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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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Business

Letlole La Rona suspends CEO

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Letlole La Rona (LLR), a property company listed on the Botswana Stock Limited (BSEL), on Tuesday moved to suspend its Chief Executive Officer, Chikuni Shenjere-Mutiswa.

His suspension, according to a notice to shareholders, follows preliminary findings arising from an investigation into issues relating to the company’s Long-term Incentive Plan.

Mutiswa who was appointed LLR CEO in June 2018, is said to have been suspended with full benefits pending the outcome of the full investigations.

Commenting on the latest developments, LLR Board Chairperson, Boitumelo Mogopa noted good governance remains sacrosanct to the board and all staff of the company.

“The preliminary findings of the possible misconduct arising from the investigations relate to the circumstances around the company’s Long-term Incentive Plan during or around March this year and possible acts or omissions by an individual in a unique position of power,” said Mogopa.

Mogopa said this by no means reflects the integrity of the board, financial performance and company portfolio.

“For us, it remains business as usual as the due process takes its course,” said Mogopa.

Meanwhile, the board has in the interim appointed Botshelo Mokotedi to hold the fort on an acting basis while investigations continue.

Mokotedi is seconded from Botswana Development Corporation (BDC) – a major shareholder in LLR – where he is the Head of Risk.

He is described as a forward-thinking, highly motivated and results-oriented individual with more than a decade experience in the financial services sector across a variety of senior roles, including Business Development, Credit Analysis as well as Portfolio and Risk Management.

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Cutting trees, increasing profits

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Cutting trees, increasing profits

When Innocent Tlhabano set up Archgate Solutions in 2011, the business was primarily centered around landscaping and supplies.

However, a change in direction last year, to focus on tree cutting and large area grass business, proved the change in fortune Tlhabano craved.

Reminiscing on the unusual path that led to this latest venture, the 33-year-old Tonota native explained he received funding from the Youth Development Fund (YDF) for beef production in 2017.

“Due to the fact that beef production takes a while and as a way to diversify streams, we into tree cutting to supplement our income,” highlights Tlhabano, a Mechatronics Engineering graduate from the University of Sheffield in the north of England.

“The type of tree cutting we do is mostly for government and private companies, predominantly for those trees that grow to the level of power cables, as they cause lots of power cuts,” he told Voice Money.

Cutting trees, increasing profits
CHOPPING DOWN TREES: Archgate Solutions at work

The business currently has six permanent employees but can hire up to 80 workers when contracted for large-scale projects.

Although he describes business in the last year as good, Tlhabano admits it is not quite a bed of roses.

“We are looking to expand and we have recently been working with Turnstar, owners of Game City mall. They have a number of properties around Gaborone and have engaged us to help them trim their trees and keep everything tidy,” revealed the tree-trimming boss.

Tlhabano is proud of the progress his enterprise has made since their first major project at Motswedi Junior Secondary School in Gaborone.

“It gave us a boost and from the proceeds we were able to procure much-needed equipment. Since then we have grown because now we are doing large area grass cutting. We have bought tractors for such jobs and lawnmowers,” he said.

Though based in Gaborone, Archgate Solutions offers its services nation-wide and is part of the team working on the power line from Palapye to Maun.

Cutting trees, increasing profits
CHOPPING DOWN TREES: Archgate Solutions at work

“We have been engaged as a sub-contractor by another company to provide bush-clearing services because we have the right equipment.”

As for some of the difficulties encountered, Tlhabano decried, “The main challenge we face is that there is no continuity in projects. We do a project then we have to wait a little bit longer for another one to come. We also found out that the government procurement process takes long.”

He noted that even if a government department wants to engage the company, the procurement process can take up to two months.

Despite these frustrations, Tlhabano has big plans for the future –plans that include potentially expanding across borders.

“We are thinking that maybe in the coming few years, we should explore if we can get some business outside the country. We are also looking at entities such as Botswana Power Corporation (BPC) because they have lots of jobs for tree cutting to clear their power lines,” he outlined.

As for the more immediate future, Archgate Solutions intend to further engage property companies to take care of their properties as far as tree trimming is concerned.

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