Botswana needs economic transformation � Econsult
Pauline Dikuelo | Friday August 5, 2016 15:07
In a second quarter economic review for 2016 produced by Econsult Botswana, economists Keith Jefferis and Sethunya Sejoe say the country needs a successful second transformation that will change the economic outlook in the coming 50 years.
In order to attain that, the duo suggested that government has to change its approach towards the private sector by facilitating rather than controlling them adding that the private sector must drive productivity growth and look for external markets rather than depend on government contracts.
Greater efficiency in government spending and a prioritisation of claims on government resources is also suggested noting that government cannot do everything for everybody, which sometimes seem to be the expectation.
In addition they suggested that policymaking must be rational, based on evidence and implemented consistently and transparently in the national interest.
They also said the current tendency of putting up barriers to regional and global integration would not lead Botswana towards high-income status.
“Regulatory reform has to take place promoting less, but better and more targeted regulation.
The fundamental approach must be outward looking, embracing global integration, vigorously promoting and supporting firms that export goods and services, attracting inward foreign investment, welcoming foreigners who wish to invest, work in Botswana as well as trade with Botswana.”
The economists also noted that in 50 years time, the country would be deeply integrated into global and regional markets for goods, services, capital and labour with extensive FDI in the country.
Local firms will be active investors around the region and around the world with most Batswana living and working in other countries.
In addition, they noted that the private sector would be larger, government smaller than at present as citizens would be empowered by competing successfully not by being protected from competition.
Currently under formal employment, the private sector is the biggest employer with 191,484 employees, followed by government with 130,220 and parastatals with 19,411 employees.
They also advised that it would be a mistake to assume that ‘business as usual’ as a viable approach to the future growth of the country’s economy, noting that diamond mining is unlikely to drive economic growth in future as opposed to providing foundation for current economic activity and income levels.
They stated that as mines get deeper, more deficits to exploit, costs of production will go up hence profits and the sector’s contribution to Gross Domestic Product and government revenues will gradually decline.
“Eating diamonds will not provide the basis for Botswana to move from upper middle-income status to high-income status, it may not even provide the basis for maintaining current income levels,” stated the economists in their report.
The economists also noted that Botswana did not reach the upper-middle income status by being productive, competitive nor through efficiency although there are some pockets of economic activity that demonstrate all these factors.
“We reached it by consuming and investing wisely, the proceeds of the natural resources under our soil.”