Thursday, October 1, 2020

365 days into “Sisi-nomics”: Is the economy getting stitched or tattered?

By Victor Baatweng

In April 2018, hardly a few days after Masisi’s inauguration as the country’s fifth President a local stock brokering firm ÔÇô Motswedi Securities opined that the country’s business community regards the then new President as “more business-friendly”.

Before that the same sentiment had been made about Masisi’s counterpart in South Africa – Cyril Ramaphosa. Ramaphosa had also ascended to the Presidency of the neighbouring country just under three months before Masisi did.

Despite the downward movement recorded at the local capital markets in the first quarter of 2018, which also marked the last days of Masisi’s predecessor ÔÇô Ian Khama in office, Motswedi Securities opined that the new presidency is likely to spur economic growth.

“It is not surprising that his presidency has been well received and is expected to bode very well for the markets and the economy in general, particularly with respect to areas such as job creation, economic growth and diversification”, said Garry Juma ÔÇô a financial analyst at Motswedi Securities in April 2018.

While around the time Masisi became President there was a general feeling of optimism amongst analysts and the business community, there were also those who were sceptical that Masisi may not move very far from Khama’s socialist policies, especially ahead of this year’s general elections.

It was around the same time that the United Nations’s reproductive health and rights agency ÔÇô United Nations Population Fund (UNFPA) also said that Botswana does not have the luxury of long-term planning to maximise its first demographic dividend.

UNFPA shared its view through a study entitled “Opportunities and Policy actions to maximise the demographic dividend in Botswana”.  The study was carried in conjunction with the African Institute for Development Policy supported by the Development Policy Research Unit of the University of Cape Town and national consultants from the University of Botswana.

The Demographic Dividend refers to the temporary economic benefit that can arise from a significant increase in the ratio of working-age adults relative to young dependents that result from fertility decline.

As part of their recommendations, the economic think tanks who compiled the report cautioned Botswana government and all development actors “to act with urgency and implement game-changer interventions”.

In his maiden speech, Masisi also made reference to the demographic dividend admitting that its realisation is of paramount and strategic importance since the success of the youth is the only guarantee of the long term economic prospects for Botswana.

“It is imperative therefore, for Government to redouble its effort to optimise the participation of our youthful population in the economy of this country”, Masisi said.

STITCHING OR TATTERING THE ECONOMY?

Fast forward to April 2019, the key question that arises as Masisi prepares to reflect on his first full year in office is whether he has super charged the local economy or slowed it down. Those watching from distance but with keen interest on the domestic economy seek to understand how deep his 365 administration’s fiscal fault line ran. Here are some the doings and un-doings of the Masisi administration over the past 365 days.

AFRICAN CONTINENTAL FREE TRADE AGREEMENT (CFTA)

Economic commentators points to amongst others things the African Continental Free Trade Agreement (CFTA) in Kigali, Rwanda as one of the most strategic trade deal Masisi signed which could aid him in his ambitions. CFTA is a trade agreement between 49 African Union member states, with the goal of creating a single market followed by free movement and a single-currency union. The continental trade agreement provides Botswana access to the African market estimated at 1.6 billion people in 55 countries. This means a wider and increased market access for Botswana exports; among which are live animals, beef, salt, vaccines for veterinary medicine, minerals and leather products.

BOTTLED WATER RESTRICTIONS ÔÇô A MODEL OF EMPOWERMENT

In August 2018, Masisi though the Trade Ministry announced restrictions on importation of bottled natural and mineral water. The trade instrument prohibits importation of water packed in bottles of less than 10 litres and therefore only allows importation of water packed in bottles of 10 litres and above. At the time of the implementation of the instrument, the expectations were that the regulations would promote the competitiveness and sustainability of domestic water bottling sector which is a reserved business activity for citizens. Bogolo Kenewendo ÔÇô Trade minister appointed by Masisi in April 2018 said the government, through the instrument intended to stimulate investment in the sector which would in turn lead to job creation and poverty reduction. While at the time of filing this report the performance of the instrument was not yet clear, there was visibility of local brands of bottled water in local retail stores.

VISA ON ARRIVAL ÔÇô A HIT AMOMGST TOURISTS & INVESTORS

In November 2018, at the High-Level Consultative Council (HLCC) – a meeting attended by senior government officials and private sector representatives, Masisi made another announcement hailed as “progressive”. Botswana will now start issuing VISAs to travellers on arrival. The voice of the private sector, Business Botswana commended Masisi’s administration, saying this will improve the ease of doing business in the country.

SALARIES INCREASE ÔÇô AN ACT OF CARE OR CARLESSNESS?

As 2019 marks the year of general elections in Botswana, commentators are of the view that there is an overriding aim by Masisi to win as many votes for his party as possible in a bid to cement his mandatory. Could this explain the recent splashing of money to civil servants? The main worry is that the upgrading of salary scales for some of the civil servants precisely those in the armed forces as well as Police and Prisons Services could see the country failing to balance its budget in the next few years due to high wages expenditure.

CITIZEN ECONOMIC EMPOWERMENT ÔÇô A SONG THAT REFUSES TO SELL

In August 2012, the Botswana Parliament adopted the first draft of the Citizen Economic Empowerment (CEE) Policy which was later adopted as final policy that guides economic empowerment of the locals. However economic pundits continue to rally the government to turn the policy into a law should it be of any use. Will be Masisi be the man to trigger the clause or he too will look the other way while citizens eat crumbles’ of the economy?

THERE IS NO “ALTERNATIVE” TO LAND ALLOCATION FAILURE

While on a continuous basis the Botswana government admit that land is a key factor of production and a commodity that is central to the socio- economic development of the society and the domestic economy, the allocation of it to the natives’ remains slower than desired. During his first 365 days in office, Masisi has not made any deliberate efforts to ensure that the days when the rate of allocation at both tribal and state administration level were slower than the snail pace are over. Thousands of Batswana wait to be allocated land ÔÇô both residential and commercial.

HUNTING BAN ÔÇô A WIN FOR LOCAL COMMUNITIES

Masisi’s decision to set up a committee that proposed a review on the country’s hunting policy earned him accolades locally but created foes for him outside the borders. While at some point the worry was that the decision would hurt the country’s tourism sector, those who supported it maintains that the move will help pick up participation by the locals in the luxurious sector. Tourism sector is the third largest revenue earner for Botswana after Minerals and tax.

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