Remarks by His Honour the Vice President, Lt. Gen. Mompati S. Merafhe, MP at the Media Briefing on the Impact of the Economic Crunch on Botswana

source: Republic of Botswana (9/5/09): TAUTONA TIMES no 13 of 2009
The Weekly Electronic Press Circular of the Office of the President
"Democracy, Development, Dignity and Discipline"

B2) 29/4/09: REMARKS BY HIS HONOUR THE VICE PRESIDENT, LT. GEN. MOMPATI S. MERAFHE, MP AT THE MEDIA BRIEFING ON THE IMPACT OF THE ECONOMIC CRUNCH ON BOTSWANA:

Please find below the English Text of H.H. the Vice President's opening remarks – which were delivered in Setswana - at this afternoon's Press Conference, where he among other things he made the announcement that:

"As a democracy we have heard the concerns of Batswana about the 40 points cut off mark. Government has decided to drop the cut off point mark from 40 to 36. As a result 8885 BGCSE students who attained 36 points or better will be sponsored for tertiary education."

[Start of remarks]

1.    Good afternoon Ladies and Gentlemen of the Press. I welcome this opportunity to brief you on the impact of the global economic recession on Botswana and measures taken to address the situation.

2.    Origins of the crisis

• The crisis arose from a highly leveraged expansion of credit, lax monetary policies, defective risk management, in-effective regulation of financial markets and poor business practices in major developed economies.

• As some debtors became over extended there were defaults on a wide range of financial instruments, hence the collapse of a number of financial institutions, e.g. The Leeman Brothers.

• This slow down coupled with the negative impact of the escalation in food and fuel prices made the situation worse for many developing countries.

3. Impact on Botswana

• As you all know, Botswana depends largely on mineral revenues, particularly diamonds, and this is a sector that has been the hardest hit by the recession.

• As a result Debswana decided to close Orapa No. 2 and Damtshaa for the rest of 2009, while Orapa No. 1, Letlhakane and Jwaneng mines were closed till mid April 2009.

• No diamond sales were made in the month of November 2008, and that is when the full impact of the recession on the Botswana economy became apparent, and it has been since.

• This has led to significant reduction in revenues for the country.

• This reduction, when set against Government’s expenditure plans, which were formulated before the onset of the crisis, will result in a substantial budget deficit.

• Prior to this recession the country was able to sell P2.4 billion (US$300m) worth of diamonds per month.

4. Government’s Response

• Due to the small size of the private sector, Botswana’s economy is government driven.

• It is therefore important that we maintain Government’s presence in the economy.

• This is the reason why Government has adopted a recurrent budget of P27.36 billion and a development budget of P10.5 billion for 2009/2010 financial year.

• This translates into 5.3% increase over the 2008/09 budget.

• Government has however seen the need to effect cost saving measures across the board which include, but not limited to:

• 7% reduction of ministries recurrent budgets for the financial year 2009/2010.

• 5% reduction of ministries development budgets for 2009/2010.

• Class of air travel for ministers and other political dignitaries as well as all senior government officials at deputy permanent secretary level and above, is restricted to business class. 

• All other officers are to travel at economy class. The restrictions also apply to parastatals, local authorities and other government aided organizations.

• Sizes of delegations going on external and internal travels should be restricted to the bare minimum needed to achieve the objectives of the mission.

• Payment for travel expenses for spouses accompanying Ministers and Members of Parliament on official external trips is suspended.

• Prior to this cost saving measure Ministers, Speaker, Assistant Ministers, Deputy Speaker and the Leader of Opposition were allowed 3 trips outside Botswana accompanied by their spouses while MPs were allowed 1 trip during the life of Parliament.

5. Ministry of Education

• It is the policy of Government to resource Batswana with education, thus putting the country in good stead to attain economic development.

• We are fully conscious of the fact that the future of this country rests with the youth and it is therefore important that we continue to invest in them through education. 

• This is evidenced by the proportion of the budget allocated to the Ministry of Education and Skills Development in both recurrent and development budget over the years.

• This year the ministry has been allocated P7.57 billion recurrent and P890.5 million development budget, which is 22% of the total national budget.

EXAMPLARY INITIATIVES

• In 2005 Government took a decision to sponsor students to local private tertiary institutions.

• This led to a major increase in the enrollment of first year students from 5, 517 in 2006 to 15, 537 in 2007, 10, 000 of which were sponsored to local private tertiary institutions.

• Enrolment of first years’ for both public and private tertiary institutions rose to 18081 in 2008.

CHALLENGES

It must be appreciated that unlike in other countries the government heavily subsidizes tertiary education given that it attracts 30% of the Ministry of Education’s budget. Furthermore the National Human Resources Development Strategy has identified areas of critical need in the economy that should guide training and skills development.

The government still remains committed to the empowerment of our youth. This commitment is demonstrated by the following initiatives:

National Internship Programme

Unemployed graduates are placed in Government institutions and are paid a living allowance equivalent to what they earned while at school. This will help them gain practical experience. A budget provision of P80 million has been set aside to finance the programme this year. Placement of Interns started in January 2009. 2103 have already been placed.

Constituency Tournaments

The games are geared towards keeping the youth busy and fit. The sporting codes are football, netball and volleyball. The tournaments revolve every three months. P10 million has been set aside to finance the tournaments for the financial year 2009/2010.

Employment of Youth Officers by ministries:

• All ministries have employed Principal Youth Officers.
• The Youth Officers are tasked with the responsibilities of identifying youth opportunities in their respective ministries.

The other initiatives include:

• Out-of-school youth programme
• Placement of youth officers in constituency offices
• CEDA Young Farmers Fund

As a democracy we have heard the concerns of Batswana about the 40 points cut off mark. Government has decided to drop the cut off point mark from 40 to 36. As a result 8885 BGCSE students who attained 36 points or better will be sponsored for tertiary education.

6. Botswana lines of credit to Zimbabwe

Botswana has heeded the SADC call to assist Zimbabwe in their efforts to recover from their current economic situation. This assistance entails extending lines of credit to Zimbabwe through the following terms:

• Botswana commercial banks are encouraged to consider giving lines of credit to Zimbabwe business entities.
• This will be done through letters of credit from reputable commercial banks with a presence in Zimbabwe.
• Botswana government will provide guarantorship in the process.
• The credit lines will be on commercial terms.
• This assistance will be on condition that business entities in Zimbabwe buy goods and services from Botswana local companies.
• B.D.C. and the Botswana private sector will identify business entities or opportunities to invest in through joint ventures in Zimbabwe.