Boccim's 2010 budget expectations

* MARIA MACHAILO-ELLIS | Friday February 5, 2010 00:00

Recovery only occurred in the fourth quarter of 2009 but the growth levels are not projected to reach those of 2007 and 2008. As a result, the public sector too had its challenges and had to undergo adjustments, as there is still a strain in national revenues. There are still changes required to produce long-term supporting initiatives to drive the economy and continue with sustainable development. 2010/11 is not an assured year, there's hope but no guarantees.

Poverty reduction, improved infrastructure and facilities in health, education, and various other sectors, creating a favourable economic environment and sustained economic growth, including fiscal stimulus to contribute to employment creation and economic diversification are all components that BOCCIM believes contribute to a sustainable economy. BOCCIM appreciates the efforts by government to consult and engage the private sector in various aspects relating to the economy, especially in respect to the proposed tax reforms but we believe more can be done to streamline the constitution.

The following are some of the expectations that BOCCIM has to be addressed in the 2010/11 budget:

Economic developmentThe major economies importing and consuming our natural mineral resources, such as our diamonds, are still experiencing a slow recovery period. This in turn is expected to result in slow growth for our mineral revenue, adversely impacting the mining sector and the general economy on Botswana.

Government should continue to invest in the development of infrastructure; however these should be done where a positive impact is visible and there would be value added to GDP, especially on Small Micro Medium Enterprises (SMMEs). Currently SMMEs which make up the majority of business operations in Botswana, have no stimulus recovery packages geared towards them, except the recent bailout of the textile industry.

In the last year, public expenditure has been focused on construction of public works projects which have minimum impact on the SMMEs. There is a need to balance job creation through increased expenditure at the same time restricting the budget deficit. This could be done by increasing revenue through tax or other measures, but thus may reduce economic activity via new investment. Currently a major challenge facing the budget this year is to encourage consumer spending and stimulate sustainable growth of SMMEs. It's imperative that the local procurement programme to encourage Botswana made products and its distribution be enforced to sustain local manufacturers and industry supportive companies.Stimulus packages are still required for companies that have been deeply affected by the crisis, especially those in the mining sector and again emphasis on SMMEs.

Financial institutions have hardly responded to SMME needs during the economic turmoil. CEDA and NDB must take the lead in providing more flexible and affordable loans to SMMEs instead of taking a business as usual approach while SMMEs are continuously faced with multiple challenges.  Reduction in interest rates has not really boosted SMMEs and consumer demand, because banks have remained resolute in risk management and are even more cautious on how they extend their credit. However, credit focus on SMMEs is a must. If CEDA and NDB take the lead in creating flexible longer payment options and reducing interest rates, the spill over effect may occur in other financial institutions. Delays of payments by government have a negative effect on SMMEs as it obscures operational processes. This can result in business activities coming to a halt.Ongoing development projects must continue and new projects must be selected carefully. Private sector also has a role to play by exercising strict cost and quality controls in executing projects to ensure delivery on time and on budgets. BOCCIM expects government to reduce public expenditure on luxury items and improve service delivery standards. Government needs to provide a blueprint of all projects planned for the NDP10 to allow long term planning and a proactive approach by the private sector, thus avoiding the inconvenience of impulsively responding on an annual basis to projects released during the financial year. It is also hoped that this year the privatisation programmes will be accelerated for private sector stimulation, as it will help in reducing the burden on the public sector.

EmploymentUnemployment is still a challenge especially amongst the youth; BOCCIM expects more emphasis on strategies to enhance youth employment and more programmes directed towards youth empowerment. There's an expectation to continue the internship and training programmes which has strengthened skills and encouraged youth to be more career competitive. Further,implementation of existing incentives for the private sector to take on more interns and train workers require urgency.

TransportGovernment needs to inject more funds into road safety measures, as road accidents continue to be a problem in Botswana.

ICTMore expenditure is anticipated for ICT infrastructure that can accommodate e-governance.BOCCIM recognises and appreciates that e-governance plans are well under way, such as the implementation of e-passports in 2009, however a great deal of work is still ahead for the public sector to meet international standards and ensure that the system not only meets the needs of businesses but also of the general public. Substantial Investment is required for the systems to support such an initiative such as hardware and innovative software solutions. It is without a doubt that sectors such as health, agriculture and finance, to name a few, will benefit immensely with Information technology integration.

EducationHuman resource development continues to be a priority for Botswana. It is hoped that knowledge and skill development will continue to be a priority for the public sector. BOCCIM hopes that this year's budget allocation will demonstrate the importance of this sector.BOCCIM also acknowledges and appreciates government efforts by pulling in private sector expertise, such as in the case of the establishment of the Human Resources Advisory Council (HRDAC) which is chaired by a private sector person.

ElectricityThe power situation continues to be an encumbrance for businesses. BOCCIM hopes that government injects more capital into power projects especially alternative energy generation solutions that can eventually lead Botswana to be self-sufficient and less dependent on other countries for energy consumption. The business community expects an update ondevelopments at Morupule B and Mmamabula, and what initiatives have been undertaken to promote alternative energy sources like solar.

AgricultureWith diversification in mind, BOCCIM expects the government to focus greatly on agriculture this year. Our expectations are that government will boost existing initiatives and come up with more innovative strategies to commercialise this sector to ensure food security in the long term.

SecurityThere should be an Increase in budget expenditure for security forces such as the police.Crime is inevitably a growing concern in Botswana which does, and will continue to affect investor's confidence. With the 2010 FIFA world cup being held in neighbouring South Africa, countrywide security is crucial for the sub Saharan region including for us in Botswana.

Notwithstanding, issues such as health, HIV AIDS, poverty alleviation, sanitation projects, water planning and development projects, should continue to remain high priority items on the budget for improved livelihoods, overall development and maintaining a progressive nation.

* The writer is the Executive Director of BOCCIM