What we need to transform Botswana into a high-income country
Correspondent | Friday March 6, 2020 15:49
An inflexion point. We have succeeded in building a modern and largely functional society from our agrarian past.
In spite of all the impressive gains, Botswana is now faced with common developmental challenges that bedevil many countries on their journey to becoming rich nations.
The nation remains stuck in a condition of low economic growth (averaging about four percent over the last decade), high unemployment, one of the highest income inequalities in the world and because of our mining history, a very low productive capacity compared to peer nations.
It is important for the nation to introspect and chart a new course of development, not least for the progression of our posterity into the global elite of the rich world. As a first step, I suggest we take an appreciation of our past. Our ancestors braved the uncertain future of a small desert nation with little to no known resources and built a modern republic, complete with properly functioning modern institutions. They took a leap of faith and laboured hard to realise their vision for our nation.
Unfortunately, that was somewhat short-lived as the generation that followed of sons and daughters of the founders of our republic, began to squander our nation’s wealth and they have consequently brought our nation’s institutions – which used to be the marvel of most of the developing world – into disrepute. Where we were once agile and innovative in our responses to our challenges, we have now become painstakingly unhurried and unimaginative in our approach.
But this is not a write-up on how we are failing, suffice to say, we have a plethora of those. I write to offer idiosyncratic solutions to our developmental challenge. Although this may be a brief offer, it nonetheless unveils some of the missed opportunities in our nation today.
The experience of the Asian tigers, sheds light on the importance of manufacturing in bridging the income gap between rich and poor countries. I believe that there is very little chance that our nation could join the rich world sans an industrial base. The country needs to start building an industrial base and an export base away from mining completely, if we are to have sustainable growth that will indeed propel us into our golden age. But how would we go about it?
It is a well-known fact that it is very difficult for newcomers to break into the world markets of manufactured goods today. The post-industrial rich world has produced industrial behemoths that crush any new entrants that challenge them. In cognisance of this, our approach to industrialisation, needless to say, needs to be strategic.
The financial power of the global industrial behemoths is unimaginable, especially when pitted against a first-generation Motswana entrepreneur (of which most of us are or are going to be). Unlike in much of the rich world, where business and enterprising has been a common occurrence for centuries, Batswana are only just getting their feet wet in this endeavour.
It is here that I suggest an uncommon and often ridiculed approach. We need to use our government’s financial power to build five or more industrial giants that can have access to global markets.
I suggest the government because it alone has the financial muscle and the financial credibility to access private capital, to finance large industrial developments that the country needs at this time. Unlike normal State-Owned Enterprises like the ones we have now, these firms will hire only the country’s best and brightest, literally so.
There will be strict targets that if not met will automatically result in job loss. It is here where we will need to consult our meritocratic past during the first two administrations of Khama and Masire. After about 7-10 years, the government should then sell these firms to Batswana through IPOs on the Botswana Stock Exchange.
Africa today has slightly over one billion people. It is also fact that most of the growth in the global economy is anchored by African and Asian developing countries. For Africa and elsewhere, this means an increased middle class. A larger middle class means increased buying power from the continent.
This is where our industrial giants become beneficial. Because the African market remains largely virgin to many of the famous global brands, we could set our feet in first and solidify our market offering in these burgeoning markets before the rest of the world catches on.
One very important industry is the consumer appliances market. This is a market for many of the appliances found in modern middle-class family homes; fridges, microwaves, TVs, toasters etc. The demand for these products is going to increase parallel to the growth of the African middle-class.
We should then set up a steel mill. This time with proper intent to go into the export market. The mistakes of Pula Steel are there to learn from and build something stronger on them. Steel is an essential good in any modern society and as our nation and the rest of Africa plough through our trajectory into converging with the rich nations, steel will become ever more necessary.
Our next industry is one that the Botswana Development Corporation thinks not to be viable in our country. I am highly against that notion and do not believe that we have a comparative disadvantage to. Glass production is definitely viable in the long run in Botswana. Here we should borrow a leaf from the experience of the South Koreans, who when they were told by the World Bank back in their industrialisation epoch, not to produce steel because of the many disadvantages they were told they had, went ahead and today boast of being in the top 10 largest exporters of steel globally.
In fact, we are on the side of fortune, in that we have soda ash in great abundance right here in our nation. Soda ash is a key ingredient in the glass manufacturing process. As many of Africa’s economies develop the demand for glass will inevitably increase and we will have to be the suppliers satisfying that demand. Furthermore, soda ash is not only used in glass production but extends its use to detergents and food processing industries.
These are just three industries that I believe we are well suited to venture into given the fundamentals. I admit that much work still would need to be done in refining our strategy, but I know and believe that talented Batswana are more than ready to take up that challenge. I believe the other two or more industries are already quite active domestically i.e. mining, tourism and agriculture (beef). The sufficient development of these primary sectors will inevitably lead to less capital-intensive industries that will absorb our highly skilled labour.
This is by no means a supposed panacea to our predicament but a humble submission of a path that I believe will afford our nation an opportunity to enter yet another epoch of prosperity. Our past is full of inspiration and stories of great wisdom, I know we can and should ride on that to a better future.
*Ratang Sedimo is studying MSc Financial Economics at Johns Hopkins University, Baltimore, Maryland, US.
RATANG SEDIMO*