The Budget Speech unveiled on Monday may just be amongst the most impactful in the past few decades in terms of the sheer magnitude of policy changes it presented.
In between his smiles and the near constant interruption of the House, new Finance Minister, Thapelo Matsheka unveiled what are essentially government attempts to effect a structural shift in the economy and trigger momentum in a new direction.
What President Mokgweetsi Masisi and his technocrats call “the transformation agenda” is in essence an attempt to rewire the economy, lift it out of its middle income malaise and power towards a sustainable, higher wealth future.
It is an agenda that recognises that the era is over where diamonds in particular, and mining in general powers economic growth,and that the aspirations of Batswana while still paramount, have also evolved to include more sophisticated needs.
The broader goal is captured in the Vision 2036 goal of transforming Botswana into a high-income economy which Masisi’s administration is pushing to achieve, amongst others, by moving the economy from a resource-based to knowledge-based trajectory.
The tangible policy shifts and actions required to achieved this are not all comfortable and in some cases are quite painful, as seen in Matsheka’s speech.
From a fiscal policy point of view, the first port of call is to return the country to more stable budgetary footing, to rebuild the buffers that have been worn down by years of considerable deficits and ensure there is fiscal space going forward to begin implementing the transformation agenda.
This rebuilding of necessity involves measures to increase government revenues and reduce expenditure, which include the
In the short-term, those measures may allow a small budget surplus but in the medium phase, Batswana have no choice but to come to grips with greater cost recovery in the public sector including paying more for health, education, utilities and others.
This is part of the transformation agenda under efficient government spending together with other elements such as providing appropriate infrastructure, promotion of export-led growth and building human capital. It is apparent that the nation will experience the pangs of change in the coming years as fiscal and political authorities chart a new course for the economy in line with aspirations for high-income status.
Difficult as the changes and belt-tightening are, Masisi’s administration does enjoy the political capital to power forward with both fiscal consolidation and the broader transformation agenda. However, what is required is greater education of and engagement with Batswana. Authorities from central to local government should engage citizens on the transformation, why it is necessary and what it entails, in order to secure buy-in. This is where it is important to focus away from economic indicators such as GDP targets and focus on the people, lives and aspirations behind the statistics.
“Consultation helps engender the support
decisions need to be successfully implemented”
– Donald Rumsfeld