Saturday, March 6, 2021

Economists cast doubt over Khama’s economic stimulus package

Economists have said it is difficult to review the economic stimulus package announced by President Ian Khama at a ruling party Special Congress held in Gaborone over the weekend.

Local economists that The Telegraph talked to said without benefit of the full transcript of President Khama’s speech it is almost impossible to make sense of it all.

Economics Lecturer at the University of Botswana, Professor Brothers Malema said projects undertaken should produce results that are worth the investments.

 “If the projects to be undertaken do not yield any tangible return on the investments, then the investments should be classified as bad.”

He said one does not create employment for the sake of employment. 

“Employment should be geared towards improving people’s standards of living. Simply put, employment should help people graduate from poverty”, said Malema.

He explained that if the government embarks on construction of classrooms, there has to be need for those otherwise the classrooms would be as good as non-existent.

Professor Malema wonders whether Khama understands the economic challenges facing the country or if he is just desperate to throw money into infrastructure projects believing that they would provide the necessary solution.

On the agricultural side, he said it is important to boost the agricultural sector but the interventions have to be targeted. 

“Is it going to be continuation of the ISPAAD programme? Is the programme helping to improve agricultural output and ensure national food security? How does the programme take into account issues of drought that impact on the output? How do you solve that? You definitely need a holistic approach like irrigated agriculture if that is what the economy needs. Anything short of that is an exercise in futility and a waste of public resources”, said Professor Malema.

 In his view programmes like the Selibe-Phikwe Economic Diversication Unit (SPEDU) are good initiatives as they have potential. 

“The big question however is; are they working? If they are not, what are the problems and how can they be solved? Government should invest in areas where the country has potential to reap long term benefits. We have to maximize for the future otherwise most of the current economic challenges will live with us for a long time. We ought to find holistic solutions than throwing money at the problems”, explained Malema.

On manufacturing, he observed the need for targeted interventions if the country is to make any meaningful gains. 

“For as long as labour laws and policies are not accommodative, this is one sector whose potential we will never fully exploit despite its potential”. 

On tourism he said the sector too has great potential.

He said the big question that must be asked and answered without fail is whether ordinary citizens are benefitting. 

“If they are not, then it is sad story. It should not be like what economists call pre-modern growth whether growth fails to translate into meaningful benefits for the country’s citizens.

The other issue that Malema takes issue with is corruption that in his view is reversing past economic gains. “If we will be embarking on these massive projects by tapping from our foreign reserves, the projects to be embarked on should benefit the entire economy and country and a select few who will be awarded the projects.

Malema asserts that Botswana needs local and foreign investors to reduce its dependence on exports for basic commodities. Import substitution is a good economic concept but local investors have to play their part and ensure that their products are of the highest quality. Import substitution must not benefit the rich only. If we are not careful, we will ultimately embark on a lot of good programmes that are not benefitting the ordinary citizens. I am afraid it might be the rich who will reap from the intended projects”, said Malema. Another economist, Dr Keith Jefferis doubted if the projects would be undertaken during the current financial year because in his view the 2015 budget has already been approved. “May be the president was talking about projects whose funds would be availed in the next budget. As of now, nobody knows the cost of the projects. The whole thing is shrouded in secrecy and it is difficult to make an informed opinion of the president’s pronouncements. Hopefully, more clarity will be provided in the coming State of the Nation Address and that is when one would be able to critique the pronouncements comprehensively and offer what he believes to be tangible alternatives. As of now, we are just hazarding opinions without understanding the context in which they were said”, said Dr Jefferis.

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