The digital tax stamp system for alcohol and tobacco products, known as the Track and Trace solution, is a technology-driven regulatory mechanism designed to uniquely mark, monitor and authenticate products throughout the supply chain. 

This was said by Vice President and Minister of Finance, Mr Ndaba Gaolathe, in response to a parliamentary question on Monday. 

Minister Gaolathe explained that the system, provided government with real time visibility over production, importation and distribution activities.He said by enhancing oversight and enforcement capability, the substantially reduced opportunities for smuggling, counterfeiting and under declaration. 

He added that Botswana Unified Revenue Service (BURS) and the solution provider finalised an agreement this year in February, which outlined the detailed technical specifications of the system. 

“The project has now progressed into the development phase. Implementation will commence with the tobacco sector, with rollout scheduled to begin in the second quarter of the 2026/2027 financial year. Deployment of the solution for alcohol products will follow thereafter,” said Mr Gaolathe. 

Regarding the project expenditure, its value to the country and the expected return on investment, he pointed out that the system had been designed as a self-liquidating model. 

Under such an arrangement, he said, government did not incur the capital cost associated with system development, deployment, or maintenance nor did it assume operational risk. 

He mentioned that instead the private sector service provider finances and implements the solution, while government exercised full regulatory oversight. 

Accordingly, he noted that government had not incurred any direct capital expenditure for the development of the system. 

“This approach ensures that the fiscus is not burdened with upfront costs during a period of fiscal constraint. It is also fully aligned with the Botswana Economic Transformation Programme (BETP) which promotes private sector led investment while government concentrates on governance, regulation and oversight,” he said. 

On the alcohol and tobacco products, Mr Gaolathe said they attracted a very high effective tax burden in Botswana citing that when excise duty, value added tax and the relevant levies were combined, the total tax payable was often close to the factory price of the product. 

He indicated that while the tax structure was justified on both revenue generation and public health grounds, it also created a strong financial incentive for smuggling, counterfeiting and under declaration. “Criminal operators exploit these tax differentials by introducing untaxed or falsely declared products into the market at significantly lower prices. 

The revenue losses associated with illicit trade in alcohol and tobacco are significant. 

Preliminary estimates in these industries range between P500 million and P1 billion annually,” he said. 

Mr Gaolathe further told Parliament that The Track and Trace solution was designed to address the structural vulnerability directly. 

Meanwhile, Mr Gaolathe indicated that Authentix, an American company with well-established international track record in authentication and traceability solutions in excisable products, was a successful bidder which was given the tender with a contract duration of 10 years, which he said aligned with international practice in jurisdictions that had implemented similar systems.

 “The system has been implemented worldwide and in Africa, BURS has benchmarked with countries like Kenya, Cameroon and Tanzania. 

This duration allows sufficient time for system development, integration with industry players, stabilisation and the achievement of measurable enforcement outcomes,” he said. Furthermore, he said the 10-year tenure, was consistent with the self-liquidating model under which the service provider recovered its investment through the sale of digital tax stamps over the life of the contract. 

A shorter contract period, he said would risk fragmented implementation, reduced sustainability and inadequate recovery of private sector investment. As for the BURS, in relation to the project and the involvement of the Directorate on Corruption and Economic Crime (DCEC), Mr Gaolathe said no such forensic investigation had been instituted. 

The procurement process, he said, was conducted through an open, transparent and competitive procedure in full compliance with applicable procurement laws and governance frameworks. Additionally, he said standard audit, compliance and oversight mechanisms continued to apply, as was with all public procurement processes. 

To date, he revealed that no evidence, findings or circumstances had emerged that would justify the initiation of a forensic investigation. Member of Parliament for Serowe South, Mr Leepetswe Lesedi had asked the minister for an update the on the digital tax stamp for alcohol and tobacco products. 

Mr Lesedi also wanted an update on how much was spent for the project, its value for the country and its return on investment as well as the company which was awarded the tender and the duration of the agreement. 

Furthermore, he wanted an update on the results of the forensic investigation that was instituted by BURS on the project and why it was carried out and also the involvement of DCEC in the investigation. ENDS