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Billions flow as parastatals' spending freeze eases

Holding the purse strings: Matambo says every Pula spent must be accounted for and bring a return
Parastatals are amongst the big winners of the 2018-2019 budget, with many receiving double figure increases in subventions, after years of belt-tightening by government, BusinessWeek can reveal.

The billions of pula more in grants that parastatals are set to receive in the next financial year fly in the face of the Finance Ministry’s stated austerity policy for public funds, especially those spent in the generally loss-making parastatal sector.

In his budget speech last Monday, finance minister, Kenneth Matambo pledged to crack down on losses in the parastatal sector, saying while these existed to support government’s development efforts, many were operating below par “a major concern to government”. Matambo slashed parastatal grants in 2016-17 across the board, contributing to a surplus of P1.12 billion.

However, draft estimates of the 2018-2019 budget indicate that parastatals, particularly in the ministries of minerals and trade, will be the biggest winners of the 13.8% increase in the recurrent budget.

Matambo has proposed a recurrent budget of P45.1 billion for 2018-2019 and a development budget of P19.3 billion, funded via a P3.6 billion deficit.

Within the proposed recurrent budget, parastatals under the Ministry of Investment, Trade and Industry will receive approximately 12.5% more than their budgeted allocations for the 2017-2018 year at P847 million.

Within the ministry, the fledgling Gambling Authority will see its grant rise from P26.8 million to P41 million, while another new parastatal, the Botswana Trade Commission is set to receive P19.8 million from P10 million.

The Trade Commission received a baptism of fire in 2016, when its inaugural appearance before a parliamentary committee saw pointed questions about apparent wasteful expenditure.  Legislators questioned why a staff of six (at the time) was occupying spacious, luxury offices of P79,000 per month.

The Local Enterprise Authority also emerges from the spending freeze in better stead as its grant will rise to P156.8 million in the new financial year, from P141.7 million in 2017-2018 and P139.9 million in 2016-2017. The 2016-2017 budget was a cut from an initial allocation of P141.7 million.

The Companies and Intellectual Property Authority has been allocated P55.5 million, from P49 million and P31.6 million in the previous financial years. Grants for Citizen Entrepreneurial Development Agency and the Competition Authority have been kept flat.

The Botswana Investment and Trade Centre, meanwhile, will receive P106.3 million, from P101.8 million in 2017-2018. In 2016-2017, the Centre saw its grant cut from an initial P101.8 million to

P97.6 million. Parastatals under the Ministry of Mineral Resources, Green Technology and Energy Security, will receive grants 34% higher than 2017-2018 at P223.6 million. 

The increase is largely due to the greater funding of the Botswana Energy Regulatory Authority at P56.9 million from P33.4 million. The energy regulator’s activities are only just picking up, after its formal establishment last October. 

The Botswana Power Corporation, whose subsidies fall under the development budget, will take a cut at P1.1 billion from P1.5 billion.  However, the utility is left with P7.4 billion to spend in subsidies annually until the financial year ending March 2023. 

The Water Utilities Corporation will receive P562 million support, having previously received P388 million in the year ended March 31, 2016. Other state-owned entities laughing all the way to the bank in 2018-2019 include the Botswana College of Agriculture (Botswana University of Agriculture and Natural Resources) whose grant is pegged at P286.3 million from P121.6 million in 2017-2018 and P99.1 million in 2016-2017. The College’s higher grant is associated with its transformation into a university.

Statistics Botswana (SB) will receive an injection of P96.8 million from P90.2 million in 2017-2018 and P85.1 million the previous year. The 2016-2017 subvention was a cut from the initial allocation of P90.2 million.

The higher funding for SB swims against the tide as curiously, parastatals under the Finance Ministry itself are generally adhering to the fiscal authority’s austerity policy.

The Botswana Stock Exchange will take a pay cut in the new financial year with a subvention of P5.2 million from P6.7 million, while grants stay at the same level for the Non-Bank Financial Institutions Regulatory Authority, Botswana Accountancy Oversight Authority, Botswana Institute of Development Policy Analysis and Botswana Institute of Accountants.

In 2016-2017, NBFIRA took a cut in its subvention from the original allocation of P16.8 million, to P12.6 million. In 2018-2019, the Authority will receive P16.8 million.

Matambo, last Monday, said it was important that government receives a return on its investment in parastatals and also hold them accountable for the funds they receive from the national purse. Previous investigations by parliamentary committees have found widespread wastage within state-owned entities, including exorbitant executive remuneration, credit card abuse set against poor reporting and accountability.




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