Friday, March 1, 2024

2022 – The year Masisi rooted for “Made in Botswana”

There is likely to be some awkward moments next time President Mokgweetsi Masisi passes the collection plate around at a Botswana Democratic Party (BDP) fund raising dinner.

BDP fund raising dinners are a multi-million pula frenzy of deep pocketed investors bidding for political influence. The donor rolls usually include Asian big investors seeking to accrue favour with the ruling party.

For more than five decades, this brand of quid pro quo politics has built the BDP war chest while fattening wallets of big businessmen who have invested in political capital. It characterized the golden era of business elites and organized groups representing business interests during which the denizens of big business held substantial sway over Botswana government policy while mass-based interest groups and average citizens had little or no independent influence.

Masisi’s predecessors, from Sir Seretse Khama to his son Lt Gen Ian Khama presided over the fastest growing economy in the world, the growth however disproportionately increased the wealth of the well-to-do. The country’s economic growth under Sir Seretse Khama, Sir Ketumile Masire, President Festus Mogae and Lt Gen Ian Khama effectively funnelled wealth and income, reverse Robin Hood-style, from the pockets of the bottom 90 percent to the coffers of the top 10 percent. As a result, in the midst of the nation’s long economic expansion, the separation between rich and poor continued to grow.

To be clear, some degree of income inequality is to be expected—people have different talents, skills, and predilections, and markets will reward these in different ways. But there are serious consequences when things tip too far in one direction, as seems to be the case for Botswana.

Currently, Botswana is one of the most unequal countries globally, having the 9th highest Gini coefficient, indicating the degree of inequality of incomes, according to the most recent UNDP report (2020). The UNDP report states that “both theoretical and empirical studies have shown the negative effect of inequality on long-run growth, poverty reduction, social and political stability. The huge wealth disparity belies the efforts of successive benevolent administrations, which used substantial fiscal revenue to expand social assistance. This however is hardly surprising. With Botswana’s political leadership in the thrall of big business interests, the country’s wealth inequality was by and large seen an issue for those who have less, and it certainly was.

According to the 2021 UNDP report, “the issue of inequality in Botswana has received limited attention historically from both research and policy perspectives.”

President Masisi’s Economic Inclusion Act, which came into operation on 20th April 2022 makes history because beyond disrupting the tradition of cronyism and rent-seeking, for the first time, government is reaching out to those it has left behind. The Act seeks to enforce existing economic empowerment laws and most importantly the effective participation of “targeted citizens” in the economic growth and development of Botswana.

From the first paragraph to the last, the Act makes explicit reference to “targeted citizens”. The Act does not provide a definition of “targeted citizens”, but since demographic data suggests that those who have been left behind are indigenous Batswana, the unemployed, women and youths, a subtle subtext of race, class and gender underpin the “targeted citizens” phrase. A source close to the drafting of the Act says the “targeted citizens” phrase is a euphemism for the politically incorrect Motswana wa sekei. 

This is not far-fetched. In one of his emotionally charged moments, President Masisi tapped into the anger and resentment of those Batswana— usually portrayed as an aggrieved mass, a sort of basket of unignorables who feel left behind by Botswana’s economic growth.

Speaking at a public event in early April 2020l, as COVID-19 began to upend commerce and everyday life, the president lamented that some people who had come to Botswana wearing borampeechane – sandals made from reuse tyres – but were now filthy rich, had shown that they don’t have national interest at heart. Those people, he added, cared only about milking Botswana of its riches and not the welfare of Botswana and their Batswana employees. He didn’t refer to any one race or nationality but he provided way too much detail as to compromise the identity of the race and nationality he was referring to. That is because he used the same set of words that is used in the street to complain about a particular race. As a matter of fact, there was public reporting about that race complaining bitterly to Masisi behind closed doors about the borampeechane remark.

The “targeted citizens” class and racial load has not been lost on powerful business interest who are worried that Masisi is moving their cheese. It is understood that among those who have made formal complaints against the “targeted citizens” phrase is Cash Bazaar Holdings headed by John Maynard, one of the richest men in Botswana.  The Cash Bazaar Holdings’ group subsidiaries, associates and investments include the BSE listed Furnmart Ltd and New African Properties Ltd, as well as Afritec personal finance, Indaba Lodge Gaborone, Chobe Safari Lodge, Kwando Safaris and Panda bricks and plant.

The Act is already breaking new ground and among the first to feel its business disruptions was Woolworths, the biggest upmarket chain store in Botswana.

Woolworths which is a subsidiary of the South African multinational retail has been operating in Botswana since 1987 as a franchise business owned by local multi-millionaire Ish Handa. From its mouthwatering pickled fish to its vegetables and loaves of bread, the supermarket stocked its shelves with “Made in South Africa” products. That was until Masisi’s new law insisted that they sourced their vegetables and bakery products locally,

Woolworth initially turned up its nose at the “Made in Botswana” bakery products citing quality and capacity issues. Then the Ministry of Trade came brandishing the Botswana Economic Inclusion Act which to all intents and purposes is a Riot Act: It mandates private sector enterprises to help “build capacity of targeted citizen and targeted citizen owned enterprises” to meet their quality and capacity needs. “Failure to accord a targeted citizen or citizen owned enterprise a benefit that is accorded by the provision of the Act is liable for a fine of P500 but not exceeding P1000 000 or to an imprisonment for a term of not less than six months and not exceeding 10 years for individuals, a fine of not less than P5000 and nor exceeding P10 000 000 for organisations.”

Woolworths complied and is currently sourcing all its bakery products locally.

Next to feel the heat was PEP stores and Ackerman’s. As part of the new Act, Botswana has placed trade restrictions on the importation of school uniforms. Botswana’s biggest suppliers of school uniform PEP stores and Ackerman’s import their products from South Africa – thus stifling the “Made in Botswana” label and exporting thousands of Botswana jobs to South Africa. (See story on Page 2)

PEP stores and Ackerman’s are part of the Pepkor Group, South African-based investment and holding company with business interests in AfricaAustralia and Eastern Europe. The group manages a portfolio of retail chains focused on the value market selling predominantly clothing, footwear and textiles.

The two retail stores, which are the biggest suppliers of school uniform in Botswana have gone to court for an order to continue importing school uniform from South Africa and exporting thousands of Botswana jobs. Botswana’s unemployment rate is at an all time high of 25%.

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