Wednesday, May 27, 2020

The P10m from tenders reserved for citizens won’t trickle down to most needy citizens

On paper (literally), the February 28 order issued by the Minister of Finance and Economic Development, Dr. Thapelo Matsheka, seems a good thing. Invoking powers vested in his office by the Public Procurement and Asset Disposal Act, Matsheka decreed that all government works, supplies and services tenders up to P10 million would henceforth be reserved for 100 percent citizen-owned, medium and micro enterprises with a maximum annual turnover not exceeding P10 million itself.

The sums and dispensations vary but going back to the administration of Sir Ketumile Masire, there has always been ultimately failed attempts to meaningfully empower citizens in the fashion of Matsheka’s order. As things stand, the Trade Act reserves the following business activities exclusively for citizens of Botswana: auctioneer, car wash, cleaning services, curio shop (souvenirs and cultural artefacts), fresh produce, funeral parlour, general clothing, general dealer, hairdresser, hire services, Laundromat, petrol filling station, and takeaway food.

The starting point should be parsing the language and to that end, the Citizenship Act is a useful reference. For starters, what is a citizen? The Citizenship Act establishes five types of citizenship: citizen by birth, citizen by descent, citizen by adoption, citizen by settlement and citizenship by naturalization. In case of the latter, a foreigner who is naturalized as a Botswana citizen must take an oath of allegiance and the qualifications to be naturalized are “good character”, “sufficient” knowledge of Setswana or any other indigenous language and upon being granted a certificate of naturalization, the new citizen must reside in Botswana. The Act doesn’t define “good character”, “sufficient” and there are no formal processes for monitoring whether beneficiaries of this dispensation actually reside in Botswana. 

That there are naturalized citizens who have bad character and don’t speak any indigenous language shows that the enforcement of this Act is very poor. That some naturalized Batswana repatriate profits from their businesses to their countries of origin and exploit their Batswana workers show that the oath of allegiance means nothing to them. That there is no long queue of people who want to become citizens of economically-challenged countries like Burundi and Zimbabwe is adequate proof of what motivates desire of most to become Botswana citizens. That non-citizens can game the system to trade in businesses that are supposedly reserved for citizens means that the provision in the Trade Act that seeks to do so is ultimately ineffectual. That non-citizens do so for reserved businesses necessarily means that they will find a way to also benefit from the P10 million tenders that Matsheka plans to reserve for citizens.

Analysis by the World Top Incomes Database project at the Paris School of Economics shows that Botswana’s top 10 percent earned 67 percent of the national income while the bottom 40 percent earned only 4 percent. Matsheka’s order is mainly designed to empower people who are citizens by birth, descent, adoption and settlement. Historically though, these citizens themselves don’t believe in empowering other citizens. As a matter of fact, when the former Debswana Diamond Company Managing Director, Louis Nchindo, got on his soapbox about “citizen economic empowerment”, he was not thinking about citizens outside his family and social circles. Some Batswana-ba-sekei (to use President Mokgweetsi Masisi’s term for full-blooded Batswana) operate companies through which they have been beneficiaries of the reservations policy and employ other full-blooded Batswana whom they exploit dastardly. When they bid for jobs, these companies play up the fact that they are “100 percent citizen owned” and that they will employ a certain number of citizens, thus economically empowering them. In some cases, bids are scored for citizen economic empowerment and it is reasonable to assume that this factor alone can help one win a government contract. However, when the money comes, it is almost always the owner of the 100 percent citizen-owned company who personally benefits at the expense of their citizen employees. In one too many instances, money that could have gone towards decent wages is diverted to the purchase of luxury goods, exotic travel and over-the-top merry-making. 

Example: On account of having been marketed heavily to black communities in the immediate post-World War II American, Hennessy is one of the most consumed luxury goods in black America. Translated into hard figures, between 60 and 80 percent of Hennessy’s global revenues come from African-Americans. What the latter do is aped by urban Africans and Hennessy (which costs between P1100 and P1600 a bottle in Botswana) is a popular drink among the tenderpreneur set that patronise Gaborone’s exclusive “lounges” – a new term for nightclub. The money that buys Hennessy could have gone towards staff wages.

What happened in parliament a few days apart shows that there is no coordination of citizen economic effort across ministries. Matsheka’s order has gone into effect in the absence of an all-embracing statutory instrument to ensure that money that should have paid decent wages isn’t instead used to holiday in the Seychelles or buy Hennessy at exclusive Gaborone lounges. As a matter of fact, the Minister of Investment, Trade and Industry, Peggy Serame, pretty much confirmed the latter assertion when she presented budgetary estimates for her ministry to parliament’s Committee of Supply last Wednesday: “Mr. Chairman, my Ministry has started the process to develop the Citizen Economic Empowerment Law, with consultations expected to be concluded by April 2020. The main objective is to ensure inclusivity and meaningful active participation of Batswana in the development of the economy. The Law is planned to be in place by 2021.” The latter guarantees that 100 percent citizen-owned companies that win P10 million government contracts will take advantage of this gap in the law and continue paying their citizen workers slave wages and keep the rest for themselves. As early as now, it is also very easy to predict that the law Serame said is being promulgated will not amount to much because it doesn’t single out the one racial group that needs to be economically empowered. 

Likewise, no processes are in place to ensure that citizens who benefit from government contracts – in some instances having been awarded such contracts because they promised to empower other citizens, actually do so. On account of being under-resourced, the Department of Labour and Social Security has been not very effective in enforcing worker protections in Botswana’s labour law. There is also very strong belief among workers that some labour officers are bribed by employers. Indeed, such discovery was made about a former Commissioner of Labour and Social Security.  

Real economic empowerment requires a radical approach the Botswana government doesn’t seem to have the heart for. For such purposes, not everybody should be considered a citizen. In the particular case of Botswana, there would have to be positive racial discrimination in favour of indigenous (meaning black) Batswana. A similar view has actually been expressed in parliament, first by then Shoshong MP and current High Commissioner to Kenya, Duke Lefhoko, and a few days ago, by the Gaborone Central MP, Tumisang Healy. On paper, the South African government went a step farther and introduced the Broad-Based Black Economic Empowerment Act in 2003. This law recognised the fact that for centuries, black South Africans had been economically marginalised and that there was need to develop a statutory instrument to close the yawning wealth and income inequality between blacks and other races. While the country’s black economic empowerment degenerated into a farce because it has been hijacked by ruling-party (African National Congress) tenderpreneurs. It remains a good idea in principle.

Botswana’s situation is not any different from South Africa’s and any citizen economic empowerment law has to acknowledge that indigenous Batswana are the most economically marginalised racial group. As used by Matsheka and Serame, “citizen” includes whites and Asians who are certainly not going to pass up the opportunity to hoard more wealth at the expense of black Batswana they have never wanted to share wealth with in the first place.

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Sunday Standard May 24 – 30

Digital copy of Sunday Standard issue of May 24 - 30, 2020.