In her just announced 2023/24 national budget, the Minister of Finance underscored the need to improve the efficiency of government spending as part of fiscal discipline. Of course it is a good thing to be efficient and disciplined in your spending and so no one can argue against that. The big question though is whether or not, the government in its current structure is really suited to achieve that feat. The answer to that is in the negative because the government lacks the market discipline that is inherent in the private sector.
In the private sector, companies face demise if they are efficient and therefore uncompetitive. This means that the market imposes costs on companies for bad behaviour. The government system on the other hand faces no such costs or pressure. Bad behaviour is rewarded with even more government subventions. Project delays are routinely and generously rewarded with supplementary funding and extensions of completion dates. We also see that with the likes of Botswana Meat Commission and Air Botswana where losses are regularly rewarded with more subventions and loan guarantees.
Botswana Power Corporation (BPC), to its credit, wants to charge market based prices for electricity but the government would have none of it. They would rather pay BPC the difference between what the power utility charges and the market price. When all has been said and done, the money that the government sends to BPC to pay for the difference between government mandated electricity prices and the true price comes from us in the form of tax.
Another flagrant example of the waste that goes on in government can be seen at Finance Park, right here in the nation’s capital. Swanky offices which were occupied by several government departments a few years ago now stand empty and vandalised. The excuse that is bandied for the exodus of government departments is that the terrain on which the buildings sit is unsuitable. It is interesting that only the government moved while private firms, because they are subjected to market discipline, stay put.
For the government to become efficient in its expenditure, it must launch genuine, bold and deep structural reforms. It must be borne in mind that some of the said reforms will take strong political will. Therefore, the first step towards reform is to reduce the size of government so that our hard earned money that we send to the fiscus otherwise known as tax is not wasted on a bloated bureaucracy but rather spent on productive endeavours such as roads, education and health and social protection for the indigent.
Secondly, the government needs to privatise state-owned enterprises to reduce the government footprint in the economy as part of structural reforms. The government’s extensive foot print crowds out the private sector because resources that should ordinarily remain in the hands of both of the private sector and ordinary people for investment and savings , now have to be go to the government where they will be largely spent in a profligate manner. Because the privatised companies are free from the strictures of government bureaucracy, they would have the space to develop, grow and even export
To instil discipline in government and ensure that projects get completed on time and on budget, it is necessary to adopt public private partnerships because the private partners by nature have little tolerance for unnecessary delays and cost overruns. The fact that private partners are strict on project delays is for the benefit of government too because it would improve the efficiency of public spending. As part of reforms, the government must also begin to ensure that its anti-poverty initiatives such as Ipelegeng do not pay more for less work. Such practices encourage Ipelegeng participants to shun full time jobs that they otherwise would and make them less productive members of society at a time when they should be adding to economic output.
