Govt to recover ‘stolen’ money

If it were by Vice President Ndaba Gaolathe, the Government would go after those proven to have benefited corruptly from the Government contracts and recover the loot.

Gaolathe, who serves as Minister of Finance, took Parliament floor on Thursday, to present ‘The State of Public Finances’ as found by the month-old Umbrella for Democratic Change (UDC) Government.

Giving his own personal view about what should be done to those who stole from government, Gaolathe declared – “I am more interested in recovering the money from those who benefited corruptly and return it to Batswana. I take it that we were voted in for this reason – to stop the rot and return the money to the owners”.

This is comparable to the South African situation where after a Commission of Inquiry and an investigation by the Special Investigations Unit, billions of Rands were recovered from those found to have benefited unduly.

FORENSIC AUDIT 

Gaolathe announced that President Duma Boko will soon unveil and launch an independent Forensic Audit process that he will not interfere with. “The President will announce at the right time, how the multi-layered financial forensic audit will unfold in respect to projects, processes (including GABS), Government ministries and state-owned enterprises. Once set in motion, not even the President will have the power to influence its findings – we are keen as a nation to learn from our past lapses,” he said.

He assured curious MPs that the scope of the investigation will not be limited to the immediate past administration but will be guided by those who provide evidence. “We can not say ema pele (wait a minute) once the process is underway,” he declared after MP Phillimon Aaron had suggested that the investigation should span the period covered by the Presidents who are at least alive today who could answer for themselves.

“Concrete signs are increasingly emerging that in the recent past, a new culture of personal enrichment and corrupt practices cultivated by the political leadership top brass of the Botswana Government system was taking root, but unearthing the nature, extent and concreteness of it constitutes part of the work to which the people of Botswana have entrusted us,” he said.

FINANCIAL CHAOS

He painted a picture of financial chaos of a country that seems to have been on auto pilot, spending recklessly from savings and borrowings without generating sufficient revenue and stopping the leakages that arose from inefficiencies.

“To be simplistic, the Government system has been spending, particularly in the second half of this year, about P8 billion/month, against receipts of only about P2 billion/month. There is no need for a certificate in Physics to observe that, if unchecked, this is far from sustainable. In fact, at that kind of rate of financial haemorrhaging, this path leads to a financial implosion of a magnitude such as this country has never experienced. History reveals that, this nation has experienced and survived financial or near financial crisis before, including in 1981, in the early 1990s, in 2008 and during the Covid period, but none were as severe or as uncertain as our current position,” he revealed.

He regretted a collapse of systems crucial for a well functioning government. “The systems for monitoring of projects, the systems for transparent payments and the systems for informed and fair economic decision-making are near dysfunctional, if not broken, in the Botswana Government system,” he said, warning that this has cost government Billions of Pula in recent years.

Gaolathe also revealed that some parastatals have no board of directors or necessary key management staff. “This means the very enterprises that should have been either generating wealth for our nation or facilitating the creation of wealth are instead mostly a drain on our nation’s coffers. Our job, all of us, is to turn around these state-owned-enterprises into sound, enduring and nation building institutions that enable or generate funds for our national coffers,” he said.

DECLINING REVENUE

Botswana’s foreign exchange reserves declined to P52.8 billion by September 2024 compared to P63.9 billion in the same month in 2023 due to the declining diamond sales. “As at September 2024, Total Revenue and Grants stood at P34.67 billion in the first half of the financial year, compared to an estimated collection of P46.47 billion in the original budget. Most of this decline is driven by the shortfall in mineral revenues of about of P8.75 billion during the first half of the financial year. Non-Mineral income Tax and Value Added Tax also recorded under-collections of P1.74 billion and P1.69 billion, respectively, during the period under review,” he said.

Gaolathe expressed shock and alarm that on the face of declining revenue Government failed to revise its spending pattern. “This has left us with a serious fiscal liquidity crisis, while the diamond downturn continues, with revenues that are insufficient to support budgeted spending. Government spending needs to be reduced, both to deal with the short-term fiscal problem and to start the process of longer-term adjustment to fiscal sustainability,” he observed.

Total Government Debt stood at P70.5 billion as at end of September 2024; including P27.2 billion for external lenders and P43.2 billion owed to domestic lenders.

AIR BOTSWANA, BSB

The Vice President drew a comparison between Air Botswana – which he said was haemorrhaging state resources to Botswana Savings Bank (BSB) which he said was bound to be a standout performer in the coming years. “We are taking concrete steps to halt the financial haemorrhaging at some state-owned enterprise including Air Botswana, with some announcements expected before Christmas. We are also taking concrete steps to stabilise parastatals that we believe are dysfunctional, particularly those that are draining our national coffers,” he said.

Media reports have been scathing about how Air Botswana recently acquired an aircraft that is not in a good condition and that the airliner was renting an aircraft from Namibia. This is happening at the time when the airliner is swimming in deep financial crisis.

As for BSB, Vice President Gaolathe was glowing about the miracle that is about to unfold at the bank, saying the new Government has even decided to stop a merger with the National Development Bank (NDB) because of the higher risks exposure the latter carried.

VEGETABLE BAN

Gaolathe took a posture of lecturing when he discussed the ongoing vegetable ban. “The ban is bad economics. In fact, very bad economics. Anything that you need to sustain a tariff for is bad. The result is that the cost of food shall go up and the most affected would be the low-income groups. The people that are hurt most are low-income groups. Indeed, vegetable farmers have benefited, this sector is growing. The way to grow it is to subsidise it directly with proper funding and through research and development. You will grow it without using bans. Botswana is a small country with a small market. The way to create jobs for its people is to create industries that export. We have a small market so we need to create enterprises that export. Botswana because of its small market needs the outside world more than it needs us,” he cautioned.

Members of the opposition in particular were worried by the possibility of lifting the ban saying it could increase unemployment; as most locals who have been benefiting from the ban will lose out.

WAY FORWARD

Several steps will be taken by the UDC government to turn things around and bring more stability into the fiscus, Gaolathe declared. Government will introduce a mid-year budget statement; commit to (at a minimum) balance the budget; allocate part of mineral revenues to saving in the form of a Sovereign Wealth Fund; improve the quality of the projections in the medium-term fiscal framework; Reform the design and implementation of social welfare programmes; Introduce public expenditure reviews (PERs); introduce carbon pricing in order to guide appropriate investment decisions; introduce a multi-stage project appraisal process; complete the revision of the Public Finance Management Act;  improve transparency and consultation; and revive the practice of using pilot studies.

“We, the people of Botswana, face some difficult economic times, but like the Corinthians of the old, “we are hard-pressed on every side but not crushed; perplexed but not in despair’,” he declared.