Monday, October 19, 2020

At 50 years, what do ‘objective’ factors tell us about Botswana’s growth prospects?

For many years, Botswana has been described as Africa’s development success story. When it gained independence from Britain in 1966, then a small, landlocked and undeveloped country, Botswana was one of the poorest countries in Africa. By then, its per capita gross domestic product (GDP) was about $70. However, available figures show that in the years that followed, Botswana became one of the fastest growing economies in the world, buoyed by good governance and revenues from recently discovered diamonds. As such, we were elevated from the lower ranks of ‘developing economy’ to an upper-middle income country. Statistics indicate that real GDP, based on the revised estimates and at the new constant 2006 prices, increased at an average annual rate of 4.6 percent between 1994 and 2011.

So unlike in a majority of other African countries, Botswana has had a lot to celebrate over the years.  However, the situation is not so glittering when one pays closer attention to the plight of the ordinary citizens. On close scrutiny, it appears a number of citizens have little to celebrate as they have not been able to actively participate in Botswana’s economic growth.

It is common knowledge that politicians often use the independence celebrations as an opportunity to overstate their achievements and make Batswana believe that even though they are poor, hungry and unemployed, they are much better off than they were in 1966. While it is true that Batswana are much better off than they were in 1966, it is a fact that they have not benefitted directly from the immense economic growth and development experienced by their own country.

Granted’ government must be credited for its prudent management of mining revenues, stable democracy and good governance record. But the same government dismally failed to equitably share wealth from diamond mining among its citizens. As it stands, more than half of Botswana’s population lives in rural areas, while close to 50 percent of the population lives below the poverty datum line. The question remains why is has it taken government so long to prioritize poverty ‘alleviation.’ In fact why should we have poverty in such a wealthy country with a population of only two million people? Why is unemployment the bane of young adults in a country that has invested heavily in their education since 1966? The quick answear to the last question is that although the knowledge base is there, the industry or structures to support it are nowhere to be seen.

We also need to ask ourselves, at 50 years, what do ‘objective’ factors tell us about Botswana’s growth prospects? Generally economic growth depends on two underlying factors being savings (or investment) as well as productivity (of the investment/savings). Back in the years, the Soviet Union had phenomenal savings rates but little productivity, so it went steadily downhill despite its ‘blood, sweat & tears’. Elsewhere, the East Asian economies had phenomenal savings rates but also high productivity, so they grew at ‘miraculous’ rates. At Bot50, where is ÔǬBotswana in terms of savings and productivity? With the anticipated slower growth in GDP and return to deficit of the government budget, do we still need to stick to our traditional strategy of a “decorated” budget? Or we could go to the debt market to sustain growth?

These are amongst the few questions that we ought to be asking ourselves as we celebrate our independence. Solely because there is need for us to think about some economic reforms that could bring to an end this income disparity, brought about lately by unemployment. These reforms should be aimed at accelerating and sustaining economic growth while at the same time making it even more inclusive. To reform is to turn the inevitability of change in the direction of progress. As such, to reform is to improve the life of every citizen of this country, more especially indigenous Batswana. 

As we go into the Independence week, we need to pause and ask ourselves as a nation, “why have reforms that have happened since 1966 so far not done more to produce medium and large scale firms in the labour intensive sectors, to create many well paid jobs in the economy (and perhaps even boost exports)?

We have said it so many times in this space, and we shall continue saying it that the high property prices in this country especially housing are part of the reason why a large number of our people remain impoverished. As such we call for an urgent intervention by government and any interested party. If there is anything we should be more concerned about, and swiftly act on, it is the housing of our people, most of whom are struggling to get a small piece of land in their own country. A survey carried out by Finscope last year revealed that about 90 percent of Batswana earn not more than P10, 000 per month, which automatically results in a low uptake of financial services such as mortgage finance.

The outcome of this survey should give the Ministry of Lands and Housing and Botswana Housing Corporation (as a housing authority) sleepless nights. The two have been given the mandate to ensure adequate provision of housing units that are affordable to Batswana at the bottom of the income ladder. The #Bottomline however remains that, without inclusive growth and financial inclusion, Batswana cannot afford to freely celebrate independence. So as we celebrate Bot50, we must consider opening a new chapter of citizen-building. This involves providing our people with the required skills to gather understand and analyze evidence about the contexts and institutions that affect their lives ÔÇô particularly their economical lives. Our people need knowledge, support, services and opportunities in order to thrive economically. In the meantime we shall join the chorus and say: Happy 50th Anniversary our Botswana.

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