Republic of Botswana PEOPLE’S GUIDE TO THE 2019/2020 BUDGET Ministry of Finance and Economic Development Website: www.finance.gov.bw 4th February 2019 The Context of 2019/2020 Budget September 2018. On the other hand, Speech donor aid has drastically reduced to around one (1) percent of the annual 1. The 2019/2020 Budget is the first development budget, as a result of the under the leadership of His Excellency country’s graduation from lower income the President, Dr. Mokgweetsi Eric to middle income status. Keabetswe Masisi, whose roadmap is anchored on the country’s long-standing Global and Domestic Outlook principles of good governance and respect for the rule of law. The Speech 3. The global economy is projected provides the country’s developmental to grow by 3.5 percent and 3.6 percent in achievements, over the past years, 2019 and 2020, respectively, while the advocating for consolidating gains domestic economy is forecast to grow by achieved and mapping the way forward 4.5 percent in 2018, 4.2 percent in 2019, in transforming the country from a and 4.8 percent in 2020. The global middle-income to a high-income status. economy continues to be characterised by Hence, the broad-based theme for the sluggish economic activities, due to 2019 Budget Speech is “Consolidating uncertainty in the global markets. The Development Gains for Further implication of the projected growth in the Economic Transformation”. domestic economy is that less revenues will be realised, therefore, this calls for The Country’s Developmental continued expenditure control in order to Transformation since 1966 ensure that the country remains on a path of fiscal sustainability in the medium 2. Between 1966 and 2008, the term. domestic economic performance as measured by GDP growth rate, averaged 10 percent per annum, before slowing CONSOLIDATING DEVELOPMENT down due to the world financial crisis GAINS FOR ECONOMIC experienced in 2008/2009. Over time, the TRANSFORMATION economy transformed from predominately agriculture to mining 4. Botswana aspires to transform to a based, but has since diversified towards high-income status in accordance with the services sector in the recent past the country’s Vision 2036. Achieving this years. Over the same period, real per goal will require the country to capita income increased from around consolidate gains achieved in its US$70 to the present level of over economic management and address the US$7 000. Average inflation declined challenges hindering further economic from around 10 percent between 1966 transformation. Government will and 2010 to around four (4) percent in continue to pursue a number of structural recent years, while formal sector reforms during the 2019/2020 financial employment grew significantly from year aimed at promoting growth and 29 000 persons in 1966 to 417 162 in creating the much-needed jobs, through 1 broad-based policy initiatives that can be business productivity, value chains and grouped into three (3) areas of: economic competitiveness. consolidation; social development; and maintaining governance and security. Promoting Development of the Private Sector (i) Economic Consolidation 7. To promote private sector participation in the economy, 5. The domestic economy is Government has since come up with currently characterised by; low debt several initiatives that include; Public- level, stable inflation, and high gross Private Partnerships (PPPs), national savings as a percentage of GDP. Privatisation of State Owned Enterprises This is attributed to Government (SOEs), as well as reform of the business relentless effort in pursuing appropriate environment to facilitate the growth of fiscal and monetary policies over the the private sector. The Public-Private years and undertaking reforms. While the Partnerships (PPP) Policy and its country has recorded significant Implementation Framework was adopted achievements in most of these areas, in 2009, as an alternative means of there is need for continued consolidation financing public infrastructure projects to in some of them in order to transform the accelerate and improve infrastructure economy from its current upper middle- development, and create a conducive income to high-income status by 2036. environment for stronger public and To facilitate this, Government, has over private sector partnerships. Among the the years, pursued specific strategies to major projects identified as being eligible promote economic growth that has for PPP are; Zambezi Integrated Agro- potential to create employment Commercial Development, Gaborone opportunities. These included; pursuing Waste Water Treatment, Chobe-Zambezi economic diversification, promoting Water Transfer Scheme, and Strategic Oil private sector development, and Reserve at Tshele Hill. development of human capital and physical infrastructure network. 8. With regards to privatisation of State-Owned Enterprises, the Economic Diversification demutualisation and privatisation process 6. In an effort to diversify the of the Botswana Building Society (BBS), domestic economy to reduce dependence which included the conversion of the on the mining sector, Government has Society into a company registered under embarked on several strategic initiatives. the Companies Act, was completed in These include, among others the: April 2018, while efforts to restructure Economic Diversification Drive; which the National Development Bank (NDB) was established in April 2010; Special continue. Once fully restructured, the Economic Zones policy adopted in 2011; NDB will be commercialised, with the SPEDU Revitalization Programme, and ultimate objective of privatising it. Cluster Development aimed at improving Another significant milestone achieved during 2018 was the demutualisation of 2 the Botswana Stock Exchange, which 2018/2019 and 2019/2020 financial involved significant changes to its legal years, 43 new villages will be electrified status, structure and governance. This while network extension will be done in transformation has positioned the Stock 72 villages countrywide. This will result Exchange to play a critical role in the in an increase in household access to development of the domestic capital electricity from the current 58 percent to market. 65 percent. In order to reduce the burden of the cost of connecting and improving Infrastructural Development access to electricity, Government 9. Over the years, a significant amount introduced the National Electricity of resources has been allocated to energy Standard Cost (NESC) in October 2010, generation, water supply and road-network and standardised connection costs to P5, infrastructure. To this end, Government will 000 for households. continue to invest in power generation and distribution in order to support 11. Availability of water is also a economic growth, promote employment critical input in various economic sectors. creation and improve the living standards In this regard, Government has invested of the citizens. Among the major ongoing substantial resources in the water sector energy projects is the extension of the over the past decades in order to improve power transmission grid to provide power water supply throughout the country. in the North West part of the country. Some of the achievements in this regard Three (3) contracts for extension of the include: the four (4) multi-purpose dams; high voltage transmission grid from Ntimbale, Thune, Lotsane, and Morupule 600MW power station to Dikgatlhong; completion of water Maun, Toteng, Samochima and Ghanzi scheme projects such as Middlepits- were awarded at the end of 2017, and Khawa, Zutshwa-Ngwatle, Lecheng- construction work is ongoing. The Matlhakola, Mahalapye-Bonwapitse, and construction of Rakola and Gaphatshwa Mmopane-Metsimotlhabe; and Power substations were completed in completion of groundwater project at 2017 and 2018, respectively, and the Masama East, which augmented the refurbishment of Morupule A is expected water supply in the Greater Gaborone. to be completed in 2019. These projects are expected to impact positively on the 12. Some of the major water projects country’s security of electricity supply, underway are the implementation of the which currently stands at 79 percent, North South Carrier 2; and Botswana against a target of 85 percent. Emergency Water Security and Efficiency projects. These projects will 10. The Rural Electrification include: construction of strategic Programme continues to be implemented reservoirs; bulk water transfer pipelines; to address availability, access and groundwater resource development and affordability of electricity by citizens. To water supply distribution networks, date, 402 villages have been electrified including treatment facilities. Other out of 492 gazetted villages. During water projects are the: Selebi Phikwe- 3 Serule Water Transfer Scheme; Boteti Eradication of Abject Poverty Southern and Central Cluster Villages 15. Government will be scaling-up the Water Supply Scheme; North East and interventions to address poverty through Tutume Sub District Water Reticulation cluster gardens, fish farming and egg Scheme; and Lobatse Wastewater production, as well as production of Treatment Works. commodities such as toilet paper and liquid soap detergents in the next 13. Government over the years has financial year. However, in order to invested a significant amount of improve the efficacy of the existing resources in the development of poverty eradication measures, the Single transport-related infrastructure projects. Social Registry