6th February 2023
Sello Motseta
Government’s decision to allocate the largest share of the development budget to the implementation of infrastructure projects is influenced by the recognition that infrastructure development is a critical enabler for enhanced productivity and sustainable economic growth.
Overall development expenditure has been increased by 27.88 percent in the 2023/2024 financial year, compared to the budget for the current year with P12.73 billion being set aside for the implementation of infrastructure development projects.
“It comes with the problem of rising unemployment during NDP 11, from 17.5 percent of the labour force in 2015 to 22.2 percent in 2019 and further to 26.0 percent in 2021,” observed Peggy Serame, Minister of Finance and Economic Development when delivering her budget speech Monday.
Officials allege that preliminary data released by Statistics Botswana in January 2023, shows that there has been nominal improvement with unemployment falling to 25.4 percent in the fourth quarter of 2022 from a peak of 26.0 percent in 2021.
Despite these challenges officials allegedly take pride in realization that Botswana has however emerged with one of the fastest recoveries from the impact of the COVID-19 pandemic with an impressive GDP growth rate of 11.8 2 percent recorded in 2021, the highest in sub-Saharan Africa.
“Our economic recovery has continued with strong GDP growth of 6.5 percent year-on-year over the first three quarters of 2022. For the full year of 2022, it is estimated that economic growth reached 6.7 percent. On the basis of this estimate, once again, Botswana will be among the fastest-growing economies in sub-Saharan Africa in 2022,” said Serame.
Corruption is also increasingly a concern, despite Botswana’s ranking having improved. The ratings have improved from a score of 5.5 in the Corruption Perception 3 Index, being number 45 out of 180 countries, in 2021 which was a slight decline compared to the year before.
“We have since moved to a score of 6.0 in 2022, being number 35 out of 180 countries internationally, indicating our substantial efforts in fighting corruption in Botswana. Government continues to support all law enforcement agencies in the country to curb this scourge which may be one of the causes of poor project implementation as well as financial losses to Government and society in general,” said Serame.
Total revenues and grants for the 2023/2024 financial year amount to seventy-nine billion, seven hundred and ninety million Pula (P79.79 billion) – Total Expenditure and Net Lending for the 2023/2024 financial year is projected at eighty seven billion, three hundred and sixty million Pula (P87.36 billion) – Overall Budget deficit P7.59.
The domestic economy is expected to grow by 6.7 percent and 4 percent in 2022 and 2023 respectively. The rate of inflation increased from 2.2 percent in 2020 to 8.7 percent in 2021 breaching the upper bound of the Bank of Botswana’s medium term objective range of 3-6 percent.
Botswana, as well as most countries in the world, has experienced a sharp rise in the cost of living due to high global inflation. To mitigate this, Government temporarily reduced the rate of Value Added Tax (VAT) from 14 percent to 12 percent, which has since been extended to the end of this financial year
The Finance Ministry is reviewing the lists of items that are zero rated or exempted for VAT purposes. The lists will be extended to include, among others, 5 sanitary products and private medical services. Some items that are currently in the lists but are no longer justifiable to maintain, may be removed.
Government has also introduced a new Wealth Creation programme, which consolidates some of the existing economic empowerment loan and grant programmes.
The Wealth Creation programme will continue implementation of micro enterprise projects in agriculture, housing, social protection, women empowerment and education sectors to create employment and improve livelihoods.
It encompasses poverty eradication, with a view to enable the sustainability and/or viability of the micro projects for long run purposes. A budget of eighty-five million Pula (P85 million) is therefore, being proposed for the Wealth Creation programme under the development budget.
In addition, the Youth Development Fund will continue to be funded at hundred and four million Pula (P104 million) under the recurrent budget.
The revamped Ipelegeng Programme which encompasses a skills development component and the high COVID-19 vaccination rate of 77.4 percent, are also some of the significant highlights of NDP 11.
The removal of Botswana by the Financial Action Task Force, FATF for short, from the list of countries with strategic deficiencies in their anti-money laundering, counter financing of terrorism and counter proliferation financing regimes, was also identified as a major accomplishment, since it led to the delisting of Botswana from the European Union’s list of high-risk countries.
The Retirement Funds Act will enhance the proper functioning of the pension system by strengthening corporate governance, supervision and allowing deferred pensioners access to their pension funds and thus providing relief to Batswana during times of financial distress.
Furthermore, the Income Tax (Superannuation Fund) Regulations, 2022 have also increased withdrawals from pension funds from a maximum of one third to a maximum of fifty (50) percent at retirement. Moreover, the Tribal Land and Deeds Registry Acts will enhance access to land, amongst others.
NDP 11 projected an average GDP growth of 4.2 percent over the five years from 2017 to 2021. However, the actual growth averaged only 2.7 percent a year over this period.
The balance of payments recorded a surplus of P5.2billion in the first half of 2022, a significant improvement from a deficit of P4.2billion recorded during the same period in 2021.
“There were no measures identified to identify corruption,” said Dumelang Saleshando, President of the Botswana Congress Party(BCP).
He said, “The Ministry of Defence continued to get a large portion of the budget despite other more pressing challenges.”
Saleshando maintained the bulk of military arsenal was procured from western multinational companies and little was being done to enhance local manufacturing.
There remains a surplus of foreign exchange reserves at P60.7billion as at October 2022.
