Wednesday, October 28, 2020

Before we sell Public Assets

This past few week’s reports emerged from the government enclave that suggests that a decision to sell of the country’s biggest power plant ÔÇô Morupule B has been made. Actually the minister responsible for Energy ÔÇô Sadique Kebonang confirmed to us on Friday that the over P11 billion worthy asset will be sold to the Chinese government should the two parties agree to the unknown set conditions. 

Apart from Morupule B, the government is also set to shut down the BCL mine and possibly sell it off to private individuals. On the line also might be the national airline ÔÇô Air Botswana. All these public assets are up for grabs and will ultimately land on the hands of private individuals ÔÇô who are highly likely not indigenous Batswana. There is nothing wrong with selling some public assets to foreigners or non indigenous Batswana but before we do that we need to ensure that the end result will be a positive gain to our people. Before we rush into doing such we also need to allow our people to have sayings as such are huge transactions. That is to say – the government should do the right things first – consult. 

Consultation aside, as it stands, there is no doubt that we need well deliberated policies from including the plans for revitalization of the programme of privatization currently being run by the Public Enterprises Evaluation and Privatisation Agency (PEEPA). This would properly situate public debate of economic structural change agenda that seems to be unclear to many of us. 

Already concern have been raised by our people over the potential risk of not being able to maximize the benefits from the process in terms of proceeds from the sale of state owned assets as such as the proposed sale of Morupule B and other key assets. One key worry is that the government might not get a poor deal as it unloads treasures onto the private sector. Even if we are to make money from deals, such as the proposed sale of Morupule B, there is no concrete plan on what or how we are going to spend such money. This leaves room for abuse and misuse public funds by those in power, atleast based on historic record and behaviour. 

Before we sell some of these public assets, we should remind ourselves that our relatively impressive economic growth rate over the past decades did not resolve the major challenges of poverty, unemployment and income inequality. This was even admitted recently by the Finance and Economic Development Kenneth Matambo when he presented the draft National Development Plan 11 in Parliament. 

Matambo noted that trio remains the government’s key challenges even at the end of the NDP 10 and beginning of NDP 11 which kick starts next year. Even elsewhere, poverty eradication has eluded even the mighty economies such as the United States, Western Europe and many parts of the developing world.

It is quite evident that poverty is less responsive to growth in such economies such as ours because of the un-availability of jobs. Elsewhere the availability of jobs remains the main channel through which growth is uplifting the poorÔÇöwhich is unfortunately limited in our case. 

With a high income inequality rate of a Gini coefficient of 0.61, Botswana portrays a relatively unequal distribution of wealth ÔÇô that we should never forget. The gap between our top income earners and the majority bottom poor earners is one of the highest in the world and it is the reason why we need to pause and think before we sell Public Assets. 

So, yes again, there are very deep challenges that growth did not yet resolve for our country since the early 1990s into the mid 2000s when our minerals were selling like fat cakes. 

To date, there is no question that unemployment has become an exceedingly sensitive public debate. It is a hot potato, made all the worse by the fact that even the official statistics depicting it no longer inspire public confidence as more and more people begin to suspect that not only are these statistics outdated they also are an outcome of a process that has questionable, possibly duplicitous integrity. Just this week, Tertiary Education Minister Alfred Madigele pegged it at 20 percent, some estimate it to be over 30 percent while the government statistics agency says it is at 17.5 percent. 

That aside, we strongly feel that it is a major mistake that our economy continue not get the timely and right type of policies that could help us avoid the calamitous collapse into negative growth in the last few years. The record of the government for timely and right action on the economy is so far not encouraging. Look how long it took them to guarantee a loan for the embattled BCL mine which is facing closure. Maybe just maybe, had the government acted timely, we could be telling a different story about that ghost town of Selebi Phikwe. 

We all know that while our government has a reputation for prudent management of mining revenues, and also boasts of a good governance record and stable democracy, its formula of sharing wealth leaves a lot to be desired. The 2011 CIA World Fact book, ranked Botswana as the ranks fourth-worst in the world on the measure of inequality in wealth distribution, with a lower gini coefficient than Sierra Leone, Haiti, and the Central African Republic. 

All these should clearly remind us of the need to empower our people economically before we can even think of selling off Public Assets such as Morupule B. As it stands, selling it off will not necessarily become of benefit even to the government itself. The government balance-sheet will be restructured, not necessarily improved. 

One cannot end this commentary without stating that it is good economics to stimulate economy through increased government spending in a time like this. So, there is a place for the ongoing economic stimulus programme (ESP). However, the economic vision that will arrest the macro imbalance in the short run must be deeper than the proposed plan to “spend, spend and spend”. After all, if massive government spending were to be the solution that can fix our economic failures, then they should never have happened in the first place based on our public expenditure record. 

The #Bottomline however is that before we sell off Public Assets, our people should be allowed sufficient time to question whether such privatisation is done for their benefit or to cover up for corruption and maladministration. For now it is only accurate and safe to conclude that both the preceding and the current administration conspired by their actions and or inactions to throw our economy into the deep rut from which it must be rescued to avoid social implosion. 

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