Friday, June 5, 2020

Coronavirus rescue package should have been in place by early March – Gaolathe

While he is keen to stress the importance of deferring to and supporting the decisions of the “authorities”, the Alliance for Progressives president, Ndaba Gaolathe, is as keen to share his thoughts on what those same authorities should have done “as early as early March.” And while he uses diplomatic language in sharing those thoughts, he is very clear about the fact that the authorities have not been swift enough in dealing with an ahistorical crisis that has brought the entire world to a standstill.

“We need a multi-pronged fiscal intervention to combat the immediate health threat – medical equipment, sanitisers, quarantine expenditures, medical health expenditures and even technology to manage the pandemic circumstances,” says Gaolathe, adding that Botswana also needs resources to provide immediate economic relief to SMES as well as the most economically vulnerable citizens, the self-employed and blue-collar workers “who immediately fall into poverty once income streams cease.”

In terms of interventions, the AP leader enumerates three: interventions to ensure that businesses don’t collapse purely on account of momentary cash flow crunch; interventions to improve food production capacity within the borders of Botswana; and fiscal interventions to ensure that “we create the foundations and install aggregate demand for future economic growth.”

Last Thursday morning, the Minister of Presidential Affairs and Public Administration, Kabo Neale Sechele Morwaeng, launched the Coronavirus Relief Fund and encouraged both the private sector and individuals to donate to it. Gaolathe holds the view that at this point, there should already be a board that runs the pandemic’s main fund and sub-committees of technical professionals looking at sub-sectors of possible targets. 

“Both the main board and technical committees should consist of players from within government and non-governmental sectors. Additionally each theme of intervention (whether financing of agricultural production, or direct payments to qualifying blue collar, or soft loans to viable but cash-starved businesses or restructuring of viable businesses in which government can take a temporary stake all to be repaid later) should have clear guidelines. All these guidelines should have been ready by now. More importantly than even the quantum, we need to act swiftly. Frankly, this should have been done as early as early March,” he says.

No amount of euphemistic language can obscure the fact that Botswana, and indeed the rest of the world, is going through a very dark phase. Gaolathe doesn’t use “dark” but what he describes invokes such state.

“The loss of diamond and customs revenue for the country and government will choke aggregate demand in the economy in general and dampen both investor and consumer demand,” he says. “We face a real danger of not just a recession, but possibly a prolonged one and a prolonged period of economic hardship for a majority of the Botswana population.”

To be clear, Botswana has been through dark phases before – in 1981, 1992 and 2008 – and needed a stimulus to be restored to better economic health. Gaolathe reckons that it will need much more this time around.

“Monetary action alone, in the form of lower interest rates will be far from adequate. Botswana will need a major stimulus, much more than it has needed in prior recessions – in 1981, 1992, and 2008.  I know it is counter-intuitive to want to spend during a difficult period, but that is what will work. I am afraid that we would need to borrow more and create higher deficits for the next two years at least.  Things are serious enough to warrant a possible bail out from one of the international financial institutions,” says the former Gaborone Bonnington South MP, adding that “an additional fiscal boost of anything less that 5 or more percent of GDP (at least P5 billion) of wisely targeted interventions, will not be enough to meaningfully navigate the looming global and national recession.”

At least from a common-sense perspective, one supposes that it may be a good idea to suspend some major infrastructure projects as a precautionary measure to deal with a still-unfolding economic crisis. An example that Sunday Standard gives is of the traffic interchanges in Gaborone that will replace traffic circles and whose construction is at very early stages. Our thinking is that this project can, as a way of hedging bets, be put on hold until the full cost of the pandemic is determined. If the pandemic drains the treasury, then the money could be used for the relief effort; if not, then the interchanges project can resume.

Conversely, Gaolathe’s takes the view that such projects are core to building the foundations from which the economy can grow. 

“Even if it’s not those specific road infrastructure projects, any road infrastructure projects that enhance our delivery chains and capacity to build an economy must proceed,” he says.

In an alternative universe in which AP had emerged victorious from the October 23 general election last year, President Gaolathe would have handled the current crisis a lot differently.

“Yes, we definitely would have done things differently, mainly on preparation, both from the health threat perspective and economic perspective.I know this because we have had, as a country, significant lead time on this. We saw this coming and we certainly tried to reach out and caution that this dark cloud is on its way,” he says.

The party submitted recommendations on what could be done at its recent policy address and Gaolathe followed up by making public statements on the issue.

With all of that said, the AP leader is keen to stress that everyone has their own management style and sense of priority and thatat this moment in time, it would be inappropriate to dwell on the details of how differently AP would have handled the situation.

“It is not fair on the country to talk about that right now. It’s important to rally behind initiatives rolled out by those in authority right now and confront this corona monster as one people,” he says.

The party has encouraged Batswana to be compliant with those in authority as well as with medical practitioners.

Such magnanimity notwithstanding, Gaolathe expresses grave concern about what is happening in the quarantine camps that the government has set up.

“The overcrowded circumstances, lack of food, lack of process and order, lack of testing and lack of sanitisers at some of these quarantines could pose a more serious health threat if we do not attend to all these inadequacies immediately. We encourage government to put in place all these measures and to put in place processes and teams to implement effectively.”

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