Saturday, July 11, 2020

Late President Masire believed low wages attracted FDI

You would have had to be at the dinner table of a Democratic Republic of Congo warlord whose troops had been accused of cannibalism to hear an uninhibited former Botswana president express heartfelt views about how generous employers should be to employees.

In “A Sacred Cause”, Phillip Winter recounts a dinner conversation between four men: Jean-Pierre Bemba, Vice President-designate of the DRC; Gani Are, head of a regional UN office in the country; and “the former head of state of the most successful country in sub-Saharan African in the previous forty years.” The latter was Sir Quett Ketumile Joni Masire ÔÇô or “QM” as the writer prefers to call him in the book. Masire was in the DRC as the Facilitator of the Inter-Congolese Dialogue between 2000 and 2003 and Winter, a Cambridge-educated consultant, served as his Chef de Cabinet. 

Winter writes in the book: “Jean Pierre Bemba was interested in Botswana’s approach to attracting foreign investment. QM explained that low wages, the rule of law and stability attracted investors. Mr. Are, a Nigerian, suggested that low wages led to exploitation and QM countered him from experience, suggesting that low wages could be used to attract new investors also, which give rise to competition for skilled labour and so caused wages to rise.” In the next breath, Winter editorialises by observing that “Skilled labour is in short supply in Botswana, whereas I imagine the opposite is the case in Nigeria.”

Are pushed back some more, asking Masire to explain why (if what he was saying was true) 45 percent of Batswana were living below the poverty datum line when the country had between $8billion and $9 billion of foreign reserves. Masire’s responded by stating that the poverty figure had actually been halved in 36 years from what it was at independence on the basis of prudent economic management by the government. 

It is interesting to reflect on what Masire said about low wages against the background of a very recent debate on a proposal for a living wage. The policy that he was outlining has clearly not worked but there is every indication that the government is still sticking to it. Alongside an effective wage freeze that lasted a whole decade and only ended this year, that policy has led to severe degradation in the quality of life.

On the whole, Botswana’s FDI attraction has always had a very well-pronounced human sacrifice component which Masire revealed in an unguarded moment the book quotes. During its life, the now disbanded Botswana Export Development and Investment Agency (which at one point was led by Masire’s own daughter) attracted FDI by telling investors that Botswana had a “non-militant” national labour force. Investors never pass up the opportunity to exploit non-militant workers.

Winter’s point is also worth reflecting on some more. Good wages tied to skill will continue to elude Botswana as a direct result of institutional dysfunction within the government. Largely as a result of laissez faire regulatory regime, a slew of fly-by-night institutions of higher learning continue to churn out thousands graduates into a virtually unregulated marketplace. One result has been that graduates who studied engineering are likelier to end up working as slave-labour waitresses in high-end restaurants than as junior engineers. The problem is compounded by the government’s own graduate internship programme which in one respect functions as a cheap-labour pool that the government itself draws from.

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Sunday Standard July 5 – 11

Digital copy of Sunday Standard issue of July 5 - 11, 2020.