Hot on the heels of finance minister Peggy Serame’s Budget Speech, First National Bank Botswana (FNBB), held a seminar where panelists discussed opportunities in value chain development that the government has identified in its Transitional National Development Plan (TNDP) among six national priorities that will guide the 2023/2024 budget.
Delivering the Budget Speech early this week, Minister Serame, stated that the value chain approach will involve progressively developing linkages between different stages in the production of goods and services with the aim of carrying out more of those stages within Botswana, thereby creating jobs and improving livelihoods.
“Government remains committed to creating a conducive environment for the private sector to explore value chain opportunities in strategic sectors such as tourism, minerals, energy, manufacturing, and agriculture,” Minister Serame said. To that end, she unveiled a development budget of P540.9 million proposed for this priority area. At FNB’s budget review seminar therafter, panelists discussed opportunities in the value chain development, especially for SMMEs.
The Executive Director of Business Intelligence at Botswana Investment and Trade Centre (BITC), Dr Margaret Sengwaketse, said a value chain encompasses a full range of activities necessary to bring a product or service through various stages of conception, intermediary stages and production to delivery of the final product or service to the consumer and ultimately disposal.
For Botswana, she said, value chain development could be used as a tool for industrialisation, more so that it is an integral part of the country’s Economic Transformation and Recovery Plan (ERTP) and its Reset Agenda. Dr. Sengwaketse’s focus was on value chain development in three sub-sectors of agriculture, namely horticulture, goat production, and dairy farming. “Goat production is mostly informal but there are also some commercial activities going on,” she said.
Dr Sengwaketse noted that goat production in Botswana is largely oriented towards household consumption at the moment but there are opportunities to export goats and their by-products. “We believe there is opportunity in terms of import substitution,” she said. “This is because when you look at the trade statistics, animal feed imports stand at US$20 million.” For the dairy value chain, Dr. Sengwaketse said an opportunity exists for the private sector in terms of supply of dairy cows, veterinary services and feeds. “Figures for 2021 indicate that we produce 6 million litres (of milk) against a 67-million national demand,” she noted. “There is an opportunity for the private sector here as well.”
Dr Sengwaketse saw horticulture as also presenting an opportunity for import substitution for products like seeds, pesticides and fertiliser. “There has been a global shortage of fertilisers on account of the Russia/Ukraine conflict,” she pointed out. Another panellists, Joel Ramaphoi, who is the Permanent Secretary in the Ministry of Entrepreneurship, pointed to two factors as potential game changers in the development of the value chain envisaged for Botswana, especially for SMMEs.
He identified the first as leveraging on a commodities exchange as a new and smarter way to move up the value chain. “A commodities exchange is more or less the same as a stock exchange,” Ramaphoi noted. “The only difference is the types of commodities that are being traded there.” He explained that market reforms would have to be introduced as the first step to upgrade smallholder producers into the value chain. “We need to reform our market systems,” he said. “This will involve developing an inclusive market system with a pyramidal structure of reforms with the commodity market reforms at its apex.”
He named the second factor as adopting an anchor firm approach to integrate small-scale producers into formal value chains. “These two game changers are mutually inclusive,” he asserted. “With this approach, the first step is to analyse value chains and select buyers in the end market for priority sectors.” Ramaphoi said this would help to avoid situations where producers produce without knowledge of where the markets are. “The second step is to target anchor firms,” he stated. “We already have the likes of BAMB.” The third step would be formulation of small scale producer groups and enhancing their productivity and quality of their supplies.