The rolling hardships that the national economy went through in the past year exposed the private sector’s vulnerability and further weakened its grip on the economy, as well as its prospects of assuming the coveted role of ‘engine of economic growth’. Businesses faced a myriad of challenges in 2015 which ushered them into a ‘new normal’. In the aftermath of the brittle economic conditions of 2015, only government seems to have retained its position as a major player in the economy. However, the same government cannot be said to be a true engine of economic growth.
Relegated to the sidelines, the private sector still maintains that government has not totally created an enabling environment for business to thrive and demonstrate its capability as the new engine of growth. With government consistently failing to impact economic growth, in the face of a private sector in limbo, there is no clear driver of Botswana’s economy and its growth is left to the fate of recovery in the global economy. This is more like a gamble.
The brutal truth is that Botswana’s economy is in peril and completely exposed to external shocks, which may result in significant deterioration if the impact of such shocks is not contained. It is therefore very important for either government or the private sector or both to seriously take on the responsibility of engineering growth in the economy. According to Motswedi Securities, businesses have become less optimistic as demonstrated by a decline in business confidence. This is not surprising considering challenges that the economy has been facing; including power and water shortages, sharp decline of credit to the business sector and weak demand due to consumers’ low disposable income. All of these have contributed to the subdued business performance.
Business Botswana has expressed disappointment that the 2016/17 budget failed to reaffirm the role of the private sector as the engine of economic growth.
“There is need for an innovative and clear strategy to grow the economy. This strategy should be anchored on the private sector as the engine of growth while government focuses on policy making and regulations,” said Leta Mosienyane, Chairman of Business Botswana in his response to the budget speech.
He added that the private sector had expected government to highlight measures through which it will engage the private sector to manage projects to avoid cost over-runs and delays. In terms of economic reforms, Business Botswana called on government to in lay out a properly resourced economic reform agenda that will ensure that project implementation is not hindered by inability to exercise prudent spending. It also encouraged government to re-double efforts in resolving the water and power situation by roping in private operators as a way of popularising Private Public Partnerships (PPP).
While many believe the prevailing economic and business conditions paint a gloomy future for Botswana, economist Moatlhodi Sebabole believes that Botswana still has a few levers to pull in overturning the depressed economic environment, unlike many countries that are currently experiencing a slump. He further proposed increasing participation in the bond market as a way through which government can respond to the healthy appetite from local investors.
“The question that Botswana should seek to answer is which direction it will take going forward to induce further growth in the economy,” said Sebabole.