Own Correspondent
27th January 2020
The failure of Government to attract sufficient Foreign Direct Investment(FDI) with inflows dropping to 0.6% of GDP in 2018 compared to 5% of GDP in 2000’s has catalyzed reforms and initiatives such as the Special Economic Zones(SEZ) to position Botswana as a premier investment destination.
Special Economic Zones’s(SEZA) were formally institutionalised by an act of Parliament, SEZ Act of 2015 to overcome serviced land and infrastructure constraints, ensure reliable access to water, electricity, telecommunication etc and identify fit for purpose solutions within SEZ’s.
Site locations have been established for SEZ’s around the country with Lobatse focusing on meat and leather, Gaborone aerospace, logistics, pharmaceuticals, agroprocessing, diamond beneficiation and international finance, Palapye energy, Selibi Phikwe metal beneficiation, agro processing, textiles and pharmaceuticals, Tuli block water management solutions and agro processing, Francistown mineral beneficiation, cargo, freight and logistics and Pandamatenga integrated agriculture.
Goabaone Masike, SEZA Director – Infrastructure and Property Development, said “Special Economic Zones Authority(SEZA) will fully fund infrastructure (Services and Facilities) and provide access to serviced land whilst investors will erect own buildings.”
He said, “There will also be opportunities for Public – Private Partnership (PPP) where SEZA/Private Developer will jointly develop site and SEZA will contribute land whereas Developer lays infrastructure in a revenue sharing arrangement.”
Masike maintained in the event a private developer wants to assume control of whole site they will have to erect infrastructure and recoup investment over an agreed period with developments reverting to SEZA at the end of lease period.
According to SEZA officials Local Engineering Firms will lead Masterplanning and Design Work for the project in line with the Government policy on citizenship economic empowerment. All SEZs Investors will expected to be 100% exporting with exceptions for import substitution, where derogation will not have a detrimental effect on local operators.
Officials stress that export into Botswana and SACU markets will be subject to the Common External Tariff and import duties on entering those markets.
Neo Mahube, Director of Investor Facilitation and Relations at Special Economic Zones’s(SEZA), said “Special economic zone incentives will be outcome-based and aimed at stimulating job creation, private sector investment, technology development and increased access to international markets.
She said, “The incentives will ensure equitable and fair treatment of all firms seeking entry into the SEZ’s areas and will not create businesses that are dependent on Government. They will be aimed at greenfield, or new product lines in case of brownfield investment to guard against erosion of the tax base.”
Mahube revealed that there will be a 15 % Corporate tax rate for manufacturing, financial services companies and companies registered in the Innovation Hub; 5% Corporate tax for the first 5-years, 10% thereafter (for SPEDU region) and 22% corporate tax for other sectors.
There will be possible tax holidays for 5 – 10 years under the Development Approval Order (DAO), Duty – free importation of machinery and equipment for manufacturing purposes, 200% Tax Allowance for Training costs and long term renewable land leases of 50 years and beyond.
Lesitamang Paya, Co ordinator of the Local Enterprise Authority(LEA), said that it was important that government bodies acted jointly and not in silo’s if the SEZ policy was to be effective. He gave the example of the Botswana Meat Commission(BMC) which is currently dysfunctional.
Paya, a seasoned farmer himself, stressed that BMC needed to change the meat pricing structure for both butcheries and BMC Abattoirs to encourage farmers to use Government facilities.
“Prices of meat and hides/skins should not be less than 60% of market prices,” said Paya.
Land zoning-separate areas in Lobatse which is targeted for meat and leather is going be earmarked for housing, greenbelt and industrial facilities. Modernization of the tanning and leather products industries including introducing both mandatory and optional cleaner production methods such as use of fresh hides, desalting, hair-save liming, Cr-recycling etc. to be included.
SEZA will also be encouraging introduction of energy saving solutions-these include proper building orientation and use of building materials corresponding to climatic conditions.
Application of solar energy for pre-heating process water to generating biogas from solid wastes is also expected to be employed. Strict segregation of streams of chrome free and chrome contained liquors for easier treatment and possible re-use of sludge as fertilizer.
“Mineral tanning using chromium remains dominant leather processing method for most tanners required for shoe upper, leather goods, glove and garment manufacturing,” observed Paya.
He said, “Therefore chrome recovery is very important and segregation from individual tanneries, central collection and recovery of spent chrome liquor will be an important part of the pollution control system in the LIP.”
SEZA will also ensure that there will be enough space for additional industries such as mechanical workshops, chemical suppliers, testing labs and SMME participation in Lobatse.
