Sunday, September 20, 2020

Kenewendo makes her first “promises” to the nation

The Ministry of Investment, Trade and Industry through its new minister, Bogolo Kenewendo has vowed to use policy tools at their disposal to protect the country’s emerging industries.

The youthful Kenewendo said the government will do whatever it can to protect some industries which are still in infancy so that they get a chance to grow. The minister made these remarks at the ministry’s first press conference held in Gaborone on Monday.

Of recent the government has been leaning towards protectionism policies, some of these include the ban on importation of bottled water, and seasonal bans on certain vegetables and fruits. In the past, the same ministry came hard on mall owners during licensing process, demanding that mall owners show how they will aid in citizen empowerment. The majority of tenants in Botswana’s busy malls are foreign based companies.

Kenewendo explained that it’s not the intention of the government to have foreign businesses ceding some shareholdings to citizens. Instead, the minister said foreign companies must show support for local industries by procuring or carrying locally made products in their operations.

Protectionism is a set of policies aimed at protecting domestic industries against foreign competition by means of tariffs, subsidies, import quotas or other trade barriers placed on the imports of foreign competitors.

Kenewendo said the government is working tirelessly to grow the country’s exports, and conceded that while the country’s products and services may lack comparative advantage, they can gain competitive advantage if the industries are nurtured. She said they are prioritizing sectors which are ready for exports, while also promoting export incentives.

At the core of protectionism is that if a country is trying to grow strong in a new industry, trade tools can be used to protect it from foreign companies. This gives the new industry’s companies time to develop their own competitive advantage.

While protectionism may be helpful to emergent industries in developing nations, mainstream economists have argued that while in the short term it works, in the long term it weakens the industry. Their key argument is that without competition, companies within the industry have no need to innovate, and as such the domestic products will decline in quality and be more expensive than that of foreign competitors.

Other countries usually react to protectionism by retaliating through their own protectionist policies. Protectionism has of recent been in headlines after Donald Trump, the US president, imposed tariffs on Chinese goods, targeting in particular steel and aluminium imports.

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Sunday Standard September 20 – 26

Digital copy of Sunday Standard issue of September 20 - 26, 2020.