Monday, March 8, 2021

Outsourcing of some gov’t services highlights the urgent need for a law on citizen economic empowerment

When presenting the budget speech in 2012, government announced its intentions to cut the public sector wage bill by five percent annually for three consecutive years. This was to be partly achieved through outsourcing non-essential services to the private sector as per the advice of the International Monetary Fund (IMF).

Three years down the line, the extent to which this has been achieved is not clear due to lack of data. However, at the time government hinted that it intended to cut around 5,000 jobs per year. It seems the project was either abolished along the way or poorly implemented, because to date the central and local governments remain the dominant employers in the economy, which translates into a relatively large public sector wage bill as a share of total government expenditure. For example, in 2011/12 the public sector wage bill accounted for about 31 percent of total government expenditure. In the following financial year (2012/13), the public sector wage bill slightly reduced to about 30 percent of total government expenditure, which suggested that the outsourcing process was being implemented with caution due to the significant social impact of such reforms.

We all are aware of that prior to the 2008 global financial crisis the government of Botswana ran budget surpluses and accumulated substantial savings. As the saying goes that “days are never the same,” there was a sharp reduction of 46 percent in diamond production in 2009 due to the global economic meltdown. This pushed the national budget into a substantial deficit of 11.3 percent of GDP, from an average surplus of 4.7 percent over the previous five years. While outsourcing may seem like the perfect solution for a deficit-plagued government like ours, its after-effects could provide unpleasant surprises. However, if properly implemented, outsourcing could have broader beneficial effects on both government and the civil servants who would be laid off.

A good outsourcing deal starts with a thorough cost-benefit analysis to see if a third party can effectively deliver services better and more cheaply than public employees. The key question therefore is whether our government has done its homework. What we know so far is that cleaning services in hospitals and security services in government departments have been outsourced. What is unclear is the fate of the people who were employed in those government departments. Were they absorbed into other government departments, were they given opportunities to own the enterprises to which their services were privatized, or were they simply laid off?

If they have been absorbed then government would have defeated the objective of trimming the wage bill; if they were laid off then we have to investigate whether they were empowered enough to deal with the challenges of their new lives.

The 2008 global economic recession strangled budgets, forcing other countries to lay-off employees and shut down some departments. As such, the search for financial salvation continues unabated in our country; and the idea of contracting public services to private companies as a way of cutting costs actually makes sense. Government’s efforts to disband some departments and trim down its wage bill should not be dismissed wholly as a bad thing. While being laid off is not enjoyable, it could actually result in positive developments if those who have been laid off are empowered.

Even though government does not have a specific citizen empowerment policy, it has reiterated its commitment to citizen economic empowerment, citing the localization policy, preferences under public procurement, as well as establishment of the Citizen Entrepreneurial Development Agency (CEDA) and Local Enterprise Authority (LEA) as evidence.

With that in mind, the logical thing to do is to empower those cleaners and security guards who are being laid off by grouping them into small companies that will in turn bid for contracts from government. Put differently, government should take advantage of his great opportunity to economically empower citizens who may have been cut off.

Apart from retaining their monthly income, such individuals will also be able to generate additional income from dividends at the end of each year. It is also important for government to stop being so secretive even about issues that must be shared with the public. The outsourcing program must be thrashed out in public for us to make sure that those who are affected are not left in the lurch, but are empowered even more.

It has been three years now but government has not said a word to explain whether the outsourcing exercise was successful, how many people were affected and how much money was saved. We don’t even know whether the project is still underway or whether it has been shelved.

As we patiently wait for answers that may never come, we remain cognizant of the #Bottomline that all these developments point to an urgent need for a law on citizen economic empowerment. Not a policy, but a law.

Policies have not served us well because they have not been enforced. In the end, foreigners capitalized on the current status quo while locals were left empty handed.

RELATED STORIES

Read this week's paper