PEEPA 12 th NATIONAL BUSINESS CONFERENCE Implementing Privatisation: Emerging issues and lessons for the future Kgotla M. Ramaphane Chief Executive Officer Public Enterprises Evaluation and Privatisation Agency Francistown, October 16, 2012

OUTLINE OF THE PRESENTATION  Privatisation Policy of Botswana  Privatisation Master Plan  Other policy initiatives that have a bearing on privatisation  Privatisation model for Botswana  Key stakeholders in the privatisation process  Privatisation implementation processes  Update on on-going transactions  Emerging issues  Lessons from on-going transactions  Privatisation lessons from Zambia  Conclusions

BOTSWANA PRIVATISATION POLICY (PAPER NO. 1 OF 2000)  To facilitate greater private sector participation in the economy.  Promote competition, improve efficiency and increase productivity of enterprises,  Accelerate the rate of economic growth by stimulating entrepreneurship and investment,  Increase direct citizen participation in ownership of national assets,  Reducing the size of the public sector,

BOTSWANA PRIVATISATION POLICY (PAPER NO. 1 OF 2000) …  Withdrawing from commercial activities which no longer need to be undertaken by the public sector,  Broaden and deepen the capital market  Relieve Govt of the administrative and financial burden  Privatisation Policy allowed for the establishment of PEEPA

PRIVATISATION MASTER PLAN 2005  Objective was to draw up an action plan for privatisation.  Identified opportunities for private sector participation in activities of central government and local authorities  The Plan proposed a two pronged approach….  Restructuring and privatisation of commercial public enterprises  Commercialisation and rationalisation  Currently reviewing Privatisation Master Plan of 2005

OTHER POLICY INITIATIVES THAT HAVE A BEARING ON PRIVATISATION  Public-Private Partnership Policy and implementation Framework  Competition Policy and Law  Citizen Economic Empowerment (CEE) Policy  Economic Diversification Drive (EDD) Initiative  Botswana Excellence Strategy: a strategy for economic diversification and sustainable growth  Investment Strategy for Botswana  Botswana National Export Strategy  Establishment of Regulatory Agencies  Botswana Communications Regulatory Authority Act passed by Parliament in July 2012  Bill to establish Energy and Water Regulator is being drafted

PRIVATISATION MODEL FOR BOTSWANA  Privatisation in Botswana differs from that of other countries  Encompasses all measures and policies aimed at strengthening role of private sector in the economy  Covers divestiture, public-private partnerships, and outsourcing of public services  Voluntary rather than due to external pressures  Aim is to improve economic efficiency, provide new opportunities for private sector  To foster market principles within public enterprises for sustainable growth and job creation.  Guided by a policy rather than law

KEY STAKEHOLDERS IN THE PRIVATISATION PROCESS  Cabinet and Parliament  Ministry of Finance and Development Planning  Sector Ministries  Public Enterprises  Attorney General’s Chambers  Public Procurement and Asset Disposal Board  Private Sector  General Public  Trade Unions  Media

POLITICAL AND PUBLIC SUPPORT  Communication Strategy being implemented  Stakeholders engaged at different levels to facilitate buy-in and support  PEEPA has addressed – Parliamentary forum, Local Authorities; Business Communities; Editors forum and Policy makers

The Privatisation Process – A systems View (1) Program Development (Master Plan) (2) Project Funding (3) Project Kick - Off (4) Project Appraisal (5) Project Execution (6) Monitoring & Evaluation INPUT PROCESS / TRANSFORMATION OUTPUT OUTCOMES or BENEFITS Government Owned Enterprises Non - Core Services offered by Government Non - commercial Public Entities Divested Parastatals Outsourced Public Services Commercialised Public Entities Corporatised Public Entities Restructured Public Entities Information (studies, reports) Efficient and effective delivery of Public Services Increased Private Sector in the Economy Increased citizen ownership of national assets Broadened capital markets Divest or Outsource or Restructure or Re-engineer!

UPDATE ON CURRENT TRANSACTIONS

 Implementation being undertaken in 3 stages  Citizens allowed to trade shares among themselves  Up to 5 % of the 49% of shares will be allotted to citizen employees of BTC only  Board and Acting CEO of Botswana Fibre Networks (BoFINET) appointed  Drafting of constitution and relevant documents complete  Registration of BoFINET in progress  Transfer of network assets from BTC Ltd to New Entity BOTSWANA TELECOMMUNICATIONS CORPORATION

NATIONAL DEVELOPMENT BANK  Processing of NDB (Privatisation) Transition Bill on-going  Bill to be considered during Nov 2012 session of Parliament  Incorporate NDB as a Company  Procure IPO Advisor to assist implement transaction  Implement IPO during 2013/14  Undertake a Communications Programme

PUBLIC SERVICES OUTSOURCING PROGRAMME (PSOP)  Approved PSOP in March 2011 to outsource Landscaping, Office cleaning, and Security guarding  Consultations with staff and unions complete MoH outsourcing programme  Phase I –cleaning, grounds maintenance and laundry services, porter services in referral hospitals complete  Phase II – non-clinical and clinical services outsourcing has commenced  PEEPA and MoH have finalised a five year outsourcing implementation programme for the Ministry country wide.

RATIONALISATION BEDIA/IFSC Merger  BITC Board appointed in February 2012  The merger has been completed, BITC started operations in April 2012 BPS/BSB Merger  Merger through establishment of holding company with 3 business units of postal, courier and banking services  Botswana Savings Bank Transition Act passed by Parliament in July 2012  BOCRA Act of July 2012 will facilitate corporatisation of BPS  Transition Bill for Botswana Post to be considered by November 2012 session of Parliament. BOTEC/RIPCO Merger  Merger of BOTEC/RIPCO to establish a new Research Institute approved: Botswana Institute for Technology Research and Innovation (BITRI) registered

EMERGING ISSUES FOR EFFECTIVE IMPLEMENTATION OF PRIVATISATION  Commitment and support of major players  Continued legislative and policy reforms  Financial resources for implementation of transactions  Capacity building in different areas of privatisation  Employee support programmes  Willing and capable private sector  Increased stakeholder engagement 16

LESSONS FROM ONGOING TRANSACTIONS  Transaction specific legislation  Approvals at different levels of implementation  Human Resources issues and the consultation/negotiation processes  Financing transactions within limited resources  Many stakeholders with differing priorities and diverse expectations  Building strong stakeholder relationships must be coupled with targeted capacity building  Privatisation is a political, commercial and economic process.  Policymakers and managers in the privatisation process require capacity to deal with broad dynamics. 17

LESSONS FROM ZAMBIA PRIVATISATION  Privatisation process played a central role in Zambia’s subsequent economic recovery and rapid growth  Privatisation imposed by IMF and World Bank  Driven by Privatisation Act of 1992 which established Zambia Privatisation Agency (ZPA)  ZPA autonomy and strong government commitment, led to the success of the privatisation programme  250 privatisation transactions completed in 9 years  Examples of successful privatisation transactions:-  Zambia Airways was liquidated, resulting in registration of 4 private airlines

CONCLUSIONS  Progress has been made notwithstanding the challenges  Implementation still a major challenge  Concerted effort and commitment by all stakeholders required  Privatisation provides opportunities for the private sector  Privatisation can facilitate economic growth and diversification  Privatisation more relevant in light of the current economic environment

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