Upsurge in parastatals crowds out private sector
Pauline Dikuelo | Tuesday October 18, 2016 18:02
Speaking at the second annual Private Business Growth Awards last week, which were hosted by Grant Thornton in collaboration with Business Botswana, the guest of honour, Charles Tibone said the proliferation of parastatals definitely dampens the growth of private business. He expressed concern that the majority of these parastatals businesses are chronically unprofitable saying they operate on negative returns on investments or on life support from government through subsidies.
“In the private sector an entity that does not deliver positive returns on investments is bound to have a bleak future,” he said. Some of the new parastatals that have been created in the last few years include Botswana Trade Commission, Botswana Oil, Gambling Authority, Companies and Intellectual Property Authority and Botswana Accountancy Oversight Authority (BAOA).
According to Tibone, massive injection of state resources into entities that have no guaranteed growth is evidence that there is a distinct prospect that the privatisation of a number of government parastatals will not simply lead to quantitative growth of the private sector, but possibly to a dramatic transformation of the economy.
“In my view, the statement that the private sector is an engine of growth gives them a mandate to come up with strategies of growing the sector and through that growing the national economy,” he said.
Tibone said the strategies could only have a positive impact if there is close cooperation between the private sector and government. He said most countries that have experienced phenomenal economic growth have acknowledged that encouraging private sector growth is an imperative. He said the advantages of prioritising the private sector growth are that it grows the economy, creates jobs, accrues wealth, pays taxes as well as engages in research.
“In the country, we seem to make the right policy pronouncements about private enterprise but on the growth, we have failed to resist the gravitational pull of welfare state programmes which is understandable because we come from a background where everything had to be initiated by government,” he added.
He said the economic circumstances require that the country should rapidly transform from a welfare state into a truly private sector led economy which he said will mean that the country has to accelerate the privatisation of parastatals. For his part Business Botswana CEO, Racious Moatshe said the awards will continue to strengthen business to grow local economies, provide job opportunities and drive forward broader economic and social developments of Botswana.
“These awards seek to appreciate the role of the private sector and its impact on economic growth and development sustainability,” he added.
Nashua Botswana walked away as the winner under the Medium enterprise category over their competitors Part Sales Botswana and Chobe Marina Lodge while under large enterprises, Flotek Botswana emerged the overall winner.