Making millionaires: The thinking behind govt’s Middle- Class Strategy

Mbongeni Mguni | Monday September 20, 2021 06:00

Mmegi: What informed the development of the Middle-Class Strategy and when did the consultation on this start?

Ministry of Investment, Trade & Industry (MITI): In 2018, the government decided to develop the Strategy for the Development of the Middle Class in Botswana. The idea was informed by the realisation that most government policies and programmes in the last 10 years were predominantly targeting groups like the youth, women and people living with disabilities. There were no programmes specifically designed and targeting the middle class even though they have a competitive advantage for entrepreneurship emanating from both tangible and intangible assets in their possession. The intangible assets include managerial experience, expert knowledge and education, while tangible assets include land, vehicles and housing, all of which may support business start-up. MITI was tasked to develop the strategy and undertook a situational analysis study for the development of the study. Consequently, the report from the study was used to draft the strategy.

The situational analysis demonstrated that the Middle Class in Botswana makes 34.8% of households, comprising 275,104 individuals. The situational analysis further demonstrated that many countries have the middle class. These include Rwanda (which considers the middle class as an entrepreneurial class), China, Canada, Ghana, Japan, Malaysia, South Africa and the USA.

Mmegi: Who was consulted for the strategy?

MITI: During the development of the Strategy for Growing the Middle Class, extensive consultation was undertaken covering across the country. The process of consultations started with stakeholder mapping to identify all critical stakeholders and Batswana who qualified under the definition of the middle class were drawn from the government, parastatals, private sector and civil society organisations as well as policymakers. A combination of data collection methods was used including direct interviews, focussed group discussions and key informant interviews.

Mmegi: Kindly explain the strategy’s broad targets?

MITI: The major objective of the Middle-Class Strategy for Botswana is to empower the middle class to effectively participate in the country’s economic development through the creation of globally competitive businesses.

Focus Area 1 is about tapping onto middle-class competitive advantage for entrepreneurship. Focus Area 2 focusses on middle-class business opportunities and highlights areas of their potential business opportunities in the diverse sectors of the economy. Focus Area 3 is about middle-class contribution beyond formal employment and aims to facilitate the middle-class to see their skill, managerial experience and expert knowledge as a business opportunity and opportunity for social entrepreneurship. Focus Area 4 focusses on creating an enabling environment for middle-class entrepreneurship, while Focus Area 5 is about pathways for new graduates, the unemployed and other income groups into the middle class. The focus area will be built on the Top Entrepreneurs Development Programme and its Fund.

Focus Area 6 is about communication and will ensure that the middle-class businesses and the general public at large are aware of the strategy developments and opportunities.

The broad target of this strategy is to develop 100 new young Batswana millionaires in 10 years. Other strategic targets include 10% contribution to the national power grid by middle-class entrepreneurs in the renewable energy sector by 2036, middle-class access to a third of their pension to support their business start-ups and middle-class businesses financing by the Citizen Entrepreneurial Development Agency, Botswana Development Corporation and National Development Bank.

Mmegi: Critics have said the plan of creating 100 millionaires in 10 years will not result in broad-based empowerment of Batswana. How does the strategy link expanding the middle-class to improving the overall performance of the economy and the lives of citizens?

MITI: Growing the middle-class in this context means coming up with appropriate economic policies and strategies that would cause the middle-class to grow both qualitatively and numerically, while equally causing a concomitant growth in the other income categories.

The growth of the middle-class would, in this case, involve the movement of the fresh graduates, unemployed and other income groups into the middle-class. Likewise, the upper income group would also increase as some of the middle-class would grow and migrate into this category.

In this case, government would actually be targeting the growth of all the income categories. In addition, the middle-class involvement in business development will have the potential to create new job opportunities for young Batswana. This will also increase locally produced goods and services that will also be globally competitive and be able to penetrate the international markets.

Mmegi: Are there any instruments in the strategy to ensure that the appearance of political favouritism or corruption is eliminated?

MITI: In developing the strategy, it became apparent that there are some underlying fundamental issues that need to be taken into consideration for the strategy to achieve its intended objectives. The strategy is unambiguous on the selection criteria for participation of the middle-class in the programmes prioritised by the strategy. Employee engagement in business while at work – this raises the concern that there may be potential conflict of interest, misuse of employer resources and time in both the public and private sector businesses. The strategy provides for a re-look at the terms and conditions of employment in both the public and private sector to ensure that they provide for flexibility for employee transition to entrepreneurship as well as ensuring that they serve the interests of both employers and employees.

Mmegi: Are there any instruments in the strategy to ensure beneficiaries are spread out across the country in terms of geography, backgrounds etc?

MITI: This is a national strategy, which covers beneficiaries across the country and there are plans to engage different stakeholders about the opportunities availed by the strategy as well as terms and conditions for their access. The pillars in the Implementation Plan cover the different categories, so the Communication Plan will cover the entire country.

Mmegi: How much funding or what size of budget has been proposed for the strategy?

MITI: We are currently working with all relevant stakeholders to unbundle the strategy and identify bankable projects. Once this exercise is completed, the lead agencies will make a determination on the project costs.

Mmegi: How much funding or what size of budget has been proposed for HE’s Top Entrepreneurs Fund within the strategy?

MITI: The HE Top Entrepreneurs Fund will be financed through the Human Resource Development Council (HRDC) Training Levy and through private sector contributions. Engagements with HRDC and the private sector are yet to commence which will make a determination of the contribution that will be made to the Fund. The Top Entrepreneurs Programme targets a minimum of 10 students’ bankable project proposals per annum from both the public and private universities.

Mmegi: What happens next?

MITI: We are currently unbundling the strategy, preparing for the launch and roll-out to all stakeholders as well as development of a structure within the ministry that will drive the implementation of the strategy.