Monday, June 14, 2021

Government not transparent enough on the scale of economic hemorrhage

Right from immediately after independence up until Festus Mogae’s administration which started in 1998 –at least up to the moment before he devalued the Pula, Botswana had a well-deserved reputation of prudent economic housekeeping. Frugality and parsimony have actually been the more appropriate descriptions. Since after that fateful currency Botswana government has dabbled in some of the most bizarre project financing and expenditures. Long before covid-19, Botswana’s debt levels, especially household had been growing exponentially.

National economic roadmap as espoused in the form of National Development Plan is no longer treated as sacrosanct. This is a total departure from the 1970s, 1980s and early 1990s.At the moment Government sticks to NDPs when it is convenient to do so. It has now become fashionable to drop developments contained in the NDP at a stroke of a pen. Otherwise it is no longer uncommon for cabinet or the president cancel projects in the NDP even after parliament has discussed and adopted the NDP. This is a reality that is happening on the ground. And it is destructive.

At a time when the economy is losing its dynamism, sticking to the rules is the most natural and appropriate thing to do. This enhances predictability that was so much a big feature for Botswana’s development planning and economic path in the early years. There is no doubt that economic growth has slowed dramatically this year, owing to the global pandemic and also the lockdowns that resulted. Diamond sales have been very low. Botswana government is trying with little success to cut to size its spending spree. No big breakthrough will be made on that front until Government agrees to cut the size of its bloated public service. There is a feeling that government is overestimating how much the economy can pump out.T

hat is exemplified by ongoing appetite for borrowing. The taxpayer will be shouldering some of the burden – a lot of it by the way. The increase in Value Added Tax is example of such a fallacious belief that the economy will continue to grow to fill in the big hole in government expenditure. Botswana’s borrowing is yet to reach a ceiling prescribed by law vis-à-vis the GDP. Until then, it looks like Botswana is going to rely on debt to much of the government expenditure. This debt-financed expenditure has consequences, especially in the wake of declining diamond sales that are also uncertain in the short to medium terms and likely to experience significant competition from all kinds of synthetic diamonds. Government should never attempt to hide the true extent of public debt. And more importantly just how capable government will be in repaying that debt.

The scale and scope of unemployment levels too has to be properly assessed. And be calculated in a more meaningful scientific way. This goes beyond just the integrity of statistics, but also publishing those statistics out frequently and regularly. The best way to prepare people, especially in a welfare state such as Botswana is to be open up and tell them in clear terms how the economy is doing. This involves getting rid of jargon. And using a language that means a lot to them. For instance tell an old man and woman in the village who has relied on government to till the land whether or not government will be continuing with such assistance in the next two to four years. That would allow them time to plan. It is also the best way to get people prepared beyond covid-19.It also arms them with knowledge what rebuilding the economy will entail sacrifices. And that government is no longer able to shoulder all the burdens of development.

Catching people by surprise is not the best way to prepare people for rebuilding an economy what looks likely to be very difficult economy ahead. The haphazard thinking that characterized interventions during the lockdown have undermined Botswana’s reputation for studied economic management that is always underlined by caution and conservatism.

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