Revival of textile firms key to Phikwe economy

Onalenna Kelebeile | Friday January 31, 2014 17:38

To the unemployed and low-income earners the textile industry assured them a stable income as compared to the temporary Ipelegeng programme.  'Okare di firm di ka bulwa mma ra kgona go bona ditiro (I wish firms would re-open so that we get employment),' said one unemployed lady who worked for one textile firm that was closed a few years ago. From the initial 17 textile firms, only one, Denish, is operating after Botswana Development Corporation (BDC) shut down Microlith last year for failure to fulfill rental obligations.  Former mayor Molosiwa Molosiwa also wished that government would consider re-establishing the textile industry in the mining town. 'Factory shells have turned into white elephants and Ipelegeng is not a sustainable programme that can substitute the benefits that were presented by textile firms. 'We know it is a long process but it would in the long run ease the burden on the Ipelegeng programme,' he said.Molosiwa observed that the initial process of attracting textile firms to Selebi-Phikwe was not done properly; hence it should be reviewed for it to present sustainable employment opportunities. One firm was allegedly given a cash injection of P34 million to start up its operations but it never showed up. 'Let us retrace our steps and identify the loopholes then come up with a sound and watertight textile industry programme that will be sustainable and create employment. 'We cannot afford to watch and despair. The budget must also look into reinstating development projects that were earmarked for this town but were deferred because of economic recession,' he added. 

A local businessman Tebogo Venson said this year's budget must concentrate more on the BCL mine. He said there had been talks that there was a company that wanted to set up a sulphur capture plant to convert mine emissions into sulphuric acid.  

He believed that this could create employment for the local people. 'We were once told about a horticultural project that would make use of waste water from the mine but it appears the project has been abandoned. 'These are some of the things that the budget must consider,' he added. He also hoped that the current budget could include the construction of a tarred road from Selebi-Phikwe to Francistown through Mmadinare and Matopi villages to speed up businesses and tap into horticultural activities along the Letsibogo and Dikgatlhong Dams. He said for the town to become the next city big plans must be put in place and wondered why it was necessary for people to first travel to Serule when going to Francistown instead of a tarred road via Mmadinare being constructed. 'The road would enhance opportunities for Selebi-Phikwe to become a stopover for people from northern countries to South Africa.

Employment opportunities will grow very quickly,' he said. On the issue of the textile firms Venson said the main challenge was that Botswana was a landlocked country hence it was very expensive for investors to transport their products to the markets through the ports in Durban and Walvis Bay. He suggested that Selebi-Phikwe Airport be upgraded so that consignments can be flown to markets instead of shipping overland. He acknowledged that the textile industries had an impact in the town's economy.Efforts to diversify the town's economy dates back to the 1970s when the town was established.Since then it has always been recognised that the town would need to diversify its economy so as to survive the eventual closure of the mine. Although the town was initially totally dependent on the mine, there was need to diversify away from it (the mine) so that it would eventually become a self-sustaining urban centre. One initiative was the attraction of investors in the form of large-scale firms that emphasised on clothing and textiles through the Selebi-Phikwe Regional Development Programme (PRDP).Through this initiative several textile firms were opened in the town and mainly concentrated at the industrial site. It undoubtedly created a lot of jobs for the people of Selebi-Phikwe and the surrounding villages. 

Those firms employed mostly women while men worked in the BCL mine.  Unemployment, especially among women was addressed and the town's economy was experiencing an upward trend. There was a trickle-down effect; transport business ferrying workers to and from work, food and clothing shops were assured of sales. With more people seeking opportunities, the town population increased leading to more services and companies streaming. However it became evident that most of the firms later on failed to live up to their mandate. Instead of them ensuring sustainable employment to the locals, they later on left poor women in the lurch but closing down unceremoniously.

 This would mean that the entire workforce would join the jobless in the town while others relocated back to their villages.While other firms maintained professionalism and honesty to their workers, they were disadvantaged by lack of a market for their products. Incidentally, they ran at a loss and eventually closed down, again defeating the whole objective of improving the economy.  PRDP was set up in 1988 and the government contributed P3.7 million towards the programme. An additional USD 7.6 million was obtained from the World Bank. The PRDP was expected to lead to the setting up of a light manufacturing sector in Selebi-Phikwe among others. On the industrial side the intention was to attract new firms and to encourage expansion by existing large-scale manufacturing firms as well as to encourage the development of SMEs. As a move to provide incentives that would attract investors to Selebi-Phikwe the PRDP unit proposed a Special Incentive Package (SIP) for the town's investors in the form of a corporation tax rate of 15% for 20 years and the exemption from withholding tax on dividends for 10 years. The reduced corporation tax rate was compared to the national corporation tax rate of 40%.

The SIP was approved by government and was introduced in 1989. It was restricted to companies investing in Phikwe and to the firms employing more than 400 people and exporting 100% of their output outside the SADC region. The SIP was an addition to the existing Financial Assistance Policy (FAP), which was available to investors anywhere in Botswana. It offered subsidies for labour, tax holidays and sales augmentation grants to the manufacturing, tourism, service sectors, to name a few.Through the PRDP 17 manufacturing firms were attracted to Phikwe with the job creation of 4,048 new jobs by the end of 1995 and a cumulative 6,315 jobs by January 1998, according to the CSA report.Some of these were firms, which relocated from other parts of Botswana to take advantage of the SIP. However the quality of jobs created, in terms of stability and lifespan was very low and by 1992, four of the 17 firms established under the SIP had closed.By 1998 only five firms were still operating. The programme was eventually terminated in 1996. According to the CSA report, factors that were blamed for the poor staying power of firms were the high transport costs for exports, low labour productivity and high labour costs. It also suggested that the SIP itself was relatively unimportant as a reason for setting up in Selebi-Phikwe. Other factors such as the unavailability of industrial land and BDC factory shells may have played a negative role. A number of firms closed down when the FAP incentives came to an end and there were cases of alleged fraud by some firms that obtained advance cash injections but never opened for business.