The European Union (EU) has allocated supplementary development funds to Botswana to the tune of 26.6 million Euros (approximately P250 million) to finance short term fluctuations in Export Earnings (FLEX).
The purpose of FLEX is to safeguard socio economic reforms and policies that could be affected negatively as a drop in revenue and to remedy the adverse effects of instability of export earnings in particular from agricultural and mining products.
“The decision to allocate the additional funds to Botswana was taken by EU following the financial and economic challenges that started in 2009 and which have severely hit Botswana as well as the world economy and of which there has not been full recovery,” revealed Gerard McGovern, head of the EU delegation to the Botswana and SADC.
Botswana is a mineral-based economy and during the 2010 period gem diamond sales decreased as a result of the world economic and financial crisis. The EU has over the years increased its financial support to Botswana.
“This positive trend is based on our very good cooperation and mirrors belief of European Union in the development agenda and capacity of Botswana,” said McGovern.
The support provided to Botswana is a joint effort from European Union and its member states.
“It remains important that countries around the world continue to support each other and to make common and coordinated efforts to address the current economic challenges,” he said.
He said the extra funding from the EU is a contribution to the efforts of government of Botswana to diversify its economy and to shift from the current resource based economy towards a knowledge society and consequently reducing the vulnerability of economy from future external shocks.
“The supplementary grants will support the government economic diversification drive through integration in the on-going Botswana-EU human resources development programme,” said McGovern.
The large programme has the objective to increase access to and quality of education and to align better labour demand and supply qualifications in Botswana. It will further provide specific technical assistance to strengthen the education system and underpin the large and comprehensive ongoing public finance management reform programme in the Ministry of Finance and Development planning.
He said the grants from EU are in the form of budget support, that is they are blended with the government own budgetary resources in the interests of streamlined management and control.
“We do it this way to reduce transaction costs for government but also because we have confidence in the country’s public finance management system.”
The cooperation between Botswana and the EU is far larger than financial and technical cooperation and has been increasing over an ever widening field embracing trade, investment and political dialogue.
“The potential to strengthen the people to people contacts, institutional linkages and innovative financing arrangements to address infrastructure needs, energy, climate change and bio diversity,” said McGovern.
He added that he is looking forward to rapid implementation of the additional allocated funds and the continuation of the good cooperation.
“The funds are intended to contribute to the goals of National NDP 10 by strengthening human resource development and supporting public sectors reforms,” said Kenneth Matambo, Minister of Finance and Development Planning.
Matambo commended the EU for being reliable and cooperative development partners to Botswana.