President Ian Khama delivered his last State of the Nation on Monday. Below are some of the issues he covered.
Inflation, Trade and Foreign Exchange Reserves
It is heartening to note that the inflation rate has been, and is expected to remain at the lower end of the Bank of Botswana’s medium-term objective range of 3 – 6%. Since the beginning of this year the rate hovered between 3.1% and 3.5%. I am further pleased to report a positive trend in our balance of trade. According to Statistics Botswana, total imports for 2016 were valued at P66.9 billion, against P73.2 billion recorded in 2015, representing a fall of 8.6%. Total exports for the same period were valued at P80.3 billion, an increase of 26.5%, compared to P63.5 billion recorded in 2015. As a result, our trade balance was in surplus of P13.5 billion in 2016, resulting in a balance of payments surplus of P2.8 billion, in contrast to the deficit of P0.57 billion that was recorded for 2015. As of the end August 2017, our foreign exchange reserves were valued at P76.6 billion, which is equivalent to 17 months of import cover. Of the total reserves, Government Investment Account amounted to P32.1 billion. Our exchange rate policy continues to support competitiveness of local industries in both domestic and international markets by maintaining the stability of the Pula against a basket of leading currencies.
Economic Diversification Drive
Over the past six years, the short term component of the Economic Diversification Drive (EDD) has resulted in a substantial increase in Government procurement from local manufacturers and service providers, amounting to a cumulative total expenditure of P13.93 billion as of March 2017, which constitutes 52% of our total procurement for the period. Implementation of the EDD medium to long term strategy for incubating local production has continued to focus on the leather, dairy and textiles sub-sector strategies. Almost all the components for the development of the leather industry in Lobatse are in place awaiting the final appointment of a technical partner, who is anticipated to be in place before end of the year. Government’s support for dairy production is evidenced by our allocation of land to farmers, which has been accompanied by increased milk production. As of March 2017, local production stood at 6 million litres or about 10% of annual national milk demand, meaning that there is further opportunity for local producers. To further develop local dairy, we have sought and obtained approval from the Southern African Customs Union (SACU) for an extension of the infant industry protection for Ultra High Temperature (UHT) milk, for an additional 8 years.
Since its inception in 2012, the Botswana Investment and Trade Centre (BITC) has attracted a total of P10 billion worth of foreign and domestic capital investment, resulting in the creation of 8,831 additional jobs. The total business expansion investment level stood at P618.6 million in 2016/17 compared to P377 million reported in 2015/16. Capacity building interventions through the Botswana Export Development Programme are also beginning to bear fruit. Ten companies are currently being assisted in developing their export marketing, while another eight are undergoing quality management and productivity improvement training. The Botswana Development Corporation (BDC) has, despite two periods of recession, also experienced growth, with its total investment assets increasing from P1.2 billion to P2 billion over the past decade. This growth has supported over 5,000 jobs across various sectors of the economy.
Government came up with a Response Strategy that will guide the Strategic approach to revitalise the economy of the SPEDU Region. The Strategy calls for the establishment of the region as a Special Economic Zone catering for, among others, renewable energy generation, recycling and distribution of green technology components, manufacturing, agriculture and tourism. The latter will include an International Convention Centre that will position the town as a prime destination for events and conferences. SPEDU has also promoted Selebi-Phikwe as a venue for public sector events and workshops. This has already seen the town hosting events such as the Africa Industrialisation Day, the International Day of Cooperative Societies and the 2017 World Accreditation Day Commemoration, along with softball and golf tournaments.
Economic Stimulus Programme (ESP)
The Economic Stimulus Programme (ESP) remains a Government priority with an allocated budget of P2.2 billion. ESP achievements during 2016/17 included the award of majority of projects to citizen contractors, the completion of projects and employment creation. Significant progress has been made in the overall execution of ESP projects as over 80% of the 2016/17 planned projects have been started and some completed, covering the maintenance and expansion of Senior and Junior Secondary Schools; as well as backlog eradication in provision of classrooms, teachers quarters and ablution blocks in 139 primary schools country wide. Other projects include the construction of 30 Customary Courts and minimal and peripheral land servicing just to mention a few.
The minerals sector remains a principal source of revenue and primary sector for the growth and diversification of our economy. Government will therefore continue to promote mineral beneficiation to maximise value addition. Copper and nickel prices continued to be unstable in 2016/17, creating uncertainty for potential investors. By the end of June 2017, the average price of nickel was 7% below the same period in 2016. More encouraging is the fact that copper prices have improved by 19% when compared to the same period in 2016. The prolonged non-profitability of BCL Limited led to it being placed under final liquidation in June 2017. Tati Nickel Mining Company meanwhile remains under provisional liquidation. Boseto Mine which was acquired by Khoemacau Copper Mining also remains under care and maintenance. Mowana Mine has been acquired by new investors, who started operations in April 2017.
Agriculture and Food Security
There has been a corresponding improvement in the domestic food security. The harvest of major cereal crops (i.e. maize, millet and sorghum) was estimated at 175,000 metric tonnes in 2016/17, a notable improvement from 2015/16 harvest of 54,000 metric tonnes. The deficit in the sorghum supply is expected to decrease by around 80%, to 31,000 metric tonnes this year, while the shortfall in the domestic supply of maize is expected to decrease by 10% to 274,000 metric tonnes. In the livestock subsector, the LIMID programme has been expanded to cover different packages including small stock, Tswana chickens, guinea fowl, fodder production, water reticulation and development of animal handling facilities such as loading ramps and kraals. Since its inception, the total number of beneficiaries for LIMID has increased, reaching 34,653 by July 2017. In terms of gender, 64% of LIMID beneficiaries are women.
In an attempt to increase citizen participation, Government has reviewed the Tourism Act of 1992 and the Tourism Regulations of 1996 to accommodate the reservation of some licence categories for citizens. Reserved activities include; guesthouses, bed and breakfast, mobile safaris, motorboats, tourist transfers, camp and caravan sites and mekoro. This has led to an increase in the number of citizen operators from 290 in 2007 to 1015 in 2017, with another 252 currently being joint ventures, while 245 operators are non-citizens. The number of licensed operators is envisaged to grow at a rate of 11% annually. Expansion and localisation is estimated to have generated some 60,000 jobs. The Tourism Industry Training Fund was established to finance skills training for employees in the tourism sector. The levy was increased from P2 to P10 in 2012 to broaden the scope of training to include personnel from other entities, departments and organisations that provide support to the tourism sector. Going forward, utilisation of the Training Fund is to be expanded further to cover a broader scope which will include tourism research, marketing amongst others. 82. Tourism continues to show resilience, with the country experiencing an increase in tourist arrivals to around 2 million.
Health and Wellness
In the past decade, Government has made strides in improving access to health services and notable achievements include the following: 84% of the population is accessing basic health services within 5km radius due to construction and upgrading of clinics and hospitals; 31 clinics and health posts were constructed or upgraded, including 10 clinics that were donated by the private sector and Non-Government institutions. Government continues to improve access to care by constructing clinics and hospitals through the Economic Stimulus Programme (ESP).
Five basic specialist services (General Surgery, Internal Medicine, Paediatrics, Obstetrics and Gynaecology and Anaesthesiology) are currently offered in all district hospitals. Recent years have further witnessed the introduction of new speciality services such as cardiac surgery, spinal surgery, Arthroplasty, Organ transplant. We have also established managed care and specialist services unit. With the establishment of an in-house technical team, infrastructure projects of less or equal to P100 million are now being implemented within the Ministry of Health and Wellness. Other areas of progress include the extension of hours of service with 49 clinics now offering 24 hours services, up from 12 in 2008.
Government commends all stakeholders who have contributed to the fight against HIV/AIDS. The treatment programme continues to be one of our success stories with the country having adopted Option B PLUS in 2015 in an effort to eliminate Mother to Child transmission of HIV, Treat All in 2016 whereby all HIV+ infected persons are put on treatment irrespective of a CD4 threshold. At the end of 2016, the mother to child transmission rate was 1.4%, while to date a total of 308,067 individuals have been placed on HIV treatment since the inception in 2002 of the National ARV programme. The Botswana AIDS Impact Survey (BAIS V) is about to commence with a target for completion of mid 2018/19. Its aim is to update the existing HIV and AIDS data. This survey will be combined with a first ever TB prevalence survey for Botswana to inform the country on the current burden.
Government continues to recognise adequate and affordable housing as a basic need in the context of our implementation of the National Housing Policy’s Low-Income Housing Programme. This programme contains 3 components – Self Help Housing Agency (SHHA) Home Improvement, Turnkey Development Scheme and Integrated Poverty Alleviation and Housing Scheme. In addition, Government continues to roll out housing schemes such as Public Officers Housing Initiative, Housing Scheme for Public Officers D4 and below, BHC housing and Third Party Projects, Instalment Purchase Scheme (IPS) and Youth Housing Scheme. Between March 2008 and March 2017, a total of P190.8 million has been disbursed through the SHHA Home Improvement Loan Scheme to fund 4,947 beneficiaries. This financial year 2017/18, an additional P30 million will be loaned to an estimated 500 beneficiaries. With ESP support, the SHHA Turnkey Development Scheme has awarded contracts for the construction of 2,615 units. Of these, 1,838 have been completed and handed over and 777 are at various stages of construction.
Our youth currently face serious challenges including unemployment and involvement in irresponsible behaviour. To this end, Government continues to develop and empower the youth through various interventions to ensure they improve their livelihoods, while contributing to our national development. Government annually allocates P120 million for the youth to set up businesses and create jobs for themselves and the nation at large. In the last financial year, 2,701 applications were received from young people and 1,032 were funded to the tune of P107.7 million. These projects created 2,290 jobs. For the second year running, a Youth Business Expo which attracted about 300 exhibitors was hosted to expose youth entrepreneurs to their potential market.
Self sufficiency in power supply and diversification of petroleum products are priorities for energy security. The need to increase renewal energy contributions to the energy mix is a consistent goal in an effort to develop a Low Carbon Energy Portfolio. The current maximum electricity demand for Botswana is estimated at 520 MW, which is expected to grow to 856 MW in 2025. Our installed generating capacity stands at 927 MW and comprises of the following: 132MW from Morupule A; 600MW from Morupule B; 90MW from Orapa Power Plant; 105MW from Matshelagabedi Alstom Power Rentals plant. The refurbishment of Morupule A is ongoing and Unit 1 of the plant is currently undergoing commissioning. The refurbishment of all the remaining 3 Units will be completed by end of December 2017. Once Morupule A is up and running, the Matshelagabedi diesel power peaking plant will be discontinued in an effort to bring down the cost of power generation in the country.
The development budget of the Botswana Police Service has increased by 49% from P209 million in 2008/09 to P312 million in 2017/18. This has enabled the Service to improve its performance. According to the Global Competitiveness Report for 2016–2017, Botswana ranks high in terms of reliability of the police service. In terms of achievement by the Botswana Police in crime intervention, the areas of violent and intrusive crimes including violence against women and children shows a decline; having been reduced between 2008 and 2016 by 46%, from 26,150 incidents to 14,224. This includes a nearly two thirds reduction in burglary, thefts and robberies. With respect to what are classified as serious crimes, there has been a 57% reduction in threat to kill and a 32% reduction in motor vehicle theft. There is, however, a growing trend of drug abuse for which interventions will be made to better resource the Botswana Police capability in this area.
Government has spent over P130 million on sports development this past year, against P37 million received from private sector sponsorship. Here I wish to encourage more private sector investment to at least match Government in the future. To improve performances and meet the welfare needs of athletes, Government continues to motivate athletes by paying appearance fees and performance incentives. Our heavy investment in capacity building of sport administrators and development of sport infrastructure has also enabled us to host major sporting events. You will all have witnessed the recent Netball World Youth Cup 2017 where we hosted 19 countries. Similarly, we have hosted the World Baseball and Softball Conference in October 2017 and will be welcoming International Working Group on Women and the African Union Sport Council Region 5 under 20 Games in 2018.
Botswana and the world
Despite our developing nation status, Botswana has remained steadfast in articulating her position with regard to the violation of human rights, poor governance and lack of democratic credibility as well as fanning conflicts based on ethnic, racial and religious bias and/or territorial claims. The principal culprits have been named in the past and we will continue to do so in our press releases. The United Nations Security Council has on many occasion failed to provide the required leadership on such issues as some are part of the problem instead of the solution. I wish to reiterate Botswana’s strong support for the International Criminal Court (ICC), which is the only permanent criminal international court of last resort that plays a deterrent role in preventing the commission of genocide, war crimes and crimes against humanity. In order to demonstrate our unequivocal support for the work of ICC, Botswana recently undertook a significant step by domesticating the Rome Statute and thus making it part of our national laws. Government further remains committed to ensure that the conduct of our foreign relations contributes to national development and the improvement of the living standards of all Batswana by attracting foreign direct investment and other forms of international support.
In accordance with the Constitution, 5 months from now I shall be passing the baton of leadership of our great country into the capable hands of His Honour the Vice President. I am confident that with support of members of this House and the nation as a whole the next administration will continue to build on the legacy of progress that was begun under my predecessors.