All indications are that the global economy is headed for yet another economic downturn.
It must be pointed out that for all intents and purposes, rumours of yet another recession come at a time when, as a country, Botswana has not yet fully recovered from the recession which reached its peak in 2008/9.
While the statistics, especially from the last quarter, were beginning to show a very strong economic rebound, they also went a long way to prove that we remained too far away from achieving our pre-recession strengths.
In here, we want to give credit to President Ian Khama for having highlighted in his recent state of the nation address, that whatever recovery we were experiencing, it remained fragile and fraught with all sorts of pitfalls. That kind of openness and transparency is commendable.
It is, however, our opinion that the President should have gone further to tell the country just how prepared Botswana was were the economy to slide back into what, by all accounts, appears to be a recession as deep if not deeper than the last.
When hard times fell on Botswana in 2008, a decision was taken to close down the diamond mines because there were simply no diamond buyers. That decision was meant to save cash for there was no point spending money getting diamonds from the ground when there were no buyers.
Another decision was taken to also do everything that was fiscally possible to cushion as many Batswana as was feasible from the debilitating economic effects.
In their wisdom, the Government decided that many development projects that had already been planned would continue; yet another good decision in that those projects were in turn able to sustain and fuel the economy for some time while also providing employment.
Another decision was taken that only minimal retrenches would happen. Over and above those splendid decisions, money was voted to provide temporary and menial employment for a good number of out of job citizens.
Government then went on a road show, using its enviable creditworthiness as well as a strong balance sheet to borrow locally and externally.
More crucially, the government started using a portion of its cash reserves accumulated over the years when the economy was in a good shape.
Looking back, it is very clear that Botswana Government had an array of good opportunities with which to fight and or stave off the negative effects of recession that hit the country in 2008.
Those opportunities were exploited wisely ÔÇô by and large.
The big question then is just how prepared are we this time around, given that we kind of exhausted the instruments and tools that we had at our disposal the last time around?
Was recession to strike again, as it looks ever so likely, will the country be in a position to once again emerge in a better economic shape as it did the last time around?
These are the difficult questions that we have to grapple with as we prepare ourselves for the difficult times ahead.
In the past, government has talked about belt-tightening only to go on a spending spree.
The recklessly overpriced ventures, like the ministerial houses, immediately come to mind.
We hope those kind of things will not happen again because this time around the economy of this country is so weak and so exhausted that it will not carry on such a financial load.
Just recovering from the bloody hemorrhage that was the last recession, asking it to shoulder such a burden would lead to total collapse.
What then of such programmes like Ipelegeng and constituency league?
We hope tough decisions will be taken to scrap all those projects deemed unsustainable, regardless of emotional attachment to them by some of our leaders.
This time around, Botswana’s much vaunted prudency looks set for a real test.
In the State of the Nation speech alluded above, the president also talked about Government losing P1 million a week to over pricing and in some instances double/multiple invoicing by unscrupulous contractors.
That is unpardonable.
Thankfully, the President has made it clear that those days are now behind us as government has put in place measures meant to plug the holes.
We have noted that this week another sobering piece of statistical information has come into the public discourse.
Debswana Diamond Company has said the international diamond market looks very fragile.
And as we know, Botswana is what it is because of diamond revenue.
By their own admission, Debswana states that the penultimate selling period recorded substantially reduced diamond sales, adding that “indications are that the last sight for the year might also be small. The first sights 2012 will also be impacted until the Christmas sales are known.”
Given that traditionally these selling periods are the highest points, as a result of Christmas holidays, we have every reason to worry.
That said, we want to acknowledge and credit Debswana for their openness, transparency and forthrightness in releasing this very important piece of information. Forewarned is forearmed!
Ahead of the last recession, all government agencies held steadfastly to a mistaken belief that Botswana was going to be immune from the economic hailstorms that terrified the entire world.
Secrecy was the order of the day.
It was only when it became abundantly clear to our authorities that it was inevitable that Debswana was going to have to close down its mines as a way of cutting down operating costs, that some information started to trickle in bits and pieces ÔÇô grudgingly released, one might add.
Many citizens were, in fact, shocked to hear from the then Managing Director that Debswana did not have any cash reserves to see the company through difficult times. All money from diamond sales had been passed to shareholders.
It would appear to us that lessons have been learnt from past mistakes.
Not only is there openness in the state of the international diamond market, Debswana also says in its statement that efforts will be made to conserve cash.
