The power of legislation

| Friday July 16, 2010 00:00

This was meant to cushion the country's economy from the risk inherent with relying on diamonds as the only source of revenue. Though each budget speech spells out government plans on economic diversification none of these plans have borne any tangible results.

This is due to the BDP government approach to economic diversification. The BDP has not done anything to ensure citizen participation in main stream economic activities. The BDP is also too reliant on foreign businesses to take the lead in its economic diversification drive. There is no denying that we need foreign expertise in our economic diversification drive, but that should not take place at the expense of citizens. We should at all costs encourage and protect the flourishing of citizens enterprises even if it means using an act of parliament so that Batswana are involved in economic activities.

As the BNF, we have always maintained that citizens have to pioneer economic diversification. This can only be achieved through a robust legislation on citizen economic empowerment and citizen participation. To ensure citizen participation in economic activities the legislation can for instance impose a requirement on foreign companies with operations in Botswana to sell a substantial amount (say 45 percent) of their stake to 100 percent citizen owned companies.

This will in the long run assist in creating a representative society by changing the complexion of wealth distribution to ensure that a vast majority of citizen companies have access to means of production. For as long as BDP government talk economic diversification without a law on citizen economic empowerment and participation, diversification will always be an unattainable goal.

A few weeks back there were media reports that Botswana Insurance Fund Managers (BIFM) is offloading 21 percentage of its stake in African Life Financial Service of Zambia to comply with Zambian's regulations. This was a consequence of the Zambian government passing a law aimed at citizen economic empowerment barring foreign owned companies like BIFM to operate in Zambia with a shareholding of more than 49 percent. Due to this legislation BIFM had sell all of its stake above the 49 percent limit to comply with the law. The majority stake of all fund/asset management companies in Zambia according to their legislation has to be owned by Zambian citizen companies. The experience of BIFM in Zambia is a classic example of how a determined and committed government can use the legislation to advance citizen economic empowerment and participation in strategic economic sectors.

Early this year as the BNF we circulated an article on citizen economic empowerment in the construction industry. In that article we emphasised the need for a construction law that leverage citizens to participate actively in the construction sector. This article was necessitated by the realisation that our construction industry is dominated by companies of Chinese origin which can easily out compete their Botswana counterparts on bids as they have the benefit of state subsidies and hence can afford to tender for work at prices not reflective of market forces. We mentioned that it is not only in Botswana where contractors complain of unfair advantage enjoyed by Chinese contractors. Even Europe major contractors have always complained about state subsidised Chinese companies.

We outlined in the article the need for government to ensure citizen economic empowerment and participation through a legislation enforcing joint ventures with citizen construction companies, mentoring of small citizen contractors by large foreign contractors in Botswana through subcontracting packages of work and monitoring their progress. There should also be employment equity where quotas are imposed on foreign construction companies on number of citizens required to be in strategic positions, skills transfer and skills development where foreign construction companies are forced to put in place a structured training programme to train local labour and impart skills on unskilled citizens. All the above empowerment plans cannot happen in a vacuum and we cannot rely on foreign companies to use their discretion and goodwill to get Batswana to the level of citizen economic empowerment and participation we require.

An enforceable construction legislation is a prerequisite to achieve citizen economic empowerment and participation in the construction industry. This is a sector where the government spends millions of Pulas annually and as the BNF we feel this spending has to a large extent benefit citizens.Legislation on broad based citizen economic empowerment and participation can help the government of the day achieve a lot and help address wealth distribution imbalances for every government.

For as long the BDP government fails to create a representative society through a legislation encouraging equitable wealth distribution, citizen economic empowerment and citizen participation will remain a dream. This will make it impossible to diversify our economy because the bulk of economic activities are controlled by foreign companies who repatriate their profits and as a result the country loses on the multiplier effect of government spending which could result in emergence of other sectors in the country if profits were reinvested in the country.

The BNF government promises a law on citizen economic empowerment and participation which provide for citizen companies to take the lead and be actively involved in economic activities. This law will ensure wealth is distributed equitably to avoid a situation where people in the corridors of power, their friends and relatives accumulate immense wealth and ordinary citizens are expected to live by slavery salaries after a month of hard work slashing grass.

Moeti MohwasaInformation and Publicity Secretary, BNF