Government warned on Monday it will take action against companies that work against its Economic Diversification Drive (EDD), a strategy aimed at given citizen companies a chance to participate in the economy.
Mompati Merafhe, Vice President of Botswana said his administration is going to be tougher on companies that import goods from outside the country when the same can be sourced locally.
“Tough measures will be taken against companies which would have been awarded tenders to manufacture products locally, but instead import them,” warned Merafhe.
The strategy follows years of failed attempts by government to promote local investment and diversify the economy, which is largely dependent on mining.
An example of over-dependence on a single sector can be drawn from the global economic down turn when Botswana lost its key markets which were in recession.
Merafhe revealed that the core elements of the short term strategy being implemented are the promotion of local procurement through preference margins based on turnover threshold.
These are categorised by company size: small companies with a threshold of up to P5 million with a preference margin of 15 percent, medium ones with a threshold of between P5 million and just under P20 million with a preference margin of 10 percent and large ones with a threshold of P20 million and above at 5 percent.
It is hoped that categorisation will allow locally-based SMMEs to have a higher advantage of price differentiation when tendering with larger companies, with price preference margins as indicated above.
“Government will not accept non-compliance with principles and intended purposes of this strategy,” warned the Vice President adding that tough measures will be taken against companies which would have been awarded tenders to manufacture products locally, but instead import them.
Some of the measures will include blacklisting the perpetrators from subsequent tenders and to achieve this, government said it will ensure that the PPADB Delisting Guidelines and Procedures are effectively implemented.
To show its seriousness, Merafhe revealed that a Suppliers’ Directory is being compiled with the assistance of BOCCIM. Equally, the Ministry of Trade and Industry is registering companies for the Economic Diversification Drive Certification.