Costs, Implications and Benefits on the 11th Parliament Sitting Announcement

Costs, Implications and Benefits on the 11th Parliament Sitting Announcement

Introduction

The President of the Republic of Botswana announced that there are bills passed by the 11th Parliament sitting. He announced this on the 12th of August 2019 through his Facebook page, in his own words “I want to share with you that among the bills passed by the 11th Parliament is a bill that allows you to run your small business from home without requiring a license. Soon I will sign this bill into law. It is our serious intent to reduce excessive and unnecessary regulation of the economy to allow you to prosper. This is part of our improving the ease of doing business for Batswana. Please take advantage of these efforts to do your part in self-improvement for your communities and our country”. Batswana are still absorbing and debating whether this bill will bring economic glory and if so, to who and how? Economic principles of scarcity leads to choice which also results to opportunity cost. A fast assessment on the bill might likely better the lives of ordinary citizens but on the other hand crippling the real estate investors and other stakeholders. This article gives a quick assessment on the corresponding responses the market is likely to yield in response to the announcement and subsequent adoption of the bill into law.

Impacts on ordinary Batswana

Peter Drucker was quoted saying plans are only good intentions, unless they immediately degenerate into hard work. From the shared sentiments, indeed the President plans on improving the ease of doing business for Batswana. He has initiated this plan by endorsing the bill and is also perpetuating it by promising to sign the bill into law. The overall success of this initiative will be largely dependent on the attitudes of Batswana. In as much as the legal framework can be laid properly, if Batswana fail to put concerted efforts in developing their small businesses, the President’s efforts will be fruitless. If Batswana embrace the initiative, it should lead to an increase in numbers of unregistered business that are growth oriented. When one is allowed to operate from home, they enjoy the benefits of avoiding commuting and rentals that are associated with people who operate businesses in the CBD. Avoiding rentals and commuting commitments increase the chance of success on start-up organizations. 

Perspectives of Growth Oriented Analyst

Analysts are philosophers who have their own unique thinking. They help us to search out and understand matters. Speed interviews carried on with analysts have yielded different notions. Some noted that if the President signs the bill into law, it will discourage small organizations from growing into multi-million pula worth companies. They argue that putting regulations for one to operate a business can be a distinguishing factor and can encourage citizens to pursue business diligently and excel. The point raised cannot be brushed off easily and it should be important to consider it before the President signs the bill into law. Other analysts pointed that the government is supposed to support smaller businesses financially through various platforms to help them scale and become big businesses. Existing funding platforms like CEDA are good examples although they have been widely condemned as being relevant only to the politically connected citizens. Funding platforms should be apolitical they charged. 

Political Implications

As a political leader, to retain power, the President has to implement policies that better the livelihood of the voters. The President is working towards reducing unemployment by advancing self-employment policies amongst Batswana. From a snap survey conducted, members of the opposition party argue that the President is using the bill as a strategy to expedite his political gain. The efforts should however be appreciated. The bill might also be criticized by members of the revenue collector Burs. They will likely struggle to collect revenue from the proceeds Batswana make when they are operating from home. Transactions might not be well documented when one is working in such an environments and this can affect sound transparency and reporting.  

Effects on Secondary Office Space (Kgale) 

The bill will encourage small business to operate from homes. Generally businesses aim to lower their operational costs and maximize returns. Rentals and commuting costs are major cost elements for start-up organizations. The bill will endorse the idea for Batswana to operate from their homes. This has a negative effect to the property companies who own real estate intended to be used as office space. Ironically, the property manager will be left with a small pool of tenants to choose from. In an already depressed office rental market, this will likely result in decreased rentals hence lowering the return from the real estate investment. Some common office spaces that are already suffering from high void levels like Kgale Mews, Finance Park and Commerce Park will end up not being manageable. This will be detrimental to real estate investors. The economic principle of scarcity and choice will have caused property investments being left out as an opportunity costs. 

A synthesis of effects and implications to Stakeholders 

Stakeholders Positive NegativeOverall Comment
Real Property Owners 
X
Decreased returns and reduced returns.
Transport Operators 
X
Less commuting lowers business.
BURS
X
Decrease collection of tax from citizens.
Fuel Service Stations
X
Less commuting lowers demand for fuel.
Construction Companies 
X
Construction activity likely to decrease.
Ordinary BatswanaX

Empowered and likely excel in business. 
Banks that issued mortgage
X
Suffer from defaults. 
Mortgage Holders
X
Poor performance lead to pressure.
Property Managers
X
Decreased rentals and economic activity. 

Conclusions and Recommendations The initiative by the President is indeed genuine and aims to improve the easy of doing business in Botswana. It is however important that the bill be scrutinized to also protect the interest of stakeholders such as property owners and stakeholders in the transport business. In as much as the government is popular and works to uplift the livelihood of ordinary Motswana, it should also be popular with its investors as these have committed huge sums in making investments and hence any policy shifts and changes that disturb their investments will likely be met with massive resistance. This in turn might discourage foreign direct investments and even domestic investments in the real estate industry in the short run. In the long run, the market is likely to settle and eventually the office space properties will still have a good return since most companies prefer professionalism and a good reputation and will remain occupying the office space provided by real estate investor companies. Contact Vantage Properties via email at: info@vantagepropertiesbw.com

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