Thursday, October 28, 2021

Okavango presidential resort: Indepedent economist slams OP’s ambition

Botswana economy faces a historical crisis. The root causes are the twin deficits. First, the persistent fiscal deficit – the gap between government expenditure and income. Second, the external current account deficit – the gap between total exports and imports. The problems have been festering for too long. Without urgent reforms, the crisis could easily morph into a full blown debt crisis. Perhaps this explains why Independet economist, Sennye Obuseng is against the government’s intention to build a presidential resort in the Okavango Delta. Given the government’s level of expedmtuire and the current needs, Obuseng says there is no compelling business case for it.

“I speak without the benefit of the considerations the government made to arrive at the conclusion that a presidential resort belongs amongst our priority public interest expenditures at this point in time,”says Obuseng.

Given the austere fiscal environment and the socioeconomic challenges, Botswana is facing, not least Covid-19, the consulting economist from SPECK Dynamics struggles to appreciate how the leisure comforts of Presidents, current and future, could make it into the debate on where to spend public resources and where not to at this time.

Giving his two concerns about the project, Obuseng says, “one, it is consumption, not investment. Even if we allow for the inclusion of a Conference Facility for Government business, its complexion does not change much. It largely remains government consumption. Second, holding Government events in the middle of the Delta will prove very costly because most government offices are in South Eastern and North Eastern Botswana, and the area in question is likely to be accessible only by air. It will be a very expensive way for the Government to do business.”

Botswana’s philosophy of a market-oriented economy is not aligned with the resort’s implementation, as it hints at more government involvement. Obuseng said that if we still believe growing a dynamic private sector and making markets work better for all is our best bet for sustainable development, then the resort sends absolutely the wrong signal and negates all that. “It says to private investors that they could find themselves competing with the Government. In any case, tourism is an area where private sector risk capital is not in short supply, so why would we want to risk public money in that area?,” asks Obuseng rhetorically.

Quizzed on the impact the resort may directly have on the economy, Obuseng said he is concerned about the signal the country would send to investors. “It could hurt investment. It will also, if the conference facility is built, divert government business from the private sector with no apparent efficiency gains for the government and the economy,” says Obuseng .

He add that in all likelihood, the facility will be idle most of the time. The economist said when government does use it, it will be at far higher costs than with available alternatives, and that is because of high development access costs. “People will have to fly in, often times from upwards of 600 kilometres away for most. It will not help improve cost effeciecncy in government.”

Obuseng says that the president resort is in all probability not a business. “The land it is on will be a high security area. So it will probably not be accessible the same way State House is not. That is the reason I call it consumption,” the economist told Sunday Standard Business.

He also mentions that attempts may be made to turn the government conference facility into a self-sustaing business, and that will not be empirical. “If history teaches us anything it is that the government is unlikely to make it work. The government has a poor history of running State Owned Enterprises, so if we try to maximise exploitation of government business, we would essentially be asking he government to transact very inefficiently,” says Obuseng.

The Minister of Land Management, Water and Sanitation Services Kefentse Mzwinila told parliament that a decision was made by the government that it is desirable to acquire a piece of land in the Okavango Delta for use by the State. The land parcel being acquired by the State is 8 km by 81 km in size situated within areas demarcated as NG 28 and NG 21 in the North West District

“Office of the President (OP) had negotiations with the Ministry of Environment, Natural Resources Conservation and Tourism about the possibility of land for tourism purposes and they came to our ministry as the custodian of land about this request. We agreed with the request that it will be in the best interest of the public, in terms of public purposes for the land to be allocated to the State specifically to OP. It was a plan that had three ministries involved Office of President, ministry of Environment and land management,” Mzwinila stated.

RELATED STORIES

Read this week's paper