Recent political developments in South Africa and Zimbabwe appear to have improved sentiment within Southern Africa. Both countries are now under new leadership with Cyril Ramaphosa leading the ship in the south ÔÇô South Africa while Emmerson Mnangagwa is one driver’s seat up north ÔÇô Zimbabwe.
In Botswana, given the much anticipated hand of baton between President Ian Khama and the incoming President Mokgweetsi Masisi, the regional economic outlook seems promising despite macroeconomics.
The question that remains to be answered is who will be the change maker/transformer in the region as by April the Southern African region would have had three countries with change in leadership? More is expected from these new three leaders in terms of policy reforms, investor confidence, job creation, infrastructure development amongst other key challenges affecting the region.
Earlier this week, South Africa’s new President Cyril Ramaphosa reshuffled his Cabinet which is now seeing investor favorites return to run.
Ramaphosa’s projects to drive the recovery of SA’s economy in 2018 include: job summit, investment conference, revive the manufacturing sector, supporting black industrialists, youth employment service initiative, youth working group, infrastructure investment, small business development, grow tourism sector, and digital industrial revolution commission.
In his observation, Jeff Gable, Chief Economist and Head of Research at Barclays Africa group thinks that it will be difficult to find the right people to replace those who will be ousted for corruption as Cyril Ramaphosa administration cleans up. “We need to do more on land distribution but it might be in a tiny fraction. South Africa has barely grown in terms of the economy over the last 3-4 years. We are hoping to see growth between 1-3 percent. We don’t anticipate the reserve bank will hike interest rates soon,” so he says. There are spending pressures in South Africa largely in education, state owned enterprises and the public sector. In the country’s recent budget speech delivery, a rise in value added tax was announced, which Gable sees as a brave call.
Masisi, who take over on 1st of April 2018, also has a lot to of transformation that he needs to do. There is great belief that under Khama administration the business confidence and investment into the country has been on the decline. Investors are frustrated by the processes of acquiring visas into the country. However, there is optimism in business confidence going into 2018. On the other hand the country is still highly dependent on minerals, and struggling to diversify its economy despite the economic diversification drive strategy in place. The youth unemployment level is also high.
Business Botswana President, Gobusamang Keebine said the business community is hopeful on Masisi. He said the economy of Botswana is not doing well and it gets difficult by the day. This is evidenced by the continuous drop in almost all the indicators that are used by the World Bank to measure the Ease of Doing business.
Masisi’s administration will have to loosen up a bit on the process of doing permits and forming a company which seem to frustrate investors.
According to Keebine’s observation, where government civil service is concerned, people are disgruntled. “The leadership is not doing its job diligently. There is a lot of disgruntlement and it is more to do with the attitude. People just drag their feet at the highest level.” Some of the Ministers he said are afraid to make decisions on their own even on small issues; they rather bring matters to the High Level Consultative Council to be dealt with.
He went onto express that, “we are hoping that with the new leadership coming in April, the roles will be more clarified. From the incoming leadership, you can get the sense that they see things are not done right. There is hope that some things will be undone.”
According to their research with three audit firms locally, Keebine said it has come out that clients are not more even investing money in the country anymore. There is no certainty whether if they come to Botswana, they will be right skills available. Everybody is sitting on the edge. Some are reluctant to come invest in Botswana, some close down operations because of non-renewal of work permits.
Since the formation of the Directorate of Intelligence Security Services (DISS) under the leadership of President Ian Khama, the vetting of the work, residence permits and VISAs has been done by the agency rather than the mandated Ministry.
This once became a topical debate in early March 2017 in parliament where members of parliament called on for the removal of the DISS from the above processes as it scares away potential investors, hence a negative impact on attracting the foreign direct investment.
Looking to Zimbabwe, Emmerson Mnangagwa who recently visited Botswana said Zimbabwe is open for business.
Mnangagwa vowed to resuscitate the comatose economy through stamping out corruption, open the country to foreign investment and inculcate a new culture of hard work among Zimbabweans.
In his inaugural speech he said, “Our economic policy will be predicated on our agriculture which is the mainstay, and on creating conditions for an investment-led economic recovery that puts premium on job creation.”
He therefore, appealed to the Zimbabweans to work together in revitalizing the economy and creating jobs. Zimbabweans have blamed former President for the country’s economic and political woes.
He has also promised to be prudent with public finances, ensuring that more money is channeled into production as opposed to consumption.