Botswana finds itself in a somewhat conflicting challenge – on the one hand it depends heavily on government activities in particular its spending to spur the economy, and on the other an underlying expectation for the private sector to play on the same league in terms of driving the growth of the economy. Practically speaking however, these two do not seem to demonstrate a parallel and equally important function.
This is a problem because as pronounced recently at the Bank of Botswana (BoB) economic briefing by the Deputy Director under Research Matthew Wright that “countries and sectors don’t compete, businesses do,” it therefore means that the significant role that government continues to play in the country’s economy does not propel it towards achieving competitiveness. It also implies that the minimal contribution of the private sector is an indication that Botswana is not competitive. The private sector as has been denounced by various industry experts is challenged with mammoth impediments that it persistently contends with. Reports have cited that businesses have become less optimistic due to hindrances such as power and water shortages, sharp decline to the business sector and weak demand by consumers. These factors, according to Motswedi Securities, contributed to the sluggish business performance.
“There is need for an innovative and clear strategy to grow the economy. This strategy should be anchored on the private sector as the engine of growth while government focuses on policy making and regulations,” said Leta Mosienyane, Chairman of Business Botswana (BB) in his response to the 2016/17 budget speech earlier this year. BB has a track record in terms of articulating the failures of government in reforming the environment the private sector operates in to allow it to increase its role in the economy.
The current lethargic state of the economy prompted government to inject a stimulus, which is anticipated to keep the economy going. However to maintain economic activity is not the same as to increase the competitiveness of the private sector particularly without reformation. BoB Research and Financial stability Director, Dr. Kealeboga Masalila stated at the briefing that the role of government is to provide infrastructure that supports productivity so as to ease the operating environment for the benefit of the private sector. Wright posited that individual businesses have the freedom to attract investment and also possesses the capacity to become “viable, innovative and productive industries” and should as result use such factors to push growth of the economy. He identified infrastructure as an external factor that aids the private sector.
Botswana is yet to demonstrate its competitiveness and perhaps if government heeded to the reformation call by the private sector, businesses could start to compete as they are expected to.