Key oversights, insufficiently addressed issues in Budget Speech
DR. LOVEMORE TAONEZVI* | Monday February 24, 2025 14:26
The speech highlights several positive developments, including the successful renegotiation of the diamond agreement with De Beers, which is expected to bolster Botswana’s position in the global diamond market.
Additionally, the government’s commitment to diversifying the economy through investments in sectors such as tourism, agriculture, and renewable energy is commendable. The proposed increase in old age pensions and the introduction of a targeted monthly allowance for newborns are also steps in the right direction, reflecting a focus on social welfare and inclusivity.
However, despite these positives, the budget speech falls short in several critical areas, leaving key issues either unaddressed or inadequately detailed.
One glaring omission is the lack of clarity on the vegetable ban, which was promised to be reviewed in the State of the Nation Address (SONA) delivered in November 2024. The ban, which has been a contentious issue, has had significant negative effects on local farmers and consumers, leading to increased prices and reduced availability of fresh produce.
The budget speech fails to provide any update on the review process or outline measures to mitigate the economic impact of the ban. This oversight is particularly concerning given the potential of the agricultural sector to contribute to food security and job creation, especially in rural areas.
Another area that received insufficient attention is sports, despite its potential to reduce youth unemployment and foster social cohesion. Botswana has demonstrated excellence in athletics, as evidenced by its performance in international competitions like the Olympics.
However, the budget speech does not outline any specific strategies to harness this potential. Investing in sports infrastructure, training programs, and talent development could provide meaningful employment opportunities for the youth and keep them engaged, thereby reducing the social ills associated with unemployment. The absence of a clear plan in this regard is a missed opportunity to leverage a sector that has already shown promise.
The speech also lacks a strong emphasis on research and evidence-based policymaking. While there is mention of Research and Development (R&D) in the context of sectors like energy and natural resources, there is no clear strategy to integrate research into broader government policies. A knowledge-based economy requires robust investment in research to inform decision-making and ensure that policies are effective and impactful. The absence of detailed plans for research funding and the development of a research ecosystem undermines the government’s ability to address complex challenges such as unemployment, economic diversification, and climate change.
Youth unemployment, which stands at a staggering 38.4%, is another critical issue that the budget speech fails to adequately address. While the speech acknowledges the problem, it does not provide specific strategies to tackle it. There is no clear analysis of the root causes of youth unemployment, particularly graduate unemployment. Is it a result of a skills mismatch, where graduates are not equipped with the skills demanded by the job market, or is it due to a lack of job creation in key sectors? Without this understanding, any measures to address unemployment are likely to be ineffective. The government needs to align its education policies with the needs of the economy, ensuring that graduates are equipped with relevant skills. Additionally, there is a need for targeted investments in sectors that can absorb the growing number of graduates, such as technology, manufacturing, and services.
The budget speech also introduces an increase in corporate tax and the top bracket of personal income tax, which could have broader economic implications. While the increase is modest, it raises concerns about the potential for higher prices as businesses pass on the additional costs to consumers, potentially fuelling inflation. Similarly, higher income taxes could suppress consumer demand, further dampening economic growth. The speech does not provide a detailed analysis of how these tax changes will impact different segments of the economy or outline measures to mitigate any negative effects.
Another area of concern is the government’s optimism regarding the rebound of the diamond sector. While the renegotiated agreement with De Beers is a positive development, the speech appears overly reliant on the diamond sector’s recovery to drive economic growth. This optimism may be misplaced, given the volatility of global diamond markets and the potential for external shocks, such as geopolitical tensions or changes in consumer demand. The government should adopt a more cautious approach and focus on diversifying the economy to reduce its dependence on diamonds.
The budget speech also fails to address the promised P4,000 minimum wage and the increase in student allowances, which were key campaign promises. These measures are crucial for improving the standard of living for low-income earners and students, yet the speech provides no timeline or concrete plan for their implementation. This lack of detail undermines the credibility of the government’s commitments and raises questions about its ability to deliver on its promises.
Finally, the budget proposals lack specific timelines, making it difficult to assess their performance and effectiveness. Without clear milestones, it will be challenging to conduct meaningful budget reviews and hold the government accountable for its spending. This lack of specificity undermines the overall effectiveness of the budget and raises concerns about the government’s ability to achieve its stated objectives. The absence of structured performance benchmarks and timelines means that evaluating the success of the budget will be challenging, potentially allowing inefficiencies to persist without proper scrutiny.
While the 2025 Budget Speech contains several positive initiatives, it falls short in addressing critical policy gaps that could have significant economic and social implications. The failure to discuss the vegetable ban, the lack of investment in sports, and the insufficient focus on research and unemployment solutions are notable weaknesses.
Furthermore, the increase in corporate and income taxes without a discussion on inflationary effects, the over-reliance on diamonds, and the absence of a structured approach to the minimum wage debate raise serious concerns.
Without a clear strategy and specific implementation timelines, it will be difficult to assess the budget’s effectiveness, making future policy evaluations highly uncertain. If the government is truly committed to economic transformation, it must address these shortcomings with greater clarity, urgency, and strategic foresight.
*Dr Lovemore Taonezvi holds a Ph.D. in Economics. He is an economist and a lecturer at BA ISAGO University