Monday, August 10, 2020

The plan to fix the economy through the “Apex model”…

Today marks just under 14 days before the new President, Mokgweetsi Masisi’s 100th day in office. While a lot of things are now known about Masisi and his administration, his economic roadmap for Botswana remains unclear and ambiguous. While the clock continues to tick, the information relating to “how” the new administration will tackle high level of poverty, high unemployment and lack of access to serviced residential land seems to be coming-in bits and pieces.

This week, the nation got a peep into the non-existent “plan” through a press conference hosted by new Trade and Investment Minister Bogolo Kenewendo.

Through the press conference held in the capital Gaborone, Kenewendo once again expressed the government’s intention to create a conducive environment with a view to diversify and grow the domestic economy as well as create wealth and employment for the locals.

From her side of the corner, Kenewendo, through the trade and investment ministry vows to use policy tools at her disposal to protect the country’s emerging industries.

The start off point, she says, will be dividing the ministry into three apexes ÔÇô SMME development, Investment Promotion and Export Development.

Through the first apex ÔÇô SMME development, MITI intends to prioritise entrepreneurship and advancement of Small, Medium and Micro-sized Enterprises (SMMEs) as the catalyst to achieving economic growth, development as we as diversification.

The second apex ÔÇô investment promotion, seeks to bring investment opportunities to the attention of potential investors who have the capacity t provide capital, jobs, skills and technology to the country. Kenewendo says investment promotion targets both domestic and foreign companies.

Kenewendo admits that in Botswana, the term “investors” for quite some time has usually been closely linked with foreign direct investment (FDI), which targets large corporate and wealthy investors.

“We recognise Batswana and the contributions they have made. We are going to roll out the red carpet to them as well because they have proven their capabilities, and they can also tap on identified opportunities with our support,”, the youthful minister said.

She goes on to explain that the third apex ÔÇô Export development will explore export led growth by promoting export of goods for which Botswana has a comparative advantage.

Kenewendo has the confidence that the “apex model” is the right medicine for poor service delivery within her ministry.

To support the new model, MITI also intends to undergo a rationalisation exercise process following the realisation that mandates of some of the parastatals within it are converging resulting in some overlaps and duplications.

“A rationalisation exercise is ongoing and it will go a long way in eliminating duplication of efforts across the ministry’s parastatals where existent culminating in improved service quality”, says Kenewendo.

While she confirms the exercise, the key question that remained unanswered was whether the exercise will result in job losses or job creation. From the look of things, the issue is sensitive and no one ÔÇô not even the new minister would at this stage be willing to openly talk numbers.

A source within the ministry however has its heads on the block, “A sizeable number of LEA employees will soon lose their jobs”.

LEA ÔÇô or the Local Entrepreneurship Authority is one amongst the 11 parastatals within MITI that are said to be eyed for a possible merge with another parastatal ÔÇô Citizen Entrepreneurship Development Agency (CEDA).

PROTECTIONISM POLICIES

While a question mark lingers on the job losses/creation strategy for MITI, the ministry has made strides in protecting domestic entrepreneurs against their foreign counterparts.

Protectionism, an almost opposite of globalisation is a set of policies aimed at protecting domestic industries against foreign competition by means of tariffs, subsidies, import quotas or other trade barriers placed on the imports of foreign competitors.

At the core of protectionism is that if a country is trying to grow strong in a new industry, trade tools can be used to protect it from foreign companies. This gives the new industry’s companies time to develop their own competitive advantage.

Kenewendo says as a way of promoting the development of water bottling sector and attracting investment, MITI through the Control of Good, Prices and Other Charges ACT has put measures to restrict the importation of bottled water. The new regulation, gazetted in April 2018 is expected to enter into force at the beginning of August 2018.

“This will go a long way in ensuring the sustainability of the water bottling sector and assisting in the national diversification efforts”, says Kenewendo.

At the same time, MITI is said to have set September 2018 as the target date to implement a ban in importation of cement.  It is said that the proposed restrictions will require that 70 percent of cement be sourced from local manufacturing companies and 30 percent be imported.

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