If the people whom we elected not many months ago to run the country’s affairs on our behalf, are serious about comprehensive economic reforms to transform Botswana into a high income economy, then they must stop talking from both sides of their mouths. On one hand the political leaders agree with those who are concerned about state owned enterprises (SOEs). The majority of these SOEs are loss making and therefore a drain on the tax payer.
And on top of that there are concerns about the proliferation of SOEs. And once again the leadership also shares this concern- or so it seems – in many of their public statements. And in raising the flag about proliferation, the issue is not whether or not, these SOEs are profitable. The main concern here is that these SOEs have a crowding out effect on the private sector because their products and services, can and are easily carried out by private service providers. So it really does not matter for example whether Botswana Development Corporation (BDC) is profitable or not. The relevant point for discussion is that their services can be provided by private operators.
Overall concerns about lossmaking SOEs and the fact that the government keeps on creating new ones are well founded. The number of loss making SOEs which also happen to be monopolies and therefore have to be bailed out, year in year out, by you and I, is staggering. They are so many that one does not even know where to start but let us randomly get the ball rolling with Botswana Power Corporation (BPC). BPC runs at a loss and struggles to keep the lights on. The corporation has nothing to show after splurging over P 10 billion on a Chinese contractor to build a coal fired power station in Palapye. Ten years down the line, one of the government’s beloved Chinese contractors, has failed to deliver a functioning power station. And as night surely follows day, BPC has recorded a staggering P1.4 billion loss and once again the Finance minister is bailing them out.
Botswana Meat Commission (BMC) which is, for all intents and purposes a monopoly exporter of beef, remains unprofitable and uncompetitive after a countless series of capital injection by the tax payer. Its assets in Francistown and Maun lie idle after millions were sunk in setting them up.
We also learn from the Finance minister in his Budget speech, that Botswana Post also posted a loss. So whichever direction you look at, there is a litany of SOEs which continue to bleed the tax payer dry.
However this is not enough to deter our policy makers. While they tell us ad infinitum that they want to build a private sector led economy, they have at the same time, mounted another concerted campaign to install another state owned company called Botswana Oil as a monopoly. They talk in euphemistic terms about an exclusive licence for Botswana Oil to import 50% of the nation’s petroleum needs.
Since independence, private oil firms have been importing, distributing and selling petroleum using their own channels. This market based system has worked pretty well for the economy for many years save for moments when supply chains get disrupted. The state wants to change all that by expropriating the commercial rights of these companies in favour of Botswana Oil. Consequently, the companies would have to hand over part of their business to a company run by the state.
The spin we are going to hear in the days to come from the government is that they are nationalizing petroleum imports to secure supplies. This is rich coming from people who have failed to provide reliable electricity or run a profitable beef export monopoly. The truth of the matter however is that if we get a disruption in the pipeline in Namibia or South Africa , Botswana Oil won’t be imbued with any magical powers to resolve the problem.
COVID should not be used to tinker with a sound market framework in favour of failed nationalisation policies.
