Advance inclusive growth and posterity

Mmegi Editor | Friday January 30, 2015 14:44

In the past three years, Matambo has done a good job in preserving Botswana’s much-celebrated financial prudence image with rolling budget surpluses.  The enviable trend is set to continue this year with the 2015/16 Budget Strategy Paper (BSP) predicting another P1.4 billion budget surplus in the coming fiscal year. Despite the accolades Botswana has been crowned with for sustainable economic growth and pragmatic financial management, the log in Government’s eye still remains the lack of adequate employment opportunities, poverty eradication and income inequality.

As Matambo goes about his business of sharing the country’s resources, we urge him to give tackling narrow growth priority as it has emerged as an albatross on the development history of Botswana.

For an upper middle-income country, an assessment of Botswana’s social upliftment indicators shows that the country is lagging behind its peers.

According to Statistics Botswana, the proportion of the population living below the poverty datum line (PDL) stood at 19.3 percent in 2009/10.

In absolute terms, the number of persons living with income below the poverty line declined from around 500 thousand in 2002/03 to about 373 thousand in 2009/10. On income disparity, the latest available estimate of the Gini coefficient of per capita consumption is 0.49 in 2009/10, one of the highest in the world. On the other hand, the unemployment rate is also very high at 17.8 percent in 2009/10, although according to the IMF the number can be as high as 30 percent if discouraged workers were taken into account.

Despite the rapid economic growth over the past four decades after independence, it is worrying that Botswana still faces these fundamental development challenges. While the need to maintain consistency of a balanced balance cannot be taken lightly, we also expect Matambo to take up the challenge and commit to the new fiscal rule, which is meant to ensure posterity through buffering of financial savings.

The 2008 financial crises exposed our vulnerability to global economic shocks when our financial assets dipped to negative balances.

While it might be impractical to save 40 percent of diamond revenues and maintain a budget surplus simultaneously, we still expect Government to waste no further time; roll out this plan now and implement it over the next two to three years.