It is almost April 2023 – five years since the first inauguration of President Masisi as state president. The key question that arises as analysts, both political and economic prepare to reflect on his first five years in office is whether President Masisi has super charged the local economy or slowed it down. Most importantly, has the Masisi administration ignited necessary processes that would see a smooth handover of the local economy to the citizens or is he leading the nation to the brink?
Any future looking analyst will agree that failure to put in practice, policies and laws that would see a smooth handover of the economy to the locals will overshadow any good of Masisi’s tenure. It will also be a highlight of his weaknesses, possibly inherited from the ruling Botswana Democratic Party (BDP) that has been overseeing the transfer of wealth to foreign hands over a period close to six decades.
At the moment, those watching from distance but with keen interest on the domestic economy seek to understand how deep Masisi administration’s fiscal fault line ran in the past five years. What are some of the doings and un-doings of his administration over the past five years that could stich or tatter the local economy?
Bottled water restrictions, a model of empowerment?
In August 2018, Masisi though the Trade Ministry announced restrictions on importation of bottled natural and mineral water. The trade instrument prohibits importation of water packed in bottles of less than 10 litres and therefore only allows importation of water packed in bottles of 10 litres and above. At the time of the implementation of the instrument, the expectations were that the regulations would promote the competitiveness and sustainability of domestic water bottling sector which is a reserved business activity for citizens. Bogolo Kenewendo, the then trade minister appointed by President Masisi in April 2018 said the government, through the instrument intended to stimulate investment in the sector which would in turn lead to job creation and poverty reduction. While at the time of filing this report the performance of the instrument was not yet clear, there was visibility of local brands of bottled water in local retail stores suggesting that locals might be benefiting. Learning for the 2018 water bottle ban, the Masisi administration has since moved on to other products with another ban imposed on some horticultural products by 2021.
The Deputy Permanent Secretary in the Ministry of Trade and Industry Gideon Mmolawa this week told Sunday Standard that the importation of vegetables has reduced the country’s import bill from P375.5 million in 2021 to P176.9 million in 2022.
Despite the celebration mood at government on this achievement, the Botswana Horticulture Council has a different story to share. Its chairperson Mogomotsi Moatswi says there is still a lot that can be done beyond bringing down the import bill.
“We still have a problem with accessing local markets and in some instances when there is access, we then fail to agree on product pricing, so we thought that government was going to assure us of the market,” said Moatswi.
The comment by Moatswi suggest that while the Masisi administration could list self-sufficiency in some horticultural products as one of the key achievements, the celebration could easily be regarded as premature as the ultimate beneficiaries are yet to reap from the policy.
Public servants salaries increase, an act of care or carelessness?
Besides jobs creation, workers’ welfare has become a major talking point going into any general elections. By the time Botswana went for the 2019 general elections, it was clear that while the economy has been growing at a steady pace, and corporate earnings rising, the opposite has been happening in the labour market. Even before the arrival of the Masisi administration a large majority of public servants were complaining of stagnated wages in the prior decade. Part of the charm offensive by the new administration therefore included adjusting salaries for unionised workers, while the law enforcements agencies got a huge bump in pay as the salary structures were altered in 2019 through what was dubbed ‘Ntole’. As the year 2019 marked the year of general elections in Botswana, political commentators were of the view that there is an overriding aim by Masisi to win as many votes for his party as possible in a bid to cement his mandate. (Could this explain the splashing of money to civil servants during that year?) The main worry that followed immediately was that the upgrading of salary scales for some of the civil servants precisely those in the armed forces dubbed is the main reason the country has failed to balance its budget in the last few years as the government wage bill has since ballooned.
Crime, corruption, and unemployment
Masisi administration, just like that of his predecessor, continues to dig deeper into public coffers to finance the country’s social security programmes. Botswana’s social protection system has three major categories – social insurance, social assistance or safety nets, and active labour market programmes. In the social safety net category are scholarships and sponsorships which support students in tertiary education, accounting for 1.4 percent of GDP and nearly half (45.3 percent) of total social-assistance spending. As a results of hikes in cash allowances, usually done on the eve of elections, pundits believe that Botswana’s social security expenditure will likely grow up to undesirable levels. The country has also registered growth in the level of crime, corruption and poverty over the past five years.
A new report released by the AfroBarometer in December 2022 indicated that a significant number of Batswana feel unsafe and fear crime; with some stating that the Masisi administration is performing badly on reducing crime.
According to the report, half of Batswana say they felt unsafe walking in their neighbourhoods at least once during the past year, while about the same proportion feared crime in their homes. The report shows that crime/insecurity ranks second, behind unemployment, among the most important problems that Batswana want their government to address, and citizens give the government poor marks on reducing crime. When it comes to unemployment, Botswana’s labour data is at best confusing, and at most misleading. The data is usually collected through surveys, which work through sampling, thus leaving many outside its scope. Despite the data access challenges, it appears that the COVID19-linked economic woes unleashed mammoth job losses for the local economy as hinted by the results of a survey carried by Statistics Botswana in 2020. The Statistics Botswana’s survey captures the impact of COVID-19 on jobs and businesses in Botswana estimate that the total number of persons who lost jobs or businesses due to COVID-19 in 2020 reached 67,132 while those who gained employment because of COVID-19 was 19,112. Statistics Botswana says out of the total of 67,132 persons who reported to have lost jobs/ businesses due to COVID-19, only 2,720 (4.1%) were able to find new jobs. Away from the Covid job losses, the country’s unemployment rate remains at a record high 25.4 percent by the fourth quarter of 2022 according to Finance Minister Peggy Serame.
On corruption front, the Masisi administration is on record speaking against it. But what is the reality on the ground over the past five years? In July 2022, Wynter Mmolotsi, Francistown South MP requested figures for corruption cases over five years, the then DCEC Director General, Tymon Katholo, said that the number of cases in the country is decreasing because corruption is becoming more sophisticated.
“Our corruption is graduating from petty corruption to grand corruption,” said the DCEC boss, adding much later that the Ministries of Local Government and Rural Development as well Transport and Public Works are the most corrupt.
While Katholo used “grand corruption” in throwaway fashion, the term actually has precise technical meaning that has been developed by Transparency International (TI), the Berlin-based international corruption watchdog. TI defines “grand corruption” as the abuse of high-level power that benefits the few at the expense of the many.
Katholo’s back-and-forth with the Parliamentary Committee never got to a point where he detailed how grand corruption plays itself out but it lead to his indefinite suspension from work by the Masisi administration.
Will Caesar ever get what belongs to Caesar?
Masisi’s 2019 electoral victory was due to a promise of economic transformation premised on citizen economic inclusion and job creation. At the time he repeatedly assured the nation that his administration remains committed to growing the economy and tackling the exclusion of citizens from the economy by narrowing the inequalities.
But now some analysts argue that a fair assessment of the Masisi’s presidency when it comes to the economy should be made minus the Covid 19 pandemic. They believe if such an analysis is to be made, then the Masisi’s administration will easily get a pass, at bare minimum. But there are those who are counter-arguing that Masisi deserves a mark that is below average. Perhaps this is because by his own admission, his administration has not been able to transfer wealth to hands of Batswana.
At a recent press conference when The Botswana Gazette journalist, Tefo Pheage asked him on his ‘regrets’ to date, Masisi’s response came in the form of an admission that the desired level has not been reached.
He said that amongst the things that his administration could have done better, in hindsight, “is to be more efficacious with the issue of citizen economic empowerment”.
“If you look at the span of our economy, and business sector, particularly big businesses there are very few Batswana who play there and this is not good for the nation”, admitted Masisi.
With the admission on this failure, the President might need to relook into a new empowerment bill that was signed into a law in April 2022 dubbed the Economic Inclusion Act.
The piece of legislation was sold as the kind that could see an effective participation of citizens in the economy but despite its existence there are no signs of change.
“This law is supported by the revised Public Procurement Law….. the two laws together will complement the implementation of the Reset Agenda. We must ensure that the laws are not only fully implemented, but also complied with by all stakeholders. Legislation approved! Let us implement. ”, said Masisi during SONA 2022. With some of the laws in place, the failure to have more Batswana in the business space can easily be alluded to financial literacy and behind the scenes lobbying by powerful foreign business persons.
While on the business side the Masisi-nomics have very little to show, it could list land allocation as having given Caesar what belongs to Caesar. In 2022, the administration set 100 000 as a target of land allocations that were to be made during the current financial year and by early March 2023, a total of 52, 277 plots were allocated.
How about the economy, is it getting stitched or tattered?
As a president elect, on a Saturday night following his October 2019 election victory, Masisi started to make vows and economic remarks. One of those was that Botswana’s gross domestic product output (GDP) has to grow by an average of 5.7 percent in order to become a high-income country.
“We cannot get there at the 4.3 percent average of the last eight years, and it is all about productivity, innovation, ethics, and a belief system that upholds the decency and integrity of Batswana collectively and individually,” Masisi said. But how much work has his administration put in to ensure that the 5.7 percent economic is achieved despite all the hurdles? In his account, Masisi does not talk much about the pre Covid-19 years. At a recent press conference, he took journalists down the memory lane of what happened from March 2020 which was the time that Botswana was hit by the global health pandemic, Covid 19.
“Never in the history of this country had we faced the enormity of challenge to our financial, fiscal and economic viability as we faced during Covid 19”, Masisi said further revealing that at that point, the Government Investment Account was so ravished to an extent that at some point the Treasury was operating with a cash-balance.
Botswana’s fiscal position was compromised in 2020 after the COVID-19 pandemic forced the government to raid the GIA, leading to a massive decline – plunging from 2019’s P18.3 billion to P3.3 billion by end of December 2020.
The central bank manages foreign exchange reserves through two portfolios; the Liquidity Portfolio and the long-term investment portfolio know as Pula Fund.
The Liquidity Portfolio comprises of the Liquidity Investment Tranche (LIT) and the Transaction Balance Tranche (TBT). The TBT, used for any short-term needs for foreign currency, recorded P9.7 billion in November, down from the P11.7 billion in the prior month. The LIT, which provides further support for medium term funding, had P5 million compared to P5.1 million in October.
The Pula Fund, which accounts for a large portion of foreign reserves, advanced slightly to P44.7 billion in November, from the P43.8 billion in the previous month. The Government Investment Account (GIA), which represents the government’s share of funds in the Pula Fund, was down to P16.3 billion compared to P17.4 billion in October. However the GIA, which makes up the sovereign wealth fund, was 103 percent higher than the November 2021 balance, a sign that the fund was being replenished.
Due to the strong performance of its diamonds last year, the country recorded a 66 percent jump in mineral revenues in the first six months of the 2022/2023 fiscal year that began in March 2022, leading to a nearly P600 million budget surplus in the period, according to data from Bank of Botswana.
With the GIA being built back, revenue from diamonds also back, it is up to the Masisi administration to choose whether to stitch or tatter the economy.