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State of the Nation Address by His Excellency Lt 0 REPUBLIC OF BOTSWANA STATE OF THE NATION ADDRESS BY HIS EXCELLENCY LT. GEN. SERETSE KHAMA IAN KHAMA PRESIDENT OF THE REPUBLIC OF BOTSWANA TO THE SECOND SESSION OF THE ELEVENTH PARLIAMENT 9th of November 2015 GABORONE Final 1 INTRODUCTION 1. Madam Speaker, may I request that we observe a minute of silence for those who have departed during the past year. I thank you. 2. Madam Speaker, it is once again my pleasure to report on Government’s perspective of where we are and where we intend to go along our path towards an even better Botswana. In this journey Government’s goals have been constant. • We continue to seek a Botswana where sustained development is achieved through inclusive, diversified economic growth that further advances us to high income status; • As democrats, we remain committed to ensuring that our citizens are politically and socially, as well as economically, empowered to live dignified lives; • We are steadfast in our commitment that the custodians of our future, our talented youth, possess the moral and intellectual discipline, as well as material means, to take full advantage of emerging opportunities, while overcoming any challenges they may face, in this ever changing globalised world; • We thus envision a society in which all shall share in the resources of our homeland through common values, as well as rights and responsibilities. 3. As our resources are finite, we must focus on our national priorities; which include accelerated job creation, the eradication of abject poverty and the provision of quality education. We will also have to continue to commit considerable resources to improving health care, including the war on HIV/AIDS. Given current circumstance, we further recognise an urgent need to improve the capacity and management of our water supply, while at the same time moving beyond the outages we have hereto experienced as we become an energy surplus nation. 2 4. As we begin the countdown to the 50 th Anniversary of our Republic, let us accept that we have reached a stage where a major choice must be made. We can either become more productive by working together to reach our goals; or we can allow individual desires and potentially debilitating divisions to rob us of further progress. 5. As a nation we can only achieve our full potential if our individual interests remain subordinate to the national interest. Our greatest strength over the past five decades has been our capacity to find common ground in our planning. This administration has in this respect consistently sought consensus by reaching out to all sections of the public, through our various, well known forms of consultation. This has given us a clear roadmap to guide us to our destination. 6. Madam Speaker, it is in the nature of any journey to be confronted with emerging challenges beyond one’s control, such as the onset of drought or current global economic trends, which have been characterised by greater market volatility; as was reflected in the abrupt fall in the price of most mineral commodities including diamonds earlier this year. It is in this context that Government further recognised the need to take bold, proactive measures to stimulate the local economy while quickening the pace of public sector delivery. 7. The Economic Stimulus Programme (ESP) that I unveiled last month is a holistic action plan for achieving the goals of stimulating economic growth, accelerated employment creation and the promotion of economic diversification. The following have been identified as key sectors that will drive the programme: Infrastructure, Agriculture, Tourism and Manufacturing and Services, enabled by the establishment of Special Economic Zones (SEZs) and the Economic Diversification Drive (EDD). In addition to stimulating inclusive economic growth a key ESP objective is to re-boot Government to ensure the urgent delivery of existing national priorities. The programme thus targets key areas where there is a backlog of public projects as well as labour intensive opportunities to promote local enterprise. ESP implementation will thus further focus on: 3 • Accelerated land servicing • Boosting local manufacturing and services with increased citizen participation; • Road construction; • Achieving food security and job creation through improved agricultural production; • Kick-starting economic activities in rural areas; • Improved education and healthcare through the upgrading of facilities; and • Leveraging ICT for the creation of an e-society through expanded e- services. 8. To further ensure its delivery, ESP is being coordinated by His Honour the Vice President who is being assisted by a Cabinet Sub- Committee supported by a Technical Committee and District Development Committees. To strengthen the overall coordination of local delivery, District Commissioners will report on progress directly to the Ministry of State President. In addition, the delivery of ESP will be facilitated by a high level Project Implementation Unit. Economic Outlook 9. Madam Speaker, the introduction of ESP is consistent with the need for us to constantly adjust to changing economic circumstances. Unfortunately, we still find ourselves in a post-2008 global economy that is characterised by slower growth and greater uncertainty. Having weathered the initial storms of the downturn we had hoped for a more robust and stable global market than currently prevails for our exports and services. In this regard, the latest indicators suggest a decline in the demand for our diamonds during the second half of the current financial year that will be greater than what we experienced in 2008-09. 10. The latest estimates from Statistics Botswana indicate that in real terms, the domestic economy expanded by 4.4% in 2014 compared to 9.3% in 2013, due to decreased growth in both mining and non-mining sectors. Growth in the mining sector was 4.5% in 2014, down from the 4 exceptional 23.9% registered in 2013, resulting from a general decline of commodity prices including weakened demand for diamonds. The non- mining sector also registered a lower growth, at 4.4% in 2014 as compared to 6.8% in 2013, with the challenges of the Water and Electricity sectors being especially difficult. 11. According to the latest IMF World Economic Outlook report a modest growth rate of 3.1% is projected for the world economy in 2015. Due to the steeper than originally projected slowdown in mineral revenue, our expected domestic economic growth has also been adjusted downwards to 2.6% this year. 12. Madam Speaker, I am, however, pleased to note that in 2015 our domestic inflation rate continued to fall within the Bank of Botswana’s target of 3–6%, with monthly inflation ranging from 2.8% and 3.6% during the first half of the year. This trend is expected to continue in the coming months, due in part to lower fuel prices. For its part, the Bank of Botswana has pursued an accommodative monetary policy, lowering its Bank Rate to 6% thus reducing the cost of borrowing. In January 2015, the weights of the currencies in the Pula basket were revised to 50% South African rand and 50% SDR currencies, based on inflation differentials, while a zero annual rate of crawl of the Pula exchange rate was implemented for the year. 13. The exchange rate between the pula and the SDR currencies has had a positive impact on our Foreign Exchange Reserves, which as of August 2015 were estimated at P87.8 billion, a 16.3% increase from P75.5 billion in August 2014. Of the total amount in August 2015, the Government investment Account, which is Government’s savings, was P 39.6 billion. A combination of these savings and borrowing, especially domestic borrowing, can provide additional funds to stimulate our economy. Any use of savings and borrowings will be done prudently to ensure the continued sustainability of our fiscal situation. Budget & Planning 5 14. Madam Speaker, insofar as Government’s budget remains an important factor in our country’s development, continued financial prudence remains crucial. For the 2014/15 financial year, the total expenditure and net lending was P50.56 billion, which was 95% of the revised budget estimate of P53.22 billion. Out of this, recurrent expenditure amounted to P37.58 billion, while development expenditure was P13.07 billion. This was a significant increase in development expenditure compared to the P8.91 billion spent in 2013/14. The overall fiscal balance for the 2014/15 financial year was a budget surplus of P5.34 billion, compared to a surplus of P7.22 billion in 2013/14. 15. Subsequent to the extension of the duration of National Development Plan (NDP) 10 to March 2017, the preparation of NDP 11 has progressed alongside the formulation of the new vision to take us beyond 2016. A consultation framework for the next vision was drafted in April 2015, allowing the preparation for NDP 11 to now also move forward. A task force has meanwhile been appointed to engage the public on the framework. 16. Government also remains committed to the global partnership programme with the World Bank on Wealth Accounting and Valuation of Ecosystems (WAVES). Through this programme, we are developing natural capital accounts for water, minerals, energy and tourism. The information obtained from this accounts will guide policy decisions during the implementation phases of NDP 11. The results from the water accounts are already guiding our planning. More broadly developing natural capital accounts gives us a truer picture of the economic contribution of natural resources. As such, the programme should foster sustainable development strategies, while providing a complement to GDP as a measure of economic growth. Doing Business and Competitiveness 17. Madam Speaker, as our improved but still middling performance in the latest World Economic Forum Competitiveness report attests, we can and must do more to enhance our country’s business environment for both 6 local and foreign investors.
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