Tuesday, August 9, 2022

Digital economy: The new growth engine

The Digital economy is taking the space, turning around the economies of countries across the world. In particular, the term “digital economy” refers to the use of information technologies in the production of goods and services, as well as in their marketing and consumption. This term highlights how industry takes advantage of technology to create new products and services or transforms existing ones. Global trade stats place its value at $11.5 trillion, and it is reported to be contributing 15.5 percent of global GDP, which has grown two and a half times faster than global GDP over the past 15 years. However, a United Nations Conference on Trade and Development report says many developing countries, consumers and businesses have not capitalized on pandemic-induced e-commerce opportunities due to persistent barriers. In Botswana, these barriers include overreliance on cash, poor digital skills among the population and governments’ slow implementation of policies that directly affects e-commerce.

But now the Bank of Botswana has joined those who have been singing a chorus that says by embracing new technologies, Botswana could once again become the region’s economic rising star.

In 2020, the central bank’s annual report theme chapter identified four priority areas to drive Botswana’s economic transformation agenda and propel it to a high income status by 2036. These included, ‘Harnessing of information and Communications Technologies (ICT) – Digital Economy’ which then became the 2021 annual report theme chapter.

The bank says a more successful transition and adaptation to the digital economy has the potential to cure the perennial economic challenges of Botswana, namely, narrow economic base, unemployment and unequal distribution of income.

Innocent Molalapata, deputy Director – Research and Financial Stability Department says while Botswana lags behind in the technological readiness and innovation compared to peer upper income middle income countries, the country needs to leverage on existing technology to improve productivity and foster inclusive growth.

“There is need to invest in ICT driven financial systems”, Molalapata told journalists at an economic brief held by the central bank in the capital Gaborone this past week.

As part of his presentation, Molalapata highlighted on various digital economic policies put in place by the government in a bid to grow the country’s digital policy.

“The central message is that Botswana needs to leverage on existing technology to improve productivity and foster inclusive growth, as she transitions towards a high income status by 2036,” Molalapata said.

The central banker also said that there is need for a dedicated focus on improving existing ICT infrastructure, fostering innovation-friendly policies, investing in ICT driven financial systems, removing regulatory barriers to the uptake of ICT, improving the quality and quantum of supportive institutions and deliberate focus on research and development and innovation for local solutions.

Botswana’s journey thus far…

Bank of Botswana says the ICT sector has been acknowledged as a priority area in the structural transformation and policy reform agenda for the local economy. The bank cites the National Development Plan 11 (NDP11), the Economic Recovery and Transformation Plan (ERTP), and the Reset Agenda as part of the government of Botswana’s grand plan to advance the country economically.

The Digital Transformation Strategy (SmartBots), a proposition to enhance adaptation of technology, digitalisation and to enhance public service delivery is said to also be aiming at accelerating the country’s transition to a knowledge-based economy.

“In view of the foregoing, Botswana has embraced ICT as an effective and value adding enhancer of economic activity and as being integral to attaining sustainable and inclusive economic development towards a high income status,“ says BoB.

Away from the central bank, In April 2020, it emerged that Botswana is preparing to join a growing list of African countries that will effectively capture an untapped digital economy within their tax base. The Botswana Unified Revenue Services (BURS) – a government agency responsible for tax collections said at the time that Botswana need to benefit from the multinational tech companies that are remotely doing business in Botswana.

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