10th February 2025
Own Correspondent
Vice President and Finance Minister Ndaba Gaolathe used his maiden budget presentation to reaffirm the newly elected Umbrella for Democratic Change(UDC) Government’s commitment to earning the trust and faith of Batswana in public office bearers.
Government made an undertaking to ensure timely payment of suppliers to protect and nurture local businesses. He however did not mention the much vaunted UDC election promise to raise the minimum wage to P4000 monthly but he did partially fulfil a government commitment to raising old age pensions from P830 monthly to P1,400 monthly from April 1st.
“The New Botswana is determined to become the best managed country, a paragon of unity, fairness and prosperity on the African continent,” said Ndaba Gaolathe, Vice President and Minister of Finance.
He said, “I stand by my December 2024 Parliament Statement on public finances, that “the state of our public finances, by any standards, is in an undesirable place”. I highlighted the economy’s severe fiscal constraints, declining Government revenues, as well as slow and jobless growth. To be clear, we inherited a Government machinery plagued by deeply entrenched systemic inefficiencies that have crippled progress and development.”
The largest contributor to the public purse continues to be Southern African Customs Union revenue which is estimated at twenty-four billion, three hundred and sixty million Pula (P24.36 billion. The second largest contributor is non-mineral income tax which is projected to attain nineteen billion, and ten million Pula (P19.01).
Mineral Revenue is estimated at fifteen billion, seven hundred and fifty million Pula (P15.75 billion). VAT collections are projected to register twelve billion and one hundred million Pula (P12.10 billion).
Revenue income from Bank of Botswana is projected at seven hundred million Pula (P700 million) in the financial year 2025/2026. The remaining three billion, five hundred and eighty million Pula (P3.58 billion) is anticipated to be accounted for by other revenues and grants.
Botswana has experienced a significant decline in foreign exchange reserves from a peak of P84.9 billion in December 2015 (17.7 months of import cover) to P53.6 billion (7.2 months of import cover) as at the end of November 2024.
The balance on the Government Investment account (GIA) stood at P30.5 billion, and total foreign exchange reserves were P68.6 billion. As at December 2024 total public debt including sovereign guarantees amounted to P71.01 billion.
This consisted of P44.53 billion in domestic debt (P40.85 billion in securities and P3.67 billion in guarantees), and P26.47 billion in external debt (P21.24 billion in loans and P5.23 billion in guarantees).
Total public debt as a proportion of GDP is estimated at 25.75 percent which is within the statutory threshold of 40 percent. According to officials, when the first case of Covid-19 was reported in Botswana, foreign exchange reserves were at P65.3 billion, while the GIA stood at P18.3 billion.
“Today, as I stand before you, both the foreign exchange reserves and the GIA are at the historical low levels and fast declining. On the other hand, the Government’s financial position has also been deteriorating as financial buffers are down and debt accumulated. The Government’s Net Financial Assets has fallen by more than 50 percent of GDP, from 31 percent of GDP in 2008/09 to minus 24 percent of GDP by the end of November 2024,” said Gaolathe.
To enhance domestic resource mobilization a 1.5 percent increase for both the corporate tax and the last bracket of the personal income tax (top earners) is being proposed.
“Even with this adjustment, Botswana’s tax rates will remain among the lowest in the region. Currently, Botswana’s tax-to-GDP ratio stands at approximately 13 percent, below the African average of 16 percent and the SACU average of 20 percent,” said Gaolathe.
Gaolathe acknowledged validity of preliminary evidence indicates that citizens are encountering artificial barriers that impede their access to lucrative sectors such as poultry, automobile, retail, franchising and distribution as examples.
He expressed a resolve to facilitating removal of cumbersome and protracted regulatory processes that create significant delays for businesses, hindering the swift establishment of new enterprises, slowing the expansion of existing ones, and stifling innovation. For instance, a supermarket must obtain approximately six (6) different licenses, each requiring separate applications at multiple offices.
“Our conviction is that a corruption-free culture will save us, not a billion, but billions of Pula’s every year. This is why an array of efforts are already under-way to: review our current procurement model, enhance transparency, support free press, as well as revise and approve the Draft National Anti-Corruption Policy,” said Gaolathe.
He said, “With these initiatives, we hope to protect whistle-blowers, strengthen institutions, enhance integrity and accountability. It is pleasing, that so many citizens, more than this country has ever witnessed before are coming forward to blow a whistle or guide on how best to neutralize the culture of corruption.”
The Efficiency in Process Initiative will address existing revenue leakages across all sectors of economy. Examples of these financial leakages include the significant amount owed to Local Authorities (LA’s), which currently stands at about P765 million in property rates and P27.9 million in service levies.
Officials concede revenue collection whilst improved under the Masisi administration remains inefficient, with an average collection rate of just 56 percent of the target over the 2023/2024 and 2024/2025 financial years.
The Government has therefore started a process to persistently facilitate the Botswana Unified Revenue Service (BURS) to unlock its revenue collection potential, aiming to surpass the annual average P26 billion collection in non-mineral and non-SACU revenue achieved over the past five (5) years.
A well-managed and efficient BURS can boost this revenue collection efficiency by at least 30 to 40 percent in the next five (5) years.
Gaolathe revealed that some SOEs have operated without substantive Chief Executive Officers for upwards of five (5) years; some have had no boards and many operated on partial boards. The neglect, and sometimes outright callous mismanagement of these enterprises by political principals cultivated a culture of wastage and stagnation.
“We are determined to fan the embers for a new progressive culture of good governance, integrity, efficiency, effectiveness and excellence. The New Government has wasted no time, and has already commenced work to revitalise SOEs based on this clear vision,” said Gaolathe.
Officials revealed that the Selebi Phikwe Citrus project initiated by the previous administration continues to create opportunities for Batswana. The project has already achieved 5 000 tonnes during the first harvest, and it is anticipated to rise significantly to 21 000 tonnes during the 2025/2026 financial year.
“The increase in production per hectare is projected to raise employment levels from the current 294 employees to 600,” said Gaolathe.
On the market front, there is progress in securing new opportunities for Botswana produce expected to be concluded by July 2025. There is also talk of Government helping local farmers sell produce through local multi national retailers. It is not clear how this initiative differs from the Buy Botswana initiative.
“While we currently serve several destinations, we are actively negotiating to enter three (3) key international markets being India, South Korea, and the United States of America,” said Gaolathe.
A landmark achievement was the successful conclusion of negotiations with De Beers Group, resulting in an enhanced rough diamond sales agreement and the extension of mining licenses beyond 2029.
These negotiations completed within 100 days of the UDC administration is expected to rebuild market confidence and trust in this government’s ability to build partnerships and improve the doing business environment. It also ensures Botswana, strengthens its position as a leader in the diamond industry.
Khoemacau Copper mine in the North West District is embarking on an expansion exercise that will ramp up production from the current 60 000 tonnes of copper to at least 130 000 tonnes. The expansion is anticipated to increase the labour force from the current 2 000 to 4 000 employees.
Another noticeable progress is Menzi Battery Metals which has been granted a mining license to exploit battery grade Manganese at Kgwakgwe Hills near Kanye and they are currently finalizing the establishment of the processing plant.
At construction, the project will employ 300 people and during operation the numbers will reduce to 200 due to plant automation. Energy sector – a key driver for diversification.
A development budget of P11.54 billion has been proposed to fund infrastructure development projects. It is not clear what will happen to Developer Manager Model. Will projects initiated under previous administration continue or will they be discarded.
Botswana expects to scale up electricity production to at least 8 000 MW within four (4) years, laying the foundation for a more sustainable and competitive energy landscape.
“We are also proposing a targeted monthly allowance of P300.00 for new born babies until they turn one (1) year old. Additionally, we will be proposing provision of free sanitary pads to female students, ensuring that dignity and essential needs are upheld across different segments of our population,” said Gaolathe.
According to officials, the Botswana economy grew by 3.2 percent in 2023 compared to 5.5 percent in 2022, reflecting lower than expected global demand for diamonds.
In 2024, the domestic economy declined by 3.3 percent during the first three quarters of the year compared to a positive growth of 3.5 percent in the same period of 2023.
The decline in GDP is attributable to 22.9 and 44.1 percent contraction in mining and diamond traders’ sectors, respectively. Non-diamond mining sector grew on average by 4.2 percent in first three quarters of 2024, cushioning domestic economy against what would have been a much significant decline.
The latest official estimates project the domestic economy at -3.1 percent in 2024. In 2025, the economy is projected to grow below its potential at 3.3 percent.
“This growth outlook is premised on the recovery of the diamond industry which is expected in the latter part of 2025 and continued positive sentiments in the non-diamond mining sectors,” said Gaolathe.
The largest share of the proposed Ministerial Recurrent Budget amounting to P12.55 billion or 19.0 percent is allocated to the Ministry for State President to coordinate Government business as well as safeguard and promote good governance.
The bulk of the proposed budget will cover operational costs for Botswana Police Service, Botswana Defence Force, DEA and the Chemical, Biological, Radiological and Nuclear Weapons Management Authority (CBRNWMA) at an amount of P9.79 billion or 78 percent.
The budget will also cover the absorption of Special Constables into Botswana Police Service, provision for termination allowance, Copyright and Authors fees, carrying out special investigations by DCEC as well as National AIDS and Health Promotion Agency (NAHPA) activities.
A budgetary provision has also been made under this Ministry for the operational costs of the Directorate of Intelligence and Security(DIS).
The Ministry of Transport and Infrastructure has been allocated P4.31 billion or 18.1 percent for the Financial Year 2025/2026 to fund the construction of road networks that will facilitate the smooth transportation of goods and services, enhance market access, boost trade and attract investments.
Out of this amount, a sum of P3.78 billion will be allocated for the continuation of ongoing roads projects, including Tshesebe- Mosojane-Masunga Road, Makalamabedi – Motopi, Mmandunyane -Shashemooke – Borolong – Chadibe – Mathangwane, Moshupa-Manyana, Mokolodi Access Road, Tloaneng-Mmankgodi, Borobadilepe – Mokatako with access road to Logagane and Phihetswane, Ghanzi–New Xade, Digawana- Ntlhantlhe, Radisele – Pilikwe, Kacgae Access Road, Mabule – Sekhutlane, Thamaga-Kubung, Medie- Lentsweletau, and Mmathethe – Bray – Werda .
The budget will also cover Output and Performance-based Road Contract (OPRC) Projects being Mmankgodi Junction-Kanye Road (50.5km) with associated access roads, Rakhuna – Tlhareseleele – Pitsane – Phitshane Molopo – Mabule road (145km) and associated access roads as well as Traffic Signal Modernisation and Centralised Traffic Control for Greater Gaborone.
During the 2025/2026 financial year, Government will connect over 500 schools to the internet; expand the connectivity of private research and education institutions through the Botswana Research and Education Network; and roll out the Digital Competency Framework building the digital literacy. The proposed development expenditure for the financial year 2025/2026, amounts to P23.75billion, a decline of P6.32billion or 21.02 percent over 2024/2025.
The proposed Ministerial recurrent expenditure for the financial year 2025/2026, amounting to P65.95 billion reflecting an increase of P2.21billion or 3.5 percent compared to current year’s approved budget.
The budget deficit for 2025/2026 is expected to reach P22.12 billion or 7.56 percent of GDP. It will remain below the statutory limit of 40 percent of GDP.
