Tuesday, January 26, 2021

Tough road for Botswana’s manufacturing industry

The Botswana Exporters and Manufacturers Association (BEMA) recently held an open workshop in Gaborone. At the workshop, it came to the fore that since the inception of the Economic Diversification Drive programme in 2010, it has been fraught with implementation challenges, some of which still exist to this very day.

The EDD utilises government’s purchasing power to promote consumption and production of locally produced goods and services. Along with other deliverables, it is expected that EDD will reduce the country’s import bill. This is based on the belief that Botswana possesses the potential to produce goods and services that otherwise would have been purchased from its neighbouring country, South Africa. Currently, Botswana imports 80 percent of goods from South Africa.

Responding to the programme’s minimal impact on manufacturing, government in 2014 introduced a Presidential Directive which enforced local purchase by government functionaries through tendering processes. The Directive was in line with section 68 of the Public Procurement and Asset Disposal Act (PPADB) which stipulates that, “All procuring or disposing entities shall, when preparing bidding packages or briefs, or evaluating bid proposals, comply with the provisions of this Act in respect of reservation and preference schemes which might be in place from time to time.” This indicates that procuring entities should first of all prioritise goods and services produced locally provided that such items are available, competitively priced, meet quality standards and can be reliably supplied. The challenge however, as was highlighted, is that the Directive falls short because of limiting factors such as unavailability of goods and services, uncompetitive pricing and unreliable supplies by local producers.

Critics opine that the directive on its own and its plain reference to the PPADB Act doesn’t guarantee compliance. The argument is that it provides a leeway to procuring entities given that they are not bound by a specified standard framework that measures and reviews compliance. The country’s high import bill could also suggest the limited production of goods and services which implies their unavailability on the local market for purchase by procuring entities.

An example was given about an advert published a few weeks ago requesting for construction material. It was established that out of the 75 companies that had applied, approximately 25 items were put across out of which about six are produced locally. This was presented as an opportunity to expand the scope of production within the construction sector, but also highlighted that the majority of construction materials are imported given the limited number produced locally. 

In terms of competitiveness Botswana as with other African countries, lags far behind in terms of its ability to penetrate markets outside of the country. Put next to the world’s star performers in manufacturing, who have invested in and developed an environment that drives competitiveness, it was proven that Botswana has a tall order in being ranked in that league. Issues that hinder the country’s competitiveness namely poor work ethic in labour force, inefficient government bureaucracy and restrictive labor laws were highlighted and extensively discussed. It was therefore put forward by industry experts that to find a market for goods produced in Botswana, the country must take decisive and deliberate steps towards cultivating talent, increasing workforce productivity, addressing its energy challenges and producing goods at a lower cost amongst other key drivers. Botswana in that regard contends heavily with issues of competitiveness. 

The intent to promote local production is proven by EDD and the Presidential Directive. It cannot be questioned that Government has invested significantly in the manufacturing sector in the form of subsidies and incentives to set up production plants. However, procurement of locally produced goods remains minimal and Botswana is not yet globally competitive.  

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