Botswana’s cash-strapped parastatals have plunged deeper into debt, leaving taxpayers exposed to more than P1.6 billion in unpaid government loans as the Auditor General raises concern over weak oversight, broken repayment agreements and questionable use of public funds.
Government-owned entities including the Botswana Meat Commission, Air Botswana and Botswana Postal Services have failed to honour repayment obligations running into hundreds of millions of pula, according to the latest report by Auditor General Keneilwe Senyarelo.
The report shows mounting arrears, weak financial controls and public funds tied up in entities struggling to pay back state loans issued through the Public Debt Service Fund.
At the centre of the findings is the Botswana Meat Commission (BMC), which owes government P368 million. Of that amount, P248 million was already in arrears by March 2023.
The Auditor General revealed that P160 million was due in 2019 while another P88 million became due in 2020, yet no repayments had been made.
‘Despite the Commission being unable to pay the years arrears, Government issued another loan in 2023 amounting to P120 000 000,’ Senyarelo noted in the report.
The report further stated that as at March 31, 2023, ‘there were no repayments made for the two outstanding loans.’
Air Botswana was also singled out for failing to service a P230 million government loan.
According to the Auditor General, the national airline has defaulted on repayments since the first instalment became due in 2021.
‘As at 31 March 2023, the balance on the loan stood at P230 000 000 and the loan was still in arrears as reported in the previous year,’ the report stated.
Botswana Postal Services was similarly criticised after delaying repayment of a P140 million loan.
The outstanding balance stood at P137.2 million after repayments only commenced in 2022 instead of the agreed 2017 start date.
‘I have not been provided with a satisfactory explanation for the failure to honour the repayment terms of the loan,’ Senyarelo wrote.
The Auditor General also raised serious concerns over a staggering P900.5 million advanced to the liquidator of the now-defunct Bamangwato Concession Limited (BCL).
The report revealed there was no clear loan agreement specifying repayment terms, repayment dates or interest rates.
‘Should it transpire that the amount advanced is not repayable for any reason, this would be inconsistent with the terms governing disbursements from the Fund,’ Senyarelo warned.
She stressed that the Fund Order requires disbursements ‘should not have the effect of depleting the fund but rather should grow it.’
The report also uncovered irregularities in the Agricultural Credit Guarantee Scheme Fund under the Ministry of Finance.
The audit found that some loans guaranteed under the scheme were used for purposes outside approved agricultural activities, including farm purchases, irrigation equipment and farm vehicles.
Among the questionable expenditures were loans worth over P11.5 million facilitated through the HYPERLINK ‘https://www.ceda.co.bw?utm_source=chatgpt.com’ t ‘_new’Citizen Entrepreneurial Development Agency and the HYPERLINK ‘https://www.ndb.bw?utm_source=chatgpt.com’ t ‘_new’National Development Bank Botswana.
‘The inclusion of these items under the Scheme represents non-compliance to the established eligibility criteria,’ the Auditor General stated.
Management acknowledged the findings and said both institutions had been instructed to stop financing assets not covered by the scheme guidelines.
Meanwhile, the audit of COVID-19 procurement exposed what the Auditor General described as ‘nugatory expenditure’ after government paid P8 million in a court settlement linked to a cancelled tender for electronic movement tracking devices.
The tender, valued at P14.3 million, had been awarded in August 2020 before being terminated because the ministry allegedly had no budget for the purchase.
The contractor later sued government, resulting in an out-of-court settlement funded from the COVID-19 account.
‘The Ministry should not have entered into a contract for which they knew there were no budgeted funds,’ Senyarelo said.
She further criticised the decision to charge the settlement to COVID-19 funds, saying the money ‘was specifically allocated for the pandemic containment.’