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Three budget deficits in a row

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Three budget deficits in a row

Experts unconcerned as deficits are decreasing

Although government has recorded three successive budget deficits for the first three years of the National Development Plan (NDP) 11, observers note that the deficits are decreasing.

On Monday, Minister of Finance and Economic Development, Dr. Thapelo Matsheka delivered his maiden budget speech, painting a picture of how the national cake will be shared for the 2020/2021 financial period.

According to Matsheka – who doubles as a Member of Parliament for Lobatse – his budget speech responded to the need to transform the economy to a high-income status.

He announced that a budget deficit – when spending exceeds income – of P5.22 billion is projected, which represents 2.4 percent of the nation’s Gross Domestic Product (GDP).

Matsheka noted this marks a significant drop from the 3.9 percent deficit forecast for the previous financial year.

“It represents the first step towards a healthier fiscal position,” declared the Minister.

Speaking to Voice Money shortly after Matsheka’s speech, Chief Economist at First National Bank Botswana (FNBB) Moatlhodi Sebabole confirmed it is evident deficits are dropping.

“It is clear deficits are going down, which is in line with government objectives to keep it at a bare minimum of 4 percent of the GDP,” said Sebabole, adding that another notable highlight was for government to see the economy ‘coming into the hands of the citizens’.

He further mentioned government’s intention to streamline State Owned Enterprises (SOEs) to align them with the transformation agenda.

At the moment there are over 60 SOEs, ranging from regulatory, through academic to commercial ones.

Created to achieve specific goals, Minister Matsheka noted that the poor performance of some of these enterprises indicates they have lost their direction over time.

Indeed, Sebabole feels government is going in the right direction by revisiting the mandates of these organisations.

“While the idea sounds good on paper, implementation will, however, remain key,” warned the Chief Economist.

For his part, FNBB Chief Executive Officer, Steven Bogatsu admitted he had anticipated the deficit to grow due to the rise in public service salaries introduced last year.

“If the Minister has managed to curb the budget deficit to about 2.4 percent, I think he has done very well to try to attempt to balance it,” praised Bogatsu.

He told Voice Entertainment it was also encouraging to note that the Minister has acknowledged the importance of Public Private Partnerships, particularly in the private sector.

Bogatsu also described the reduction of SOEs as a ‘welcome development.

In terms of priorities, the CEO feels the P8.56 billion allocated to the Ministry of Defence, Justice and Security was way more than necessary.

“So, I believe going forward there is still an opportunity to reduce allocation to defence and channel it to more pressing needs such as education and health,” stressed Bogatsu.

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IDM’s Richard Malikongwa and Dr Onalenna Seitio-Kgokgwe receive top awards

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Richard Malikongwa, a seasoned Human Resource and Corporate guru who serves as IDM Regional Director and Chief Executive, was bestowed with the highest award of the Congress of “Chief Executive Officer with Human Resource Orientation”, while Botswana Country Director, Dr Onalenna Seitio-Kgokgwe received the Women Super Achiever Award.

Dr Seitio-Kgokgwe is also a recipient of the 2018/2019 Global CEO Africa’s Most Influential Women in Business and Government Awards.

The two Executives are commended for steering transformation at IDM and taking the Institution to higher levels as evidenced by amongst others; the Institute’s exponential growth and deliberate focus on people, since assuming their roles in 2016.

Chairperson of the Institute of Development Management, Governing Body and Director of Public Service Management Naledi Mosalakatane has commended the duo for the achievement.

Mosalakatane says IDM Board and Staff are proud of their sterling job of steering IDM to greater heights, further delivering excellent results.

According to the Founder of World Sustainability Congress, Dr R. Bhatia, the CEO with HR Orientation is the highest accolade which recognizes a Chief Executive in the global scene who employs the right combination of interventions to drive business performance, who is authentic and people oriented, and aligns his diverse teams to achieve solid business results on sustainable basis.

On the other hand, Women Super Achievers award is a reflection of professional achievement by women of the world who set a big example for transformation and change. The award celebrates the most respected and much sought-after Women Leaders in the industry who contribute immensely to the field of Women Platform, as well as nurturing talent, having trained several young people to grow in their profession.

The World HRD Congress is a global event which attracts thousands of international professionals from over 100 countries around the world.

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The Power of now

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The Power of Now

Key decisions needed regarding power generation in Botswana

2020 is set to be a landmark year for Botswana in terms of investing in electricity production.

According to the latest economic review from research specialists Econsult, this year the country must decide the path it intends to take for future power generation.

While it is appreciated that the new capacity is not needed anytime soon, economists warn that key decisions need to be taken now as energy generation investments are large and take years to implement.

The big question, according to the review, is whether the country intends to continue to rely on coal as its main source of energy or switch to large-scale solar power generation.

Since it started producing its own power, Botswana has been heavily reliant on coal-fired power stations for energy.

Having established the 132Megawatt (MW) Morupule A Power Station back in 1989, by 2014 the country, through the Botswana Power Corporation (BPC), commissioned a larger power station, Morupule B at a capacity of 600MW.

However, the two have never been enough to meet local demand as the country still imports a considerable portion of its power.

According to the Econsult report, electricity consumption in Botswana has been increasing at an average of 4.6 percent a year over a three-decade period from 1989 to 2018.

It is for this reason that a number of options are proposed for Botswana to consider, the most prominent being solar power generation.

Although the country experiences sunlight all year round, solar energy remains largely unexplored in Botswana.

“Most current solar power initiatives are private and small-scale, mostly in off-grid locations such as farms and safari camps,” notes Econsult.

Plans have been in the pipeline since 2017 to develop two 50MW solar generation facilities to supply power to the national grid. However, neither initiative has got past the tender stage.

Indeed, although solar energy presents a huge opportunity for the country to attain self-sustenance, it is believed there is still preference for coal-fired power station. Experts point to the proposed 300MW Morupule B Units 5/6 Project as evidence of such a mindset.

Econsult believe going with another coal-fired power plant would be inconsistent with Botswana’s Climate Change Strategy.

Another option available for the country is to explore is Coal-Bed Methane (CBM). There are already projects in the pipeline, with Tlou Energy at an advanced stage with its CBM project.

Econsult has urged government to choose quickly where its next 300MW of power will come from.

It has, however, warned that choosing coal over solar power runs the risk of being ‘backward-looking’ rather than anticipating likely technical, economic and political changes over the next two decades.

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Barclays completes Absa transition

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Barclays completes Absa transition

The start of the week saw Barclays Bank Botswana finally complete its transition to Absa Bank Botswana Limited.

The name change comes almost four years after main shareholder Barclays PLC announced it was ending its presence in Africa following 100 years in the continent.

Barclays PLC, a London based lender, was a 63.2 percent majority shareholder in Barclays Africa Group Limited (BAGL), which in turn operated in a number of African markets such as Botswana, South Africa, Kenya, Tanzania and Ghana.

Since the March 2016 announcement, Barclays PLC gradually reduced its controlling stake and has now become a minority shareholder.

In July 2018, Barclays changed its name back to Absa after the London bank sold the majority of its shares, which were primarily acquired by South Africa’s Public Investment Corporation.

The rebranding exercise was soon rolled out across the continent, with local operations starting their own rebranding late last year.

This came after local shareholders had in June 2019 approved changing the company’s name.

The bank also announced this week that it has obtained approval from the Companies and Intellectual Property Authority (CIPA) for the name change.

Despite the new look, the bank’s executives have stressed operations will continue as they did under the previous name.

According to the bank’s Public and Media Relations Manager, Spencer Moreri, the whole separation exercise for local operations cost a total of P16 million as of June 2019.

However, as the company is still on closed period, Moreri explained that the final amount spent will only be disclosed when Absa releases its financial results, which is expected to take place next month.

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