* Multi-billion financial services sector is foreign controlled * Asset base of 8 foreign-controlled banks of over P100 billion * Yet the sector only employs less than 7,000 people - BOB report
The Minister of State President Kabo Morwaeng says the economy of the country is not in the hands of Batswana.
He said for years, the country glossed about having low debt levels, and watching with satisfaction as its foreign reserves increased. The minister stated that this is one area where Botswana missed the golden opportunity of using proper capital management frameworks.
“We could have borrowed more in the latter years when we still had strong revenues and used the funds for productive investments. But it is only now (that) we are looking at borrowing at a time (when) our fiscus is compromised,” the minister said.
He added that the country’s economic base is so narrow that government is the biggest employer, and effectively the main anchor of the economy – a situation that has placed the government in a tight corner when it comes to implementing longstanding reforms such as restructuring of the public service.
“How is it possible to restructure now when government is the biggest employer, when the other sectors of the economy rely on government expenditure? All these could have been done long time ago when there was room for that,” Motrwaeng said.
He said the government is not a cash cow, and it should be firm on how it spends its money prudently to be able to cater for its people. He told Parliament that it is often said that the purpose of any business is to maximise profits. For governments, the purpose is to maximise the welfare of its people, he said adding that the lucrative sector of the economy is not in the hands of Batswana.
“Year in and out we lose money as it is repatriated outside the country. This is the money that could be reinvested in the country to create opportunities for citizens. I will give an example of the financial services sector.
“This is a multi-billion sector which is foreign-controlled. All major banks and insurance companies are controlled by foreigners. Yet this is a sector that is heavily reliant on government workers," he said.
He added that the Bank of Botswana’s annual supervision report indicates that the eight foreign controlled banks had asset base of over P100 billion yet the sector only employs less than 7,000 people.
"What are these banks doing with the profits? They ship them back to their parent companies where the funds are then used to create jobs for others,” said the minister who is also MP for Molepolole South.
The Minister revealed that of the nearly P80 billion in loans issued by banks, about 65 percent of this debt belongs to households, and from those households, more than 55 percent is held by government employees.
Even more worrying, 70 percent of the loans to households are unsecured loans, mostly used for consumption and not productive bearing investments. Morwaeng told Parliament that people are trapped in debt and they cannot rise above their economic constraints.
“But nothing seems to be done. Zero action being taken against this bad player. Instead, we reward them by giving them more money. But we should uphold them to the highest key performance indicators.
“How do we explain that the Gambling Authority was established in 2012 but yet there is still no lottery? It’s not only the Gambling Authority but many other SOEs.
“The value of the money spent on these SOEs could have been used elsewhere to create jobs,” the minister said.
He said for years, the country glossed about having low debt levels, and watching with satisfaction as its foreign reserves increased. The minister stated that this is one area where Botswana missed the golden opportunity of using proper capital management frameworks.
“We could have borrowed more in the latter years when we still had strong revenues and used the funds for productive investments. But it is only now (that) we are looking at borrowing at a time (when) our fiscus is compromised,” the minister said.
He added that the country’s economic base is so narrow that government is the biggest employer, and effectively the main anchor of the economy – a situation that has placed the government in a tight corner when it comes to implementing longstanding reforms such as restructuring of the public service.
“How is it possible to restructure now when government is the biggest employer, when the other sectors of the economy rely on government expenditure? All these could have been done long time ago when there was room for that,” Motrwaeng said.
He said the government is not a cash cow, and it should be firm on how it spends its money prudently to be able to cater for its people. He told Parliament that it is often said that the purpose of any business is to maximise profits. For governments, the purpose is to maximise the welfare of its people, he said adding that the lucrative sector of the economy is not in the hands of Batswana.
“Year in and out we lose money as it is repatriated outside the country. This is the money that could be reinvested in the country to create opportunities for citizens. I will give an example of the financial services sector.
“This is a multi-billion sector which is foreign-controlled. All major banks and insurance companies are controlled by foreigners. Yet this is a sector that is heavily reliant on government workers," he said.
He added that the Bank of Botswana’s annual supervision report indicates that the eight foreign controlled banks had asset base of over P100 billion yet the sector only employs less than 7,000 people.
"What are these banks doing with the profits? They ship them back to their parent companies where the funds are then used to create jobs for others,” said the minister who is also MP for Molepolole South.
The Minister revealed that of the nearly P80 billion in loans issued by banks, about 65 percent of this debt belongs to households, and from those households, more than 55 percent is held by government employees.
Even more worrying, 70 percent of the loans to households are unsecured loans, mostly used for consumption and not productive bearing investments. Morwaeng told Parliament that people are trapped in debt and they cannot rise above their economic constraints.
“But nothing seems to be done. Zero action being taken against this bad player. Instead, we reward them by giving them more money. But we should uphold them to the highest key performance indicators.
“How do we explain that the Gambling Authority was established in 2012 but yet there is still no lottery? It’s not only the Gambling Authority but many other SOEs.
“The value of the money spent on these SOEs could have been used elsewhere to create jobs,” the minister said.
