Wednesday, July 24, 2024

Productivity holds the key to new growth potential

Across the world there is a lot of talk about economic uncertainties.

It really is nothing much more than an article of faith to believe that injecting more money can on itself have a dent on the challenges that the economy faces.

In that score the budget which will be in two weeks time should depart from the tired path of just doling out money without providing a blueprint of where the country is headed. 

Other than just dishing out money, it is important to also highlight the many intractable problems and bottlenecks that our economy faces.

After more than 30 years of trying, why are we failing to diversify our economy?

After more than 20 years of working at it, why are we not a services economy that was once the ambition of the now defunct BEDIA and IFSC?

After more than 15 years of continuously pumping more money into education than on anything, why has the quality of our education regressed?

These are just a few of the questions that a rounded budget should address.

Since the late sixties diamonds have provided disproportionately high amounts of export revenue for Botswana’s economy.

That was good while it lasted. One can reasonably argue that diamonds provided Botswana with creating an economic base that would otherwise not have been possible had such a find been discovered.

But increasingly, it now looks like the phrase “diamonds are forever” could not have been further from the truth.

Our reliance on diamond has become shockingly unsustainable. And this is not just because the sales are today at a slump, but also, even if prices were to improve, the future points to an existence where getting the rough from the soil will become prohibitively expensive.

We need to look at new ways to take Botswana’s economy forward.

Where other countries had to through wars as a result of their minerals, ours have resulted in a totally different kind of curse.

Because money was for a long time never an issue especially within the framework of public finance structure, that has resulted in systemic efficiencies that was for long concealed by infinite money supply.

There is need for structural reforms before there are introductions to unsustainable, short-term packages like the Economic stimulus Package. ESP might help create a false feel good aura. But that will not go far. As a tool for those intent on holding political power at all cost, the ESP might, potentially work wonders in the short term.

But it manifestly goes against the prudence, austerity and frugality that our leaders like to claim.

The required reforms include enhanced corporate governance rules, strong political will against corruption, and above all a change in work ethic.

Botswana’s economy will not go to another level unless productivity levels increases.

Diamonds have played their role. And it is now time to look at others sources of growth.

Botswana’s private sector remains too weak, too fragile and overly dependent on government patronage. That has to change.

It can only be done through reduced regulation. And of course allowing more indigenous citizens a bigger role to play in the economy of their country!

What we see today is nothing more than tokenism.


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