1. The legislation landscape of Botswana has been changing over the years to create a conducive business environment to assist Botswana in moving to greater heights in economic development, and this ranges from changes in tax laws, data protection laws, changes in laws relating to economic zones, and to laws relating to the sale of land. These are all interesting changes to businessmen exploring business opportunities in various sectors of the economy of Botswana. Alongside these commendable strides, there has been for a while, pressure mounted on Botswana to also consider laws to empower the native citizens like what has been seen as new legislative changes in a few other countries in Southern African Development Community such as South Africa (through the Broad-Based Black Economic Empowerment Amendment Act, 2013) which is still recovering from the legacy of apartheid.
2. In this regard, the Parliament of Botswana found it fitting to promulgate the Economic Inclusion Act (the “Act”), which came into force on 20 April 2022. The primary objectives of this Act is to among other things, promote of the economic empowerment of targeted citizens, ensure the promotion and facilitation of ownership of income-generating activities and assets by targeted citizens, strengthen the ability of a targeted citizen to own, manage and control a private sector enterprise and productive assets. These objectives will be the responsibility of the Economic Empowerment Office (headed by the Coordinator), a body created under the Act, and it is envisaged that it will be monitoring and measuring implementation of the objectives, ensuring ease of monitoring and evaluation of economic empowerment laws, policies, initiatives and programmes, and facilitating enforcement of the economic empowerment laws, policies, initiatives and programmes and continuously reviewing the economic empowerment laws, policies, initiatives and programmes.
3. The term “targeted citizen” which refers to the beneficiary for the enforcement of the Act, is defined under the Act as a citizen whose access to economic resources has been constrained by various factors as may be prescribed by the Minister of Investment, Trade and Industry (the “Minister”) from time to time. As at the date of this article, it may well be argued that the Act cannot technically be enforced against anyone as there are currently no prescribed criteria for identifying a targeted citizen and this would presumably be set out under the Regulations to the Act which are yet to be promulgated to also give effect to a number of provisions of the Act.
4. This notwithstanding, it is imperative to understand the expectations and extent of application of the Act to the private sector players. The Act imposes obligations, which are couched in wide and general terms to all sectors of the economy, the State, public bodies, private entities and agencies, to implement the empowerment of targeted citizens.
5. In terms of the Act, the private sector is obliged to put in place appropriate strategies to empower “targeted citizens” through:
5.1. Mentoring and sharing knowledge on business development and market penetration with “targeted citizens” or targeted citizen owned private sector enterprise;
5.2. Promoting economic empowerment of targeted citizens and to incite entrepreneurial culture;
5.3. Building capacity of targeted citizens and targeted citizens owned enterprises;
5.4. Procuring goods and services from targeted citizens and all targeted citizen owned enterprises within the private sector;
5.5. Developing sector codes of good practice for economic empowerment;
5.6. Developing supplier development programmes with a targeted citizen or a targeted citizen enterprise to foster business relationships;
5.7. Preparing transformation charters and reports of compliance;
5.8. Training employees to effect inclusive ownership of businesses;
5.9. Enabling economic empowerment of private sector businesses owned and managed by targeted citizens;
6. In terms of the Act, the private sector players are required to apply the economic empowerment standards and strategies referred to above, when they are prescribed, and this is also yet to be done as there are no Regulations to the Act.
7. The Act empowers the Coordinator to measure compliance by public bodies, and the Compliance is measured through reporting and returns and imposition of administrative fines for non-compliance.
8. The Act also makes it an offence for private sector where it inter alia, engages in fronting with regard to economic empowerment laws or fails to accord targeted citizens the benefits accorded by the provisions of the Act and prescribes fines of up to BWP 1,000,000.00 and imprisonment of up to 10 years.
9. As a general concluding note, we are of the view that given how the provisions of the Act have been widely and generally couched, it is uncertain as to how it may impact entities in the private sector.
10. In fact, there are no specific provisions in the Act relating to obligations of the private sector, save section 25 of the Act which imposes the general obligations set out above.
11. Therefore, at this stage, it is not possible to determine how the private sector players should structure their businesses or implement the strategies to empower “targeted citizens” because of the general nature of the obligations set out in the Act, and hopefully this will be rectified when the Regulations are promulgated by the Minister in the future.
12. For more information on the above, please contact Simon at simon@armstrongs.bw or call +267 395 3481.
