Government departments could be pushing the ease of doing business in Botswana to historic lows as they frustrate legislation amendment initiatives aimed at removing bottlenecks that investors and local startups face to register a business, The Business Weekly & Review has learnt.
Concerns are growing that Botswana’s performance in the ease of doing business could also drop to an all-time low. Some of these concerns were identified by Sweet Springs (Pty) Ltd, which was engaged by Business Botswana (BB) to investigate the prevalence of non- requirements by some councils across the country when they consider applications for trade licences from the business community.
BB was further concerned that making applicants appear before a licensing committee has the potential to create fertile ground for subjectivity and unpredictability of trade licensing procedures and licence application outcomes.
Over the years Botswana has come under increasing pressure from Business Botswana and the World Bank to remove bottlenecks to doing business.
In response, the government introduced amendments through the Trade Act of 2019 and the Industrial Development Act of 2019. New regulations were introduced and implementation commenced in June 2020.
Some of the progressive changes introduced were abolishing licensing committees for both the Trade Act and the Industrial Development Act save for licensing businesses under the Liquor Act. However, Regional Appeals Boards were retained to attend to queries from either licence applicants or officers issuing business licences and business registration certificates.
According to the new regulations, trade licences and business registration certificates should be issued over the counter without reference to any licensing committee and trade licences should be issued only to businesses that pose public health and safety risks such as restaurants and those dealing in chemicals or the wellness of the public .
But it emerges in the report that the Ministry of Trade and Industry’s Department of Trade and Consumer Affairs and Department of Industrial Affairs continue to frustrate these progressive amendments in the form of “Inconsistent implementation of Trade Act of 2019 and Trade Regulations of 2020”. The report quotes respondents as saying that Gaborone City Council, Tlokweng Sub-District Council in the South East District Council, Kgatleng District Council (Mochudi), Kweneng District Council (Molepolole), Palapye Sub-District Council in the Central District Council, and Francistown City Council continue to “compromise the intended statutory objective of ensuring that investors and business enterprises have easy, fast and inexpensive access to efficient issuance of business licenses and registration certificates.
“Although the Department of Trade and Consumer Affairs maintains that it briefed all local authorities on changes and resultant statutory requirements in the Trade Act of 2019 and the Regulations of 2020 prior to the commencement of implementation of the Act, the problem of inconsistent implementation of the Act was found to be present…”
Some of the contributing factors, the report suggests, could be inadequate transitional arrangement, unavailability of implementation guidelines, insufficient capacity in the form of manpower and equipment such as computers which local authorities face and insufficient monitoring and support by the Ministry of Investment, Trade and Industry.
According to the report, the business community has expressed concern about lax administrative processes and continuing poor attitudes and services of some commercial officers who insist on asking applicants to submit irrelevant documents such as work and residence permits, and health and environmental reports for all applications even when the applicants want to renew their business licences or business registration certificates.
“Business respondents such as Pep Stores and Mascom, which have a countrywide presence/footprint in Botswana, stated that Tlokweng Sub-District Council, Kgatleng District (Mochudi), Kweneng District Council (Molepolole), Palapye Sub-District Council and Francistown City Council require them to submit irrelevant documents, which are not stipulated in the Trade Act and Trade Regulations,” says the report.
The report found that most local authorities were reluctant to implement the 30-day grace period provided under Section 13 of the Trade Act of 2019 to allow businesses to operate prior to issuance of trade licences or business registration certificates because of lack of guidance on these.
“For instance, Ghanzi District Council (Ghanzi), Chobe District Council (Kasane), the Central District Council (Serowe), Francistown City Council, Kgatleng District Council (Mochudi), Jwaneng Town Council and Selebi-Phikwe Town Council argued that they did not find any reason to give licence applicants a grace period of 30 days when they were able to issue trade licences or business certificates immediately upon presentation of requisite documents,” says the report.
It points to lack of coordination among departments within local authorities for making it onerous for business licence applicants to chase various local authority departments responsible for issuing reports on compliance with health, environmental, zoning, building occupation and fire requirements and says this has the potential to create fertile ground for bribery and corruption. “Applicants pointed out that these departments were not aligned to the new dispensation to make business authorisation seamless,” the report says.
It notes that some Commercial Officers of local authorities such as in Lobatse, Jwaneng and Gaborone were able to issue business licences and registration certificates over the counter while others would not because the responsibility for signing business licences and registration certificates has been delegated to Senior Assistant Council Secretaries/Clerks and Assistant Council Secretaries/Clerks, ostensibly as a governance mechanism.
The report says although sporadic inspections and visits to local authorities are conducted, as well as day-to-day exchanges between officials take place, both the Department of Trade and Consumer Affairs and the Department of Industrial Affairs did not have planned or scheduled programmes for monitoring and evaluating implementation of the Trade Act of 2019 and the Industrial Development Act of 2019 by local authorities to whom the responsibility for issuing business licences and business registration certificates has been delegated.
“This has resulted in Gaborone City Council, Francistown City Council, the Central District Council (Serowe), Chobe District Council (Kasane) and Kweneng District Council (Molepolole), “sneaking in” non-statutory requirements under the pretext that their own laws and/or bye-laws could not provide for every eventuality, yet such non-statutory requirements have been abolished under the current Trade Act and the Industrial Development Act,” the report says.
For example, the “Manager Designate Form” has been removed from Trade Regulations but most local authorities still have the requirement. “Much as the requirement could be necessary and may have been an innocuous omission in that the principal Act requires a business to employ a competent Manager, it is important that the requirement be properly provided for in the Regulations,” the report says.
The report recommended that the Ministry of Investment, Trade and Industry be engaged to monitor implementation of the Trade Act and its regulations with a view to ensuring that all local authorities consistently implement the Trade Act and its Regulations in a uniform and standard manner.
Another recommendation was that the ministry be engaged to educate the public, businesses and implementing officers on the new changes in the Trade Act of 2019 and its regulations, as well as on what is required to comply with statutory requirements for a trade licence application. It calls for remedial support and guidance, including holding biannual monitoring and evaluation retreats with local authorities to address challenges constraining efficient issuing of business licences and business registration certificates in accordance with the Trade Act and Industrial Development Act.