Botswana State of the Nation Address 2018
Delivered by Dr. Mokgweetsi E.K. Masisi, President of the Republic of Botswana, to the First Meeting of the Fifth Session of the Eleventh Parliament, 5 November 2018
Mister Speaker, Honourable Members, this being the first time that I come before you to report on our country’s progress over the last twelve months, is an apt opportunity to also update this House and the nation about our roadmap that seeks to take this country to greater heights.
During my Inauguration Speech on 1st April, 2018, I made several policy pronouncements which are primarily meant to address, as a matter of urgency, the twin problems of poverty and unemployment particularly amongst our young people who constitute sixty per cent of this country’s population.
In pursuit of these noble development objectives, we continue to be guided by the pillars of our pdf National Vision 2036 (2.97 MB) which provide for broad based, inclusive, comprehensive and complementary National Development.
In order for us to achieve our overarching objectives, Government is in the process of developing a National Transformation Strategy whose key objective will be to unlock the tremendous potential of our human and financial resources. It will also broaden and deepen the beneficial participation of citizens in all sectors of the economy.
Underpinning the National Transformation Strategy will be the national value system that will promote the spirit of entrepreneurship and commitment to development. In addition, our public institutions will be revitalized and they in turn, will renew their commitment to serve effectively with purpose and agility.
In this regard, a National Monitoring and Evaluation Framework is also in place to ensure that we achieve the targets that we have and will continue to set for ourselves.
Our current pdf National Development Plan 11 (NDP 11) 2017-2023 (4.47 MB) , is due for its Mid-Term Review in the next financial year. It is during this process that most of our transformative adjustments will be effected.
Performance and Outlook of the Domestic Economy
Growth in the Real Sector
After recording a moderate growth rate of 4.3 percent in 2016, the domestic economy slowed down to 2.4 percent in 2017, mainly as a result of the weak performance of both the Mining and non-Mining sectors. In terms of the domestic outlook, the economy is expected to strengthen in the medium-term, driven by positive growth in both Mining and non-Mining sectors. Among the non-Mining activities where such positive growth is expected are the services, in particular the tourism and retail sub-sectors.
Merchandise Trade, Balance of Payments and Foreign Exchange Reserves
The merchandise trade balance continues to be driven by trade in diamond, mainly from De Beers Global Sight-holder Sales, which includes a substantial re-export trade for rough diamonds. During 2017, total exports were valued at P60.15 billion compared to P80.34 billion recorded in 2016. The decrease was largely due to weaker global demand, which restricted diamond sales from Botswana. Total imports were valued at P54.9 billion, representing a decline of 17.9 percent from P66.86 billion in 2016. As a result, the trade balance was in surplus of P5.25 billion in 2017.
Balance of Payments
The balance on the current account was a surplus of P22.23 billion in 2017, attributed to improved revenue inflow from the Southern African Customs Union (SACU), which increased by 35.5 percent from P12.8 billion in 2016 to P17.3 billion in 2017, as well as a modest surplus in the merchandise trade account.
Overall, the balance of payments was in deficit of P3.3 billion in 2017, compared to a surplus of P2.8 billion recorded in 2016. The deficit was mainly attributable to Government’s financial obligations, including: funding of Botswana’s Diplomatic Missions in various countries, payments for imports and external loan repayments, resulting in withdrawals from foreign exchange reserves. Foreign currency revaluation losses, which resulted from the appreciation of the Pula against the US Dollar, also contributed to the overall deficit balance.
Foreign Exchange Reserves
As at December 2017, foreign exchange reserves amounted to P73.7 billion, a decline of 4.0 percent from the P76.8 billion recorded in December 2016. The foreign exchange reserves have since increased to P75.1 billion, as at the end of July 2018. Of this amount, the Government Investment Account amounted to P34.75 billion, which represented 46.3 percent of the country’s total foreign exchange reserves.
Financial Inclusion Strategy
Financial Inclusion is achieved when consumers across the income spectrum in a country can access and sustainably use financial services that are affordable and appropriate to their needs. To achieve this, Government has developed a National Financial Inclusion Roadmap and Strategy that runs from 2015 to 2021. The strategy provides a holistic outlook of the financial needs of the society, and indicates how the financial sector should be improved to provide better services and financial products that promote financial inclusion. The Strategy is being implemented by various stakeholders including Ministries, Regulators and Financial Institutions, among others, under five priority areas namely: Improvement of Payments Eco-System; Facilitation of Low Cost, Accessible Savings Products; Development of Accessible Risk Mitigation Products; Improvement of the Credit Market and Consumer Empowerment and Protection.
Small and Medium Enterprises (SME) Development
The development of SMEs remains central in Government’s development agenda. To this end, Government is undertaking initiatives that will facilitate development of SMEs. Such initiatives include, establishment of Centres of Excellence country-wide, where SMEs productive capacities and competitiveness will be developed.
Furthermore, Government is collaborating with Development Partners on the implementation of Enterprise Development Programmes. Some of these include, Tokafala, which is a collaboration with Debswana, De Beers and Anglo American. The Programme is budgeted for Eight Million United States Dollars (US$8 million) of which, Government’s contribution is Four Million United States Dollars (US$4 million). The Programme will be implemented in three years, commencing in 2019 targeting SMEs across all sectors of the economy.
The other initiative is the Supplier Development Programme (SDP), whose objective is to strengthen citizen-owned enterprise competitiveness. The aim of the Programme is to connect small-scale producers/suppliers to local markets as well as abroad. The Programme is anticipated to start in 2019 and will target five (5) priority Sectors of Mining, Agro processing, Leather, Infrastructure projects and Textile, as well to develop their associated value chains.
Economic Diversification Drive (EDD)
We remain committed to using Government purchasing power to boost local productive capacity and help build competitiveness for our industries in the regional and global markets. To this end, Government through the support of the United Nations Development Programme (UNDP) is undertaking a comprehensive review of the Economic Diversification Drive (EDD) Strategy with a view of making it more relevant and impactful. The review is taking into consideration the institutional capacities to effectively implement strategy project policies, programmes and initiatives. The review is expected to be concluded by end of this year.
As part of sectoral development and efforts to develop the Leather Sector, preparatory work for the construction of the Leather Industry Park in Lobatse is at an advanced stage. All the preliminary works including, the establishment of Special Purpose Vehicle; approval of the Environmental Impact Assessment and Environmental Management Plan; and the appointment of the Project Management Team and the Technical Advisor have been completed. The Leather Industry Park Business Model is currently being updated in line with the current industry landscape. The construction of the Leather Industry Park is expected to take off in 2019.
We have recognised investment promotion as key to economic growth and job creation, as it leads to expansion of existing, and establishment of new industries. We have since embarked on a transformation agenda to lure investors to our country through a revamped investment promotion drive which I am leading. These missions are to ensure Botswana’s visibility and position us as an investment destination. We are building the goodwill in the global village through Brand Botswana initiatives including investment booths, marketing our arts and culture, cuisine, dance and song.
In addition, we are also working on stimulating domestic investment by ensuring that the same red carpet in offer for FDI is also available for domestic investment. Further, plans are advanced to establish the Economic and Investment Board, which I shall Chair, and which is expected to be operational in 2019. As part of this work, prior key milestones include establishment of an Investment Clearing House to ensure facilitation of ease of investment.
In the year 2017/18, through the Botswana Investment and Trade Centre (BITC), generated One Billion Eighty-Two Million Pula (P1.082 billion) worth of Foreign Direct Investment (FDI) and Two Billion Nine Hundred and Twenty Million Pula (P2.92 billion) from domestic investment and expansions in the country. This points to a notable increase in domestic investment, which underscores the increasing confidence of local investors in the economy. The new investments made in 2017/18 resulted in creation of an additional 3 050 jobs, of which 2 008 jobs were created from FDI inflows and 1 142 from domestic investment and expansions.
With a view to enhance export competitiveness of local companies to enable them to compete regionally and internationally, Government is reviewing the Botswana Exporter Development Programme (BEDP). In 2018/19, BEDP will enrol twenty (20) companies to assist them to develop their export marketing plans to enhance their export readiness and competitiveness. The Programme will build capacity for companies to supply both the local and international retail chain stores.
Meanwhile, following the launch of the Botswana One Stop Service Centre (BOSSC) in October 2017, investors continue to be facilitated through shortened and simplified administrative procedures and guidelines for issuance of business approvals, permits and licences. The approval rate for BOSSC authorizations for the year under review stood at 81 percent, a significant improvement when compared with previous rates. I therefore, wish to urge the Business Community to take advantage of the streamlined business processes provided by the BOSSC.
Implementation of the SPEDU Revitalization Programme is underway. We have approved a set of incentives for this region which include a 5 percent corporate tax rate for the first five (5) years and 10 percent thereafter. Seven (7) of the eight (8) companies assessed have been approved. The revitalization program in total has resulted in sixteen (16) projects which have created seven hundred and eighty-one (781) jobs in the following Sectors, Agri-business one hundred and ninety-two (192); Manufacturing three hundred and ninety-nine (399); Infrastructure Development one hundred and thirty-seven (137); and Information Communication Technology fifty-five (53). Besides these, a total of eleven (11) potential investors are being facilitated by SPEDU for business start-ups and land acquisition. The number of jobs to be created from these will increase investor confidence, and should itself attract others to follow.
Special Economic Zones
Preparations for operationalisation of the Special Economic Zones is nearing completion with Regulations and Incentives for the SEZs being finalised for consideration by Government this financial year. SEZs are a key component in advancing our goals towards export-led economic growth. It is also worth noting that we will roll-out Public Private Partnerships (PPPs) in the development of infrastructure in the SEZs.
On another note, I would like to take this opportunity to inform you that the first company to operate in one of our SEZs will start production during the fourth quarter of this financial year with the potential of making Botswana the largest exporter of processed poultry meat in the whole of Africa. The initial setting up investment capital of the company amounts to Two Hundred Million Pula (P200 million). This investment together with many others will have downstream linkages with local industry and service providers such as in transport and logistics, financial and other related services.
Doing Business and Business Facilitation
In an effort to continuously improve the doing business environment and the economy’s competitiveness, Government continues to monitor and evaluate all the processes and procedures as well as the regulatory instruments. Government has therefore reviewed the Doing Business Reforms Roadmap to take into account emerging issues at home, in the region, and beyond. Implementation of the revised Roadmap should complement our reinvigorated efforts of attracting and retaining meaningful, sustainable and impactful investment. Treat this, Mister Speaker, if you will, as one of the numerous elements in my Road Map to enable and ease investments which will lead to jobs, and more jobs, being created.
This year we have passed a number laws which will enhance the ease of doing business environment in Botswana. Worth noting in terms of completed reforms, is the introduction of the new Customs Management System (CMS) which has improved trade across borders where business can pre-declare their goods and make payments online. The same online system forms the basis upon which a Single Electronic Window tool would be built to further enhance cross border trade.
Furthermore, Parliament has passed four (4) Bills on Companies Amendment; Companies Registration; Registration of Business Names; and Registration of Business Names Re-Registration) which have enabled the development of an Online Business Registration System under the Companies and Intellectual Property Authority (CIPA). At the initial stage, this System will allow for integration with online systems from BURS and PPADB, thereby facilitating information exchange between these tripartite institutions. This is anticipated to limit unnecessary physical interactions with these institutions.
To improve the regulatory framework, Government has engaged an expert to guide implementation of the Strategy for regulatory impact assessment, with a view to remove all regulatory hurdles to business and reduce the cost of doing business in the country.
In our endeavour to support innovation, we will do all in our power to ensure that youth owned enterprises are assisted to harness their potential. This, we intend to do through, among others, making affordable the process of registering patents as a way of utilising intellectual property to grow our economy.
It is the intention of my Government to enable and ease patent development and protection as pre-requisites to growing and trading on our knowledge capital. To this end, specialized training will be offered by Government to train lawyers to qualify in the specialities of patent and copyright law. Furthermore, in our quest to enhance our job creation potential and innovative, productive outputs, we shall find a job for our top achievers in their fields of study, through a strategically managed talent and young professionals programme. Efficiency, productivity and competitiveness shall be the guiding values of such a programme.
As Government continues to work towards a more conducive business environment, it is expected that the private sector will align their investment with key priority areas as well complement efforts to build local productive capacity for SMEs. For instance, Government is working with the Retail Sector to develop the Retail Charter to ensure that Batswana benefit from the retail value chain. Government will also continue to implement sector specific interventions and initiatives to stimulate investment and job creation. This will include deliberate interventions to promote manufacturing of goods in Botswana.
During the year 2017/18, export development and promotion efforts yielded a total of Two Billion Three Hundred and Sixty Million Pula (P2.36 billion) in export revenue against Two Billion Two Hundred and Thirty Million Pula (P2.23 billion) generated in the previous period. This gives comfort that we are moving in the right direction as we strive to being an export-led economy. To this end we will vigorously promote the export of meat and fresh produce to new markets, and in so doing, utilize existing meat export channels to export fresh produce. Furthermore, we continue to negotiate Trade Agreements which will guarantee us preferential access to third party negotiating partner states.
Tripartite Free Trade Agreement (TFTA)
Botswana signed the Tripartite Free Trade Area (TFTA) on the 30th January 2018. The Tripartite Negotiating States are the twenty-seven (27) members of the three (3) regional groupings of SADC, the Common Market for East and Southern Africa (COMESA) and the East African Community (EAC). The Agreement offers potential access to a market of a population of around six hundred and twenty-five (625) million people. To date, twenty-two (22) States have signed the Agreement, while only three (3) have ratified from the fourteen (14) required ratifications for it to enter into force. Tariff negotiations with Egypt and the EAC are on-going, once the Agreement enters into force we can have preferential access in these markets for our beef, salt and plastic tubes among other products. It goes without saying that our output and efficiency will have to improve to serve such a big market. And here once again, Mister Speaker, is where I place my conviction on the jobs that we will create.
African Continental Free Trade Agreement (AfCFTA)
Flowing from the TFTA and in pursuance of the Vision 2063 of the African Union and Boosting Intra-Africa Trade (BIAT) Initiative, we are nearing the conclusion of negotiating a Continent-wide Trade Agreement. This is expected to make the movement of goods and services easier across the continent. The AfCFTA will present opportunities to markets of over one (1) billion people living on the Continent with potential value of over 1 trillion US dollars in trade across the Continent. It is envisaged that the outstanding issues will be resolved at the December, 2018 African Ministers of Trade meeting, thus paving the way for Botswana to sign the AfCFTA at the AU Assembly of Heads of State and Government in January, 2019.
SACU + Mozambique Economic Partnership Agreement with the United Kingdom
We are currently, together with the rest of SACU and Mozambique, negotiating an Economic Partnership Agreement (EPA) with the United Kingdom. This Agreement is necessitated by the impending exit of the United Kingdom from the European Union (EU) which means that the former can no longer be a party to the SADC-EU Economic Partnership Agreement. In view of the importance of the United Kingdom market for our goods and services, together with the fact that it has hitherto been the point of entry for our goods into the EU, it was imperative that we conclude the Agreement with the UK to ensure that there are no trade disruptions. Negotiations for the Agreement are at a very advanced stage and it is envisaged that the SACU + Mozambique and the UK EPA will be signed sometime in December, 2018 in Botswana.
Review of the SACU and European Free Trade Association Free Trade Agreement
Botswana is also part of the negotiations to review the Free Trade Agreement (FTA)) we have with the European Free Trade Association (EFTA) states of Switzerland, Norway, Liechtenstein and Iceland. Of particular importance to us is the need to increase the current quota of 500 tonnes of beef and 500 tonnes of lamb that we enjoy together with the Republic of Namibia through our bilateral agricultural agreement with Norway. We are also working at convincing our Norwegian counterparts to transpose the additional quota of 2700 tonnes for beef that we enjoy under the Generalised System of Preference (GSP) into the FTA so as to offer us certainty that will allow us to plan ahead.
In this respect, projects such as the Lobu Farm Cluster Development, for small stock production, in Kgalagadi District will benefit immensely from this guaranteed market once fully operational. Indeed, it also offers an opportunity for all small-stock farmers across the country to expand and grow their production in the knowledge that they will have an all but guaranteed market. It is the intention of Government to replicate the Lobu model, however, to be lead by the private sector, in other parts of Botswana.
Declaration on Trade and Women’s Economic Empowerment
The Government of Botswana and the International Trade Centre (ITC) recently signed the Buenos Aires Declaration on Trade and Women’s Economic Empowerment to adopt initiatives that support women participation in trade.
On the international front, Botswana continues to pursue an active and influential role in the advancement of various issues of national interest at bilateral, regional and multilateral levels. Our foreign policy seeks partnerships and fosters international cooperation to advance the national development agenda. Equally, in line with my pledge, we endeavour to do our part to contribute to finding solutions to the global challenges that afflict humanity.
I must further affirm that in seeking to achieve these goals, Botswana’s policy shall remain fully anchored on the ideals and values of peace, democracy, equality, and good governance. I have thus committed Botswana to vigorously engage with the international community by among others, participating at fora that promote those fundamental principles and values, as well as, issues of strategic interest such as trade and investment, environmental issues, wildlife conservation, and trade and investment, among others.
Immediately after taking office, I advanced our foreign policy objectives by paying courtesy calls on my counterparts in our regional organization, the Southern African Development Community (SADC). While these were mostly introductory visits, they served to affirm the importance we attach to our relations with our most vital and critical partners, with whom we share borders, deep historical, political, cultural and socio-economic ties.
I am pleased to report that we continue to make headway towards making Botswana a business destination. This is demonstrated by among others, the numerous strategic regional and international meetings that Botswana has hosted thus far since April, 2018. I was therefore honoured to host the 6th SACU Summit during the Botswana’s chairmanship, in June, 2018. This afforded us an opportunity to provide strategic leadership towards advancing the SACU Work Programme. Regarding SADC, Botswana as both the founding member and the host of the SADC secretariat, attaches great importance to the work of our regional organisation and continues to contribute to the regional integration agenda. 80
On the continental front, Botswana will continue to play an active role in advancing the transformational agenda as envisioned in Agenda 2063, advocating for a transparent and inclusive institutional reform process of the African Union. In that regard, Botswana has initiated the process to join the African Union Peer Review Mechanism.
At the global level, we will continue to actively participate in the work of the United Nations in pursuit of sustainable development, as well as the maintenance of international peace and security. The Human Rights Council remains significant in the promotion and protection of human rights and fundamental freedoms, which we strongly support. With regard to the International Criminal Court (ICC), its work will remain relevant to Botswana, as we believe it has a paramount role as the only international criminal tribunal for war crimes and crimes against humanity.
In a nutshell, Botswana’s foreign policy will continue to be guided by the principles of: democracy; development; self-reliance; unity; botho (humility); peaceful resolution of conflicts; peaceful co-existence and good neighbourliness; territorial integrity and sovereignty of nations; respect for human rights and rule of law; good governance; a rules-based world order, and adherence to principles of international law. Based on these enduring values, Botswana’s foreign policy document is being compiled, and will, once completed, serve as an authoritative point of reference.81
Batswana are all aware that the transition from the previous administration has not been as smooth as expected. However, it ought to be noted, I have in my attempt to smoothen the process engaged senior citizens namely; His Excellency Dr. Festus Mogae, His Honour Dr. Ponatshego Kedikilwe, Honourable Ray Molomo, Honourable Patrick Balopi and Honourable David Magang to assist and lead in smoothening the transition. I regret to announce that their efforts have not borne fruit up to this point.
In the true tradition of Botswana, such mediation should be managed, for the benefit of everyone. Worth noting, however, is that there is in place legislation that governs the benefits and entitlements of Former Presidents. I have no intention whatsoever of breaking the law. I intend to apply the law to the letter. The search for a lasting settlement shall continue.
Let me conclude by once more reiterating the fact that my Government places its citizens at the centre of its socio economic development agenda. To this end, we have to ensure that citizens continue to enjoy the economic prosperity of this country as well as their individual and collective freedoms and rights, as enshrined in the Constitution.
As a nation that is well known for peaceful coexistence and tolerance for diversity of cultures, we have to continue to work together to achieve our common goals. This is the only practical way we can achieve the aspirations of our National Vision 2036 which are aimed at “Achieving Prosperity for All”.
Finally let us seek guidance from the Lord in our efforts and commitments to contribute to the development of this great country. I urge you, Fellow Citizens, to register for elections honestly to enable us to vote for our sustained peace, tranquillity, and sober prosperity as a nation and a people.
Ke kopa Batswana gore ka Sontaga yo o tlang reye dikerekeng gongwe le gongwe fa re tlaabong rele teng go rapelela Pula, ka gore ke yone, e re e solofetseng go lema, go nosa leruo, le diphologolo tsa naga le go tlatsa matamo a rona.
Ke le leboga ka Pula.