The Botswana Government has been reduced to an old vehicle with no power to extend its engine life and this is despite its increasing need to arrest development challenges, writes SUNDAY STANDARD’s TLOTLO LEMMENYANE.
Botswana has in the past received backlash from the International Monetary Fund (IMF) to reduce its wage bill. The World Bank describes it as an urgent shift which should see the public sector reducing its share of the wage bill on the Gross Domestic Product (GDP) from 35 percent to between 25 and 30 percent. This in other words renders a government that is forced to slash certain jobs and also one that is incapable of creating jobs. Regardless of education receiving the highest share of the recurrent budget, a figure also considered among the highest in the world, many graduates however lie idle. The lack of absorption of graduates into productive economic activities has spiked unemployment, which is estimated at 20 percent. Unemployment has for that reason stubbornly clawed itself in the economy and is leaving behind ugly stripes. Rural communities harbour poverty despite a sharp decline from over 50 percent at independence to around 19 percent today.
While this information presents nothing new it however speaks to a reality that is unfolding about the level of wealth and comfort that many Batswana are growing wider apart from. The deterioration of the standard of living has plagued the country with a wide and far reaching divide between the rich and the poor. The generally accepted measure of the standard of living is real GDP per capita, which gives a figure of how much each individual in the country would be entitled to if GDP were to be divided equally.
Generally, a healthy economy is among others depicted by income that rises on par with the cost of living, if not higher. If however the cost of living rushes forward, it forces people to borrow money so as to make up for the shortfall. The danger in this is that over-borrowing is highly likely to be the fruit that is borne, a fruit however with a bitter taste. This scenario has come very much alive in Botswana. According to bank of Botswana figures household debt reached a peak in 2014 and the soaring impairments reflected by banks’ financial reports were testimony of a society that is leeching on credit.
At the same time, unemployment is a topic that needs no introduction. The sprout of the national internship program, Tirelo Sechaba, Ipelegeng and Graduate Volunteer scheme speak volumes about both the quality and availability of employment in the country. All the mentioned programs except for Ipelegeng which provides temporary employment are designed to up-skill graduates with competencies demanded by the labour market but however do not guarantee permanent placement after exiting from them. Jobs are therefore still lurking and what is in place does not address the unemployment scourge.
Extreme poverty rate
According to the 2014 African Economic Outlook 8.4 percent of the rural population lives in extreme poverty compared with 2.7 percent in urban areas. This proves that the face of extreme poverty is rural and even though extreme poverty drastically declined between 2002/03 and 2009/10 from 23.4 percent to 6.5 percent, the remaining pockets of it cause a concern.
Botswana’s education has in the recent past been subjected to a cold counterblast. It is due to go through transformation given that it has failed to produce skills that are responsive to the economic needs. The availability of education in Botswana is laudable; the quality however is questioned by its inability to provide a fitting match with labour market demands.
In the same line, housing in Botswana picks a thorny reading. The quality of housing has not risen as an issue but affordability today remains a stifling issue. The property market experienced a surge in prices due to the imbalance between property supplied by the market and its existing demand. Supply treaded below the demand. Soaring property prices against stagnant incomes brewed an out of reach recipe for housing.
Slow national economic growth
Figures provided by the central banks on Monday showed that Botswana’s economic growth has slowed from what it used to be before the 2008/09 economic meltdown. According to the Central Intelligence Agency Botswana upheld one of the world’s highest economic growth rates since the early exploitation of diamonds following independence in 1966. It adds that economic growth was negative in 2009 due to the weak demand for diamonds. The economy is experiencing a slow recovery which is putting strain on revenue. The narrowed revenue stream makes it challenging to tackle persisting economic challenges. Real GDP growth increased to 5.4 percent in 2013 from 4.2 in 2012 and although this showed improvement, it is not growth that Botswana had become accustomed to.
Officially speaking, income inequality is reflected by a Gini coeffient measure which in Botswana is estimated at 0.61, which in simpler terms means that there exists an unequal distribution of wealth. In terms of comparison with other countries, in 2013 Global Finance ranked countries from richest to poorest using figures from the IMF World Economic Outlook database. It used GDP based on purchasing power parity (PPP) which is a measure that converts respective GDP figures to a common set of prices in a common currency to make comparisons between countries. Botswana ranked 56th out of 194 countries and fairs better than both South Africa and Namibia at 80th and 100th ranking respectively.
Will Botswana watch its people fall from comfort?
