$Unique_ID{COW00460} $Pretitle{404} $Title{Botswana Chapter 3. Industry, Banking and Finance} $Subtitle{} $Author{Cecilia Gautier} $Affiliation{Embassy of Botswana, Washington DC} $Subject{botswana training per cent bank industrial development new areas mines} $Date{1988} $Log{} Country: Botswana Book: Botswana Review of Commerce and Industry 1988 Author: Cecilia Gautier Affiliation: Embassy of Botswana, Washington DC Date: 1988 Chapter 3. Industry, Banking and Finance The Department of Industrial Affairs The Department of Industrial Affairs is engaged in a wide spectrum of activities, with the objective of developing and promoting the industrial sector and creating employment opportunities. Batswana are encouraged to participate at all levels within all areas of industry, the emphasis being on the growth of local industries. The Department is divided into the following five sections: MANAGEMENT OF THE DEPARTMENT - Responsibility for manpower resources. - Staff development at all levels a high priority. POLICIES AND PROGRAMME CO-ORDINATION - Establishes national industrialisation policies. - Formulates operational guidelines for the industrial sector, including technology research and development. - The Project Research Unit identifies, prepares and appraises industrial projects, assists investors, performs pre-feasibility studies and provides advice to the licensing committee. LICENSING AND PROTECTION - Promotes establishment of industrial activities. - Protects local design and technology development. - Ensures that licenses issued are within policy guidelines, through efficient screening processes. INDUSTRIALISATION SUPPORT MECHANISMS - The Financial Assistance Policy (FAP), to create employment and diversify the economy. - The Local Preference Scheme, to channel purchases by government, local authorities and parastatals to local manufacturers. - The Industrial Infrastructure Unit establishes landbanks of serviced industrial plots in towns and villages. INTEGRATED FIELD SERVICES (IFS) Former Botswana Enterprises Development Unit (BEDU), Rural Industrial Officers Cadre (RIO) and Business Advisory Services (BAS). - IFS assists and trains entrepreneurs, in all districts, from `start to business' by offering the following: technical training, business management training, advisory services, FAP application assistance, marketing assistance and common workshop facilities. - Technology transfer, with an emphasis on know-how, is realised through joint-venture projects pursued and assisted by IFS. - Income-generating projects in the remote rural areas are launched by IFS, e.g. - A leather tannery project in the southern region resulted in local tanneries adapted to the needs of rural areas. - A handicraft project in Ngamiland, in the north-western region, provides a basic source of income for the Basarwa people, known world-wide as 'Bushmen', whose chances of continuing in their earlier nomadic-hunting life is rapidly diminishing. Land of INDUSTRY Opportunity Botswana has an open trade-oriented economy and a strong infrastructure to facilitate economic growth, such as a tax structure favourable to investors, with a 40 per cent rate of company tax, the lowest in the Customs Union Area, a highly sophisticated system of business communications, and good road, rail and air links. There are many customs preferences for foreign investors, who, in any export drive, may take advantage of trading partners who impose little or no duties on Botswana goods. The Lome Convention allows duty-free access to the EEC, and the Southern African Development Co-ordination Conference (SADCC) gives entry to Southern Africa. Substantial concessions have been made with the USA and European countries outside the EEC, under the Generalised System of Preferences. Botswana also belongs to the South African Customs Union. In terms of the National Development Plan 6 (NDP6), the Government continues to encourage foreign investment, will offer increased citizen participation in many enterprises, will diversify the economy by the introduction of new skills and will stimulate job opportunities, especially in the rural areas, as the main industries still predominate around the four major towns of Gaborone, Francistown, Selebi-Phikwe and Lobatse. The creation of job opportunities is of prime importance, as the population is increasing at a rate of 3,5 per cent per annum. A study carried out in 1979 during the International Year of the Child indicated that approximately 4 000 children are leaving school per annum with secondary education, 10 000 with some primary education and 5 000 with little or no education. Accepting the above figures, 20 000 employment opportunities are required annually. It is estimated, however, that approximately 30 per cent of this number is being achieved. BOTSWANA DEVELOPMENT CORPORATION The Botswana Development Corporation is the primary development and investment parastatal organisation in the country. Incorporated in 1970, it identifies opportunities in industry, commerce and agriculture and then participates in the equity of promising new ventures. BDC plans to invest P100 million during NDP6. This is a substantial increase over the P26 057 000 invested in the country during NDP5, of which 21 per cent was in commercial and industrial property, 25 per cent in hotels and tourism, 15 per cent in agriculture, 14 per cent in commerce and industry, 11 per cent in transport, 10 per cent in residential property, 2 per cent in financial services and 2 per cent in small-scale enterprises. BDC investment policies are always in line with the current development plan. Preference is now given to ventures which are export oriented, diversify the base of the economy, generate employment, give new skills, contribute to the rural economy and provide a substitute for imports. Industrial land is available from the state in urban areas and from Tribal Land Boards in other areas on terms similar to 50-year leases. Any company, whether foreign or locally owned, can acquire this land and erect buildings, with or without BDC help. BDC also plans to ensure an adequate supply of low-cost shops and factory units of all sizes. It is hoped that sectional title deeds will be introduced to facilitate property purchase. In an attempt to achieve a more equitable redistribution of wealth from this expanding economy, the Sechaba Investment Fund enables citizens to invest in BDC companies and a share series has been set up. A stock exchange may be established in the future. SMALL-SCALE BUSINESSES BOOSTED Tswelelo, established in 1984 as a joint venture by BDC, the National Development Bank and FMO, has helped to establish many small entrepreneurs and is playing a significant role in rural areas. PFP (Partnership for Productivity) is specially geared to establishing small-scale businesses within the home for people with little formal education, while Botswanacraft organises and sells local craftwork and has built up a significant export market. The Department of Industrial Affairs is engaged in a wide spectrum of activities to create employment. Botswana are encouraged to participate at all levels in all areas of industry. The Department's Integrated Field Services assists and trains entrepreneurs and generates income in rural areas, such as a tannery project in the south of Botswana and a new handicraft project in Ngamiland, which specialises in Bushman artefacts, since the possibility of these people continuing their earlier nomadic hunting life is rapidly diminishing. TIPA (Trade and Investment Promotion Agency) promotes Botswana and all her products, whether originating from large industrial corporations or from rural householders. It organises promotion missions and trade fairs, including the annual Gaborone Trade Fair. ECONOMIC BANKING ACTIVITY Botswana's strong economy is based on a balance of payments surplus, and is backed by foreign exchange reserves equivalent to over 18 months import cover. Add to this the many incentives created to promote economic activity and the liberal exchange control regulations, and it is easy to understand why Botswana enjoys a high level of foreign investment. Banking in Botswana has rapidly reached internationally accepted standards in every respect, while at the same time retaining some aspects that are unique to the community it serves. For instance, while the town branches of the commercial banks are as sophisticated as any in the world, some clients in the remote areas are able to conduct their financial affairs only on the days that the bank flies in! The state-owned central bank, Bank of Botswana, was established in 1975 and a year later oversaw the introduction of the Pula as the national currency. Three commercial banks, Barclays Bank of Botswana Ltd, the Standard Chartered Bank, and Bank of Credit and Commerce (Botswana) Ltd, conduct all the usual banking activities in the main towns as well as in many of the large villages. The Botswana Savings Bank, until recently known as the Post Office Savings Bank, operates through 64 post offices in the country. It is a government-owned bank mainly providing deposit facilities in the most remote areas which have not been reached by the commercial banks. In 1986 and 1987, Batswana were given their first opportunity of investing in a local commercial bank, when 750 000 new shares in Barclays Bank were offered for sale. Previously Barclays Botswana was wholly owned by Barclays Bank PLC of London. The new share issues gave Batswana the opportunity of purchasing 20 per cent of the bank, and raised its capital reserves to approximately P31 million. The move is in keeping with the policy of Barclays PLC to encourage local participation in the share capital of its subsidiaries, and at the same time has given citizens an alternative to the traditional forms of investment such as cattle. An on-going commitment to extending computerisation and improving client services is characteristic of Botswana's banking sector. The Bank of Credit and Commerce (Botswana) Ltd has recently completed a new Head Office building in Gaborone, as well as a new branch in Lobatse. This bank has a well-developed staff-training programme and, in the short time since its establishment in Botswana, has sent a number of staff members to the BCC group training facility at Harare. Local staff have taken full advantage of BCC's emphasis on training and many promotions have taken place among citizen staff. BOTSWANA BUILDING SOCIETY The Botswana Building Society serves the community by assisting citizens in purchasing or building their own homes. It is possible for citizens to obtain loans of this type for up to 95 per cent of the cost of the house. INSURANCE Compulsory insurance in Botswana is limited to workmen's compensation, which applies to all employees. Two brokers with international connections operate in Botswana. Third party premiums are no longer paid by a single annual payment, but by means of a levy on petroleum products. Enriching MINING the Nation Diamonds continue to be the mainstay of Botswana's economy and provide the impetus for the rapid growth and development of the country. Diamonds make up 77,8 per cent of Botswana's exports and the country is now the third largest producer of diamonds in the world. The diamonds are mined at three mines by De Beers Botswana Mining Company (Pty) Limited (Debswana). Debswana is a unique equal partnership between the Botswana Government and De Beers Consolidated Mines Limited. The company was formed to carry out the mining of diamonds in Botswana. It is the success of Debswana that has transformed Botswana into the vibrant, growing country that it is today. Before the discovery of diamonds about twenty years ago, Botswana was one of the world's poorest countries. Infrastructure was virtually non-existent and the small economy was dependent on beef exports. Health and educational services were very basic. The picture today is a very different one. The economy is one of the fastest growing and healthiest in Africa. Debswana and the mines have played a major role in this rapid development. The mines support modern communities where health welfare, schooling, sports and recreational facilities have contributed to improved living standards, not only for the mine employees and their families but also for the neighbouring communities. Infrastructure has been developed, too, in response to the needs of the mines and their workforces. In addition, the job opportunities and training facilities offered by the mines have transformed the traditional way of life for a large number of Botswana's people. Even though Botswana does not see its known diamond resources drying up, extensive prospecting continues all over the country. At present there are three diamond mines operated by Debswana. These are Orapa, Letlhakane and Jwaneng. Orapa was the first mine to be discovered and was followed a few years later by Letlhakane. These two mines are about 40 kilometres apart and are situated in the northern part of Botswana below the Makgadikgadi Pans. The very rich Jwaneng mine, situated in southern Botswana, was brought into full production in 1982. The combined diamond production of these three mines in 1986 was 13,09 million carats, making Botswana the world's third biggest diamond producer. Debswana's three mines together employed 4 630 people at the end of 1986. Of the total employees strength, 4 212 were citizens; this amounts to 91 per cent of the workforce. The company is clearly committed to localisation and the number of Batswana in senior technical and management positions continues to grow in line with this commitment. Debswana's entire production is sorted by its wholly owned subsidiary, Botswana Diamond Valuing Company (Proprietary) Limited (BDVC). The production is sold to the London-based Central Selling Organisation (CSO) from where it finds its way to the various cutting centres and ultimately is sold as jewellery or is used for industrial purposes. The variety and scope of job opportunities, and the training facilities available to employees, is almost unlimited. Beyond the obvious mining skills required, the artisans needed in every aspect of the operations, and the transport, security, administrative and personnel staff, there remains all the expertise needed to ensure the smooth running of an enormous number of services to staff, their dependents and even the communities who are the mine's traditional neighbours. Orapa's hospital, for instance, in addition to looking after the health of the mining community, extends its services to several villages in the remote areas of Boteti and Mopipi. The hospital employs doctors, dentists, a medical technologist, radiographer, pharmacy technician and physiotherapist as well as a full complement of nursing staff, so that almost all cases can be attended to at the hospital or one of its clinics. In addition, Debswana, through its Donations Fund, has for a number of years made an important contribution to the community at large. An amount is set aside each year to assist charitable and related organisations. This amount is used to assist projects being undertaken by communities to improve the quality of their lives. TRAINING PROGRAMMES The wide variety of educational and training programmes conducted by Debswana can be divided into three main areas-the scholarship programme, intended to train future managers and professionals; technical training, to supply skilled artisans; and in-service courses, to upgrade the skills and qualifications of employees at all levels. At the end of 1986, 108 Debswana-sponsored students were engaged in studies in various disciplines at universities or specialised training institutions either at home or abroad. Scholarship students are sent overseas to follow courses not offered in Botswana, such as engineering, surveying, medicine and dentistry. Each year approximately 20 students graduate and commence employment at one of the mines, and 20 others start their studies in fields as diverse as accountancy, chemistry, data processing, metallurgy and social science subjects. APPRENTICE SCHEME To alleviate the shortage of skilled artisans needed to keep the mines operating, Debswana financed its own Apprentice Training Centre at Orapa in 1979. The Centre has since been doubled in size and has to date produced 115 qualified artisans. More than 119 apprentices are at present in training in various year groups. To gain entry to the four-year apprenticeship scheme, applicants must have a Cambridge Certificate with mathematics, science and English. The four trades offered at the Centre are auto-mechanics, electrical technology, fabricator/welding and fitting. IN-SERVICE TRAINING In-service training facilities are available to all employees, for Debswana believes that its staff members should be encouraged to increase their knowledge and improve their skills. The training centres at Orapa and Jwaneng play an important role, and the disciplines of training are wide and varied. Sometimes the training takes the form of lectures conducted during working hours on the mine, while in other cases employees are sent on off-mine courses or seminars. The new employee's initiation to this on-going learning process starts immediately after employment, with "induction", the very first training, which includes a detailed introduction to the company and the job, the service contract, industrial relations policies and the use of lines of communication within the company. Debswana's heavy investment in training has averaged out at over P2 million for the past few years. These funds, however, are considered well spent on training future leaders under whose management Debswana will remain one of the most successful operations in the country. A Boom CONSTRUCTION Year Construction is one of the sectors of industry that serves as a barometer of a country's economic condition. Two years ago there was little evidence of new construction in Botswana; in 1987/88, however, there are large projects under way in the public and private sectors. Formal and non-formal educational facilities are being built throughout the country for all age groups and Vocational Centres, costing P17 million, have recently been completed at Jwaneng, Palapye, Maun and Selebi-Phikwe. During 1988 a 200-room international hotel with conference facilities, a business centre, boutiques and a gymnasium are planned for construction a few kilometres outside Gaborone. New factories have been build throughout the country and several new industrial sites are planned in order to provide decentralized employment opportunities. New or upgraded roads will service these and also help to expand the tourist industry. HOUSING FOR ALL-ALONG-TERM AIM The Government's current focus of attention is on housing, since a shortfall of 93 500 units is predicted by 1990/91. It has established an Urban and Housing Division within the Ministry of Local Government and Lands, which will work closely with the Botswana Housing Corporation, the Botswana Building Society and the Self-Help Housing Agencies. A National Housing Plan is expected to be formulated during 1988 to help implement the Government's long-term objective of providing safe and sanitary housing for all through a programme of building and upgrading. This revitalised housing policy is in accordance with Botswana's membership of the United Nations Centre for Human Settlements and the fact that 1987 was the International Year for Shelter for the Homeless. In the financial year 1988/89, the Government aims to provide serviced building sites to encourage private sector initiative and self-help projects. Financial institutions will be encouraged to expand their home loan activities, particularly to lower income groups in the rural areas, and to provide incentives for middle and high income housing. Affordability is the key factor in home construction and the recent Urban Development Standards have provided guidelines to be followed to help control costs. Building Regulations (Type II) for low-cost and self-help housing will also be useful in this regard. In conjunction with these guides, the Botswana Government has approved a land allocation ratio for home building prospects that provides Councils with 65 per cent of new plots for allocation through the Self-Help Housing Agency, 17,5 per cent for private developers and the remainder for public sale.