A year of Sisinomics: Is this what the doctor ordered?
Mbongeni Mguni | Friday March 29, 2019 13:51
It would be fair to say President Mokgweetsi Masisi has put greater deliberate focus in lifting the economy in his first year in office than his predecessors did in theirs, and for a good reason.
From the heady heydays of rapid economic expansion enjoyed by Messrs Seretse, Masire, Mogae and to a lesser extent, Khama, the economy had significantly plateaued by the time Masisi stood next to then Chief Justice, Maruping Dibotelo and repeated the oath of office last April.
Coming from a low base, Masisi’s predecessors had the fortune of witnessing the diamond miracle’s effect on the economy, watching as GDP figures ran into double digits every year as growth spread across existing economic sectors and created new pathways.
The recession of 2009 underlined the end of the diamond miracle and Debswana has never returned to the production levels seen before that time. Since then, non-mining activities have contributed more to economic growth, as mining has frequently encountered headwinds, such as those which closed BCL, Tati Nickel, Discovery Metals and African Copper in 2016.
The impact can also be seen on the real GDP numbers during Khama’s term. The former president began his term with economic growth of about seven percent in the first quarter of 2008, as the recession’s effects were building, dropping to a low of -10.4% during 2009, then recovering to 11.3% in 2013, before closing at 4.8 percent in the quarter before Masisi took over.
Employment during Khama’s tenure equally fluctuated and while the period produced a net of more than 26, 000 jobs, sectors such as mining heavily shed jobs during the period, while demographics such as the youth emerged from the period worse off.
Signalling his focus on economic recovery, Masisi became the first president in Botswana’s history to talk about tax evasion, strengthening of oversight and plugging of gaps, in his inauguration speech.
He also used the speech to lay out his plans to lift the economy from stagnation which included enhancing the country’s investment climate, improving the ease of doing business, boosting digitisation, and a range of other specific interventions.
Flies on the wall of Masisi’s initial Cabinet meetings indicate that shortly after his inauguration, the new President was drumming into his lieutenants the need for each of them to prioritise economic revival over and above the mandates they were leading. For instance, the Foreign Affairs ministry is expected to transform all the country’s envoys into economic ambassadors who sell the country, create opportunities for Batswana abroad and attract investment home.
In the year since that rainy day when he delivered his inauguration speech, Masisi has, to some extent, delivered on the softer targets of his economic policy. He has tackled issues in the investment climate, with steps towards visa relaxations, including the visa on arrival initiative, removal of red tape including easing the pesky certification process, while continuous engagement of the private sector has enhanced business confidence.
That the supply of water and power has generally been stable since he assumed office, has been the cherry on top for Masisi’s administration. Business leaders, through their organisations and individually, have applauded the new President for being responsive to their concerns. Masisi has embarked on a number of foreign trips, under his investment promotion and export development mandate, opening up new opportunities for local products and to varying extents, securing investor interest in Botswana.
The biggest of these, which in terms of impact could be the jewel in Masisi’s crown, is the extended September trip to China, where he returned with assurances for about P12 billion concessional infrastructure loans.
Botswana Railways this week floated tenders for two major railway lines expected to benefit from the funding and open up economic corridors through and out of Botswana.
Masisi’s signing of the African Continental Free Trade Area and the negotiations towards a new pro-Brexit deal with Britain are efforts in line with creating markets for local innovation and production. The new president’s early engagement of unions and finalisation of a wage deal has also been described as a masterstroke in terms of avoiding civil service-led economic unrest, as has occurred in previous instances of disputes. The two-year deal also puts a little more in the pockets of hundreds of thousands of civil servants, helping improve demand in the economy.
Masisi’s achievement of the hard targets of his economic policy is not yet clear, particularly as any data coming through from the year he has been in office is invariably linked to the period before he assumed the presidency.
For instance, formal employment, excluding Ipelegeng, rose from 342,771 jobs in March 2018 when Masisi took over to 344,947 in June and 347,357 in September 2018, a total addition of some 4,600 jobs. However, the factors driving the jobs may be related to initiatives prior to Masisi, a possibility seen in that a number of these jobs have emerged from the agriculture sector whose turnaround for project development takes time.
In addition, actual investment, both local and external, figures will come in later this year, when the Botswana Investment and Trade Centre publishes its annual report for the year ended March 2019.
Masisi, however, will draw comfort from indicators by the various ratings agencies as well as the Bank of Botswana’s latest business expectations survey, suggesting rising confidence in the country’s economic trajectory.
Analysts are agreed that where his predecessor took up office at the onset of one of the country’s worst recessions in history, Masisi’s first year in office has been free of major shocks, allowing him to establish his economic policy.
The results of the policy will soon become evident for all.