Sunday, May 9, 2021

Citizen Economic Empowerment: Botswana’s song that refuses to sell

While former cabinet minister David Magang wrote in his latest macroeconomic book that if the domestic economy continues to be dominated by non citizen interest it could ultimately lead to instability and even greater calls for protectionism, SUNDAY STANDARD reporter VICTOR BAATWENG argues that until Botswana has a law on citizen economic empowerment, then the recently approved policy on economic empowerment will remain a piece of paper to fill a gap.

Former cabinet Minister, David Magang wrote in his book, ?Delusions? of Grandeur Vol 1, that although Botswana did not have a formal empowerment policy for over four decades, government did attempt a number of direct and indirect empowerment initiatives which yielded very little if any fruit.

A track record on the implementation of the Citizen Economic Empowerment shows that the idea of introducing a policy on empowering citizens was adopted more than 10 years ago and ultimately brought to parliament in 2012.

A review of the ownership of companies doing business with Government between 2004 and 2006 indicated that while the majority of tenders awarded went to citizen owned companies, the value of tenders awarded to Batswana owned businesses was less compared to that of non-citizen owned companies doing business with Government.

In January 2007, Government undertook a review of citizen economic empowerment programmes with a view to formulating a comprehensive citizen economic empowerment policy and strategy for Botswana.

However, available records show that although various initiatives contributed towards business development in the country, generally citizen participation in major economic activities and opportunities is not significant, which economic experts says is not a good indicator for sustainable economic development.

“A government that is serious at empowering its people does not simply educate them; it educates them predominately in fields critical to contemporary economic needs. Its educational system ought to be competence-based. In other words, it should be tailored as to drill learners with skills that can enable them to make a living on their own even if they are not formally employed”, Magang notes in ?Delusions?┬áof Grandeur Vol 1.

Finance and Development Minister, Kenneth Matambo said in his 2012 budget speech that the Government embraced citizen economic empowerment in the absence of a specific citizen empowerment policy as evidenced in its localisation policy, Preferences under Public Procurement, Citizen Entrepreneurial Development Agency (CEDA) and Local Enterprise Authority (LEA).

“There have been persistent calls for greater emphasis on citizen economic empowerment as a more intrinsic part of Botswana’s development policy and strategy. It is against this background that Government has decided that a more strategic and holistic approach to citizen economic empowerment is needed, hence the development of the Citizen Economic Empowerment Policy (CEE Policy),” Matambo said.

However Magang is of the view that the Citizen Economic Empowerment has been construed as Citizen Economic Entitlement. “Every time government has appeared to accentuate it, it has largely been in the context of bailouts of politically connected citizens who are in dire financial straits and the bailiffs are menacingly bearing down on them”.

Magang says where empowerment in good faith has been intended, there has been an underlying indemnity of some sort. He says seemingly, government has taken as a matter of course that the beneficiaries of the intended empowerment cannot be relied upon to run a viable project.

“For instance, through its Credit Guarantee Scheme, CEDA guarantees 75 percent of the sum its clients are unable to settle with the bank from which they sourced investments funds, a dream insurance policy for the banks all of which are foreign owned.”

Magang is of the view that the mentoring and training by tailor-made institutions such as Local Entrepreneurial Authority should be regarded as supplementary at best and not as en end in itself. The draft of CEE policy was adopted by parliament late last year.

Policy not enough

To date, the government has been urged to come up with a definite law on citizen economic empowerment because the current status quo puts the population at a disadvantage while unscrupulous foreigners capitalise on the prevailing environment.??Passing the test of standards and requirements, foreign owned companies are free to set up business in the country, thereby suffocating struggling locally owned businesses with their excessive funds and abundant resources.

Francistown West Member of Parliament, Ignatius Moswaane in his response to the 2015/16 budget speech called for an ending to the irregularity occasioned by lack of citizen empowerment laws.

He further challenged the government to enact a law demanding 40 percent share interests on companies owned by foreigners as a way of avoiding depletion of the country’s natural resources by fly-by-night briefcase entrepreneurs.??“About 99 percent of Botswana’s population is employed by foreign owned companies. To avoid this deplorable situation we should come with definite economic empowerment laws,” Moswaane said.??The controversial ruling party legislature said Botswana should take a leaf from Zimbabwe and demand that foreigners should venture into partnership with locals on a 49 percent and 51 percent base arrangement.

?When presenting the 2015/16 budget speech Matambo reiterated his traditional government stance that inclusive growth cannot be achieved without empowering citizens to play an active role in economic activities. ??He reassured the nation that government has made efforts to empower citizens so they can benefit from economic growth. As an example, Matambo cited the amended Citizen Economic Empowerment Policy which makes it mandatory for sub-contractors of government funded projects to be 100 percent citizen owned companies. The policy further stipulates that 30percent of each ministry’s projects budget should be reserved for 100 percent owned companies to promote citizen empowerment. However, Moswaane called for a definite law to replace the policy, saying policies were not binding.

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