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INTRODUCTION
- Mr. Speaker, I have the honour this afternoon to present to the National Assembly budget proposals for the financial year 2003/2004.
- As Honourable Members are aware, this is the first budget of the ninth National Development Plan (NDP 9), which was approved by this Honourable House in December last year. Therefore, the budget estimates, which I am presenting, are the first instalment in the implementation of the policies, strategies and expenditure allocations approved in the National Development Plan 9. The theme for NDP 9 is "Towards Realisation of Vision 2016: Sustainable and Diversified Development through Competitiveness in Global Markets". This theme challenges the nation to work towards the achievement of the Vision 2016 goals and objectives during the Plan period. The Plan has identified the most critical development challenges confronting the nation and outlined policies and strategies for addressing these challenges. The Plan has also presented the financial and manpower ceilings allocated to Ministries over the period, from 2003/2004 to 2008/2009. In addition to taking into account the projected revenues over the same period, the allocation of financial and manpower ceilings were based on a number of principles, including the need to avoid budget deficits and have adequate financial reserves to cushion the country against exogenous shocks such as drought, fluctuations in the diamond market, outbreak of animal diseases, and the ravages of the HIV/AIDS pandemic. These principles will be observed strictly during the budgeting processes throughout the NDP 9 period.
- Mr. Speaker, the theme of this Budget Speech is "Improving Botswana's Competitiveness in Global Markets". This theme is a component of the theme for NDP 9, and recognises the fact that Botswana's economy is small and open, with little influence on the process of globalisation, which has been taking place through continuous growth in international trade and investment flows, as well as through advances in information technology. The globalisation process makes it imperative for Botswana to position itself for competing effectively in global markets by adjusting its economic structure and institutional framework to take advantage of opportunities offered by globalisation. Success in this regard can be achieved through vigorous implementation of appropriate policies, strategies and programmes, such as provision of requisite infrastructure, maintaining a conducive macroeconomic policy regime for private sector initiatives, and increasing labour productivity through human resource development, as well as development of science and technology. In this context, during 2003/2004 Government will review the Revised National Policy on Incomes, Employment, Prices and Profits of 1990, which is the basis for the work of the Wages Policy Committee and the tripartite Council comprising representatives of labour, employers and Government called the National Employment, Manpower and Incomes Council or NEMIC in short. The objective of the review is to align the Policy with the current level of development of the economy and with best international practices.
- Another avenue for improving Botswana's market access and global competitiveness is through active participation in regional and international trade initiatives, such as the renegotiated Southern African Customs Union Agreement (SACUA); various Southern African Development Community protocols, in particular the SADC Trade Protocol; the African Growth and Opportunities Act (AGOA) of the USA; and the Cotonou Agreement. The Cotonou Agreement, previously known as the Lome Convention, is an agreement between the European Union (EU) and the African, Caribbean and Pacific (ACP) countries, giving preferential access for certain goods from the ACP countries into the EU. Currently, Botswana beef is benefiting from this Agreement. The national competition policy currently under preparation will also improve the environment for competition within the economy, which is a necessary adjunct of enhancing international competitiveness. Other initiatives are the promotion of industries and exports with the help of institutions like the Botswana Export Development and Investment Authority (BEDIA), the Botswana Development Corporation (BDC) and the Botswana Export Credit Insurance and Guarantee Company (BECI), while the Industrial Development Policy facilitates and guides the setting up of manufacturing industries.
- Mr. Speaker, improvement in factor productivity, especially labour productivity, is critical for global competitiveness. It is important, therefore, to relate wage increases to increases in labour productivity in order to contain inflationary pressures. It is also imperative to maintain an environment conducive to cooperation between workers and employers, as well as speedy and amicable settlement of labour disputes. It is only through an efficient, productive and reliable workforce that the country will continue to attract foreign direct investment and improve global competitiveness. The role of the Directorate of Public Service Management (DPSM) and the Botswana National Productivity Centre (BNPC) in the implementation of productivity enhancing measures, such as organisational reforms and the Performance Management System (PMS), is also critical in achieving these objectives. I wish to raise concern regarding productivity in the private sector, particularly some of the building contractors, who have performed unsatisfactorily in the delivery of public sector projects. In a number of cases, contractors have failed to finish projects on time, resulting in unnecessary cost escalations and delays in benefits reaching the intended beneficiaries. This problem needs to be addressed effectively for Botswana to enhance international competitiveness.
- Mr. Speaker, it is pleasing to note that after the initial assignment of high investment grade sovereign credit rating by Moody's and Standard and Poor's in 2001, both rating agencies maintained the same rating for Botswana in the A grade in 2002. This rating, which places Botswana ahead of all African countries, reflects the strong external position of the country and the pursuit of a development strategy that has successfully balanced the provision of social services with prudent fiscal and monetary management over the years. The rating enhances Botswana's international stature and ability to attract foreign capital to support the process of economic development. However, several challenges to the maintenance of the high sovereign credit rating remain. These include the need to accelerate economic diversification, maintain and strengthen financial discipline and contain the ravages of HIV/AIDS. Mr. Speaker, I remain confident that these issues will be addressed fully and adequately during NDP 9.
- Mr. Speaker, the implementation of the Citizen Entrepreneurial Development Agency (CEDA), which is the newest of the major special citizen empowerment schemes, has continued countrywide. As at the end of December 2002, CEDA had approved 792 applications, amounting to P421.1 million, while disbursements for approved applications stood at P247.7 million. In terms of sectoral distribution, 45 percent of approved projects were in the service sector; 25 percent in retail trade; 13 percent in agriculture; 10 percent in manufacturing; and 7 percent in property development. These projects are expected to create over 7 000 additional jobs in the country, when they are fully operational. Since January 2002, repayments amounting to P6.2 million have been received from beneficiaries of CEDA loans, while arrears stood at P3.6 million as at the end of November 2002. To address the problem of arrears, CEDA is intensifying staff recruitment, with a view to establishing a credit control unit, which will follow-up on loan repayments.
- It is very important that CEDA assists viable businesses, if the objectives of economic diversification, developing citizen entrepreneurship, employment creation, citizen economic empowerment, and poverty alleviation are to be realised. Any business promoter, whether small, medium or large, needs to know the fundamentals of business; namely, what to produce; how to produce; where to sell; how to get products to the market place; and whether there would be sufficient profit to warrant the effort. This explains why the CEDA application form is comprehensive. Nonetheless, as a result of representations, CEDA has produced a shorter and simpler application form for small and micro businesses, which borrow up to a threshold of P150 000. The shorter form will be introduced later this month.
- Another important component of assistance, which CEDA has begun to implement through engagement of private sector business consultants, is the training, monitoring and mentoring programme. It is expected that this type of support will equip citizens with the requisite skills for running businesses. Government believes that achieving success in this area will contribute a great deal in empowering citizens to participate meaningfully in Botswana's economic development. Meanwhile, guidelines for the operation of the CEDA Venture Capital Fund have been finalised and the process of identifying a Fund Manager has already started. It is expected that the Fund will be operational by April 2003. For the financial year 2003/2004, a provision of P300 million has been made for CEDA operations.
- Mr. Speaker, I am glad to report that the Public Procurement and Asset Disposal Board (PPADB) commenced operations on 2nd July 2002, taking over the responsibility for the management of the public procurement functions previously performed by the Central Tender Board (CTB). However, the process of establishing the various committees required under the Act is still ongoing for completion in the coming financial year. The major challenge of the Board is to ensure higher standards in the procurement process and enable Government to deliver timeously and cost-effectively on projects envisaged for implementation under NDP 9.
- The Public Procurement and Asset Disposal Act recognises the twin principles of reservation and preference as affirmative schemes for the promotion of citizen economic empowerment. In particular, the existing reservation and preference schemes should also be seen as the means for the progressive development of capacity in particular sectors, with the ultimate goal of achieving global competitiveness in those sectors. During 2003/2004, Government, in consultation with PPADB and other relevant stakeholders, will be embarking on an exercise to introduce targeted, time-bound reservation and/or preference schemes in identified sectors of the economy, with a view to enhancing citizen contracting capacity, particularly through joint ventures in works, supplies and services. This, in turn, should result in increased investment into Botswana and transfer of technology.
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