Gov’t calls for alternative investment sources
Government has challenged the business community to explore other sources of investment, as the local economy recovers from the COVID- 19 pandemic.
The call comes as the COVID- 19 shock has reduced government revenue, increased spending on health and social services, widening the overall budget deficit.
Speaking at the Botswana Institutional Investors Forum 2022, Senior Policy Advisor, Dr. Keith Jefferies, the current economic developments have put pressure on government financing requirements, reinforcing the need to look for alternative, predictable and stable sources of revenue. “We need to strengthen these synergies and develop policies that will trigger alternative investments and reduce the likelihood of future shocks,” said Dr. Jefferies, citing the need for alternative methods of financing public investment projects. He said the economy also needs a broad base economy driven by high productivity, technological upgrading and innovation, and labor- intensive sectors. “This will increase the participation of sectors such as finance, insurance and pension funding, real estate and professional, scientific and technical Activities, whose share has averaged around 11 percent of GDP since 2006,” said Dr. Jefferies. The Senior Policy Advisor said government is continuously considering new and more flexible approaches that are necessary to open up access to a wider range of sources of investment finance for both the public and private sectors. “This includes, but is not limited to, the Public- Private Partnership ( PPP) framework, which covers a wide range of potential financing models.” He said the wide range of financing models can be implemented through various kinds of special purpose vehicles or private entities implementing projects for Government or State- Owned Enterprises on a long- term contractual basis. “On our part, we are aiming to improve the ease of entering into such PPPs and ensure an appropriate distribution of risk between the public and private sectors.” Despite its calls for alternative finance, government remains alert to risks and says their actions are pinned to a responsibility to manage fiscal resources prudently. “We appear to act slowly when presented with innovative financing proposals for public sector projects. But we continue to be guided by two key principles when government involvement is sought. “First, risks must be transparently disclosed and well understood. Second, risks should be borne by those who are best placed to manage them,” said Dr. Jefferies. He however said governments, for instance, are wellplaced to bear policy and regulatory risks, while private investors are better placed to bear business, implementation and market risks. “We wish to ensure that the regulatory environment is supportive of alternative investments, and value fora such as this one to keep us apprised of any regulatory challenges or reforms that need to be addressed,” said Dr. Jefferies.