Wednesday, September 23, 2020

Councils gearing up for a non diamond driven economy

With diamond revenues dwindling ÔÇô income for distribution to the government from diamond mining will fall by about 65 percent by the end of NDP 11 in 2022 and decline to near zero by the end of 2028 ÔÇô councils have been called upon to devise means of raising their own money.

Councillors in Lobatse are already dreaming big about what might be possible for them. Specially-Elected councillor, Malebogo Kruger, suggested that the town council should provide services directly to the town’s residents.

“As politicians, we should dream. I am licenced to dream and positively. I can dream and technocrats will sieve out what is feasible from what is not,” Kruger said at a workshop for councillors last week.
One of her dreams is that the Lobatse Town Council should be able to provide services like water and electricity directly to residents.

Apparently, the idea is not far-fetched because that is exactly what happens in some countries.
Thandi Motsaathebe, one of the consultants facilitating the workshop, said that in South Africa, where she comes from, municipalities buy power from Eskom and sell it on to their respective communities.

One other suggestion is that fines for traffic offences committed on roads that are owned and maintained by the town council should go to the town’s coffers instead of the central government’s.
Under the current local government financing structure, 95 percent of funding for councils comes from the central government but there is a new economic reality looming on the horizon that everybody has to come to grips with.
Isaac Garaba, Motsaathebe’s colleague, said that the depletion of central government revenue sources presented a challenge that councillors have to tackle.

“Revenue sources are getting depleted. The world recession has affected the sale of your diamonds. As councilors, you may now need to think about alternative sources of funding,” Garaba said.
Debswana, the diamond mining joint venture between De Beers and the Botswana government, has already announced plans to cut production by about 20 percent in 2009 to meet the global slump in diamond demand. The prolonged recession in the United States has been particularly bad news for gem-diamond-producing countries like Botswana. The US is by far the world’s largest market for retail diamond jewellery, accounting for about 50 percent of annual consumption.

The beef industry, which was once the backbone of Botswana’s economy, is faring no better. Domestically, continual outbreaks of foot and mouth have disrupted trade and, internationally, Botswana has to compete with other beef-producing countries.

“Namibia is emerging as a strong competitor,” Garaba said.

While they appreciate the desperate need for local authorities to be financially independent, not all councillors think it would be feasible to attain complete self-sufficiency.

Woodhall councillor, Molaudi Mantle, wondered whether the money they raise would be adequate for the council’s needs and whether local authorities have the capacity to raise the money.
“We are not even able to collect the 5 percent we should raise for ourselves,” Mantle said.

It was also suggested that local authorities should consider starting their own commercial enterprises as happens in other countries. However, in the Botswana situation the problem would be that such entrepreneurship would at one level, be in conflict with government’s policy to empower citizens, notably small business people.

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