Friday, December 13, 2019

Botswana broke and living beyond its means

Botswana’s fifth President Mokgweetsi Masisi has his job cut out as he inherits a country that is broke and living beyond its means –  a gloomy Mid-Term Review of National Development Plan (NDP) 11 has revealed.

In a nutshell, the review reveals that Botswana neither has the money nor the human resources to carry the country forward because there is no return on the billions of pula invested on education and health.

According to the review compiled by the Ministry of Finance and Economic Development,“the relatively high rate of unemployment, especially among the youth, is one of the primary factors causing poverty and income inequality. This means that the high level of spending on education and training is not realising the anticipated employment creation opportunities.”

The document states thatthe shortfall between social (health and education) spending and economic outcomes is illustrated by the World Bank’s Human Capital Index (HCI).

The Human Capital Index is a report prepared by the World Bank. The Index measures which countries are best in mobilizing the economic and professional potential of its citizens. The index measures how much capital each country loses through lack of education and health.

“Botswana’s score on the HCI and its components is relatively low, consistently in the third and fourth (i.e., lowest) quartiles across countries and below the average for the upper-middle income group,” the document says.

It says because of subdued learning and health outcomes, children born in Botswana in 2018 will be only 42% as productive when they grow up as they could be if they enjoyed complete education and full health.

“While improved health, nutrition, and education outcomes are important for their own sake, the current situation is compromising future productivity and competitiveness,” the report says.

But it further observed that one positive aspect of Botswana’s HCI score is that girls do better than boys across all of the component scores. This, it says, indicates a positive achievement in terms of access to health and education, as well as likely higher female productivity in the workplace.

“The growth rate of formal employment has also been low in recent years, with several years when employment growth has been barely above zero, and one year of negative growth (following the closure of the BCL mine). There was a small recovery in 2018. Overall, the private sector has been lagging behind in creating new jobs, and there remains too much reliance on the public sector ,” the review says.

Many of those in employment are in low productivity occupations, such as subsistence agriculture, household employment, informal sector activities and Ipelegeng, the document noted.

“Over the longer term, the growth of incomes on a sustainable basis is dependent upon productivity growth, which has two components: increasing productivity within sectors and moving people from low productivity to higher productivity activities,” the document says. 

It says monitoring productivity growth requires improved productivity data (especially on the growth of Total Factor Productivity (TFP)). There are likely to be many reasons behind the slow growth of formal employment.

“However, it is clear that the fall in the growth rate of formal employment has been associated with a sharp reduction in the availability of work permits for foreign investors and workers albeit at time necessary as a way of encouraging employment of the graduate youth,” the document says. 

The document found that unemployment is not measured regularly or consistently in Botswana, and is usually derived from questions included in a variety of social and economic surveys.

“The latest figures date from the Botswana Multi-Topic Household Survey (BMTHS) of 2015/16, which recorded an unemployment rate of 17.6% of the labour force. Unemployment is above average for all youth age cohorts from the age of 15 to 29,” it says.

There is no information on how unemployment has changed during the first half of NDP 11,the document says. However, Statistics Botswana is planning to measure unemployment regularly and consistently through a module of the new, continuous quarterly household survey that is being introduced.

There are many challenges that need to be addressed in improving the employment situation in Botswana.

“ The main objectives are to increase the rate of job creation, thereby reducing unemployment, and increasing incomes for those in employment, particularly for those at the lower end of the income distribution – which will happen when demand for labour is sufficient to generate something close to full employment,” the Mid-Term Review of National Development Plan 11says.

 The challenges have been extensively discussed in the new National Employment Policy (NEP) and its accompanying technical report28. The NEP also proposes a variety of solutions to the employment problem, some of which are short term, while others will require a longer period to implement, it says. 

On other issues, theMid-Term Review of National Development Plan 11 found that “Although the actual GDP growth rate was close to the NDP 11 projection, it is well below the Vision 2036 target rate of 6%, which is needed to achieve full employment.”

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