Tuesday, June 2, 2020

NEW INVESTMENTS IN INFRASTRUCTURE NEEDED

To prop the stagnant and even sluggish economy, government might have to postpone efforts to reduce budget deficit and instead spend more, especially on infrastructure.

Botswana’s infrastructure needs to be revamped. There is need for new infrastructure as well as for maintenance of existing one.

That bill would no doubt run into billions.

Given the size of the challenges to the economy, it is important to go big as a way of stimulating the economy.

Having said that, even in an election season, the gathering economic storm demands that there be maturity, sobriety, cool-headedness and calmness in the management of our national economy.

The country does not need any populist drama made in the heat of the moment to win an experienced voter who might think he is out for revenge against an authority.

During hard times, it is difficult for one to be the custodian of the status quo.

Incumbency has its own down sides.

Managing Botswana’s economy is a pragmatic exercise that at all time needs to be tampered with maturity, caution ant conservatism.

We arrived where we are as a result of discreet and frugality.

But still any economic exuberance is a dangerous game to play.

It might lead to the loss of grip by country’s economy.

Any such mishap would thereafter mean that recovery would be painful and much longer to achieve.

Botswana’s foreign reserves have always provided a buffer against any shocks – regional or international, including against price increases and or sudden changes in exchange rates.

Any excessive use of reserves could prove catastrophic.

In short, it can only be destabilizing.

First because replenishing them is never easy, especially in today’s economic climate.

But also because there are numerous competing needs some of which will with time prove more critical that a self-inflicted and indulgent minimum wage.

Botswana’s economy remains vulnerable; firstly, because it is not diversified.

A near absolute reliance on diamonds is this economy’s its Achilles Heel.

And secondly because the market for those diamonds is again intricately reliant on the global economy doing well, for which Botswana has absolutely no say. Global geopolitics play on independent of the situation Botswana. If anything Botswana is only a recipient of what dynamics play on at global level.

The outlook is generally not positive, especially on the back of growing and protracted trade dispute between the United States and China – two of Botswana’s biggest markets of diamonds.

There are indications that the dispute might take much longer than had been anticipated.

As we know there is a tight limit of how far Botswana Government can go in using public spending to boost the economy.

Resources are very limited.

This would force Botswana Government to look elsewhere to finance the budget, whose deficit is already over P6 billion.

SACU (Southern African Customs Union) revenue and also the country’s tax base are some other such sources.

But none of them come anywhere close to being substitutes to diamonds.

There is a need to spend on areas already identified as employment creators like ICT.

Delays would spell disaster.

Fastracking and stimulating new growth areas is also needed. And that means putting money into those areas by Government as a way to pave way for entry and further investments by the private sector.

The most obvious is investing in roads, rail and bridges.

Botswana needs to connect to the sea – and fast.

Other than that millions are every year lost in traffic logjams, especially in Gaborone and Francistown the country’s two largest cities.

Batswana have bought cars at an unprecedented speed.

This could not have been foreseen by planners a few years back.

Getting a car has been made all the easier by used imports from Asia at low prices.

These cars are no doubt a problem to the environment.

But the economy is also hurting as a result.

Priceless time is lost in our roads because goods and people are locked in traffic jam.

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