Saturday, October 24, 2020

Botswana’s unemployment: “Demographic dividend” or “demographic time bomb”?

The most recent estimate of the national rate of unemployment pegs it at 20 percent. However given the weakness in gathering accurate data in the country the figure could be far higher than this. 

In its latest annual report, Bank of Botswana suggest that looking ahead, providing enough jobs will become more challenging in the context of modest rates of economic growth compared to the past. Official GDP data shows that a growth of 1 percent was recorded in 2015 while 4.2 percent is projected for 2016 by the central bank. 

The central bank governors and researchers however warn that the extent of the slowdown in the mining sector could mean that the forecast for 2016 could be “optimistic”. 

In addition, other bottlenecks, including the shortage of water and electricity together with fragile confidence among local businesses, could constrain activity in the private sector. 

A survey carried by BoB showed that overall business confidence in the domestic economy during the period the first six months of 2015 (H2-2015) stood at 44 percent, the same as for the first quarter of 2015 survey. This was significantly lower than the 51 percent projected for this period in the earlier survey, a clear indication that expectations have been revised downwards. The continued subdued level of confidence reflects recurring water shortages in the greater Gaborone area as well as power outages.

With this picture in mind, the central bank says unemployment in Botswana has reached critical proportions thus requiring a commensurate response from policy makers.  

At the same time, the bank briefly acknowledges that they could be something positive put of the current economic pattern.

“Like many countries in Africa, the increase in the number of younger, better educated generations has the potential to become a “demographic dividend.” says BoB. 

Investopedia.com describes a demographic dividend as the freeing up of resources for a country’s economic development and the future prosperity of its populace as it switches from an agrarian to an industrial economy. In the initial stages of this transition, fertility rates fall, leading to a labour force that is temporarily growing faster than the population dependent on it. All else being equal,  HYPERLINK “http://www.investopedia.com/terms/p/percapita.asp” per capita income grows more rapidly during this time too.
However despite this likely positive outcome, researchers at Bank of Botswana emphasise that the current economic trends threatens to be a “demographic time bomb”, as opposed to “demographic dividend”. The outcome is highly likely if chronic youth unemployment is not addressed says the bank.

UNEMPLOYED OR UNEMPLOYABLE? 

While the major problem over the years has been high rates of unemployment, it has since emerged that Botswana is also faced with a daunting challenge of limited skilled workers. Over the past few years, government, the private sector and other stakeholders have been spending sleepless nights trying to find ways of amassing a pool of skilled workers who can match the demands of industry. At the moment, the country depends on migrant workers to fill the skills gaps in some professions. 

Local business people have also complained that the country does not have adequate skilled manpower. Skilled workers are imported from southern African countries such as Zimbabwe, Zambia, Malawi and some as far as Kenya, Nigeria and other economic powerhouses of Africa. Botswana has a lower proportion of tertiary students graduating in the fields of engineering, manufacturing, science and services compared to its neighbours. 

At the same time the central bank says while 16 percent of Botswana’s labour force has tertiary education qualification, only about 19 percent of those employed are considered to be skilled workers. 

To date, official figures pegs the highest unemployment rates for Junior and Secondary school graduates at 27.5 percent and 27.9 percent respectively, brigade certificate and diploma (23.5% and 19.8% respectively), vocational certificate and diploma (17% and 13% respectively) as well as university certificate and diploma (15.2% and 15.5% respectively). 

The central bank notes in its 2015 report that key factors explaining the unemployment problem in Botswana are relatively undiversified economy, a large public sector as well as the labour force that is inadequately trained and has low motivation. 

In his budget speech delivered in February 2016, Finance and Development Minister Kenneth Matambo admitted that unemployment, especially among the youth, is one of the development challenges facing the domestic economy. 

“Some of the economic activities with potential for creating employment opportunities, which Government will be undertaking during 2016/2017 include: infrastructure backlog eradication, road networks and maintenance, wildlife and tourism initiatives, continued implementation of EDD initiatives, creation of Special Economic Zones, as well as regulatory reforms and improving efficiency”, Matambo noted. 

On the other the central bank warns in its 2015 annual report released late May 2016 that a large cohort of unemployed and underemployed people compromising mostly of the youth represents a waste of valuable resources and needs to be addressed urgently. 

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