Let me start off by declaring that I am not an economist nor am I learned in issues of investment.
That notwithstanding, I would like to hazard an opinion on this topical issue.
For a while now the Botswana government has been seized by a spell on Foreign Direct Investment (FDI) as a panacea to the revitalisation of the country’s fragile economy. However, there exists a paradox in viewing FDI as a panacea to energise economic growth. The paradox is in that developing countries, Botswana being in that class, are characterised by: low savings rates, poor telecommunications, poor internet connectivity, low investment rates, and low per capita income growth rate. Therefore, such countries are not necessarily attractive to FDI from developed countries. Under the circumstances, it then becomes an imperative for developing countries to bend backward double twice in order to attract FDI.
Similarly, in many cases developing countries have to change their FDI policies in order to attract FDI by adopting different promotional policies such as: “liberalizing trade regimes, establishing special economic zones and by offering incentives to the foreign investors” (Mottaleb, 2007). In view of this, it goes without saying that the FDI relationship between the developed and developing countries is skewed in favour of the developed countries. Developing countries only occasion minimal benefit. Only a few countries in the developing world such as: China, Indonesia, Egypt and Columbia enjoy the benefits of FDI. I think it is apparent to many why these countries attract profitable FDI as compared to other developing countries such as Botswana.
So the moot question is, how does the present government, besides its mantra of ‘peace and tranquillity’, propose to attract FDI? Another question that begs an answer is, in the years since the former President Mogae to date, how much beneficial FDI has the BDP led government managed to attract? Were the government to openly discuss this, it would probably put paid to doubts some us have. I am genuinely beginning to fear that the current regime has gone bankrupt of ideas on how to resuscitate the economy. My fear is FDI is just a hype this government is using to hoodwink Batswana into believing it knows what it is doing. But then again government can start open debates on significant strides FDI initiative has made towards sustainable economic development for this country. This would make doubting Thomas’ like myself eat humble pie.
The debate on whether FDI can be used as an effective engine of economic growth in developing countries is raging in South Africa (SA) with many scholars pointing out its inequities.
Commentators in the field of economic diversification have berated the SA government for flirting with the notion that FDI will engineer sustainable equitable development in that country where many still live below the poverty datum line. Mind you SA’s economy is doing far better than ours. So the question is, how does the government of Botswana propose to do things differently in order to ensure FDI works for this economy?
David Keagakwa is a member of the joint BTU/BOSETU Publicity Committee.
