In his response to the national budget speech of 2021/2022, the Member of Parliament for Kanye North- Honourable Thapelo Letsholo have made a very bold assertion that it is needful for Botswana to guard its natural resources- especially diamonds, in response to these difficult times of Corona Virus Disease (COVID-19) pandemic. Letsholo says this will enable the country to increase its revenue inflow.
“As a Government, we have to jealously guard our national resources to a point of being considered somewhat selfish, all in the best interest of our citizens and for their protection and participation.” He said this giving an example of COVID-19 vaccine producing countries “who are putting their people first in distributing the vaccines”
Letsholo says in the same manner, Botswana should jealously guard its natural resources so as to increase its revenue inflows, “I propose that through ODC (Okavango Diamond Company), we cut out the middle man that is De Beers, and sell all of our diamonds directly to the market in order to maximize the revenue from our diamonds. We need every single Thebe possible and the current allocation of about 15% to ODC is just untenable.” He asserted.
However, Letsholo condemned the government’s sole dependency on diamonds revenues and South African Customs Union (SACU) contributions, “It is such a pity that over the last 50 years, our country has failed to generate alternative sources of revenue away from diamonds and taxes.” Letsholo says it is imperative for Botswana to generate other means of generating revenue thus strengthening the economy.
“We have to note and recall that even in the pre-COVID-19 era, our country’s GDP (Gross Domestic Product) growth was already in the decline. Diamond mining has become very expensive to pursue as evidenced by the billions of Pula spent on Cut 9, and possible underground mining will be more costly, and potentially with reduced revenues. Synthetic diamonds also pose a real threat to natural diamonds with new generations seeming to place less value on natural stones by comparison. We need therefore, as a progressive nation, to look for other contributors to the GDP.”
In his response, Letsholo mentioned other ways which could be explored to diversify the economy hence increasing revenue streams;
Privatizing State Owned Enterprises
In agreement with Minister Matsheka’s deliberation that some State Owned Enterprises (SOEs) need to be privatized, Letsholo however stated that the idea has been a talk but no action for the past fifteen (15) years. This, Letsholo says makes the government to lose credibility. Privatizing some SOEs would save the government up to five billion pula (P5 billion) annually according to Letsholo.
Investment on Research & Development (R&D)
Through R&D, and with the appropriate incentives, tax breaks and tax credits, Letsholo is convinced that “we can get a firmer grip on our destiny as our people come up with creative ideas and solutions”. “Engaging consultants and academics through private entities and institutions of higher learning will give Batswana the opportunity to tackle issues and challenges of interest to them and Botswana from an informed, strategy-led standpoint.” He proclaimed.
Botswana Development Corporation (BDC)
Giving an example of Temasek Holdings Limited- a Singaporean holding company, owned by the Government of Singapore, Letsholo says it is time BDC benchmarked from Temasek and achieve bigger financial outcomes by realizing “significant revenue contributions flowing in from BDC’s investments, which ought to be spread globally” hence making significant contributions to the government’s revenues and GDP. “Real and meaningful revenue generation lies in investment. We must move from a culture of spending to a culture of investing.” Letsholo declared.
Financial Service Sector
“The financial services sector presents a significant opportunity as an alternative high value contributor to our GDP. We will make a huge mistake if we do not recognize the potential of the financial services sector and make deliberate effort to grow it as a competitive advantage.”
Emphasizing the above point, Letsholo challenged Bank of Botswana to “seriously and intentionally facilitate development of the first fully Botswana citizen owned commercial bank in Botswana” This, Letsholo says will ensure that the “super profits” currently enjoyed by foreign banks remains in Botswana and possibly reinvested in Botswana.
Foreign Companies to give back
“The Minister of Investment, Trade and Industry should approach companies such as Tiger Brands (manufacturers of Crosse & Blackwell Mayonnaise and Oros), CIRO (manufacturers of Five Roses and Freshpak Roiboos Teas), Unilever (manufacturers of OMO and Sunlights soaps), Johnson & Johnson (manufacturers of baby powder) and others, as they benefit greatly from access to our market, yet do not return the favour”
Restructure income tax
In light that the ‘One-size-fit-all’ approach to tax does not work sufficiently, Letsholo is of the view that the government “need to be more thorough with the tax brackets and in deciding on the rates”. “For instance, people who earn P300,000 should be taxed at a higher rate of say 30% and those earning even higher, say from P500,000 and above could pay 35%. This is progressive tax and I am aware that the UK and South Africa as examples, use the same approach across types of taxes. South Africa’s top end rate is 45%.” He said.
“I urge the Ministry of Finance and Economic Development to seriously act to remove all the impediments that constrain better collections for BURS (Botswana Unified Revenue Service) as this will save Batswana from more and further tax increases. I also urge this Honourable House to approve funds to remove such impediments when the request comes to the House.”
Restructuring of sugar tax
“The sugar tax in its current format, where it is levied only on sweetened beverages, leaves out all other sweetened products in the market. This is somewhat discriminatory and takes away from the overall noble objective of pursuing healthier lifestyles. It is in my view, vital to cover all bases and include all other sweetened items such as chocolates, confectionaries etc. If we do this, we will create the opportunity to reduce the tax while achieving envisioned revenues and health aspirations.”Hon. Thapelo Letsholo
According to Letsholo the dangers of discriminatory taxes like this pose a danger of chasing away foreign investors which bring revenue (Foreign Direct Investment) and employment opportunities to Botswana, he said this giving an example of sugar tax that will only affect Coca Cola as it is the only company that produces sweetened beverages beyond 4g/100ml. In this light, he proposed that the said tax be put on hold pending restructuring. “We cannot be going all over the world attracting FDI and then when they come we slap them with discriminatory taxes. The efforts to attract FDI are nullified by the discriminatory taxes applied on them.” He charged.
Make Title Deeds easily accessible
By making Title Deeds to be easily attainable, Letsholo says it will be easy for Small, Micro and Medium Enterprises (SMMEs) to “benefit from the representation process that allows using your assets to generate capital”. He is of the view that the process of converting the “useless” tribal land certificate to Title Deeds is “painfully slow”. This according to Letsholo is a reason why most SMMEs operated by Batswana are under-capitalized.