Saturday, May 15, 2021

Diversification and job creation elude Botswana

In his latest book, ?Delusions?┬áof Grandeur Vol 1, former cabinet minister and now businessman, David Magang asks a critical question. Can the combination of Botswana’s Chief Executive-Ian Khama, Chief Financial Officer-Kenneth Matambo and Treasurer-General Linah Mohohlo deliver on the panacea to elusive economic diversification?

Magang who launched his latest book recently, asks the question at a critical time when there has been minimal growth in non-mining sectors like agriculture and manufacturing. Worse, unemployment hovers around 20 percent, which is roughly double the unemployment rate in countries with income levels similar to that of Botswana. In the 2010 budget speech, delivered under the theme: “Transforming our economy after the crisis:

2010 and beyond”, Minister of Finance and Development Planning, Kenneth Matambo called for more concerted efforts to facilitate economic diversification. Magang believes economic diversification has always been the ‘catchphrase’ backdrop in all budget speeches since the days of Sir Seretse Khama.

Magang, who was a senior minister responsible for minerals during the tenure of former President Festus Mogae, says government has over the years emplaced a plethora of policies, strategies and programmes aimed at diversifying the economy, but to no avail. According to Magang, the little diversification that might have taken place over the years is scarcely reflected in employment numbers. Botswana’s official employment rate has been pegged at 20 percent as at 2013 from 17.80 percent in 2010. Archived figures show that the country’s unemployment rate averaged 18.42 percent from 1991 until 2013, reaching an all time high of 23.80 percent in 2006 and a record low of 13.90 percent in 1991. This has left Magang wondering why a country like Botswana, with a population estimated at around two million, has such high rates of unemployment.

“Why should there be unemployment at all in a teeny-weeny population of only two million? Why should our people be without work when the ground we tread practically pulsates with those famed, wildly popular precious stones that a far sighted economic manager should have long beneficiated to churn out a whole galaxy of downstream industries that should have guaranteed full employment?”┬á

From a macro-economic perspective, with these rhetoric questions, Magang says it is tear-jerking to watch huge populations of youth being disgorged from high school on a yearly basis without hope of gainful integration into the economy.

“The imperative to diversify the economy has never been as pressing and as critical as it is today. Unemployment in a population of only two million, the harshest brunt of which is borne by the youth, is on the rise,” says Magang.

The elusive goals

As it is, government is trying to diversify the economy while at the same time battling with rising unemployment. It is unclear whether recent efforts will yield results fast enough to offset the impact of reduced diamond revenues, projected to fall off starting 2017. Government documentation however shows that thus far, diversification has focused on export-oriented manufacture of textiles, leather, glass, and jewellery. Some of the projects such as the Palapye glass project have since collapsed while the much anticipated Leather Park in Lobatse is yet to come to fruition. The projects were expected to create massive job opportunities for thousands of youth who are currently roaming the streets. However, independent economic experts are of the view that manufacturing is not feasible for Botswana because of its high cost of inputs.

Professor Brothers Malema of the Department of Economics at University of Botswana (UB) says Botswana has made very little progress in its endeavour to diversify the economy. Writing in one of his journals published by Botswana Journals of African Studies, Malema noted that the share of mining to GDP has remained significantly high at around 40 percent on average, post diamond discoveries.

“This could be due to different factors. Government’s commitment to promoting Botswana as an attractive investment destination of choice seems not to have achieved the desired results as mining has continued to receive the greatest share of foreign direct investment into the country, courtesy of South African based mining giant DeBeers. Failure of the economy to attract foreign direct investment into the non-mining sector calls for alternative strategies to realize the diversification dream.”

Despite all these uncertainties, Matambo remains positive that jobs will be created, though he repeatedly mentioned unemployment in the 2015 budget speech and somehow admitted that it is giving the current administration a headache. He added that government intends to create jobs through inclusive economic growth that is premised on gainful employment of factors of production, especially labour.

As a result, said Matambo, this year’s development budget of P12.93 billion will be spent on infrastructure projects such as construction of new schools, new power transmission lines and water pipelines; and are expected to go a long way in creating new employment opportunities. The minister said in addition, complementary labour laws such as the Employment Act, Trade Disputes Act, Workers’ Compensation Act and Trade Unions and Employers’ Organisations Act will be reviewed to facilitate harmonious industrial relations and also to make the labour relations environment conducive for investment. It is unclear whether government’s most recent efforts will yield results fast enough to offset the impact of producing ‘unemployable’ university graduates year after year. What is quiet clear according to Magang is that the government has been on the diversification ‘tip’ since 1968.

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