Revised EDD due in February
The Ministry of Investment, Trade and Industry (MITI) expects to complete the Economic Diversification Drive (EDD) review in February 2021, a development eagerly anticipated by local businesses eager for stronger procurement by government.
EDD is an initiative under which government uses its purchasing power to enhance local production and consumption through local procurement.
However, in the years since its introduction in 2011, the initiative has stalled, accounting for only 53% of government’s procurement. Officials say this means there is still not enough procurement locally, the main objective desired by the initiative.
MITI deputy permanent secretary, Lameck Nthekela said with the help of United Nations Development Programme (UNDP) the ministry has engaged a consultant who is developing a situational analysis. A meeting will then be held thereafter to give direction on closing gaps.
“The old strategy had certain terms and activities that were open ended and now we want to give timeframes to certain milestones,” he said at a LEA conference this week.
Since its inception, the EDD has accounted for P40.4 billion in government procurement. Government is the single largest buyer in the domestic economy, followed by mining as an industry, which also recently introduced its own version of the EDD.
On Wednesday, First National Bank Botswana chief economist Moatlhodi Sebabole told the Virtual Diamond Impact Week conference that it was critical to set targets for economic diversification. Sebabole, who is also chairperson of the Presidential Task Team on the National Transformation Strategy, said while diversification was being seen in certain national indicators, more focussed efforts were required.
“Diversification in terms of economic growth is seeing significant movement with other sectors coming on board to contribute, but this does not show a true picture in terms of revenue streams particularly export revenue, where mining and tourism account for nearly 97%,” he said.
“We need that diversification in certain sectors to earn new revenues, even through introducing taxes that have not been being collected before.”
Meanwhile, deputy permanent secretary to the President, Emma Peloetletse told the LEA conference that government had made a pronouncement that all government and state-owned entities will procure goods and services from citizen-owned businesses in their regions.
The move is expected to resuscitate the (Small, micro‐ and Medium Enterprises (SMME) sector, which has been negatively affected by the coronavirus (COVID-19) and associated lockdowns.
The initiative will also increase SMME’s participation in public procurement through market access opportunities, resulting in SMME sector growth, employment creation, import substitution and economic diversification.
The Local Enterprise Authority (LEA) will also identify the capacity development needs of SMMEs operating in various parts of the country, with the intention to address their challenges and transform their businesses into innovative, competitive and sustainable businesses.