Tuesday, September 22, 2020

Agriculture holds potential to reduce economic dependence on Government

The thinking among our economists, too often is to run to make calls for diversification of economy away from minerals.

There is nothing wrong with that. But such calls, when they are not accompanied by related calls to reduce excessive dependence on Government do not mean much.

Minerals, especially diamonds have for Botswana been both a boon and a burden.

A boon because they provided the much needed revenue to carry out developments; a burden because they gave Government an over-sized role in the economy.

A lot has been said about economic diversification. What is however not often made mention of d is yet another big problem we face in this country which is too much reliance on Government.

Unless economic diversification away from minerals is accompanied by a similar if not bigger reduction of dependence on Government, it will not mean much.

The structural nature of Botswana’s economy is such that Government sprawls every sector. And while that no doubts crowds out innovation and growth of the private sector, it also means that every time Government finances dip, they take down with them the rest of the economy.

Without Government patronage, many of our businesses are simply unsustainable.

That holds true for the construction sector, but so too for many other sectors.

One sector that can overnight reduce the size of Government role in Botswana’s economy is agriculture.

Growth in agriculture would turn around the fortunes of a currently stagnant and Government dominated economy.

Transformation of the economy is well and good.

In fact the best time to achieve transformation is when one is not under pressure.

But as is human nature, Botswana has waited for too long until such pressure had come before achieving such transformation.

What has always been lacking was not the resource base to do it, but rather the political will.

But even then, transformation should go beyond just diversification of the economic base.

Without deliberate efforts to reduce the size of Government, economic diversification will not be complete even if minerals contribution was to be reduced.

Crucially, there is a real risk that such diversification will in the long to medium terms prove reversible.

In fact much easier to achieve than economic diversification is a reduction of the role and size of Government in the economy.

One of the surest ways to organically reduce Government role in the economy is to increase the contribution.

Agriculture in Botswana has immense economic potential, but at the moment fundamentals are heavily stacked against growth of the sector.

The sector remains saddled by old, uncompetitive, inefficient and unproductive models.

Farmers are for the greatest time old people.

Investments in the sector remain too far below the threshold to be able to bring the kind of results seen in other countries where the sector is commercial.

This is because commercial farmers in Botswana still are averse to lending investments in the sector as they consider it a disproportionately high risk venture.

The need for new investments, especially in physical infrastructure cannot be over-emphasised.

The National Development Bank that was started by Botswana Government to extend credit to agriculture is facing big liquidity challenges.

Thankfully, yet another Government owned lender in the form of CEDA (Citizen Entrepreneurial Development Agency) seems somewhat ready to step up to the plate.

Government should not be deterred. B y leading the way, private sector will come on board along the way.

Such investments can unlock the full potential of the agric-sector in this country.

The fact that by far a majority of farmers are still on subsistence category means that a lot of untapped potential that is still locked at lower levels.

Once unlocked high volumes of such farmers can graduate to higher levels en masse thus igniting what could easily amount to a revolution of the sector.

Another boon is that the new political leadership seems for now fully convinced of the sector’s potential. President Mokgweetsi has made it be known that his Government is about to make big announcements of infrastructural development in the agric-sector.

He has made reference to roads, electricity, telecommunications including but not limited to the internet.

Like roads, energy has the potential to fast-track the graduation of farmers from subsistence to commercial levels.

Without good roads and fast access to the market, there is little to no chance of a small farmer breaking through the barriers that come with the costs of reaching the market place.

Growth in agriculture, we want to point out is the most potent and crucially essential element in reducing the role of Government in our economy.


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The Telegraph September 23

Digital edition of The Telegraph, September 23, 2020.