Jumpstarting the economy: Really?

Dithapelo Keorapetse | Friday October 16, 2015 15:32

After critically assessing the state of the polity in general and the economy in particular through his SONA, the President is expected to make a case for the stimulus package as the best way to address the country's economic challenges. The ruling Party MPs are expected to hail the King and his plan as it is usually the case with other announcements while much scrutiny and criticism will come from the opposition.

President Ian Khama has unveiled a plan at a party function recently.  The objective of the plan is said to be to stimulate the economy for accelerated employment creation and economic diversification. The package targets tourism development, agricultural production, construction of buildings and roads as well as manufacturing. In this respect key elements of the package include: Fast track land servicing, with 37,000 plots to be catered for in the coming year; Construction of 4,480 new housing units by the Botswana Housing Corporation; Construction of an additional 1,664 teachers quarters and 534 nurses quarters; Construction of 144 classrooms and 92 labs; Construction of new roads, as well as bypasses in Francistown, Molepolole and Lobatse; and Upgrading of 92 health posts into clinics.

The announcement comes at a time when the country is faced with worrying high levels of unemployment and underemployment including of graduates with undergraduate and postgraduate degrees. There are huge income and wealth disparities and the poor are becoming poorer and there continues to be an unprecedented bonanza for the haves. Poverty levels are high in the supposed land of plenty. Agriculture has almost collapsed and its contribution to the Gross Domestic Product (GDP) is minuscule. There's no manufacturing industry to talk about. The economy is in the hands of foreigners; they get the lion’s share of the development budget through building of roads, stadia, dams, big government buildings including schools, power stations, airports and other infrastructure. Batswana have been reduced to spectators of foreigners who get rich and wealthy through their resources. Corruption and economic crime statistics and perceptions are high. These and other many economic challenges are not new and many are asking themselves why the stimulus package is coming now. The ruling party Secretary General fell short of admitting that the announcement is as a result of the party's performance in the 2014 general elections.

More details are said to be coming in due course on what exactly this is. However there are already worries about this plan for many reasons. This is the government that has made many so called landmark announcements which have had no significant impact on the people. There are many unfulfilled promises by the government and the President himself. Some say that the initiative should be welcomed because at long last the ruling party has come to the realisation that what the opposition has been asking them to do for many years, to tap on the foreign reserves to boost the economy, was and is a good idea. In giving us the details, we expect the President to explain how the envisaged huge cash injection into the economy will benefit the low income group because they have no capacity to cash in for the very same reason why previous initiatives have passed them by. How will this group benefit without adequate skills of entrepreneurship? The economic empowerment policy has not benefited Batswana because it is not backed by a law on the same. The government has not heeded calls to unbundle mega projects to boost local construction companies. In fact the government of Ian Khama has failed dismally on mega projects. How many have been completed within budget and schedule? How many are without structural defects and how many are dysfunctional? It is worrying to even hear that the Office of the President will oversee the implementation of stimulus package related projects. The OP doesn't have any impressive record on project management, right from when Khama was Vice President to when he's President. The office managed backyard gardens and the project failed dismally. Can it be now trusted to oversee the proposed projects?

There's a serious water and power crisis in the country as a result of poor planning and/or lack of foresight. Business can't expand under this environment, in fact some business have incurred huge losses because of this issue. How will the economic stimulus package address these issues? If this water and power crisis is not addressed in a way that resources are mobilised outside the normal planning process and/or through the proposed plan, then the initiative would fail. Setting up a business in Botswana is a nightmare because of the bureaucratic red tape and that has to be addressed. The intelligence agency's interference in issuance of work and residents permits as well as visas is a problem. The unwarranted delays and rejections of work and residence permits and visas has affected FDI and tourism.

The problem with these types of political posturing announcements, is lack of clear measurable deliverables or quantifiable targets. How many sustainable long term private sector jobs will be created in the short, medium and long term? By how many percentage will poverty levels be reduced? By how far will the income and wealth gap be narrowed? How many Batswana businessmen and women will be created by the stimulus package? How will it benefit manufacturing industry when almost everything is imported from South Africa? What about corruption, will the stimulus package turn out to be corruption stimulus package with nothing said about this social ill?

A stimulus package ought to be a set of economic measures introduced by the government to boost a floundering economy. The objective of a package is to reinvigorate the economy and avert or reverse a recession by boosting employment and spending. The result has to be sustainable long term growth path with jobs and industries.   The primary objective of the stimulus package should be to save jobs especially in the mining industry or the diamond industry and to create jobs almost immediately. The secondary objective should be to invest in infrastructure eg water and power, education, health and other sectors. The nation is waiting with bated breath for details and answers to many questions.