Alarm raised as unsolicited funding offers to gov't reach US$40bn

Delivering opportunities: Project funding has been hit as a result of COVID-19’s impact. Unsolicited credit bidders want gov’t to take them up on their offers 
PIC: MORERI SEJAKGOMO
Delivering opportunities: Project funding has been hit as a result of COVID-19’s impact. Unsolicited credit bidders want gov’t to take them up on their offers PIC: MORERI SEJAKGOMO

Government has received unsolicited proposals for funding worth a total of US$40 billion with some of the potential funders disguising their offers as grants that will later turn into loans and others demanding impossible guarantees such as a portion of the country’s diamond revenues.

The Finance and Economic Development ministry is not entirely sure why the offers are coming at the pace they are, but it has a few ideas.

“The reasons are not quite clear and some of the proposals were submitted in previous years,” the Ministry said in an emailed response to Mmegi yesterday.

“Some of the potential investors or partners have mentioned political stability and macroeconomic conditions as reasons for their desire to invest in Botswana. “One possibility is that the economies around the world have not been performing well with a lot of uncertainty because of the effects of COVID-19 pandemic and therefore, investors are exploring alternative and safer forms of investments. The Public Private Partnership arrangement offers possibility for safer investments,'' said the ministry.


The country is facing a budget deficit of P7.8 billion this financial year, a fact which when combined with its high credit rating in Africa and considerable room for external borrowings, appears to have ignited a storm of interest among funders. The last financial year carried a deficit of P14.5 billion.

Thus far, this financial year, the country has secured US$250 million (P2.8bn) from the World Bank and another US$137 million (P1.5bn) from the African Development Bank. Last month, an opportunity became available to access a further P3 billion by converting reserve allocations from the International Monetary Fund.

Even with the ongoing domestic borrowing programme, the debt government has secured thus far this year still falls well below the fiscal limit of 40 percent of Gross Domestic Product limit.

Fiscal authorities have raised red flags about some of the bids in the deluge of offers which are taking place at various levels of government, from central, to local and district.

Mmegi is informed that of particular concern to government are the offers for funding where the source of funds is not disclosed, offers disguised as grants that later turn into offers for loans and impossible guarantees being demanded by some financiers.

“There are many coming with offers of money saying ‘just sign here’ and others saying ‘you have a deficit and we can help do these projects,’” Finance Minister, Peggy Serame told a recent televised briefing. “Others go to certain government offices and others come to the Finance Ministry saying here’s P5billion. “Someone comes and says here is money and when you ask further, they say ‘don’t worry about who I am’. “Others say they want to give a grant and that turns out to be a loan. “Some may say we want to give you a grant for nothing in return, then when you go forward there are new issues of guarantees even in the form of diamond revenue.”

She added: “On the surface you may not be able to see those details and they come out later.”

Serame said government had strict laws and processes to be followed in taking on any debt. She said guidelines had been developed to be circulated amongst the various levels of government to help in their due diligence of credit offers.

“There are laws and procedures that have to be followed as government. “There are laws around the debt limits that must be taken into account. “But you also have to ask yourself ‘who is that person who is offering, where is the money coming from?’ “We want full information about the funder, who their partners are locally, source of funding and others. “Ask yourself, if someone wants to give you money, what is that person getting? “Come to the Ministry of Finance where we can do a due diligence and we also have the Financial Intelligence Agency to help,” she said.

Existing legislation does not provide for unsolicited proposals for funding and critics of the method have said as a single-source bid, it may result in government paying far greater costs for debt than it would have through the established methods of open tender. In addition, unsolicited bids may have punitive conditions attached, which an open tender method would have ironed out.

Proponents of unsolicited proposals for funding, goods and services have said these can foster private sector innovation and enhance the creative range of alternatives government has for direct funding or procurement of goods and services.

Unsolicited bids are provided for in the Public Procurement Bill passed by the recently adjourned Parliament.

“The process to consider the offers require due diligence and there is need to comply with relevant legislation such as the Public Finance Management Act, Bank of Botswana Act, Finance Intelligence Act as well as the Public Procurement and Asset Disposal Act, which did not adequately provide for unsolicited bids,” Finance Ministry officials told Mmegi. “In this regard, the Minister of Finance and Economic Development recently sought approval by Parliament of the Public Procurement Bill, which covers, amongst others, unsolicited bids. “Parliament has since approved the request and the subsidiary regulations are being formulated.”

Editor's Comment
Should COVID-19 Vaccination Be Compulsory?

This is after the easing of several restrictions when Botswana emerged from a State of Emergency at the end of September. The embargoes that were lifted included numbers of attendees at public gatherings.The move to ease restrictions revived the entertainment industry, which had come to a complete halt for a little over 18 months, and that is a long time not making a living.Musicians, promoters and support staff largely depend on festivals to put...

Have a Story? Send Us a tip
arrow up