SSKIA-SEZ. The project includes construction of a 1.8-kilometre road into the SEZ and design of underground services like lighting, fibre, CCTV, smart city ducting and water reticulation.

Ndzinge explained that the SSKIA-SEZ has been reserved for businesses in diamond beneficiation, aviation, pharmaceuticals as well as air-related logistics and distribution.

Royal HaskoningDHV Botswana was awarded a P13.8 million tender for the Gaborone Fairgrounds SEZ and another tender worth P14.6 million for the Francistown SEZ.

Francistown has been earmarked as a freight, logistics and mineral beneficiation hub.

Lobatse, which has been zoned as a dairy and leather industry SEZ, will be developed by local firm Gabana Architects Consortium at a value of P8.5 million. Gabana Architects Consortium also won the masterplan tender for SelebiPhikwe.

Ndzinge explained that economic activities in SelebiPhikwe will include: pharmaceuticals, medical services, agro-processing and metal beneficiation.

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Sub-Saharan Gloom

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Moody’s predict bad outlook for region

Credit Ratings and Research Agency, Moody’s has predicted tough times ahead for the Sub-Saharan region in terms of sovereign credit worthiness*.

A report published this week by the American-based Investors Service states that its 2020 outlook for sovereign credit worthiness remains negative.

Moody’s attributes this to the limited progress made in reducing risk related to increased debt burdens (a large amount of money that a country owes to another which they are struggling to repay)and debt servicing.

“While growth will remain solid, it will not meaningfully buttress income nor increase economic resilience,” predicts the respected institution, further adding that the external environment is becoming increasingly unpredictable, which aggregates existing challenges.

The rating agency warns even with the region not highly integrated into the global economy through direct trade linkages, it remains exposed through its sensitivity to changes in commodity prices and financial conditions.

“The limited capacity of most governments to respond to even modest negative external shocks exacerbates the region’s sensitivity to the more negative global environment,” it states.

Moody’s Investors service has identified three key areas which underpin its negative outlook for Sub-Saharan Africa (SSA).

These are: worsening external environment, weak government finances and subdued GDP growth.

It is reported weak government finances will continue to pose a constraint, with the rise in debt and interest burdens since 2015 having weakened the fiscal profiles of most Sub-Saharan region sovereigns.

“We expect modest fiscal consolidation for the region, with the median fiscal deficit improving to 3 percent of GDP in 2020 compared with 3.3 percent in 2019,” continues the report, further adding that while this will allow debt burdens to stabilize, fiscal profiles will remain weak overall and leave SSA sovereigns with limited capacity to employ counter fiscal policies.

The region’s debt burden is expected to decline to 51 percent of GDP this year from 54.5 seen in 2019. However, it remains significantly higher than the 40.4 percent recorded five years ago.

While there are some intra-regional differences, including Botswana, whose debt burden remains low, the general trend, according to Moody’s, implies that Sub Saharan African countries have less fiscal spaces to absorb future shocks.

Regarding GDP growth, the international rating agency predicts GDP will remain steady, but will not meaningfully buttress per capita incomes or support fiscal consolidation.

“We expect economic growth to accelerate modestly, with regional real GDP growth rising to 3.5 percent in 2020, compared with 3.1 percent in 2019,” says Moody’s.

It further outlines that the regional average is weighed down by sluggish growth in the region’s largest economies, Nigeria and South Africa, while growth in the rest of SSA will accelerate to 5.3 percent, albeit with significant variations by sub-region and economic structure.

It is alsoenvisioned that there will be a recovery in growth for commodity exporters. This is anticipated to be robust in non-energy commodity exporters like Niger, Ghana and Botswana.

A sovereign credit rating is an independent assessment of the creditworthiness of a country or sovereign entity.

Sovereign credit ratings can give investors insights into the level of risk associated with investing in the debt of a particular country/region including any political risk

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Providing crime solutions

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Providing crime solutions

Faced with the daunting challenge of unemployment, a 20-year-old man decided to go the entrepreneurship route and registered a security company.

Five years later and Ditiro Leutlwetse is still holding dear to the dream that one day First Crime Solutions will be amongst the biggest employers in the country.

“The company was specifically registered to create meaningful employment for the many youths roaming the streets,” explained the ambitious youth, whose business is based in Francistown but whose services can be hired across Botswana.

The God fearing youngster, a member of Days of Glory Church, told Voice Money he is confident of the ripple effects his company can have on society.

“Young people would gain meaningful employment and put food on the table, while some will be bread winners for their families. This is what drives me!” underlined the father-of-two who originally hails from Palapye.

Some of the services offered by First Crime Solutions include: Guarding (armed and unarmed security officers), Private Investigations, V.I.P Protection, Bodyguard, Access Control, Armed Response, CCTV Surveillance and Security Officer (dog handler).

Narrating how he arrived at the idea of setting up a security company at such a young age, Leutlwetse said a few tough years of unemployment left him thinking outside the box.

“I approached someone with the idea of registering a security company and they pointed me in the right direction. I went to the Office of the President where I filled out forms; the entire process took less than six months.”

Leutlwetse admits it has not been smooth sailing since he satisfied the vetting process from OP through the Directorate of Intelligence and Security Services (DISS).

“I knew it was never going to be easy as a new company to breakthrough in this highly competitive market. Companies prefers the tried and tested, that is why you see all the established security companies getting all the tenders,” he said.

The determined youngster added that although his company is yet to win a lucrative tender, he will never lose hope.

“I’m forever optimistic. In fact I believe this year, the wheel of fortune will finally move and we’ll get a chance to show what we can offer!” exclaimed Leutlwetse, who revealed he has submitted ‘one or two’ tender documents and is hopeful of a positive response.

The entrepreneur says his enterprise is dedicated to providing excellent services and solutions to individuals, businesses and communities.

“We’ve highly trained and well equipped personnel who are monitored hourly from their posts.”

Leutlwetse said what sets them apart from other companies is that they believe in training their security personnel. He stressed training is a vital component in ensuring that security personnel are adequately equipped to provide their clients with first-rate service.

“We do this by providing Legislated Grade Training, Site Specific Training and Ongoing Refresher Training. Refresher Training is also conducted on a regular basis to ensure the company’s prescribed standard of competency is maintained,” Leutlwetse said.

The young man further told Voice Money that they have fostered relations with other local businesses to help them deliver on their mandate should they be engaged in the foreseeable future.

“I’m not then kind to give up on my dream that is why I urge other young people to remain focused and keep doing the things they are good at. It is also important to commit to God, because all I’m doing today is through his grace,” concluded Leutlwetse humbly.

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Financial transaction tax: another way to broaden revenue

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Financial transaction tax: another way to broaden revenue

As the government looks for ways to broaden its revenue base and combat the country’s ever-widening deficit, it has been advised to consider introducing another form of tax.

Financial Transactions Tax (FTT) is a levy on a specific type of financial transaction.

It is considered a better alternative to increasing Value Added Tax (VAT).

According to local tax consultant, Jonathan Hore, FTT can be levied on transactions such as: ATM withdrawals and deposits, sale and purchase of shares, issuance of loans by banks and other financial institutions as well as other related transactions.

Currently, Egypt, Zimbabwe and South Africa are the only African nations to impose such a tax.

However, Hore feels Botswana could benefit massively from the levy, as the volumes of financial transactions that take place in the country are huge.

“For example, try to imagine how many people swipe when they purchase groceries, fuel, etc or how many EFTs or e-wallet transactions are made in a day,” he said.

Hore estimates that around 700, 000 transactions occur daily.

“If authorities could for instance levy P3.50 tax per transaction, P2.45 million could be raised daily which equates to almost P1 billion per year.”

The tax expert maintains FTT is preferable to simply increasing tax, which he warns is inflationary and would lead to increase in the prices of almost all commodities.

Outlining the advantages of FTT, Hore says besides raising more revenue than VAT, it is also non-inflationary.

This is because it does not cause an increase in the prices of goods and services, which could hurt the purchasing power of consumers.

Furthermore, the FTT charge is small and predominantly targeted at those who have the capacity to pay tax.

“A VAT increase on the other hand affects everyone, whether rich or destitute,” he noted, adding FTT is easy to collect as tax authorities simply designate selected businesses – such as banks, telecommunication companies, traders in goods and services and the Botswana Stock Exchange (BSE) – as tax collection agents.

The local VAT currently stands at 12 percent, with the last hike made in 2010 when it was increased from 10 percent.

At 12 percent, it is considered the lowest in the SADC region.

It is feared an increase would result in a surge in commodity prices, including food items.

This leads to erosion of purchasing power for consumers and disadvantages low-income earners and the unemployed.

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