The 2024 Budget Speech marked the end of the second Transitional National Development Plan (TNDP), and also paved way for the Twelfth National Development Plan (NDP 12).
It attempted to laythe foundation to deliver on the Vision 2036 goals, Reset and Reclaim Agenda as well as moving towards the TNDP theme of “Towards a High-Income Economy: Transformation Now and Prosperity Tomorrow,”by significantly increasing by 23.5 percent the current year’s budget. This offers an opportunity to fundamentally reshape the country’s development trajectory and transform the lives of Batswana.
To stimulate growth and job creation, focus has been made on sectors with great potential to transform the lives of Batswana. Therefore, significant increases are proposed for sport development (317 percent), research and development (280.9 percent) creative arts (58.8 percent) and infrastructure development (33.5 percent).
“As a commitment to deliver on this theme, the 2024/2025 budget proposals have been significantly increased compared to the current year. Let me emphasise that this stimulus budget will also drive other national priorities as outlined in the Reset and Reclaim agenda. These offer the greatest opportunity to fundamentally reshape the country’s development trajectory. I am confident that the proposed budget allocations will once again be an anchor for a people-centred and transformational spending plan with immense potential for stimulating growth and creating job opportunities,” said Peggy Serame, Minister of Finance.
She said, “Additional budget increases have also been made under gender mainstreaming, Youth Development Fund, Social Protection Programmes and the Agriculture sector. To increase the potential contribution made by the informal sector and also create employment, the Budget Speech proposes the establishment of a revolving fund named “ChemaChema Fund’’ with an initial capital injection of P200 million, aimed at fundamentally transforming the informal sector and creating more employment opportunities.”
Government will further upgrade the Gaborone road network and peri-urban areas to become an event hub, using 50 percent of the Road Levy Collections Fund proceeds and this model will be replicated in other regions across the country. The Budget Speech presents some of the key activities and initiatives, including pieces of legislation and social protection programmes that impacted the lives of Batswana in the last four years.
The 2024/2025 Budget Speech takes into account the impact of both COVID19 pandemic and the Russia-Ukraine war which disrupted socio-economic plans in Botswana, thus resulting in an average of 2.9 percent real GDP growth, lower than the projected 7.6 percent.
This led to a cumulative deficit of P27.5 billion with unemployment rate rising from 22.2 percent in the fourth quarter of 2019 to 25.9 percent in the third quarter of 2023. 7. Despite the challenges and setbacks, some significant milestones were achieved during this period, which positively touched the lives of Batswana.
These were achieved through increases in total expenditure by 13.3 percent from P65.4 billion in the 2019/2020 financial year to P74.10 billion in the 2022/2023 financial year. Some of these efforts entailed redirecting the budget to cover increased student allowances, re-sponsorship as well as expenses incurred during the COVID-19 pandemic, such as the Industry Support Facility and Wage Subsidy.
Significant progress was made in reducing deficits and improving revenue collection. This indicates a reduction by P127.89 in the 2021/2022 financial year while a further significant reduction to almost balanced budget was made in the 2022/2023 financial year. On the revenue front, total revenue collected from non-traditional sources under the revised user fees and service charges increased by P314.56 million to P961.14 million in 2022/2023 financial year compared to the pre-COVID level of P646.58 million.
This was a demonstration that implementation of additional revised fees can boost overall revenue in line with the Government’s revenue maximization drive.
Special Audit of Tertiary Education Financing activities under the Ministry of Education and Skills Development, was completed in May 2023. It revealed a number of internal control deficiencies.
As such a detailed, roadmap is being developed to implement firm measures to address serious governance and financial management gaps. Further, Government will strengthen financial management and internal audit capabilities at other Ministries, Departments and Agencies and institute more targeted audits.
The backlog of eight (8) Local Authorities’ books of accounts for the Financial Years 2020/2021, is an issue of great concern, as it does not only point to corporate governance failure but also compromises accountability for public resources, thereby creating conditions for maladministration and corruption.
“Another important milestone is the removal of Botswana from the list of countries with deficiencies in Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT). To avoid another greylisting, Government is in the process of establishing a centre that will assist Botswana’s compliance with the Anti-Money Laundering, Combating the Financing of Terrorism and Proliferation (AML/CFT/PF) at the University of Botswana,” said Serame.
In addition to accelerating Botswana’s economic diversification by creating a multi-billion Development Fund, the agreement between the Botswana Government and De Beers will increase Botswana’s presence in the diamond value chain through Debswana’ s rough diamonds allocation to the Okavango Diamond Company from 25 percent to 50 percent over 10 years.
The 2024/2025 Budget outlines nine major national priorities that will be implemented to guarantee inclusive growth and reform the economy, with a focus on ending extreme poverty and generating sustainable employment
These are Infrastructure Development and Spatial Planning; Sustaining Livelihoods; Agriculture Development; Supporting the Private Sector through Business Environment Reforms and Value Chain Development; Research and Development; Innovation and Digital Transformation; Green Transition; Education and Human Capital Development and Tourism Development. 4 5 Infrastructure Development and Spatial Planning.
A significant development budget of P17.0 billion is proposed to address a wide range of infrastructure gaps. As part of accelerating the implementation of the National Spatial Planning, land servicing projects will be undertaken at special economic zones, SPEDU industrial land, Kasane, Metsimotlhabe, Mmopane, Palapye, and Ghanzi areas. Government will continue with efforts to connect villages to the national grid.
To increase connectivity by low-income households, ready-made boxes will be provided for free to those not wired. Further, Government will continue leveraging on the Public- Private Partnership (PPP) Model to accelerate the implementation of projects as well as address inefficiencies. To this effect a stand-alone Bill on Public-Private Partnerships will be presented to Parliament before the end of 2024. Sustaining Livelihoods.
Government will continue implementation of various Social Protection Programmes including Ipelegeng, Remote Area Development, Old Age Pensioners, Orphans and Vulnerable Children, World War II Veterans, People Living with Disabilities, and Destitute Programme to eliminate absolute poverty, enhance social protection, reduce inequalities and improve the quality of life for all Batswana.
In addition, access to healthcare services, education, economic empowerment programmes and job opportunities across different economic sectors will be improved to reduce inequalities and sustain livelihoods. To this end, an overall budgetary provision under this priority is proposed to be increased by 13.8 percent to reach P6.09 billion.
The 2019 Informal Sector Strategy will be reviewed during the 2024/2025 financial year, with a focus on facilitating decent places of operation for informal businesses, providing capacity building for skills enhancement, improving market access, and integrating the sector into the mainstream economy. A development budget of P2.82 billion is proposed to drive agriculture development initiatives geared towards food security and self-sufficiency.
Government will prioritise supporting infrastructure, including access roads to production centres, to transform the agriculture sector. Further to this, Government will use programmes such as TemoLetlotlo and ThuoLetlotlo to improve food security and enhance the animal production sector. Regarding land utilisation, eight plots are being subdivided for leasing to investors in Molopo Farms, while 14 small stock farms will be subdivided into 57 smaller plots for potential leasing to small stock farmers in different parts of the country. Supporting the Private Sector through Business Environment Reforms and Value Chain Development.
A development budget of P2.11 billion is proposed under this priority to support the private sector through business environment reform as well as existing opportunities in domestic value chains such as mineral beneficiation, tourism, food processing, agribusiness, cattle, small stock, and indigenous products.
Ratification of the African Continental Free Trade Area Agreement (AfCFTA) in February 2023 signifies the country’s dedication to this initiative, paving way for the private sector to participate in the growing Continental Free Trade Regime. Further, to provide innovative and tailored financial solutions for the private sector to address the current implementation challenges, emerging issues and gaps that affect businesses at different stages of development, a comprehensive review of business support products and funding models will be undertaken.
A development budget of P1.02 billion is being proposed for Research and Development programmes which will drive research across strategic intervention categories such as Mining, Minerals Beneficiation, Human Health and Social Sciences, Food and Agriculture, Livestock and Veterinary Research, Water, Environment and Climate Change. 6 7 Further, an Intellectual Property (IP) Motshelo Scheme and an Intellectual Property Ideas Incubation Centre will be established to support indigenous research and innovation with a view to empower Batswana to own and protect their Intellectual Property assets. Innovation and Digital Transformation.
A development budget of P1.83 billion that will be implemented through the Digital Transformation Strategy for Botswana, is being proposed to accelerate innovation and digital transformation initiatives.
In addition, implementation of the Village Connectivity programme will continue during 2024/2025 financial year. Regarding online services, a total of 170 services have been launched while an additional 230 services will be completed by the end of 2025/2026 financial year.
To augment the existing donor funds, enhance economic resilience and protect livelihoods, a development budget of P1.37 billion is proposed with a view to address the effects of climate change. The 2024/2025 budget will also focus on projects and programmes that mitigate climate change shocks and ensure sustainable adaptation to emerging adverse situations.
To ensure that the Education Sector produces the necessary skills for the economy, the development of an economy-wide integrated digital Labour Market Information System (LMIS) is expected to be completed by September 2024. A combined budget of P28.60 billion is proposed for this priority in the 2024/2025 financial year.
The LMIS will facilitate, among others, the development of effective policies and programmes that address unemployment, productivity and skills mismatch. Further, Government will continue to direct resources towards transforming and enhancing the delivery of education and training to address the mismatch between available human capital and the requirements of employers and the economy.
To this end, the General Education Curriculum and the Education and Training Sector Strategic Plan of 2015-2020 will be reviewed to ensure that emerging needs of the economy are addressed. Tourism Development.
Government is committed to ensuring that the aspirations of the Tourism Policy (2021) are attained through the implementation of the National Tourism Strategy and Master Plan (2023-2033). Budgetary provisions have been made to continue upgrading infrastructure in the Kasane-Kazungula Tourism areas
According to the International Monetary Fund, January 2024 World Economic Outlook Update, global economic growth is estimated to remain below the historical average in the short to medium term.
Global economic growth is therefore, estimated to slowdown from 3.5 percent in 2022 to 3.1 percent in both 2023 and 2024, largely reflecting weaker growth in major economies. Growth in the Southern African Development Community (SADC) and Southern African Customs Union (SACU) regions is also estimated to have slowed down in 2023, averaging 2.5 percent and 1.2 percent, respectively.
Growth in the domestic economy is estimated to have slowed down from 3.2 percent from 5.5 percent recorded in 2022. The slowdown is largely due to weak diamond trading and mining activities as well as the effects of global events. In the medium-term the domestic economy is expected to rebound to 4.2 percent and 5.4 percent in 2024 and 2025, respectively, as the world economy recovers.
Following the high peaks recorded in 2022, domestic inflation has declined, reaching 3.5 percent in December 2023. 8 9 This reflects the fading effects of domestic fuel price increases.
In line with the lower inflationary pressures, the Bank of Botswana reduced its Monetary Policy Rate from 2.65 percent to 2.40 percent in 2023, with a view to ensure financial stability and that inflation remains within the Bank’s objective range of 3-6 percent.
The provisional balance of payments data shows a surplus of P5.10 billion in the first nine months of 2023 compared to P5.40 billion in 2022. Foreign exchange reserves increased from P60.80 billion in 2022 to P64.90 billion in 2023. The latter is equivalent to 9 months of import cover of non-diamond goods and services, compared to 8.4 months in the previous year. Botswana faces several risks that could reverse macro-fiscal gains, including weak economic activity in major trading economies.
These risks could negatively impact the country’s ability to accumulate foreign exchange reserves and Government revenue. Geopolitical tensions disrupt global economic prospects, negatively impacting Botswana’s growth target of 6 percent needed to transform the country into a high-income country. Combining these risks could widen the fiscal deficit and delay planned fiscal consolidation, further reducing Botswana’s ability to respond effectively to future shocks. Several risks to the macro-fiscal profile, include inflation risks, expenditure risks and inadequate capacity to appraise, monitor and evaluate development projects.
Serame, said “To mitigate these risks, the Government will focus on improving domestic revenue maximisation, reduce expenditure leakages, monitor development spending and mitigate climate change effects. These measures aim to enhance competitiveness and diversify the economy, ultimately strengthening the Government’s ability to provide critical services.”
Government’s Net Financial Asset Position 42. At P11.40 billion recorded in November 2023, from P16.80 billion in November 2022, the level of Government Investment Account remains relatively low compared to pre-Covid era. Government therefore, remains committed to its medium-term objective of rebuilding the financial buffers in order to cushion the economy from future shocks.
The projected total revenues and grants for the 2024/2025 financial year amount to P93.58 billion. Of this amount, the largest contributor is the Customs and Excise receipts which is estimated at P26.46 billion of total revenues.
The second largest contributor is Mineral Revenue at P25.05 billion or 26.77 percent of total revenues, while Non-mineral income tax and VAT are estimated to account for P22 billion or 23.5 percent and P15.24 billion or 16.28 percent of total revenues, respectively. Figure 1 below depicts percentage breakdown of these categories.
