Saturday, October 24, 2020

Good bye Good times, Hello hard times

It’s been only less than three weeks that the government has published the 2017/18 budget strategy paper ÔÇô a fiscal update document which also serves as a guide for the next national budget prepared by the Ministry of Finance and Development Planning. 

One ought to admit that this is one document that should not be read and shelved like others. Not because it has any juicy news but rather because it paints a rather a gloomy picture about the domestic economy. 

According to the BSP, and based on the Medium Term Fiscal Framework, the 2017/2018 financial year is projected to register a budget deficit of P6.8 billion or -4.1 percent of GDP, due to the continued sluggish growth in revenues, and increased expenditure from the implementation of the popular Economic Stimulus Programme (ESP). At the same time, the paper further shows those financial years 2018/19, 2019/2020 will record -4.2 and -2.2 percent respectively. 

According to the same paper, the projected total revenues and grants for 2017/2018 is at around P52.8 billion: with Mineral Revenues accounting for P19.1 billion; Customs and Excise for P13.4 billion while the Non-income tax sit at P10.6 billion; and Other revenues at P9.6 billion. Mineral and Customs & Excise revenues remain Botswana’s major revenue source, constituting over 60 percent of total revenues. 

If this paper is anything to go with, it seems our economy is headed for hard times. From the paper, one can tell, it seems that after a long boom over the years, precisely before the 2008 recession, it is finally a “goodbye – good times” for the domestic economy. 

From where we stand, it seems it’s not only this budget strategy paper that is telling the reality on the ground. It is evident that of late, a smiling Motswana is as rare as a thriving business in this country. For the first time, in most recent years, HIV\AIDS has not featured among the country’s perceived pressing issues. This has to do, partly with the shape and status of our economy. 

A few years ago, the rules and practice for most Batswana were simple: If one wanted a fat pay cheque at the end of the year they would join the private sector, stay late after work and carry a bulging briefcase by December. And if one was for a job security, government enclave was where to look for a job. All that has since radically changed. 

The indication both on the ground and recent national budgets is that ours is a limping economy. Therefore this calls for some changes. For some of our people, economic hardship means belt-tighteningÔÇö reducing the number of meals eaten in a day, skipping a vacation, going from being a two-car family to one car. For others, it’s much more grave – losing a job, a house or health care. Less could be said about the close to the 30 percent of the population that continues to search for jobs. Some were recently shamboked right in front of parliament.  

That aside, as it stands, although inflation figures are generally low, mainly due to low fuel prices, food prices are continue to rise at much faster pace. Despite this rise, workers’ wages in this country however remain stagnant. This has left not just grim faces amongst Batswana but empty trolleys are also visible in aisles of some of our retail stores. 

The unfortunate thing is that economic experts continue to warn that the economy may be in worse shape than previously thought or rather portrayed by Minister Kenneth Matambo in his February speech 

We however remain hopeful, that with the right strategies put in place, the country could still regain its stability.  This strategies we should warn the executive, require serious financial discipline. It does not entail increasing government wage bill by increasing the number of cabinet and Members of Parliament. Financial discipline would in this instance entail embarking on stringent adjustments and reforms in state expenditure. This include, for once stopping heavy military spending. 

Given the recent observations of the impending economic challenges, we will have to, among others, reprioritise government’s activities and mobilise more resources that will help increase government revenue. 

This should be done bearing in mind that things may get worse before they even get better. While on its part government should institute checks and balances aimed at ensuring that our country does not fall into the debt trap, it should at the same time instill a sense of financial prudence into its populace. This could be done through rigorous financial discipline, which will not be helped by wanton borrowing. It is however worthy noting that this high household debt level seems to stem mostly from government’s continued ignorance of the principle of citizen economic empowerment. 

Like we have noted before, until Botswana has a law on citizen economic empowerment, the current policy on economic empowerment remains nothing but a piece of paper to fill a gap. We continue to argue government to come up with a definite law on citizen economic empowerment because the current status quo puts the population at a disadvantage while unscrupulous foreigners capitalise on the prevailing environment. It is quite clear that, passing the test of standards and requirements, foreign owned companies are free to set up business in the country, thereby suffocating struggling locally owned businesses with their excessive funds and abundant resources.

While we attempt to avoid this deplorable situation, the #Bottomline remains that much needed inclusive growth cannot be achieved without empowering citizens. Our people need to play an active role in economic activities, so until then Batswana can freely say, “Good bye to good times, and hello to hard times.” 

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