Billions go to Foreign ICT companies

With the government spending billions upon billions on imported ICT equipment annually, and the public sector ICT procurement system deliberately designed to be partial to foreign companies, it is a permanent rut for the country’s ICT sector and the doldrums for the thousands of ICT graduates who add to the ranks of the unemployed year after year. But it is a systemic malady that should not have to take an Oracle to cure, writes KEABAETSWE NEWEL

All electronic gadgets and ICT equipment used in Botswana are procured from outside at the cost of billions of pula to the economy annually, The Botswana Gazette has established. Further, government and the private sector spend billions of pula procuring ICT support services outside Botswana, resulting in the economy losing more billions of pula while ICT graduates outstrip the ranks of the unemployed.

As a matter of fact, at least 2000 ICT graduates add to unemployment statistics annually, according to figures from Statistics Botswana. The graduates are effectively doomed because government – the biggest employer in the country – spurns them, according to the Managing Director of a leading ICT company in the country, RPC Data, Komal Rao.

Rao revealed this recently at a Media Crash Course organised by RPC Data. The course was aimed at capacitating the media with knowledge in ICT and to help journalists as understand limitations and opportunities in the Botswana ICT sector.

According to Rao, government wants the private sector to absorb the ICT graduates, which is impossible, in his view. Rao pointed out that the private sector is mostly made up of small-to-medium enterprises which allocate most of their ICT budgets to procurement of hardware and infrastructure.

What perturbs Rao is that 98 percent of the procurement funds are transferred to foreign companies while only 2 percent remains in Botswana. Because of this, Rao concluded Botswana’s ICT sector is not able to create employment because its money soon becomes capital flight to foreign business accounts.

The Botswana Gazette independently engaged Neo Kwada at Statistics Botswana in pursuit of the money that Botswana uses to procure ICT hardware and infrastructure.

According to the statistics that Kwada provided, Botswana has bought ICT hardware and infrastructure valued at P8 billion since 2015. In 2015 alone, Botswana spent P1.6 billion and a further P1.7 billion in 2016. Further, ICT equipment worth P1.4 billion , P1.6 billion and P1.5 billion was procured in 2017, 2018 and 2019 respectively, bringing the total money used to buy ICT gadgets to P8 billion in just five years.

According to Rao, only 2 percent of that money stays in Botswana. It actually means that from the P8 billion that Botswana spends on computers, cameras, laptops and Ipads, to mention but a few, only P160 million remains in the country while foreign companies, mostly in South Africa, pocket the billions. These are multi-national companies that, according to Rao, manufacturer electronic equipment like Sahara Computers, Microsoft, Hewlett-Packard and the Samsung Group.

According to Nitin Sanghi, Technical Director at RPC Data, Botswana companies mainly import the equipment and benefit by just a small mark-up. According to him, because the ICT hardware market is controlled by foreigners, only the software side leaves an opportunity for Botswana ICT companies. It is also a challenge that government is the biggest single spender but the current public sector procurement system and process consistently demands capability and experience that is heavily skewed in favour of foreign ICT vendors. Sanghi holds that the situation is deliberately partial to foreign establishments.

“The ICT industry has only one viable customer, which is government,” he said. “The government tendering process favours foreign ICT vendors, failing both the local ICT vendors and the local ICT employees.”

Most, if not all, government systems were done by SAIS, a global ICT consulting and solutions company that engineers strategic and appropriate solutions by applying and integrating existing and emerging information technologies. SAIS does this in partnership with Oracle USA Inc. According to information in the SAIS website, the company’s current clientele base includes the Government of Botswana in its entirety, as well as quasi-government institutions like the University of Botswana (UB), Botswana Housing Corporation (BHC), National Development Bank (NDB), the Local Enterprise Authority (LEA), the Tertiary Education Council (TEC), Botswana Meat Commission (BMC), Botswana Unified Revenue Service (BURS), the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) and Botswana Training Authority (BOTA).

SAIS, which is in partnership with Oracle USA Inc., has Botswana Telecommunications Corporation Limited (BTCL)and leading insurer Botswana Life Insurance Limited and Botswana Insurance Fund Management (BIFM) under its fold. BIFM is the biggest asset management firm in Botswana with assets under management exceeding P25 billion. BIFM and Botswana Life are subsidiaries of Botswana Insurance Holdings Limited (BIHL). Further, companies like AON Botswana and BECI are clients of SAIS.

Being the ICT service provider to government, SAIS and Oracle USA Inc were engaged to do the Government Accounting & Budgeting System (GABS) at the Ministry of Finance and Economic Development, as well as the government’s Payroll, Pensions & Passages System (GPPP). Further, the same companies did SWIMS for the Department of Water Affairs (SWIMS) and all other government departments.

They also did the Integrated Fixed Assets Management System for the Ministry of Finance and the Implementation and Support (ERP) Systems for BIUST, BMC, BIHL and NDB. SAIS/Oracle further did the Integrated Tax Management System for BURS. They were responsible for MALEPA , the Examinations Management System for BEC and the Student Loan Management System for the Ministry of Education. The same companies also did the Votes and Supplies Ledger for the Ministry of Foreign Affairs, as well as the Elections System for Independent Electoral Commission (IEC).

Sanghi’s concern is that while foreign ICT companies gobble up invaluable foreign exchange in massive amounts, they do not hire Batswana and do not use local resources.

A fragmented industry, according to Sanghi, means that foreign ICT vendors and suppliers (product manufacturers) have easy access to Botswana and get away with their predatory practices. He said these foreign companies couldn’t be bothered that the local ICT industry cannot absorb Botswana’s ICT graduates. He pointed out that unlike in other regions of Africa and the world, Botswana’s private sector is not large enough to support the ICT industry.

“We are a small market with only 25 companies listed on the Botswana Stock Exchange,” said Sanghi. “But large private enterprises and local subsidiaries of foreign-owned companies elect to procure ICT from their parent companies in foreign countries like South Africa due to existing contracts or their supply chain requirements.”