The long and turbulent road to privatisation
by Joseph Balise
From the outset, the privatization process was never regarded a panacea to solve Botswana’s economic woes, especially on the back of an elusive economic diversification process and efficiency pursuit. After attaining independence, with a less robust private sector, government created a number of parastatal corporations and public enterprises to fill the void in its social services delivery programme.
However, as the economy grew and thrived, government embarked on a deliberate initiative to create more space for private sector involvement. To this end, a privatization concept was mooted. It gave birth to the privatization policy and establishment of PEEPA to push the privatization agenda forward.
For more than a decade of its existence, PEEPA seems not to have any tangible achievement to showcase. Whether it has been able to deliver on its mandate or not is arguable. To some it is just another impotent economic player which should be declared redundant. Government resolve to privatize some of its over 30 public corporations has to say the least been futile. It is still burdened with providing services that the private sector has matured to undertake.
Some economists argue that privatisation will relieve the government of the financial burden of frequently funding the parastatals which have failed to live expectations and deliver on their mandate. Others fear that such a move will become costly to the ordinary Motswana and liken it to the government abdicating social responsibility on its people.
The argument goes further that privatisation will bring with it the necessary efficiencies while those against it firmly fear the imminent job losses that the process will visit on the already high unemployment rates as the new owners strive for leaner, cost effective and high profit margins.
It is further argued that the relief will create more latitude for government to concentrate on creating an enabling environment and provision of appropriate legislation.
The big lingering question is whether privatization has been slow and the driving agency impotent.
The answer comes in a definitive NO from PEEPA communications manager Montlenyane Baaitse who maintains that "privatisation in Botswana is not slow but rather cautious" explaining that transactions such as the Botswana Telecommunications Corporation are highly technical, complex and time consuming.
She further holds that privatization is not an event but a sensitive process which impacts on welfare issues and jobs of employees of approved entities to be privatized adding that it takes time to engage and negotiate with employees as the negotiations are key for a successful privatization programme.
On the issue of whether her agency is impotent and its relevance as an economic player as perceived by the public, Baaitse argues to the contrary maintaining that public perception is that PEEPA is relevant to the economy.
"For example, its success in merging BEDIA and IFSC will save millions of tax payer's money because instead of budgeting for two entities with two overlapping similar roles and responsibilities, government will now budget for one entity (BITC). With all engagements so far done with various stakeholders; the media (refer to 2011 Editors' Forum) the public and other stakeholders appreciate and understand the complex and important role that PEEPA plays in implementing privatization. So, yes, PEEPA is a relevant economic player", enthused the communication chief.
She also pointed out that work on other mergers include the merger between Botswana Technology Centre and Rural Industries Innovation Hub (BOTEC/RIPCO), Botswana Postal Services and Botswana Savings Bank (BPS/BSB) which are still ongoing.
Other achievements include the outsourcing of the Student Grant/Loan Scheme implemented by the Ministry of Education and Skills Development on PEEPA recommendations as well as recommendations for consideration of local institutions for A Levels as opposed sending all students abroad under the High Achievers Programme including the recommendation for a centralised one stop application and admission processing function.
The agency has further recommended to the ministry to revisit the initiative to open a bank account with a commercial bank to aid the recovery of loan funds as well as developing a legislation for tertiary education student support funding that has been incorporated into the Draft Human Resource Bill in addition to adopting a free market approach to allow institutions to compete for students instead of the current quota system.
An upbeat Baaitse said her agency is satisfied with the BTC privatization despite the complex nature of the transaction. "The transaction is progressing well. Work on the separation and transfer of the Trans Kalahari Optic Fibre Network (TKOF) and Gaborone Francistown Loop (GFL) has commenced. The separation of the two (TKOF) and (GFL) is divided into four highly technical phases; Phase 1 which defines the separation is almost complete.
"Various options have been identified and cabinet decision on the matter is expected by July 2012. Cabinet decision on the preferred option will mark end of Phase 1. Once the preferred option is decided, Phase 2 which focuses on the detailed design will commence. Phase 3 is the build and transition stage and final phase is the close and monitoring stage", said Baaitse.
She said it ought to be noted that under BTC privatization, the directors to the BTC Limited board and the New Infrastructure Company were appointed in June 2012.
According to the communications manager, PEEPA has also made significant progress under the Public Services Outsourcing Programme (PSOP) whose first phase entails outsourcing of cleaning, grounds maintenance and security and porter services in government referral hospitals which has been completed.
The next phase of outsourcing non-clinical services planned for completion end of 2012 has commenced and progress has been made to meet the 2012 deadline.
The achievements notwithstanding, Baaitse said the major problems impeding privation range from many stakeholders with conflicting interests to negative perceptions about privatization and resistance to change.
The agency and the Ministry of Transport and Communications have twice failed to privatise Air Botswana despite the passing of a transition bill allowing for the parastatal's privatization. Government failed to find a suitable strategic partner for the airline.
As for political will in supporting the privatization process, Baaitse said there is incredible support across the political spectrum. The opposition in parliament has however expressed its fears that privatisation with its attendant job losses is not a viable economic option at the moment given the high rate of unemployment which hovers around 18 percent of the total labour force.
"Often politicians emphasize the need to be cautious when implementing privatization. Rightly so because privatization impacts on jobs and lives of employees of privatized entities. Unfortunately, the cautious approach that PEEPA has taken is often understood as sloppiness and noble cautionary statements across the political spectrum are again perceived as lack of support", said Baaitse.
As for the benefits that the economy stands to accrue, she said privatization is a reform that can promote citizen participation and entrepreneurship through outsourcing of cleaning and gardening services in government ministries and departments.
It will also facilitate private sector participation as the economy thrives when there is active private sector participation and not led by government as is currently the case in Botswana.
Other benefits include economic diversification as the private sector plays its meaningful role of innovation of new ideas in doing business and technology like introduction of new gadgets in the telecommunications industry such as cellphones and software.
That will effectively help government concentrate on its role of policy development and not doing business as is the case currently.
The other thorny issue with regard to privatization is citizen participation to which Baaitse said PEEPA and government continues to keep the issue under the radar to ensure that there is meaningful citizen participation hence BTC shares will be floated at an initial P2.00 per share on the IPO.
"PEEPA and government have put in place regulatory framework to safeguard the interests of the consumer. For example, the Competition Authority to ensure that there are no incidences of price fixing. BTA to regulate the telecommunications industry etc," said Baaitse in relation to measures being implemented to ensure that the public is not exposed to overpricing by the privatized entities in pursuit of high profit margins.