Friday, February 26, 2021

Standing on the Shoulders of Giants ÔÇô Botswana’s television factory ..that never was!

South Africa has consistently conducted a policy of attempting to undermine any attempt by Botswana to develop new export sectors to South Africa and this is true both pre- and post democracy ÔÇô Writes PROFESSOR ROMAN GRYNBERG
When you look at the commercial history of the country two over-riding factors appear, from the nation’s records that explain our failure to diversify the economic base of the country . The first is that the government industrial has never really seemed to understand that more was needed from government than simply doling out cash subsidies to make a success of an infant industry make the progress from infant to mature exporters. This is true with so many industries including the clothing industry which continues to get cash bailouts from government to the diamond cutting industry which is not getting the sort of support that is needed to increase productivity and to compete with India and China.
But another extremely important factor has been the pervasive and dysfunctional role played by South African industrial policy as it pertains to its SACU neighbours, in particular Botswana . One of the greatest constants of the evolution of the relationship between South Africa and its neighbours has been its ‘winner-take-all’ approach of Pretoria to industrial policy. It has consistently conducted a policy of attempting to undermine any attempt by Botswana to develop new export sectors to South Africa and this is true both pre- and post democracy. In fact if one were looking for something that the ANC has in common with its predecessor government it is its policy of national protectionism. One could be accused of being a closet ‘dependency economist’ of the 1960’s but unfortunately commercial reality goes beyond mere name calling. South Africa is a regional hegemon and will act to protect its regional interests in order to maintain its dominant position and this is true both pre and post 1994.

Apartheid For Cows

Long before Dr Malan developed the concept of apartheid for humans the South Africans were maintaining a policy of apartheid for cows from Botswana. Under the SACU customs union which has existed in 1910 Botswana or Bechuanaland as it was called had the right to export to South Africa anything that was produced in the country. The pity was that before diamonds from Orapa and nickel and copper from Pikwe we only exported two things- cattle and labourers to the mines on the Rand. In the 1920’s and 1930’s in order to protect their own industry from competition from black cattle farmers in Bechuanaland the government in Pretoria imposed a weight restriction on cattle to be slaughtered in the abattoir in Johannesburg. They were not to be below 360kg. This meant that only cattle from the white farmers would weight enough to pass the minimum weight limit and therefore there would be no competition from black farmers.
Some people who call themselves economists in Botswana have told me that this was of no importance as it did not lower overall exports. What it succeeded in doing is helping to reinforce the racial structure of the cattle industry where Batswana cattle owners would in effect be forced to sell to white farmers so that the cattle could be grazed and fattened and thereby attain the minimum weight along with good export prices. But more importantly if farmers were not able to get the premium export prices for their cattle then they and their children could sell domestically for a pittance or they had one important option- to go to the South African gold mines and work as labourers.

The Secret Protocol

At independence Botswana sought a renegotiation of the SACU agreement and the South Africans, desperately looking to seal their economic relationship with its neighbouring newly independent African states, signed a fabulously generous agreement which allowed President Seretse Khama to replace dwindling UK financial transfers just after independence for increased transfers and hence dependence on Pretoria. But, as the saying goes ‘when you sup with the devil you need a long spoon’. In return for the money that Botswana, Lesotho and Swaziland got and continue to receive to this day there was a secret agreement that the BLS states would not seek to use the external SACU to develop industries unless they were able to supply 60% of the SACU market. A completely impossible figure which meant that the relationship that developed between South Africa and the BLS was that we got money and in return South Africa got development. This secret protocol only became public with the end of apartheid in 1994. While the provisions of the secret protocol no longer exist, still to this day the external tariff is set by Pretoria, and the now BLNS countries which were supposed to set up a tariff board after 2002, never did so.
Once again, those who claim to be economists say this is a wonderful thing because Botswana never developed any of the inefficient industries that other African countries have developed. This is completely wrong- Botswana set up many inefficient industries but because of the secret protocol they were all based on the tiny local market rather than the whole SACU market and hence doomed to be eternally inefficient eg chicken and milk.

The Television Factory… that never was

In 1976 the government of Botswana approached the South Africans to seek permission to establish a television manufacturing facility in Botswana by the Swedish company Luxor. A South African company called Pretorius TV ( Pty) Ltd had approached the government but had not shown continual interest ‘ … and we have reason to believe that this has been due to pressure from the South African’ Despite strong objections from Pretoria they agreed to allow Botswana to establish a factory but it could not export more than 20,000 units per annum to the South African market. There were a whole host of other restrictions and conditions in a ten page memo that has recently been released by the National Archive. These required any Botswana exporter to get permits for virtually everything from Pretoria. Of course with all of the restrictions placed on Luxor or any other TV producer and given the size of the market then they did not proceed and we never had a television factory.
Some twenty years later the post-apartheid government did exactly the same to the Hyundai plant limiting exports of Botswana made automobile to South Africa to 1,000 units per month when the minimum profitable scale was about 1,800 per month which helped destroy Hyundai. One can only imagine how different Botswana would be today if Pretoria had permitted these export efforts to succeed.

…. And Electricity

What has been true of Botswana’s export of cattle, televisions and cars is also true for electricity exports in the 21st century. We have what is said to be 2/3 of Africa’s coal and despite the failed attempts of CIC Energy and now Jindahl which has sold its stake in the Mmambula coal fields, the South Africans have never been willing to sign an electricity off-take agreement with a private Botswana based firm. And so the South Africans prefer to sit in the dark and for Botswana to pay spot market prices to import diesel generated electricity from South Africa.
Sir Seretse Khama was one of the true giants of post-independence Africa and the next generation always stands on the shoulders of those who have passed. But if the past generations were always beaten back by a neighbour hell bent on pursuing its own narrow, short- term commercial interests, then even standing on the shoulder of such a giant is difficult to see the industrial future of Botswana above the deep diamond pits at Orapa and Jwaneng.
These are the views of the author Professor Roman Grynberg and not necessarily those of any institution with which he may be affiliated.


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