16 Sep 2020

Minister of Mineral Resources, Green Technology and Energy Security, Mr Lefoko Moagi has commended government for resorting to the local bond market to raise funding to support the National Development Plan 11 (NDP 11).

Contributing to the motion for authorisation of increase of the bond issuance programme from the current P15bilion limit to P30 billion,  Mr Moagi said episodes such as the Global Financial Crisis of 2008/09 and pandemics such as COVID-19 had demonstrated that as global market liquidity dried, funding was becoming more expensive to access.

Mr Moagi said in the absence of a well-developed local bond market, it was expensive and almost impossible to attain domestic funding.

“This, therefore, emphasises the priority to consistently revise our Debt Management Strategy, Bond Issuance Programmes and consistently issue more bonds to develop a domestic bond market that would support future borrowing requirements,” he stated.

Furthermore, he said Botswana risked to be trapped in over reliance in external debt due to her low levels of domestic debt.

This, he said also posed substantial risks to the economy and increased vulnerabilities to global and external shocks.

He therefore said increasing bond issuance was a welcome development with a view to stimulate borrowings by State-Owned Enterprises like Botswana Power Corporation and the private sector by strengthening the risk-free curve.

In addition, Mr Moagi suggested that government must use the opportunity to stimulate its Public Private Partnership (PPPs) framework and partner with private sector, with funding obtained from capital markets, in order to finance infrastructure development.

Francistown South MP, Mr Wynter Mmolotsi, also supported the motion stating that given the current liquidity within the domestic capital market, the increase in the domestic bond limit would serve as a catalyst in stimulating the domestic capital market.

He said as periods of scarcity were upon the country and revenue resources were getting drained, it was about time government exercised frugality and prudence in spending.

Furthermore, he urged government to change spending patterns and reduce awarding tenders of huge sums of money to non-Batswana.

MP for Kanye South, Dr Lemogang Kwape and Kgalagadi North, Ms Talita Monnakgotla said the revised bond programme was a welcome development.

They were of the view that the programme would go a long way addressing the inadequacies and inefficiencies of the domestic bond market.

Furthermore, they said government foreign reserves would be relived the pressure to finance the budget deficit and development projects. ENDS