Sunday, April 21, 2024

Batswana cannot ‘eat’ GDP growth but….

Statistics Botswana data, which contains preliminary estimates at current and constant prices for the second period of the year, shows that our GDP registered an overall increase of 1.6 percent.

The figures released last week do show that our economy continue to witnessa faster economic growth due to improved mining sector performance.

The non-mineral sector however seems to have slowed down from about six percent in 2012 to about five per cent in 2013, due to recurring power supply disruptions and drought.

The question that always comes to head though is what that ‘growth’ could be meaning to low income earners in our economy. What does this growth mean to a Motswana who stays in Tsau and Karakubis villages? Does it have any direct positive impact to a shop assistant who earns roughly below P1500? How about those Ipelegeng workers and thousands of youth engaged in the Tirelo Sechaba and YES programs, does it mean they will ultimately get something resourceful? The question is, does the general growth of the economy always have an immediate direct into up-liftment of lives of the citizenry?

The idea behind this commentary is to question and discuss the nature of this reportedeconomic growth and that of subsequent quarters. We need to scrutinize whether this repeated statistical publications about the high performance of the domestic economy has a positive impact on the lives of our people.

We all know that our country, which has long been held up by western donors as a leader in governance in the African continent, nevertheless has had structural unemployment of close to 20 percent despite decades of strong ‘growth’.

The sad reality is that of late there is a new economic disease, labour mismatch, which has reached our shore and seems to have no cure, atleast for now. With concerns being expressed by industry about quality of Botswana trained recruits there is an urgent need to ensure a strong and stable human resource base.

In the meantime, one is forced to conclude that maybe this GDP growth reported by the government agency will always mean nothing to a sizeable number of citizens. Atleast to the thousands graduates of the University of Botswana and other universities who are hitting the street year after year.

Mind you these are the same citizens who ultimately get economically disempowered and as such increase their dependence on government assistance programmes. They cannot ‘eat’ GDP growth.

They have business aspirations. They do want to own not just land but the one that is located in prime areas. And they do want to control all the industries including the poultry one. They do want to own franchise of leading international brands and they do not want to contribute to the ‘growth’ only as Small Medium Entrepreneurs’ but rather as ‘big guns’.

It is indeed true that economic growth is the most powerful instrument for reducing poverty and improving the quality of life in developing countries. Both cross-country research and country case studies provide overwhelming evidence that rapid and sustained growth is critical to making faster progress towards the Millennium Development Goals.

In the meantime though, one can safely say this Gross Domestic Product (GDP) concept, heavily loaded with ideology, does not reflect the realities on the ground, more especially for our rural folks, atleast in the short to medium term. The GDP growth does not any how a big issue to 20 percent of the population of this country which is unemployed.

If one takes a look at straightforward increases in national pie, you have economic growth without development. The basic numbers on wage and productivity growth in Botswana’s business cycle also tell a striking story.

As such figures do tell that poverty and inequality remain high, and the shortcomings of labour market policies are evident with an unemployment rate of about 20 percent. Botswana’s income inequality, with a Gini Index in excess of 0.5, is one of the highest in the world especially when compared with other high middle-income countries.

What we need to be looking into is productive investments in key economic sectors. This is so because not all of our policies have promoted inclusive growth and human development in a broad-based manner. At the same time, apart from stagnant growth in employment, there has been a slow growth in real wages in the labour market in Botswana.

The Bottom-line though is that shared development ÔÇô pulling people out of poverty ÔÇô boosts economic growth, as progressive countries such as Brazil and China have spectacularly demonstrated.

Our policy makers should bear in mind that though Batswana cannot eat GDP growth, the same growth can generate virtuous circles of prosperity and opportunity.

Basic economics dictate that strong growth and employment opportunities improve incentives for parents to invest in their children’s education by sending them to school.

This may lead to the emergence of a strong and growing group of entrepreneurs. #Strong economic growth therefore advances human development, which, in turn, promotes economic growth. Am I wrong?


Read this week's paper