Thursday, October 28, 2021

Exports led economy will slow Botswana’s joblessness figures ÔÇô Economists

The country’s star performer, being diamond mining, has failed pitiably to create the same luminous effect on job creation and it is for that reason that the local think tank, Econsult, is championing an export-led economy of which it advanced to be the only sustainable source of long-term job creation.

According to Econsult in its economic review for the fourth quarter of 2017, “given the magnitude of the unemployment problem, large-scale job creation can only come from the growth of regionally and globally oriented, competitive producers of goods and services for export.” The think tank’s view is convincing particularly when considering that Africa’s population hit the one billion mark in 2010. The increase in the continent’s population as was indicated by Deloitte presents an advantage of trade. “The opportunity is that large population numbers create the very necessary volume for any consumer goods and services. Numbers move product.” Given such opportunity it means that by promoting the growth of locally produced goods and services producers will capture the continent’s population as a market to sell to.

An export led growth, while sounding ideal, needs more than just Botswana’s effort. To tap into the wider regional market Botswana will require enablers such as the development of cross-regional infrastructure which allow for connectivity across the continent. The underdevelopment of such infrastructure undermines attempts of trading across the continent and closer to home, it reduces the viability of an export led growth to wishful thinking. The World Bank indicated that between 2007 and 2011 intra-African trade was at 11 percent of the continent’s total trade. It was estimated at $170 million in 2015 which is significantly lower than its potential value which is projected at trillions of Dollars.

Econsult argues against the country’s existing policies which it considers inward looking because of their attention on the country’s small domestic market and protectionism against imports of goods and services. “The alternative of inward looking policies focusing on the small domestic market and import substitution cannot hope to address the unemployment problem. And export-led growth obviously requires integration into global markets and economic openness,” it advanced.

Creation of an export led economy of one of the three things that Econsult highlighted as those that should preoccupy the new President and his economic advisors as soon as he begins his term. The think tank proposed that the new President addresses these without delay. Second is that going forward policies need to be based on evidence and analysis, rather than just being driven by political considerations. Third is establishing much better public finance discipline, which given recent scandals involving diversions of monies that later fail to be accounted for, necessitates more transparent public finance policies, laws and practices. Econsult’s suggestion for the new President to arrest the issues early on could prove useful especially given that 2019 elections are approaching and will cause fanfare that may potentially dilute his attention.

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