Dumela Tautona! Firstly, congratulations on your ascension to the highest executive office in the land where it appears you are riding an amazing crest of public confidence. It all seems refreshing but I imagine that your main concern is not the public confidence; your main concern is the reality that remains once the confidence fizzles out. And that reality, according to you, is the plight of the unemployed, in particular the youth, in this country. Not the most groundbreaking discovery, but all well and good. We should allow you to do what you believe is right. Our duty in turn, is to help you think with expanded clarity by offering our intellectual prowess as shareholders in this country, as granted by our full voting rights. I know you probably have a cohort of technocrats surrounding you and I know they mean well in their advice to you, but you must also be reminded that this is not the age for text book solutions. Those solutions are no longer enough to deal with the challenges you are facing. Try to imagine what the future should look like for this country’s economy and build a formidable foundation for that future.
Three things you must shift your mind on: the first is the myth that to create employment you must boost the activity of private business. Well, maybe it is not a myth, but certainly this way does not create employment. The approach has been tried before and evidence is showing that it has failed to boost economic activity. Americans are a great example of this. They have invested heavily on trickledown economics but you only have to look at their deficit to appreciate the gravity of my argument. They live in constant fear that the sky might fall on them as they continuously play Russian roulette with the default cliff. Trickledown economics create a huge debt bulge that expands fiscal deficits which in turn make it difficult to channel resources to areas that return life changing value. Bottom-line: private businesses do not create jobs; as such, it is a myth that boosting them with programmes such as the infamous Economic Stimulation Programme will have any impact on the economy. We also saw that with the bail-out of the textile industry; we see that with the perennially bailed state owned enterprises; we saw that with banks ÔÇô they all received a boost but the economy remains weak. Typically, the private sector will only share around 30% of their revenue with the rest of the economy. This creates great inequality as 70% of the wealth created remains in the hands of the few, and not even by design or criminal intent. But because the few with the most income can only spend so much of it ÔÇô they can only buy so many fridges; so many packets of pap; so many cans of soda; they can only have one hair-cut at a time; they can only drive one car at a time, and, and ÔÇô you get the picture Mr. President!
Why am I painting this picture? You see, when you look around the world and review countries that have stable economies and rank high in prosperity indices, you begin to realise that their success stems from a very strong middle-class participation in the economy. Therefore, it can be deduced that the middle class is the one that creates jobs as they drive demand. Essentially the size of their appetite determines the appetite for business expansion. Your predecessor was correct to focus on poverty alleviation but unfortunately he ignored those who are the natural market for the goods produced by all the beneficiaries of his programmes ÔÇô the middle class! Ergo, as you think over your employment creation programme, it would serve you well to invest, not on programmes that drive private business, but on interventions that boost consumption. Without a doubt, to get rid of poverty and unemployment requires a combination of things, but consumption is right at the centre of that universe. Currently, executives are busy cracking the whip on a demotivated workforce that spends most of the day twiddling its thumbs, waiting for customers to enter their premises. In the meanwhile business can no longer access credit and overdrafts, instruments that have thus far carried them, even at a greater risk to their owners – you only have to go through the “in the matter between” pages to confirm this. Strategy after strategy is being tossed into trash cans as various teams are trying to make things work in a market where there is zero growth due to suppressed consumption. So, you can clearly see that the middle-class is a strong driver of economic activity. I said in an article – Botswana’s Middle Class; The Real Ground Zero In 2017; Sunday Standard – 29 Jan 2017 – that the middle-class will be the wild card in the 2019 general elections and my understanding was partly informed by this.
Which brings me to the second thing: protect markets and not business. Your economic agenda should concentrate in the middle of the economy. The demographic dividend you are constantly referring to will benefit a lot from your boosting of the markets. The generation that is currently standing at the golden gates of this economy is probably the hungriest and (the) most innovative of all ever produced by this country. Against all odds, they have created their own shared economy that is propelled by the strength of their individual desire to make it. They are hacking their way through, picking a human limb over there and stitching it to a dog’s ear over here. This says that the barrier is not unemployment. The barrier is markets that can consume their produce. The best thing you can do to unleash their full potential during your administration is to re-establish an expanded middle-class. This is the most pro-business thing you can do if you want to succeed in your endevour to create jobs. Using policy instruments to shut borders is not the way to go. It harms market activity, firstly by forcing inferior products on consumers, secondly it creates an entitlement mentality on local business and lastly it exposes the economy to export limitations. So, instead of restricting bottled water or subjecting markets to gangrened tomatoes from local farmers, local businesses must be encouraged to compete with the world because, once they manage to dominate their warm markets, they will be forced to look outside their border for expansion and growth. I am not sure if those borders will allow it if their goods are not allowed into this one – I know I would not. I am quite aware that there are no perfect and free markets, but this economy can go a long way if you deregulated business. Currently business is heaving under a heavy burden of regulation, with every sector being headed by a regulatory authority or other. While I understand and appreciate the rational for regulation, I also know the sort of bureaucracy regulation imposes on business.
Therefore, your success in your endevours as President will inadvertently be impacted by how you redefine the rules that regulate the market space. As a guide, reflect on who the regulation benefits and who gets harmed. The bottom-line is that you can never create jobs without shifting the regulations. The issue is not productivity or the economy per se as testified by Botswana’s GDP ÔÇô you cannot have such a high GDP growth without a substantial and productive workforce. The issue is better efficiency tools ÔÇô both for consumption and competition. If Botswana can become more efficient in getting to markets on time with the right product, then everyone will win. I know that the digital economy is touted as efficient whenever efficiency matters arise, but indications are that, the digital economy has taken away jobs in some instances and cut wages and salaries in most, if not all others. This is a challenge for you if your agenda is to create jobs because you are forced to consider the impact of the digital economy on your grand plan. Amazon.com as an example employs roughly 60,000 people and makes approximately $170/180 billion in sales a year. That is astronomical, but imagine how many people would be hired to generate the same amount of money were there no robots and automated business processes? Even as I sound like a Luddite, I am not refuting the achievement of technology in improving lives in most instances; I am merely highlighting the disparity.
The last thing: develop the discourse and political space. I know you want to win, even when it is to your own detriment at times. But for the sake of the greater good, develop the political landscape by allowing for younger politicians to rise. While recruiting members of the opposition boosts your party, it leaves the political landscape poor. We only have to look to football for examples. All the big teams in all the big leagues recruit top footballers. Whether it is Sundowns in South Africa or Barcelona in Spain, the plan is the same: to weaken your opponents, buy their star player. Even if you then keep them benched through the season do it, for it leaves you supreme. Great mentality but it destroys talents as well as the business of football. It can be argued that Sundowns hired Rre Tsotso Ngele not for his exploits in the field of play, but to weaken his previous team. In the same manner, if the political landscape is not developed, democracy is weakened and this works against the social contract your government has with the people of this country. Even though democracy is not the greatest system of governance in the world; it has somehow kept this country going, as such it must be constantly nurtured. Create an ambience for discourse by empowering the media; create one for accountability by inteething parliament; create one for service delivery by devolving power from the central government to local authorities. In the short run this will improve efficiency and productivity but in the long run, it will strengthen Botswana. Former governor of Bank of Botswana, Mme Linah Mohohlo, is right: Botswana can attain high income status during your time, but that takes unwavering loyalty to the wishes of the citizens of the Republic. In return, all the executives currently poring over their strategies for growth will reward your ambition to create jobs that are driven by the middle-class. We may disagree on how to get there, but let us not disagree on our destination.
Thank you for your ear Mr. President and I wish you well.
*K. Gabriel Rasengwatshe is a multi-dimensional speaker, author of We Need an Economic Cooling and presenter of Gabz-FM Breakfast Show, Every Weekday, 7am-10am. Gabzfm.com.
