The decision announced at a Botswana Democratic Party Special Congress that Government will draw down a portion of the reserves saved at Bank of Botswana has assumed the ignominious reputation of being all there is to talk about.
First things first!
The policy marks a significant shift in the way we have always managed our economy.
National Reserves are too important to be disbursed at a political party function.
The setting where the announcement was made is particularly ill-poised.
No wonder there are reports that some party activists suggested that only those with membership cards should benefit from the stimulus.
One does not expect such an important national decision to be made at a secluded political party platform.
In that score, this important economic decision ÔÇô for all its merits or lack thereof – is already contaminated by its unashamedly partisan posture.
Another point of interest has to do with a role that Parliament will play. That hopefully will be clarified in the fullness of time.
But it was all in keeping with President Ian Khama’s modus operandi of wanting to be always the bearer of good news.
For the ruling party, the excitement surrounding the economic Stimulus Package is palpable.
Senior politicians who until recently were literally running away from the public because they had nothing to say are now selling the stimulus package as the renaissance as never before seen.
What a joke!
After what we have been through in terms of unemployment, just how can it be that P12 billion or so could become the end of our misery.
Our politicians are once again treating us like we were animated toys.
They are raising hopes the disappointment of which they will not be able to explain.
Surprisingly in the midst of all this hysteria, the Minister of Finance is nowhere to be seen.
He is well advised.
His erstwhile intact reputation has recently taken such a battering that this stimulus talk is a joke he can ill-afford.
Also not clear is just what advice Bank of Botswana has given.
Until the announcement of this ill throughout stimulus package, nobody could have foreseen a willingness on the part of our Government to commit the reserves at Bank of Botswana in the scale that the President’s announcement has done.
To his credit President Khama has always resisted temptation to use the Bank of Botswana managed reserves, including when called to do so by his self- aggrandising inner circle.
Now we have ministers addressing Kgotla meetings and telling people to go and form companies because the stimulus is on its way.
There is no government as dangerous as that one that has run out of ideas.
That is how government is currently behaving in its excitement over the stimulus.
Naturally in response, already there is predictable excitement among those who have endured the pain of what must often seemed like an endlessly subdued economy.
But, as they say, the devil is in the detail.
We should look ahead with caution.
The stimulus is going to leave many shattered dreams on its trail.
Critics are right to warn burning of reserves is by no means a prudent economic decision.
Critics are right to say the burning of reserves at this magnitude is nothing but an an expedient political decision forced on a reluctant President Khama by political strategists who are keen to buy political loyalty for a party that is fast losing relevance.
That however is a debate for another day.
At the moment it is not immediately clear just how much money Government intends to draw from the Bank of Botswana for the intended purposes.
More importantly, it is not immediately clear how far down that road the Government will be prepared to travel if intended results do not immediately become discernible.
While using the Reserves is likely to bring life back into the economy that is currently on a gridlock, such an instrument is also a high risk gamble.
Of importance is the fact that more than money, it is expenditure that has always presented bigger difficulties to those tasked with managing this economy.
Just what infrastructure has been put in place to make sure that the money drawn from Bank of Botswana managed reserves will be efficiently used? That is for now not clear.
Past history is however not encouraging.
Another risk is corruption.
The current administration is far more corrupt and also lenient on corruption than all its predecessors put together.
It is not a wild estimate to surmise that far less than half of the reserves drawn from Bank of Botswana will eventually reach the intended projects.
A great amount of the money will be diverted and siphoned through official corruption that has now become institutionalized inside government.
Even lower will be the benefits that will eventually trickle down into the mainstream economy.
Scary and insurmountable as that might seem, those problems are only half of the whole story.
An even bigger problem is that there seems to be ingrained reluctance within Government to accept the irrefutable reality that going forward the current low levels of economic growth will not change unless productivity levels change.
What our Government wants to pass as temporary economic headwinds borne out by low receivables from diamond sales are by no means a passing phase. Rather it is here to stay unless deep economic reforms are implemented.
The days when Botswana’s economy would grow by 7 percent or even 9 percent on the back of diamond sales are gone ÔÇô for good. And it is important to accept 3 percent or lower as the dawn of a long drawn out new reality.
Also gone are days of budget surpluses.
Who in their right mind would believe that in the next four years or so diamond sales would recover to an extent that we could see the pre-recession growth levels restored? That is simply impossible.
What should have accompanied the President’s address to his party (we hope he will mention this on Monday) should have been an addendum sending home the painful truth that the current economic difficulties will not be temporary ÔÇô no matter how much reserves we will be willing to burn.
The sooner we start preparing ourselves as a nation that the difficult economic times are with us for a long haul, the better it would be for us as a nation. It is a long game, and we should psychologically embrace that reality.
That is what President Khama should be preoccupied with when he delivers the State of the Nation Address on Monday.
The intention is neither to sound gloomy nor spoil the bliss that the BDP is busy enjoying. Rather it is to highlight the hard choices that we face going forward. Reserves are good to burn, but only when they last. As technocrats at Bank of Botswana would attest, reserves are not infinite.
The long-overdue adjustments to our economy should be fast-tracked. Top of those reforms is no longer economic diversification, which we hastily acknowledge is important, but rather enhanced productivity.
As a policy reform, productivity can no longer be postponed any further.
It is irrefutable that the reserves were built so that they could be used as a buffer during the difficult economic times such as what we have today.
But still, it is important that proper structures are put in place so that we getter a better appreciation of the policy options that are open to us.
In 2008 we wrote on this space that “President Khama should avoid throwing money at problems.”
He clearly has not listened.
We certainly could do with a little bit of more economic imagination.
