Delivered by His Excellency Lt. Gen. Dr. Seretse Khama Ian Khama, President of the Republic of Botswana, to the Third Session of the Eleventh Parliament, 5 December 2016

I come before you to once again report on our country’s progress over the past twelve months, while further updating this House and the nation about our roadmap for moving forward. Let me begin by saying that having now passed the golden milestone marking our first half century of democracy and development, we will continue to take full advantage of emerging opportunities in our shared journey as a united and proud nation.

The advent of our 50th Anniversary, coinciding with the passing of the baton from Vision 2016 to our new Long Term Vision 2036, underscores the fact that we as a nation must remain focused on our national development path. It is therefore appropriate for us to contemplate the extent to which past experience, along with current planning, may assure our future achievement.

To reiterate what I said during the Golden Jubilee celebrations, our economic and social growth as a people has been and should remain, rooted in a willingness to collectively overcome any obstacle, no matter how daunting. We can do this through persistence, hard work and mutual support, while at all times placing the interests of Botswana first.

This is all the more imperative given that the era of comfortable budgetary surpluses, driven by relatively steady mineral revenues, is behind us. We must therefore emulate our forbearers by doing more to optimise the assets at our disposal.

The prime objective of our new Vision 2036 remains the delivery of prosperity for all and ensuring that every Motswana enjoys a dignified livelihood. The quality of our progress in reaching this destination will be measured across four pillars, being:

• Sustainable Economic Development;

• Human and Social Development;

• Sustainable Environment; and

• Good Governance, Peace and Security.

Taken together the four pillars provide an ambitious but realistic framework for further progress that will be translated into programmes and initiatives with measurable timeframes.

The successful implementation of Vision 2036 across the next four National Development Plans (NDP), beginning with the just approved NDP 11, will furthermore be driven by a structured delivery mechanism based on enhanced monitoring and evaluation as well as communications, change management, planning and delivery capabilities.

Government’s recent decision to rename, rationalise and increase the number of line Ministries was motivated by a need to focus more on key developmental issues as part of NDP 11, while underscoring our intention to align ourselves with a changing world.

Enhanced partnership is further required for the delivery of our flagship programmes. In keeping with my party’s 2014 pledge, programmes such as the Economic Diversification Drive (EDD) and the Economic Stimulus (ESP) and Poverty Eradication Programmes shall remain as priorities. Job creation through EDD and ESP will be increasingly linked to private sector growth, with Government playing an enabling role.

As of September 2016 the total number of Batswana who have been employed through ESP stood at 18,867, of whom 8,718 or 46% were youth. Next year will see us rolling out yet another programme, which will embrace every constituency in the country in the form of community projects. It will increase the delivery of infrastructure at local level, while providing further income generating activities and employment opportunities. This supplementary programme will be overseen by the Ministry of Local Government and Rural Development.

Economic Outlook

According to the International Monetary Fund’s (IMF) most recent World Economic Outlook report, modest global growth rates of 3.1 for 2016 and 3.4% for 2017 are expected. Recent experience, however, teaches us to treat such projections with caution. Despite initially optimistic projections, our domestic economy last year ended up with a negative growth of 0.3%, having been driven down by a 19.7% decline in mineral revenues linked to weaker global demand, aggravated by drought and the challenges we experienced in our water and energy sectors.

We anticipate an overall domestic growth rate of 3.5% for this year and 4.1% in 2017. In this respect, while the liquidation of the BCL Group of companies will continue to have economic and social implications, particularly in the area of employment, it is anticipated that it will have limited direct impact in terms of our exports, government revenues and overall growth. Government shall, nonetheless, continue to closely monitor developments with respect to the BCL liquidation process with the view of updating our macroeconomic projections as may be necessary.

Given the difficulties facing the mineral sector, domestic growth is expected to once more be driven by the non-mining sectors, more especially in Trade, Hotels and Restaurants (6.8%), Transport and Communication (6.1%) and Finance and Business Services (4.0%).

Trade and Foreign Reserves

Trends in merchandise trade as supplied by Statistics Botswana indicate that total exports for 2015 were valued at P63.4 billion, against P76.2 billion in 2014. This represents a 16.8% decrease in exports, mostly due to a fall in the demand for rough diamonds. Total imports increased by 1%, recording P73.2 billion in 2015 from P72.4 billion during 2014.

As at August 2016, foreign exchange reserves were valued at P83.1 billion, equivalent to 18 months of import cover. Of these reserves, the Government Investment Account amounted to P33.8 billion.

Budget

The overall fiscal balance for the 2015/16 financial year was a deficit of P6.63 billion, which is higher than the projected P4.20 billion. This was an unfortunate necessity, as deficits should be avoided given their potential to erode our foreign exchange reserves; as well as impact negatively on our international sovereign credit ratings, which are critical in driving economic growth and development. Government can therefore not sustain such unbalanced spending, which we will do as a last resort only under exceptional circumstances.

Our prudent macro-economic management has continued to garner international praise for buttressing financial growth and stability. In April Moody’s Investors Service affirmed Botswana’s “A2” sovereign credit rating. Moody’s analyzed Botswana’s credit profile as still stable in the context of the shock to the economy caused by low copper and nickel prices, as well as instability in the demand for diamonds.

In its October 2016 review, Standard and Poor’s (S&P) Rating Services also reaffirmed its “A-2” sovereign credit rating for Botswana. As with Moody’s the latest S&P update reflected the continued downside risks stemming from volatile commodity prices.

Planning

Let me commend the members of this House for extending the last session of this House in order to debate and approve NDP 11, the implementation of which will commence on the 1st of April, 2017. The Plan is aligned to the UN Sustainable Development Goals as well as our new Vision 2036. Consistent with its theme of “Inclusive Growth for the Realisation of Sustainable Employment Creation and Poverty Eradication” it will, in particular, address the challenges of poverty, unemployment and income inequality.

To ensure the optimal use of our natural heritage on a sustainable basis, Government, remains committed to the Gaborone Declaration for Sustainability in Africa. This commitment is being implemented through the global partnership programme on Wealth Accounting and Valuation of Ecosystem Services (WAVES). We have now developed natural capital accounts for water, minerals, energy and compiled macroeconomic indicators of sustainable development.

Economic Diversification Drive (EDD)

Since its 2010 inception the EDD Strategy has led to a significant increase in the value of Government procurement from local manufacturers and service providers; annually amounting to over P 2.2 billion over the past three financial years. To date, 1,896 enterprises have been registered under the EDD.

Implementation of the EDD Medium to Long-Term Strategy to develop sustainable sectors for economic growth and diversification is progressing, with implementation of the textile, leather and dairy sub-sector strategies.

Under the Leather Sub-Sector, the establishment of a Special Purpose Vehicle that will own, build, operate and maintain the Leather Industry Park is progressing. Eight companies responded to an Expression of Interest, which was published in June 2016 to identify potential investors. Once complete, the Leather Industry Park is expected to create direct employment of 6000 to 8000 jobs.

Implementation of the Private Sector Development Programme, a joint initiative between Government and European Union (EU) to improve enterprise competitiveness, is being administered by Business Botswana. The Programme has enrolled 100 small and medium enterprises in manufacturing; ICT; agro-industry; hotel and tourism as well as the construction and public works sectors. The Programme is further enhancing the capacities of development institutions such as LEA, CEDA, BITC, HATAB and Community Based Organisations.

Implementation of recommendations from the Beef Value Chain Study is being finalised, while six additional value chain studies for horticulture, piggery, goats, honey, morula and tourism have been completed.

Investment and Trade

During the 2015/16 financial year the Botswana Investment and Trade Centre (BITC) registered P377 million of investment expansions resulting from their investor aftercare programme, which encourages companies to reinvest locally. FDI attracted through BITC in 2015 amounted to P1.493 billion compared to P1.489 billion the previous year, while domestic investment amounted to P1.253 billion compared toP238.4 million the previous year. In 2015, BITC further facilitated exports valued at P2.2 billion.

As part of Government’s investment promotion strategy, BITC has been further attracting investment in areas of competitive advantage such as cargo and logistics, beef, coal and soda ash beneficiation, auto components, ICT and leather production.

Moving forward our potential as a centre for trade and investment has been enhanced by the recent signing of the EU-Southern African Development Community (SADC) Economic Partnership Agreement (EPA), which accords duty and quota-free market access for Botswana’s exports to the EU market. Under this Agreement, our infant industries can be protected against EU imports from established industries. The Agreement also provides for transitional safeguard measures for Botswana’s sensitive products.

Economic Development Initiatives

A Board for the Special Economic Zone Authority (SEZA) has been appointed and is already engaged a Technical Advisor for the rollout of the zones. Priority is now being given to the development of the mixed use Special Economic Zone at Selebi Phikwe.

In addition SPEDU has engaged with communities in the SPEDU Region to resuscitate and support development projects in such areas as piggery, fish farming through co-operatives and development trusts. SPEDU is also facilitating the establishment of a Regional Chamber of Commerce and the development of the strategy to incorporate the SMME’s into the mainstream economy in partnership with Business Botswana.

SPEDU is further facilitating the allocation of land for the establishment of private sector businesses including a pharmaceutical and air separation plants and an aloe Vera farm and plant. These businesses are expected to be fully operational before the end of the 2016/17 financial year, while plans to facilitate dam tourism are also underway.

From April 2015 to March 2016, 2657 entrepreneurs were trained and mentored by LEA, of whom 2033 were youth. As of March 2016, an additional 25,189 were also trained through the Entrepreneurship Awareness Workshops programme, which targets secondary school leavers, vocational education trainees, as well as prison inmates.

Government is employing sector specific strategies to promote local industries. A statutory instrument to restrict importation of salt in small quantities has been introduced to promote market access for locally packaged salt. Since its commencement two salt packaging companies have been established.

Cooperatives

Botswana’s 241 cooperatives continue to contribute to economic, social and cultural development. Government is therefore monitoring the implementation of the Co-operative Transformation Strategy, with a view to resuscitate, revamp and re-direct the development of co-operatives into competitive businesses.

Competition & Consumer Protection

The Botswana Bureau of Standards (BOBS) has developed 216 standards in such areas as the construction, chemical, agriculture and food sectors.

For its part, the Competition Authority has been overseeing merger applications involving foreign investors, among other transactions. Such cross border transactions can strengthen the capacity of local companies as well as empower citizens through ownership of shares in the merged business. In the financial year 2015/16, a total amount of P800 million was injected into the local economy as a result of such merger transactions.

The Citizen Entrepreneurial Development Agency (CEDA) remains constant in its support of citizen business start-ups. Since 2008 CEDA has funded 3,289 enterprises with a total value of nearly P 2.7 billion. During the 2015/16 financial year, it further assisted 418 new enterprises with a total monetary value of P 400 million, generating 2,952 new jobs.

Minerals

The market demand for rough diamonds improved slightly in 2016, increasing the investors’ confidence in the diamonds supply. Carat sales and revenue for this year are forecast to be 65% and 27% respectively above 2015 as a result of improved global demand.

While the BK 11 mine continues to be under care and maintenance, the Lerala Mine started production in April 2016 and has already made two sales. The Karowe mine has continued to perform well after unearthing the second largest diamond in history, the 1,111 carat Lesedi la Rona.

Copper and Nickel prices, however, remained depressed in 2016.

The downturn put BCL and Tati Nickel Mines under severe financial constraint, leading to our decision to place the BCL Group under provisional liquidation in October 2016. In taking this difficult step Government was confronted by the fact that to stay afloat the BCL companies required an additional P 2 billion over and above the P 1 billion plus Government had guaranteed for a bridging loan advanced by Barclay’s Bank in April of this year. These additional funding requirements, on top of the Barclay’s loan that must be serviced by Government, had by any measure exceeded our financial capacity for further support; more so that based on medium term projections the mines would continue to incur losses.

To secure Selebi Phikwe’s future, Government is implementing a robust Economic Recovery Plan, coordinated by the Former Bank of Botswana Governor. The plan includes provision for the accelerated implementation of the SPEDU economic diversification framework coupled with further public and private investment.

Our other copper mines also continue to struggle. Boseto Mine has been acquired by Khoemacau after undergoing liquidation in 2015. The mine remains under care and maintenance and will hopefully reopen by end of 2017. Mowana Mine was also put under liquidation at the end of 2015 and is seeking new investors.

Notwithstanding these challenges, we continue to view the mineral sector as an area of opportunity for economic growth and diversification through the promotion of further beneficiation as well as the expansion of new, including non-traditional, mining operations. In this regard, I am pleased to confirm that there are some positive developments in the energy minerals sub-sector.

Agriculture and Food Security

Over the past year the Agricultural Sector implemented ESP packages to improve access roads to production centres, use of treated sewage water for irrigation, electricity connection to production clusters, improvement of infrastructure at horticulture production areas and commissioning of a National Agro-Processing Plant. These initiatives have contributed to food security and employment creation.

The Agro-Processing plant in Selebi-Phikwe has been completed and since September 2016 is able to produce vegetables and associated commercial products for wholesale and retail suppliers.

Government is also strengthening its efforts to exploit sewage water for irrigation such as at Glen Valley where 203ha have been allocated to 47 farmers. The Serowe grey water re-use project is also progressing well and should be completed by the end of this month.

Crop production was affected by periods of extended heat waves and low moisture levels. The national cereal production for 2015/16 is 54,374.20 Metric Tonnes, which is 18.1% of the National Cereal requirement of 300,000 Metric Tonnes. A drought assessment tour conducted in February and May 2016, confirmed that though there were late rains in February - March 2016, the rainfall had been poorly distributed and below normal in most parts of the country.

In view of this, the whole country was declared drought stricken. Government will be continuing with Drought Relief and special assistance measures until 30th June 2017 except for the 25% livestock subsidy which should terminate at the end of this month. [Its raining!]

The Botswana Meat Commission (BMC) has increased its revenue from 2013 through 2015 by about 20.4%. The BMC has also grown its export to Europe from about 6,000 tons in 2013 to just over 9,000 tons in 2015, while hoping to further increase exports in 2016 to over 10,000 tons.

The dairy industry has improved as a response to the implementation of the dairy development strategy, based on increasing the number of milking cows, availing land to dairy investors and improving milk marketing through EDD.

Government continues to implement agricultural support schemes such as ISPAAD, LIMID and Agricultural Service Support Programme (ASSP) to promote food security. In this respect, LIMID has supplied 76,076 small-stock to 5,474 beneficiaries countrywide. The construction of a small stock abattoir in Tsabong has commenced to further enhance the scheme. The project is anticipated for completion in July 2018.

A special ISPAAD programme targeting Kgalagadi, Ghanzi and parts of Kweneng and Southern Districts is being implemented to assist Batswana who could not benefit from the regular ISPAAD programme. Under the ASSP, three service centres are complete, while another three are at various stages of construction.

With respect to animal health, the last case of Foot and Mouth Disease (FMD) was reported on 4th August 2015 in the North West District. This opens the door for us to negotiate new markets for beef from this District. The FMD situation in the North East District has stabilized as a result of the continuing implementation of joint control of the disease along the shared boundary with Zimbabwe. This has led to re-listing of the Francistown BMC abattoir for export to the EU.

Government will submit applications for FMD free status for zones 3b (Nata-Gweta) and 7 (Mmadinare-Bobirwa) to the World Organization for Animal Health in May of next year.

There has, however, been an increase in livestock mortalities, especially cattle, in areas south of the Central District and northern Kgatleng and Kweneng Districts due to plant poisoning (Parvetta, called legonyana in Setswana). Under Agricultural Research and Development, maize and sorghum varieties, which are tolerant to drought, have been released. In addition Musi breed is currently being multiplied.

Rural Development

Diversification of the rural economy can foster job creation by creating resilient communities. In this regard, our rural areas are being transformed through the provision of social and physical infrastructure such as roads, schools, health facilities, water and telecommunications. Continued support for such transformation is being driven by the Rural Development Council.

Gender

Government continues to give priority to the promotion of gender equality and women’s empowerment by, among other things, the domestication of the Convention on the Elimination of all forms of Discrimination against Women. We have also adopted the National Policy on Gender and Development which promotes gender mainstreaming for sustainable development. To facilitate effective implementation of the policy, the National Gender Commission has been established and launched in September 2016.

We further recognise the need to be proactive in eliminating Gender Based Violence. To this end, we have piloted a Gender Based Violence Referral System, which allows referrals to be made electronically, relieving survivors the ordeal of having to repeat their story to each and every service provider assisting them.

The Women Economic Empowerment programme has expanded over the years from a budget of P300,000 per year which supported 20 women organisations and business to a total of over 30 Million Pula supporting over 600 beneficiaries.

International Relations

Botswana continues to be an active and influential player on diverse issues of national interests at bilateral, regional and multilateral fora. As a member of the community of nations that cherishes freedom, peace, good governance and the full enjoyment of life, it is in our strategic interests to contribute towards addressing the increasing global challenges of climate change, food security, conflict, terrorism and transnational crime.

We continue to be deeply concerned by the growing number of armed conflicts in various parts of the world. In the case of Syria, we note that, according to the International Committee of the Red Cross, protracted fighting has already caused over as quarter million deaths and 1.5 million casualties, while resulting in the displacement of some 12.5 million people. The escalation of conflicts in the Middle East and elsewhere, along with the blatant violations of universal values by some, is quite disheartening. We shall, therefore, continue to appeal to others in the international community, particularly at the level of the United Nations Security Council, to step up our collective efforts to bring an end to this ongoing trans-national disaster.

We have reaffirmed our commitment to the International Criminal Court and International Criminal Justice system. We are furthermore at an advanced stage in domesticating the Rome Statute, and making it part of our national laws.

Consistent with our commitment to uphold international peace and security, in April 2016 Botswana was elected a member of the African Union Peace and Security Council for a period of two years. We were also pleased to have been re-elected as a member of the United Nations Human Rights Council, which is a clear manifestation of the respect we enjoy in the international community.

We have further remained engaged in finding solutions to peace and security challenges in our own sub-region. In the context of my chairmanship of SADC, I convened two Summits of the SADC Double Troika which were aimed at addressing instability in the region.

As SADC Chairperson, I also convened three ministerial workshops to deliberate on the challenges experienced by the SADC relating to food insecurity and poverty eradication; water and energy crisis; as well as curbing illegal trade in wildlife. The workshops culminated in the drafting strategies that were subsequently adopted at this year’s Summit.

The progress we have made over the past 50 years has been facilitated by the generous assistance we have received from our international partners. I, therefore, take this opportunity to once more acknowledge and thank all of the countries and international organisations, including private institutions and individuals, who have supported us in our journey.

Yesterday our hearts were with the Cuban people as they said farewell to their former President Fidel Castro; who will be forever remembered for his steadfast support for our region’s liberation. We in Botswana shall remain further grateful for the generous assistance that we have continued to receive from the Government and people of Cuba, especially in the areas of medical personnel, sports and human development. This contribution is all the more remarkable given that Cuba itself is a developing nation.

Conclusion

Let me conclude my remarks by once more observing that we as a people are standing on the launch pad to greater heights. Our 50th Anniversary celebrations this year were a reminder of not only past achievement but also our potential for greater things if we remain united and focused in our shared aspiration to build a better Botswana. The domestic impact of the continued volatility in global markets was, however, a stark reminder of the risks we face in our progress.

Over the past year our unity and patriotic commitment as a nation was symbolised by the wearing of our national colours of blue, white and black. Moving forward I take this opportunity to call on Batswana to continue to make Friday’s our National Colours Day, as a reminder of where we have been and where we wish to go as a united and proud people.

In achieving our vision of a better future, while overcoming our current challenges, it is not enough that we have sound plans and a practical as well as positive long term vision. To succeed we must become much more urgent in our delivery. This is a daily challenge for all of us, both inside and outside Government. Overreliance on the state is not a sustainable much less optimal path to 2036.

As we chart our path forward, let us also be mindful and continue to seek the blessings of the Lord who makes all things humanly possible. As a nation united under God’s mercy, I would like to encourage religious leaders to continue to join together in organising common prayers for rains and the wellbeing of the nation.

Finally, let me take this opportunity to wish everyone in this nation a joyous and safe Christmas Holiday season and a happy New Year to come. May God bless us all.