Bullish prospects for the manufacturing sector

Keikantse Lesemela | Thursday February 6, 2014 15:39

 

For several years the manufacturing sector was earmarked as the principal sector through which the twin goals of economic diversification and employment creation could be achieved.

Matambo highlighted that through efforts by agencies such as Botswana Investment and Trade Centre (BITC), Government will continue to promote domestic and foreign direct investment into the manufacturing sector. Government will further provide targeted fiscal incentives to major manufacturing projects to enhance value addition and competitiveness of their products.

'To this end, development strategies for the leather, dairy, textile and clothing subsectors were completed during the 2012/13 financial year as part of the Economic Diversification Drive', he said.

Matambo said that the focal area of the leather industry strategy is the proposed development of a leather industry park, whose bankable feasibility study is being awaited. The dairy industry strategy will focus on transforming the industry into a competitive and profitable industry through investment in productive dairy support infrastructure. However, the latest BITC annual year report for 2013 indicates that the manufacturing import bill stood at P38.6 billion with machinery & electric at 17.5%, Fuel 14.8%, food, beverages & tobacco 12.5%, while chemicals & rubber products were at 10.9%. Sejoe highlighted that agriculture production is currently below capacity but opportunities exist in Cereals, Pork, Honey, Small Stock, Vegetables & Fruits and Dairy.

In its first year of operation, Botswana Investment and Trade Centre (BITC) have attracted 698.97 million in Foreign Direct Investment, exceeding its target of P600 million by 16.4% in 2013.

However the domestic investment expansions reached a target of P362.5 million against the target of P500 million creating 1,206 jobs against the target of 2,276 jobs.

BITC chief executive, Letsebe Sejoe said there are 47 projects on the pipeline that are estimated to bring investment of 4.7 billion and attract 4,075 jobs. However he highlighted that the challenges include land allocation, stakeholder engagement and lack of factory shells.

In the past decade, the manufacturing sector also received preferential treatment both in terms of targeted policies and financial support, but the sector has consistently failed to perform to expectations.

As part of its strategy, the government has also adopted several complementary policies to promote industrialisation through private-sector development. The Financial Assistance Policy (FAP) was introduced in 1982, but ended in 2000. In 2001 the government also established the Citizen Entrepreneurial Development Agency (CEDA), which provides loans at subsidised interest rates to viable private businesses as opposed to outright grants. The Local Procurement Programme (1997) and the Policy on Small, Medium, and Micro Enterprises (1998) are other initiatives aimed at enhancing the development of local entrepreneurs.