Thursday, October 1, 2020

A look at Botswana’s future economic prospects ÔÇô Part II

A simplistic or rigid economic approach to economic development can be misleading and dangerous, particularly in a country lacking in public discussion by reason of insufficiency of mass media.

In the last decade, the government policy was to encourage Batswana to get into more rural orientated developments, such as farming, as against encouraging Batswana to enter into industrial and commercial undertakings.
It was, and it is still, easier for a Motswana to obtain financial assistance to launch a farming enterprise than to undertake an industrial or commercial venture. Even public and private financial institutions (headed and controlled by expatriates) took the cue and found more comfort in the grating of loan to Batswana for farming purposes and were reluctant to provide credit facilities for industrial and commercial undertakings.

Such a policy has had the following results, among others: firstly it gave Batswana the false impression that farming, particularly livestock, was cheap and profitable. In fact, this is a fallacy because the majority of Batswana does not invest in livestock for commercial purposes but do so for traditional and cultural reasons. Secondly, it diverted the investment potential of most Batswana from commercial and industrial opportunities in urban centres to the rural areas. This, again, gave the false impression that every Motswana is a potential farmer. However, experience has shown that most Batswana, particularly the young and the educated, are bad farmers or ranchers because they are basically urban dwellers.

Consequently, it is not surprising that even at this stage of development, few Batswana are involved in industrial or commercial entrepreneurship of some significance, in my submission; therefore, the attraction of Batswana from rural areas to towns must not just be to seek employment but to find investment opportunities. The fact is Batswana cannot all be farmers. We must encourage commercial and industrial development of the country.

To be blunt, I am calling for a future economic policy, which will aggressively discriminate in favour of promoting citizens. If the existing financial institutions cannot promote a policy of discriminating in favour of Batswana, then the Government must create indigenous institutions, which will do so. As far as I know, all countries in the world consciously set out to assist in the development of their own people. I know of no country or community in the world that has been content to allow financial management of the economy to be left entirely to foreign or expatriate institutions. I am sure most of you recall my advocacy elsewhere of the creation of a national commercial bank. I reiterate my views because I believe that commercial banks are the backbone of commerce and industry in any country. The participation of Batswana in this sector of the economy is very crucial in building a healthy society.

Complaints by Botswana entrepreneurs that policies of present commercial banks do not appear to be supportive to their cause must therefore not be dismissed without careful thought.
I believe that the present commercial banks have been selective in their approach to providing the necessary credit facilities to their customers. Consequently Batswana, by virtue of their inexperience, (because they are thought to be good only in cattle) have not always been the most favoured. For this reason, I contend that the policies of the commercial banks have always been too passive in their approach to development programmes. It is for this reason that I have advocated the establishment of a national commercial bank as part of our strategy for industrial and commercial development, particularly in the rural areas. Naturally, this does not mean that I want an institution that will not be run on commercial lines or which will merely help the boys until they go bankrupt. I am talking about an indigenous institution whose policies are locally based and that is run by Batswana who have intimate knowledge of the people and their conditions.

I have said that ours is basically a free enterprise economy. There are those who are able to operate and take advantage of such free enterprise, particularly foreign investors; but there are many who for various reasons cannot, because they cannot even complete a form to apply for a loan to the National Development Bank. Regrettably, this is still the great majority of our people in the rural areas. Therefore the provision of facilities of all kinds such as water, electricity and commercial centres to our villagers are an urgent necessity as part of our economic strategy and education. I am aware that we are already doing everything we can, but the development of services in the rural areas must be speeded up if our rural industrialization programme should be meaningful. Otherwise we must accept the automatic consequences of rural migration to urban centres in search of employment. This is not to suggest that Botswana can perform some miracle by stopping the phenomenon of rural migration to urban centres. No country has succeeded, but we may slow down the momentum. What is important at present is that migration to urban centres is a consequence of, and consistent with, our current development strategies. As development progresses more and more people come to be employed in industry and commerce, which tend to be located in towns and cities. We have succeeded in achieving this lopsided development. If, therefore, as is normally the case, the standard of living in the urban centres is (or is perceived to be) higher, then it makes economic sense for rural people to want to move to the brighter lights of the cities where there is more hope and security. This means that we must have flexible and have definite policies to deal with such problems. It means that we must find employment opportunities for these people.

The strict policies which belong to the colonial era regarding licensing of businesses, factories and trading are hampering the growth of private sector that can give employment opportunities to many people. Some of the laws relating to licensing of premises are out-dated. This is even more so in the rural areas. Why should a man be expected to travel from Motokwe to Molepolole or from Tsienyane to Serowe in search of a small general dealer’s license or liquor license when he could see the local official or headman for such a venture in that community? Why adopt a long and expensive procedure for application for an ordinary trading license or liquor license?

I feel that we must adopt a deliberate and flexible policy to encourage and motivate Batswana to actively participate in the economic development of the country, particularly in the industrial and commercial sectors. The policy on subsidies, which is currently being formulated within Government, is intended to focus on supporting productive and employment generating activities. It is hoped that this policy and other incentives will be used to promote Batswana to enter into the world of commerce and industry. The Government has hitherto only dealt with this matter insofar as designing a system of legal protection of Batswana in the recent past and in addition by introducing such schemes as the Site and Service Scheme for the low-income groups. This is one way of tackling the problem. However, commercial and industrial land as well as medium and high cost residential land, continues to go disproportionably into the hands of non-citizens. This is the area where Government must try to formulate a clear policy concerning the extent to which Batswana must participate in commerce and industry as well as in real estate. The price of land and building costs have sky-rocketed out of the reach of Batswana and this in turn affects their ability to provide the necessary security for obtaining credit facilities from financial institutions to enter into the field of commerce and industry. It is a vicious circle.
I believe too, that in our development process, our aim must be to create a dependable economic base in which Batswana are active participants. One way of tackling this problem is to embark upon a policy of partnership development. This policy has been successfully adopted by the Botswana Government in the field of mining industries and by the Botswana Development Corporation in going into joint ventures with various foreign investors. It is my contention that it will not be inconsistent with our economic development ideals and objectives if we insist that any foreigner in industry and commerce should have citizen participation in the equity of the operation. I feel this is the way to build a healthy and broad based economy in which Batswana participate not just as workers but also as co-owners of the means of production. It is not just enough for a quasi-Government organization like BDC to be the only participant. I am suggesting, therefore, that individual Batswana should be offered shares; even if it means BDC or Botswana Government divest themselves of the shares in the various profitable organizations which do not require BDC’s financial assistance or management, for example, the Kgalagadi Breweries Group and the insurance companies.

This will be part of the development programme in that with the proceeds of the sale of shares to the members of the public, BDC can move on to other new ventures.
The reason I raise the above points is that I believe that time has come when we have to look at the future and consider whether the county can continue to survive on its mineral wealth and agriculture alone without the creation of secondary industries to provide the necessary tools. If our policy is to diversify our productive base and the creation of new employment opportunities, it is important that we should develop the manufacturing sector, particularly in agriculturally based industries such as leather, woodwork, etc. Otherwise our country will continue to be vulnerable.

True, we enjoy a high rate of revenue from mineral exploitation and we can take comfort in the fact that we expect even more discoveries and exploitations of minerals, such as coal. On the face of it, the state of the economy augurs well for the future. But we must realize that these commodities are susceptible to the vagaries of the world markets because in any case we are only one of the producers of these minerals in a competitive world.
In all the bodies that are engaged in economic decision-making I wish to see Batswana play the leading role. If we have not got people who can make a contribution at all levels, then our educational system is at fault and must be brought up to date. The discussions on education are still confined to telling us how many primary schools, secondary schools there were in the colonial era and how many there are now. This quantitative approach is no longer satisfactory. Our educational system must be geared to producing science-based and practical disciplines such as engineers, business managers, bankers, surveyors, accountants, mechanics, etc. this is crucial to the attainment of our economic objectives and development.

What I am calling for in the future economic development of Botswana, is an emphasis on total participation by Batswana at all levels, not merely in words but in deeds that are actively supported by Government policy discussions. I am calling for participation of Batswana in the fields of industry and commerce because I do not believe that the economy of the country should continue to be disproportionately in the hands of foreign investors. True, private foreign investment has played a major role in the creation of jobs and in the development of the country and will continue to do so by reason of the philosophy of our free enterprise economy. However, I feel we shall be failing in our duty if we allow the situation to continue indefinitely and to continue to think that it is the foreign investors’ responsibility, and our responsibility, and our responsibility, to play a major role in the creation of jobs and development of Botswana.

It is for this reason that I feel that it is the responsibility of Government to formulate a deliberate policy to promote and motivate Batswana to enter the fields of commerce and industry and real estate. Not to integrate Batswana into the modern type of economy is to perpetuate the policy of polarization of our economy into rural for Batswana and urban for foreign investors. This is why I feel that the future economy of the country that is disproportionately in the hands of foreign investors is not the healthy one and should be avoided as much as possible.

(Delivered to the Botswana Society in August 1981)

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