Friday, June 21, 2024

Budget woos the poor, snubs the middle class

The middle class, those living above the poverty line but not among the wealthy, constitute a significant part of the country’s population and despite appearing better off, it is them who the national budget needs to focus its attention on to assist their bailout.

The middle class, it seems, is the one carrying the heavier load of the economy and have as such kept it running.  The African Development Bank (AfDB) defines the African middle class as those spending between US$2 (P20) and US$20 (P200) a day. One of the middle class’ burdens is that those without jobs are dependent on them and given the extent of the country’s unemployment, one supposes it as no easy task. The question that follows is how long they will continue to shoulder the burden before they break. It would appear that it is not any better to be middle class than it is to be poor because both are struggling to eke out a living. It also does not help that in recent times interest rates were steadily brought down, the last bank rate cut being 50 basis points to 5 percent, which resulted in interest rates on savings becoming much less worthwhile. Given that many in the middle class own cars the December 2017 rise in retail pump prices for petrol and diesel by P0.30 respectively added to their pressure. Moreover, many businesses hit the bottom of their coffers which left the middle class to keep the economy moving with their consumerism.      

According to Deloitte in its report titled The Rise and Rise of the African Middle Class upper middle class equates to those spending between US$10 (P100) and US$20 (P200) a day. Lower middle refers to those spending US$4 (P40) and US$10 (P100) a day and the floating class are those that are the most vulnerable in society spending between US$2 (P20) and US$4 (P40). Botswana in contrast to some of her African counterparts is at the upper limit with 48 percent of its population classified as middle class.

The latest poverty stats released by Statistics Botswana indicated that poverty in the country fell but contrary to the fall is that households generally experienced a decline in their standard of living. An analysis by local economic think tank, Econsult, provided that the contrast “suggests that those at the upper end and the lower end of the income distribution spectrum have done better than the average. This in turn suggests that the squeeze on living standards has mostly been felt by those in the middle of the income distribution spectrum, who make up the bulk of the population.” Those in the middle refer to the middle class.

Although sounding hackneyed, one of the most obvious ways to save the middle class is if the national budget pins a deliberate move towards the creation of jobs. Other ways are less obvious but equally important. This includes curtailing income inequality, which in the case of Botswana indicates a rising trend as was demonstrated by the latest poverty stats. It is fair to expect that by distributing income equally among all classes, ensuring in that regard that the country becomes an inclusive economy, the middle class could be relieved of its weight. From that perspective the annual national budget speech isn’t just to share important economic numbers but to drive the economy to become inclusive. According to the World Economic Forum Norway is the best performing advanced economy in 2018 in terms of promoting high living standards for all.


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