Public private partnerships (PPPs) have over the years become a mechanism to develop large-scale high budget infrastructure projects on a cost effective and sustainable basis.
As such, the First National Bank Botswana (FNBB) says private-sector led growth will enable improvement in productivity and employment, which are key ingredients for sustainable growth.
In this response to the National 2018/19 budget speech, FNBB Market Strategist Moatlhodi Sebabole said government will need to enact the Private Public Partnership (PPP) Act, Business Facilitation Act and draw up a PPP pipeline so as to enable private sector to play a crucial role in project funding and project management.
Sebabole further stated that from a macro perspective, the services sector will lead growth if the efforts to transform the economy from mineral-led to human-capital led.
He added that this will take substantial investments in ICT; an overhaul of the education system; removing barriers of entry from informal to informal sector and targeted FDI growth.
“The key benefit for accelerated, diversified and growth that ensures higher per capita income is because it brings about economic prosperity for both businesses and households, a key enabler for circulation of money,” said Sebabole.
He observed that higher per capita income means higher disposable income, adding that thus consumers will consume business services and goods at a higher rate. He said given the pick-up in business demand, business profitability and thus tax collections increase, as well as expansion plans which means more people getting jobs.
He is of the view that the net effect of such growth is thus higher growth in private household consumption and business activity and translating into higher GDP growth.
He believes that the economy needs to undergo structural transformation from commodity-led to investment led. He added that the focus has to shift from mining to other aspects such as industrialization within manufacturing sector.
“Botswana has a balanced economy, however it remains vulnerable to external shocks. The economy is balanced because it has high FX reserves which its able to tap into when there’s a downturn; the debt-to-GDP levels remain low and favorable for investment borrowing;,” he said.