Business upbeat over Eskom's R60bn vote

WANETSHA MOSINYI
Staff Writer | Friday February 22, 2008 00:00

Tebogo Rapitsenyane of BOCCIM says the move breathes confidence into the business community in Botswana as the country largely relies on Eskom for power supply. He was speaking to Business Week after watching Manuel's presentation of South Africa's R635 billion 2008/09 budget on television at that country's High Commission in Gaborone on Wednesday.

However, BOCCIM's PRO warned that Botswana should not relax but must continue to seek ways of generating its own power supply. 'This assures us that at least Eskom will continue to supply us in accordance with what has been agreed,' he said, 'but we must not relax because their budget shows that they have injected billions for the development of their economy, therefore their own demand for power is going to increase.'

The CEO of the Botswana Insurance Fund Management (Bifm), Victor Senye, welcomed the R60 billion allocated to Eskom with mixed feelings, saying the money is not a grant and that Manuel has introduced a new levy on the sale of non-renewable sources of energy. In his budget speech, Manuel said 2 cents per kwh will be collected, which is expected to amount to raise about R2 billion in 2008/09 and R4 billion thereafter.

'I am not sure of what to make of it because he gives a windfall to Eskom and then introduces a new tax on power consumption,' Senye said. Another aspect related to Botswana's economy is inflation in South Africa, which Manuel projected to fall within the target range of 7.1 percent by the end of this year and 4.9 percent on average in 2009.  Rapitsenyane said it is a plus for Botswana because the country usually imports inflation from its neighbouring countries. 'Their prudent policy on bringing down inflation seems to be working; we must take a cue from them.'

Manuel announced a one percentage point cut in the corporate tax rate, a dramatic move costing R5 billion, which is expected to boost investment and the stock market. Senye said Botswana needs to emulate such measures to stimulate its economy. He points out that even South Africa's proposed tax increase aimed at moderating consumption habits is restricted to luxurious consumption.

'The tax is not a burden on ordinary people, but it is targeted to what you might call discretionary spending,' he says. For his part, the South African High Commissioner to Botswana, Dikgang Moopeloa, said as demonstrated in Manuel's budget speech, his country is committed to supporting the African continent. South Africa has allocated over R1.3 billion over the next three years to development support and the attainment of Millennium Development Goals on the continent.

The country has also pledged R272 million to the International Development Association of the World Bank and the African Development Bank over the next three years. But South Africa's economic growth rate is expected to slow down to 4 percent this year after averaging 5.1 percent in the last four years as a weak global outlook, lower domestic demand and the electricity crunch weighs on output. In his speech, Manuel emphasised that despite the stormy weather ahead, there is no need for 'gloom or panic'; he was confident South Africa would be able to weather the storm.