Foreign contractors paid a whopping P2.7bn in five years

• Total of P3.6bn spent on construction projects
• 7bn or 75% paid to foreign contractors
• Only P784mn or 22 % paid to local companies
• P106mn or 3% paid to foreign and local joint ventures

The Minister of Finance and Economic Development, Peggy Serame made this revelation in Parliament earlier this week. She was responding to a question from the MP for Selibe-Phikwe West, Dithapelo Keorapetse, who wanted to know how much money was paid to foreign construction companies from the development fund, loans acquired by Botswana over the last five years and the source of the loans. Keorapetse also wanted a breakdown of how much was paid to foreign companies versus citizen owned companies, as well as how much money was repatriated as profit.

Foreign companies bag billions

In answer, Minister Serame stated that a total of P3.6 billion was spent from the Development Fund over the past five financial years. “Of this amount, P2.7 billion or 75 percent was paid to foreign companies,” she disclosed. Another P106 million or 3 percent was paid to joint ventures between foreign and Batswana companies while P784 million or 22 percent was paid to Batswana companies.

According to the finance minister, construction tenders awarded over the last five years complied with international open bidding standards and were in accordance with the Public Procurement and Asset Disposal Act. She noted that a total of 15 companies were awarded tenders in the past five years, six of which were from Botswana, four from China, one from South Africa, one from Zimbabwe, one joint venture between Chinese and Kuwaiti companies and two were joint ventures between Botswana, Chinese and South African companies.

She said in terms of the existing sub-contracting policy, foreign companies are obliged to reserve 30 percent for citizen owned companies. To that end, an estimated P849 million should have been paid to local contractors from the P2.8 billion awarded to foreign companies.

Minister shields foreign contractors?

Asked to provide figures for each financial year and state how much was invested in Botswana by foreign companies and how much they repatriated as profits, Minister Serame said she could not. “I am unable to provide information on the repatriation of profits by individual companies over the period,” she said.

“In the absence of the exchange controls, any foreign investor, including foreign construction companies which have invested in Botswana, is free to repatriate any profit after meeting all the legal requirements such as payment for local inputs and taxes.”

P4.7bn borrowed to finance development

Regarding sources of foreign borrowings over the past five years, the minister disclosed that three foreign loans amounting to P4.7 billion were contracted to finance development projects in Botswana. “These loans were acquired under the following projects: Botswana Emergency Water Security amounting to P1.6 billion,” she said. “Of this amount, only P280.80 million has so far been disbursed and deposited into the Development Fund.”

Minister Serame stated that another loan was a budget support from the International Bank for Reconstruction and Development (IBRD) amounting to P2.85 billion which was disbursed and deposited to the Development Fund in October of 2021. “(There was also) a budget support from the African Development Bank amounting to P1.56 billion which was acquired and deposited into the Development Fund by March 2022,” she said.

Serame noted that according to the Public Finance Management Act, development projects are financed from the Development Fund, which is separate from the Consolidated Fund. The Development Fund is funded with funds appropriated by Parliament from the Consolidated Fund or proceeds from loans and grants. The finance minister said proceeds from loans and grants received from development partners are channelled directly into the Development Fund and “pooled together with funds appropriated from the Consolidated Fund”.