STATE OF THE NATION ADDRESS 2009
“Democracy, Development, Dignity,
Discipline and Delivery”
13th November 2009
GABORONE
INTRODUCTION
1. Madam Speaker, I am grateful for this opportunity to address the opening session of our 10th National Assembly. It is my duty to once more present an assessment of our nation’s progress, challenges and opportunities, along with a blueprint of how we as a Government, working with the people, intend to move forward.
2. In this endeavour, my administration shall continue to be guided by the principles of democracy, development, dignity and discipline, our roadmap for empowering the nation. Reaching our goals will also require renewed commitment on the part of all of us to yet another word that coincidentally begins with the letter “D” - delivery.
3. But, before proceeding further, let me first welcome and congratulate the newly elected members of this Assembly. Let me also take this opportunity to compliment Dr. Margaret Nasha on her election as the Speaker of the National Assembly; the first ever woman to be so elected. Each of us has been entrusted with the great responsibility of ensuring our country’s continued progress. With the blessings of God, may we prove worthy of this task.
Democratic Commitment
4. As we work together, let us be mindful that our presence here is a product of the enduring commitment by Batswana to sustain their enviable record of development through a government that is accountable for their hopes and needs. Today’s gathering is an outcome of our 10th consecutive general election. Like those before it, the ballot was conducted in a peaceful, free and fair manner. For this we can thank Batswana in general, along with the Independent Electoral Commission and all the others who helped to make the poll a success.
5. As political leaders we are answerable to the thousands who turned out to vote. In as much as the voters were naturally divided in their choices, they were also united in their undertaking to uphold the democratic values and practices that have enabled our progress over the years. As a Parliamentary Democracy we must be committed at all times to placing the interests of the nation first and our own self-interest last. Last month my party, the Botswana Democratic Party, was re-elected on the basis of a manifesto promising delivery. We now start that process.
Values
6. Madam Speaker, our consistent standing in the community of nations among the world’s most stable democracies has been nurtured by our own devotion to our country and the underlying values that have long sustained it. These include our traditions of tolerance, consultation, and respect for each other and the rule of law.
7. As citizens of a republic we are united by our patriotism. In its historic derivation, the word “patriot” is associated with ties of family, as well as territory. As with members of a family, patriots through the ages have been joined not only in their loyalty to a motherland or fatherland, but by their collective obligation to the welfare of fellow citizens. This is an ideal that is consistent with our deepest traditions and values as Batswana.
8. Let us here recognise that while the nation can be united in its diversity, it cannot be divided in its loyalties. Even in a global village one must know one’s own yard from that of one’s neighbour. As citizens we can have but one country we call home. As patriots our loyalty to the nation should be above lesser ties of ethnicity, tribe or locality.
9. In our culture, individual rights are understood to go hand in hand with civic responsibilities and constant consideration for the rights of others. It is misguided to believe that we can prosper as a united and proud people in the absence of social harmony, underpinned by discipline and the rule of law. Our ancestors survived much harder times than these by upholding the collective discipline of their communities. It is, therefore, shocking to find some who would today go so far as to try to falsely justify acts of lawlessness, such as vandalism and substance abuse, in the name of culture. Such acts belong to the law of the jungle, rather than the culture of Batswana.
10. In addition to collective discipline, self-discipline in our personal and professional conduct is a prerequisite for mitigating many of the social ills we face, from fighting corruption and crime, to curbing alcoholism and other forms of substance abuse, to finally realising the goal of an HIV/AIDS free generation.
Law & Order
11. Madam Speaker, the peace of mind of every citizen and our ability to attract foreign direct investment for economic growth is largely dependent on the security and stability of the country. To this end our law enforcement agencies should be well resourced to deal effectively with all types of crime. Likewise our communities must have a full appreciation of their role in making Botswana safe and secure.
12. While crime in general has declined over time, intrusive and violent crime remains a major concern. In the face of this increasing type of criminal activity we will come up with strategies that will be responsive to this crime trend. To this end we will increase police visibility.
13. We shall shortly be putting in place organized neighbourhood watch strategies and will assist to the extent possible other privately organised neighbourhood watch groups. I expect a considerable number of youth to be employed periodically in the implementation of these strategies as yet another way of engaging the youth in income generating opportunities.
14. With these and other measures, we can enhance and ensure the confidence of our communities in our law enforcement agencies. It is my expectation that by January 2010 we will see this and other crime on a downward trend.
15. Let us recognize that by its very nature crime is an assault not only on the human rights of its immediate victims, but society as a whole. Where there is insecurity we are all ultimately affected. In this respect, we should avoid attempting to excuse the activities of criminals, while undermining the efforts of the dedicated men and women who work to protect us from lawlessness.
16. Our law enforcement agencies exist to uphold the law, not to break it. At the same time we do recognize that instances of individual transgressions and errors can occur in any organization. Whenever credible allegations of serious abuse by security personnel arise, they shall continue to be impartially investigated in accordance with the law and demands of due process, but not subject to the arbitrary timetables set by sensational newspaper headlines or partisan adventurers.
Fighting Corruption
17. Madam Speaker, corruption is like a cancer that, if not detected and uprooted at the earliest opportunity, can spread throughout our society. Our efforts to fight this crime will therefore be geared to effectively prevent corruption from taking root.
18. We intend to re-double our anti-corruption efforts so as to maintain Botswana’s status as Africa’s least corrupt country, as well as further enhance our global reputation for zero-tolerance towards such crimes. We will cooperate and benchmark with those countries that have the most effective and well resourced anti-corruption institutions.
19. In this regard we will soon be engaging a number of international experts to enhance the capability of the Directorate on Corruption and Economic Crime (DCEC) to deal with corruption. I must, however, commend our law enforcement agencies for making more arrests for these crimes than ever before in the history of our country.
20. In the recent past there have also been incidents of fraud in the acquisition of local passports, residence permits, visas and citizenship certificates. To address this problem, a programme was initiated to improve the security features of documents and processes that are susceptible to fraud. To curb incidences of forgery of travel documents, new travel documents with enhanced security features that comply with regional and international standards will be rolled out in the coming year. Automation of the production processes of these documents will also greatly improve the turnaround time for their production.
Constitutional Balance
21. Madam Speaker, our Constitution is the ultimate legal guarantor of our responsibilities to each other as citizens, as well as the individual liberties we all enjoy. It also provides us with the framework upon which the divisions of Government are held accountable to one another and, more importantly, to the public they have been established to serve.
22. As citizens we all look to the third branch of Government, the Judiciary, to act as our final arbitrator through the delivery of impartial judgments in courts that remain accessible even to the least privileged among us. Here I must voice my appreciation of the ongoing initiatives by the Administration of Justice in the management of their caseload. The new Court of Appeal and the Gaborone Division of the High Court will further improve the effectiveness of the Administration of Justice.
23. Our delivery of good governance is further bolstered by the existence of additional independent institutions, as well as the valued contributions from the private sector and civil society.
Economic Downturn
24. Madam Speaker, the challenges we face as a nation are not always of our own making. We are living in a world where actions in one region will affect activities elsewhere. This reality has been manifest in the negative impact of the ongoing global economic downturn.
25. During the fourth quarter of 2008, Botswana’s GDP declined by a little over 6%. This was followed by a 22% drop in the first quarter of 2009, placing our overall economy in recession. These figures were primarily the result of a sharp decline in global demand for diamonds, which resulted in cutbacks and the temporary closure of some mining operations. The crisis also had negative repercussions on other key commodities, with nickel prices dropping by 46% and copper prices by 56% between September and December 2008. Overall mineral revenue is thus expected to drop from P 10.8 billion in 2008/9 to about P6.8 billion during the current financial year.
26. As Government we had to act. I therefore set up a task force to come up with recommendations to guide us through this difficult time, whose recommendations were accepted in February this year. Amongst the core recommendations that have proved to be effective are those for sustaining and growing employment and expanding the non-mining sector. Actions taken to sustain and grow employment included stay-in business strategies, which were developed and rolled out by the mining houses to avoid mass retrenchments. Government also found it necessary to assist a number of companies, on a case by case basis, in order to protect jobs and investments.
27. To grow the economy in the non-mining sector, Government also took a deliberate decision to allow the already budgeted infrastructural projects to go ahead.
28. Government further introduced the Ipelegeng Programme which is now being implemented on a permanent basis. This has provided relief in a form of supplementary income support to the poor and unemployed who are adversely affected by unfavourable climatic and economic conditions. At the same time, the programme supports the carrying out of essential projects in both urban and rural districts. Since its inception in July 2008, the estimated monthly employment created through Ipelegeng has averaged 38,000 for the entire country. The cumulative number of beneficiaries under the programme as of October 2009 was 327,494 people. Our target for Ipelegeng is 40,000 to be employed at any one time and I am working on other initiatives to increase this number in the coming months in other income generating opportunities, without the need for additional budget provision.
29. The Bank of Botswana also needs to be commended for its supportive monetary policy initiative. Inflation declined from 15% in November 2008 to 6% in July 2009. This is the first time that inflation reached the Bank’s medium term inflation objective in the last 7 years. As a result the Bank’s rate has been reduced from 15.5% in November 2008 to 11% in August 2009, while commercial banks reduced their prime lending rate from 17% to 12.5%.
30. Owing in part to the interventions stated, many of the non-mining sectors of our economy have remained stable or growing. Non-mining GDP grew by 5.7% during the first half of this year. Unlike the situation in many industrial countries, where collapsing banks choked off credit to the economy, our stable banking system has maintained a supply of credit to households and businesses.
31. The price, however, which we as a nation have to pay for the above achievements is not trivial. By not cutting Government expenditure in response to collapsing revenues, our 2008/09 budget had a deficit of P3.6 billion, while the budget deficit for the current financial year is expected to be P 13.4 billion. These shortfalls are being financed through preferential borrowing and a drawdown of our foreign reserves. Of course, such financing is not something that can be repeated year after year. This implies that future spending must be below income.
32. There has, on the positive side, been a notable increase in diamond demand since April 2009. But, this has so far been uneven, with improvement in the sales of the middle range gems, while the large and small ranges have remained sluggish. Consequently, diamond production is now running at about 80% capacity, while profitability remains below pre-recession levels. This circumstance may persist in the coming year. With regard to other commodity prices there has been a significant improvement since the second quarter of this year with demand expected to pick up further in the coming year.
33. The Botswana Stock Exchange’s domestic and foreign company indices were also adversely affected during the first half of the year, but have been showing positive growth since June.
Challenges
34. Madame Speaker, I am happy to report that there are positive indications that the end of the recession is within reach. Locally, the second quarter of 2009 showed quarterly GDP growth of 24.9%. Around the world, many economists are now forecasting a pick-up in the global economy leading to projections of modest growth in 2010 and 2011. Our challenge is to be ready to do more with less. While in aggregate our GDP is now equal to the level prevailing before the recession, diamond profitability and therefore government mineral revenue is still well below. To reap the benefits of a return to global economic growth we must therefore devise and implement new initiatives aimed at increasing the productivity of our own economy.
35. Notwithstanding the immediate challenge of the economic downturn, Government continues to be committed to achieving our overarching development goal of transforming ourselves into a high income economy, capable of providing for the wellbeing of all our citizens. The challenges we face in reaching this goal are not new:
· The rate of poverty, although it has steadily declined over the past two decades; and
· Unemployment and underemployment, especially among our youth.
36. Related to each of these has been the challenge to sustain accelerated economic growth in the non-minerals sector. Over the decades our economy has grown by reinvesting the proceeds of the high return minerals sector into other economic activities. Even in the absence of recession, the need to make further progress in this area is urgent in the context of projections that diamond revenues will sharply decline in the coming years.
Strategic Framework
37. To overcome our challenges, Government has formulated and committed itself to the “Botswana Excellence Strategy for Economic Diversification and Sustainable Growth”, which serves as a framework for us to achieve our objective of reaching high income status, while leaving no citizen behind. Its Action Plan has, therefore, been incorporated into our new National Development Plan – NDP 10. To ensure delivery, implementation of the Strategy’s key projects and initiatives will continue to be closely monitored from my Office and that of His Honour the Vice President, with the support of the newly created Government Strategy Development Office and as I announced at my inauguration the Coordinating Office for Poverty Eradication, as well as the Botswana Economic Advisory Council.
38. At its core, the Botswana Excellence Strategy recognises the need for all of us to adopt a more outward looking mindset that is conducive to accelerated private sector development. In this respect existing and potential investors can be assured of this Government’s steadfast commitment to an open society with an open economy in which all who can make a positive contribution are encouraged to do so. In pursuing investment, more especially outside investment, our country will continue to market its comparative advantages, which include our:
Political and macro-economic stability, with a record of economic growth based on prudent management;
· Relatively educated, adaptable workforce;
· Low rate of taxation when compared to many countries;
· Absence of exchange controls; and
· Superior sovereign credit ratings; along with
· Stable banking institutions that ensure adequate financial resources to cope with exogenous shocks to the economy.
39. We, also recognise the existence of deterrents to investment. Inhibitors such as complexities in the tax code, shortage of industry relevant skills and poor labour productivity can and must be overcome as a matter of urgency. In addition to continued reform of the public service, this calls for a further commitment to the promotion of technological innovation, skills training, and a reduction in barriers to starting up and growing businesses. We are currently working on reviewing our tax regime as well, to make it more simple and relevant. Any new regime we put in place will commence in the next tax year.
40. During my tenure of office employment creation will be driven by the following:
· the six hubs;
· Foreign Direct Investment focusing on mining, tourism, agriculture and manufacturing sectors amongst others;
· import substitution;
· broadening the tourism and agricultural base;
· local procurement preference;
· government schemes such as CEDA, Youth Development Fund and Young Farmers Fund will be given additional resources;
· Construction; and
· Information Technology.
41. Government’s efforts to promote both domestic and foreign investment will continue to go hand in hand with our efforts to promote citizen empowerment. To date the Citizen Entrepreneurial Development Agency (CEDA) loan, equity and credit guarantee schemes have assisted 3,608 projects valued at just over P 2 billion, which are projected to employ 27,820. The Local Enterprise Authority (LEA) also continues to provide training and advisory services to citizens in entrepreneurship development and technical and business management skills to facilitate the success of small, medium and micro-enterprises. Since April 2007 over 7000 citizen entrepreneurs have thus benefited from LEA services. Our commitment to citizen empowerment is further evidenced by additional initiatives, such as the Youth Development Fund, Young Farmers Fund, NAMPAAD, and ISPAAD.
42. In a further effort to promote citizen empowerment through local sourcing, CEDA and the Ministry of Trade and Industry have been instructed to prepare a list of companies that produce goods locally. If the pricing is competitive central Government, local authorities and parastatals will be instructed to procure from such companies with immediate effect. This should empower citizens and local companies and help towards growing our manufacturing base.
43. While Government looks upon the growth of the private sector, increasingly rooted in the citizenry, as a key instrument for national development, we are concerned about the tendency of some to embrace self-interest over the national interest. An example of this is the often inflated cost of public projects, both at the stage of tendering and in implementation. Such practices are, unfortunately, consistent with a wider attitude of self-entitlement towards public resources, which threatens to undermine the principle of self-reliance that has been a cornerstone of our collective development. In this respect let me here clearly state that where evidence warrants it, Government will not hesitate to blacklist those whose private greed undermines our ability to deliver for the greater public good.
NDP 10
44. Madam Speaker, the onset of the economic crisis caused us to delay and re-adjust NDP 10. As one of its last acts, the previous Parliament approved the Plan, whose time frame and Key Result Areas have been tied to the seven Vision pillars. The Plan was refined through lengthy consultations with representatives from all sectors of society. The Ministry of Finance and Development Planning is finalising NDP 10 document for distribution before the end of December.
45. Unlike previous plans, NDP 10 is to be implemented through an “Integrated Results Based Management Approach”, which will ensure that all of its Key Result Areas are results oriented. In this way, the Vision’s goals have been translated into practical expectations of what each organ of Government is expected to deliver.
Mining
46. Madam Speaker, I shall now proceed to outline the current and anticipated progress of various Ministries and Departments towards achieving our vision of sustained social development through equitable economic growth, beginning with the Minerals sector. Over the years our prudent management of our diamonds and other minerals has been the basis of our economic progress. Notwithstanding recent market volatility, the sector remains a cornerstone in our efforts to build a more prosperous future. Government thus has a special obligation to administer the nation’s mineral wealth for the benefit of all.
47. Mining’s contribution to the building of our nation has been, and should remain, rooted in our continued adherence to the principle that the natural resources of this country are our common heritage. It is for this reason that the ownership of our minerals, along with other forms of natural wealth, remains legally vested with the state irrespective of who owns the land upon which they are found. This national principle is, moreover, consistent with a common understanding, embedded in our indigenous values, that nature can never be owned. It is also consistent with the fact that as a developing country we must ensure that our citizens as a whole reap the benefit of our finite resources, and not just those who by a chance of geography find themselves sitting on a particular asset.
48. During the past year, the Government has made good progress in meeting its goal of promoting Botswana as one of the world’s major diamond trading centres. The Diamond Hub has been established to facilitate diamond beneficiation and support services. Fifteen of the sixteen licensed diamond cutting factories are currently operating. Preparations are underway for the remaining company to commence its operations shortly. Another encouraging sign is the recent opening of ABN AMRO Bank in Botswana, which will provide financing to employment generating downstream industries.
49. I am also happy to report that the construction of the Secure Transfer Facility at Sir Seretse Khama International Airport is near completion. This facility is part of the Diamond Hub and will be used for the movement of diamond and other goods that need to be transported under strict security conditions.
50. In the western part of the country mineral exploration is a challenge due to thick sands. As a result high costs are often incurred during the feasibility stages. To compensate for this, Government has been carrying out a high resolution aeromagnetic survey of the entire country, which will be concluded during NDP 10.
51. The Ministry has also carried out a Strategic Review of the mining sector, whose final report and resulting action plan was finalised this year and is now being implemented. Government, with the assistance of the Commonwealth Secretariat, is reviewing mineral legislation for coal, coal bed methane and radioactive minerals, such as uranium, which along with such established commodities as copper-nickel, gold, semi-precious stones and soda ash have the potential to further diversify our minerals sector.
Energy
52. Madam Speaker, reliable and affordable energy is another prerequisite for our economic and social development. Energy self-sufficiency has also become an urgent priority in light of current shortfalls and the need to increase energy throughput for both industrial and home consumption.
53. To improve access to electricity, Government is in the process of electrifying 130 additional villages by September 2010, when we will have achieved our mid-term goal of ensuring that 70% of all villages in Botswana are electrified. At a total cost of P 665 million this is an expensive undertaking. Currently some 54% of households are connected to the national electricity grid. To facilitate more connections, Government has introduced the Rural Electrification Collective Scheme, which offers relaxed repayment terms. To date this initiative has enabled 116,585 additional households to connect.
54. To further improve electricity access, Government will put in place a National Electricity Connection Standard Cost of P 5000 for new household connections. To effectively implement this initiative a National Electrification Fund is being established. It has been further decided that a levy of 5 thebe per kilo Watt hour on consumption be introduced to compensate for the actual cost of electricity connection by households charged by the Botswana Power Corporation (BPC). The implementation of this initiative is expected in the first quarter of 2010.
55. To give customers the option of Photovoltaic (Solar) electricity, Government has also introduced the “Re Botswana” project, which is being piloted in four villages. This project is being implemented in partnership with UN’s Global Environment Facility.
56. On the issue of energy supply, it should be noted that Morupule Power Station presently contributes only 120 Megawatts ( MW) of the 500 MW of electricity this country consumes, with the balance being imported from South Africa and Mozambique. Presently Botswana receives 350 MW from South Africa, which will be reduced to 250 MW in December. It is therefore, important that all of us appreciate that the provision of electricity will remain under stress until the ongoing Phase 1 expansion of Morupule Power Station is completed in 2012, which will add 600 MW of power, with another 600 MW to be added with Phase 2 of the project.
57. Working with the BPC, Government has put in place several immediate interventions to reduce the impact of the current power deficit. These include a:
· Power Management Programme;