BEMA welcomes Budget theme
Correspondent | Tuesday February 14, 2017 15:59
Given the current state of the economy from our perspective as Industry, we find this theme to be appropriate and relevant to the realities of our economy. The manufacturing sector has massive potential and is already capable of creating meaningful and sustainable employment in the short to long-term and we are appreciative of the fact that the Budget Speech addresses this issue.
The Honourable Minister re-iterated that “it’s important to clarify that Government’s major role is not to create jobs directly, but to provide a conducive macroeconomic environment to facilitate the development of the private sector”. We concur with these sentiments with the hope that the focus from the point of view of Government will be on creating a business environment that will be a catalyst to economic growth driven by the private sector.
Business faces a number of challenges which are predominantly a combination of factors that should ideally ease doing business combined with lack of implementation and monitoring of legislative instruments such as ESP, EDD and local purchase preference directives.
Although we have seen notable improvements in reforms surrounding EDD which has begun to talk to the PPADB Act, local preference initiatives are ineffective and do not benefit local enterprises as intended.
These challenges that have persisted over the years have resulted in reluctance by the private sector to undertake the investments expected to create economic growth and sustainable employment. We feel that this needs to be the focal and priority areas for Government going forward.
As Industry, we have full knowledge of the challenges that manufacturers face on a daily basis. There is a need for a turnaround in our strategy to support the growth of local manufacturers.
Meaningful growth in the manufacturing sector, particularly in a country with a relatively small population, can be achieved through export led trade. It is therefore critical that the Government takes a deliberate stance to elevate its support and invest considerable resources in the manufacturing sector.
Opportunities such as AGOA which are catalysts to export development are not fully exploited simply because the private sector without the deliberate support of its Government cannot compete in the US and other export markets.
In order to grow our exports, The Government needs to consider the following which will need a notable financial consideration:
l Investments in Industrial Economic Zones (including improved efficiencies in existing SEZs);
l Provide discounted or subsidised infrastructure and facilities in key manufacturing sectors:
l Provide export incentives to local firms that are export ready;
l Open strategic commercial entry points 24 hours a day to improve cross border efficiencies because our competitors such as Lesotho already have that 12 hour trade advantage over us;
l Subsidise input costs such as utilities;
l Create efficient One Stop Business facilitation structures and improve turn-around times; (we appreciate the recently introduced e-services by BURS at selected entry points);
lTax holidays for large employers and high volume exporters at staggered thresholds to incentivise employment creation;
l Exemption of duties on imported capital goods and raw materials for export production and Provision of finance facilities and incentives on local procurement of raw material;
We appreciate the introduction of SPEDU Land Bank but this should be applied at a national level to cover all areas with business potential Sector specific banks should be considered to facilitate access to finance, and Acceleration of Education and Training Sector Strategic Plan (ETSSP) to improve the quality of Vocational Education and Training programmes since we have a big skills challenge in our space. We are aware that there are efforts made towards business facilitation such as infrastructure development and SEZs which are steps in the right direction, but we strongly believe these efforts need to be reinforced and given priority. This fits in with the Government’s national priority of Developing Diversified Sources of Economic Growth and Revenue. Botswana’s global competitiveness and the drivers are essential to the success of export development.
According to a Global Manufacturing Competitiveness Index Study by Deloittes, the following drivers were identified, among others:
l Talent (Skills Personnel)
l Cost Competitiveness
l Labour/Productivity
l Legal and Regulatory System
l Physical Infrastructure
l Economic, Trade, Finance and Tax Systems, and others.
These key drivers need to be addressed rigorously by the Government with input from Industry.
They tally with the considerations we wish to put to Government in our efforts to improve competitiveness on a global scale and enable the meaningful growth we desire to create employment and grow our economy.
We are however, sceptical of the interpretation of paragraph 28, especially the last 2 sentences where the Government is “considering the proposals by the Tax Review Committee of how to diversify the Government revenue base.
Botswana Exporters and Manufacturers Association
(BEMA)