Monday, December 6, 2021

Deficiency of productive opportunities worsens the culture of hand to mouth

Paid job, no ownership

Does having a paid job guarantee access to high value commodities like property? In an attempt to answer the question, let’s borrow from the 2009/10 Botswana Core Welfare Indicators Survey (BCWIS), which is in fact the latest. The 2009/10 BCWIS, which measured human wellbeing through a range of indicators, estimated average household monthly income, specifically cash earnings, at P7, 219 in cities/towns.

Given that incomes have remained stagnant over the years, with only slight increases since the survey was conducted, it would be safe to assume that the estimated amount does not fall too far off from the present-day average income. According to Botswana Building Society (BBS)’s mortgage calculator, a household that earns P7, 219 qualifies for a mortgage loan of P300, 125 payable over 25 years at 10.75 percent interest, through a monthly instalment of P2887.6. On the other hand, current figures indicate that a one bed roomed BHC flat in Block 7 goes for P550 000 while a two bedroom apartment is priced at P750 000. The comparison clearly shows that the maximum loan amount that the household qualifies for falls far below the asking price for a BHC flat in Block 7. Therefore it is safe to conclude that paid employment does not guarantee ownership of a high value commodity such as property. Those without gainful employment are obviously worse off.

Slow transition of youth into productive employment

Botswana is currently faced with the stark reality of youth unemployment. This is a concern because, according to BCWIS, youth make up 55 percent of the labour force. The 2012 African Economic outlook acknowledges the efforts of several governments in creating temporary jobs for the youth through public work programmes. But there is little evidence of their impact on longer term employment. One of the biggest shortcomings of youth employment interventions, says the report, is a general lack of knowledge on what works well and what does not, which is closely linked to the extreme paucity of employment data available for Africa.

Closer to home, government advertised temporary employment for the youth, which was meant to complement other schemes like the Internship Program, Tirelo Sechaba and Graduate Volunteer Scheme (GVS). Pundits have repeatedly argued that such initiatives don’t do much to address the unemployment scourge.

The AEO report states that middle income countries like Botswana have a huge population of discouraged and inactive young people. According to the World Employment Social Outlook (WESO), the quality of jobs in sub Saharan Africa is of great concern, with working poverty and vulnerable employment the highest across all regions. Mthuli Ncube, Chief Economist and Vice-President of the African Development Bank (AfDB), believes Africa is experiencing jobless growth, which is an unacceptable reality for a continent with such an impressive pool of youth, talent and creativity. For his part, Nelson Letshwene, a Managing Consultant in Personal Finance believes the unavailability of jobs is not due to lack of money in the system but rather a shortfall of ideas and motivation in both private and public sector to create jobs. On whether gainful employment guarantees acquisition of property, Letshwene said it is upon the banker to finance those who qualify for property.

“No one can focus on acquiring property unless they’re gainfully employed. Similarly, no banker will finance property acquisition for people who don’t qualify,” he said. Letshwene further advised that people should not leave ownership of houses to retirement years, as this has proven to be a limitation.

“It is very important for those that are gainfully employed to make real estate acquisition a priority, otherwise it will never happen,” he said.

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