Financing Local Authorities in Botswana Republic of Botswana Financing Local Authorities in Botswana BY GABA SEKWAKWA TOWN CLERK LOBATSE TOWN COUNCIL

1.0 Introduction Local Authorities are funded through the Ministry of Local Government, which is responsible for maintaining and developing a framework for local government finance The framework should meet Government Macro-economic and fiscal policy requirements It should also support the government policy on the delivery of services to the people

Introduction Cont… Each year Local Authorities Prepare budget which goes through Finance committee of Council and Full council submit budget estimates to the Ministry of Local Government. MLG meets LAs to discuss budget estimates. Ministry of Local Government consolidates and submits to Ministry of Finance and Development Planning; The budgets submitted to Parliament as part of the Ministry of Local Government budget for both capital and recurrent budget.

2.0 Recurrent Budgeting Urban Councils receive 70% of their budget as Revenue Support Grant (RSG) from Central Government. 30% is funded from own sources Own sources for Urban Councils include - Property rates - Service levy - Staff housing rentals - Other service fees 4 4

Recurrent Budgeting Cont… District Councils receive 97% of their budget as Revenue Support Grant (RSG) from Central Government the remaining 3% is funded from their own sources Own sources for district councils include - Service fees (e.g. water) - Staff housing rentals The new Local Government Bill which is currently in parliament seeks to introduce property rating to district councils RSG for Councils is issued on a quarterly basis 5 5

3.0 Development Budgeting Development budget is fully funded by Central Government guided by prevailing Local and National Development Plans and policies. Councils may fund some minor development projects if they have funds from their “General Fund” or savings. 6 6

4.0 Loans and Overdrafts Local Government (District Councils) Act and Townships Act empower Councils to raise short to medium term borrowing from commercial banks Such loans are raised against their own sources of revenue [and not RSG] Overdraft facility should not exceed 1/3 of revenue (except with approval of the Minister) Loans can be secured on the revenue and assets of Councils 7 7

5.0 Donor Funding Donor funds are not directly given to Local Authorities These are channeled through Ministry of Finance and Development Planning and Ministry of Local Government- currently declining Ministry of Local Government will then be required to make quarterly progress reports to Ministry of Finance and Development Planning 8 8

6.0 Financial Controls Councils control funds sub vented to them Councils are required to cause accounts for preceding financial year balance. This should be within 3 months from end of financial year. 9 9

Financial Controls Cont…. Abstract of such accounts are submitted to Auditor General for auditing. Audit reports are submitted to the Finance Committee of Council and later to Full Council. Audit reports are also examined by the Local Authority Public Accounts Committee (LAPAC), which is separate from Parliamentary Public Accounts Committee. 10

7.0 Challenges Dependency on Government Grant. Community not willing to pay for services. Recession. Limited own income sources. Highly subsidized services which do not consider actual cost of service. Councils not able to raise expected own revenue 11

8.0 WAY FORWARD Development of a tariff model that will reflect actual cost of services. LAs have to as a matter of urgency explore other sustainable sources of revenue. Considering PPP models. Council to set up investments arm/body. Outsourcing of services. Intensify revenue collection through credit control unit

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