Searching for a 'fresh economic miracle'

| Friday November 12, 2010 00:00

 

Mmegi: The World Bank is presently supporting Botswana in energy, HIV/AIDS and information communication technology. What opportunities are there for further interaction between the two?

Ezekwesili: Our programmes are defined by the urgency for Botswana to build on the record success it has had in the last three decades in becoming a middle-income country by becoming a diversified economy.

That importance and urgency for diversification means that the relationship between us is defined within the context of the type of knowledge and expertise the World Bank can avail the leaders and people of Botswana as they make these development choices.

Within that, we have invested in energy, integrated transport, looked at our interests in climate change, information communication technology, private sector development, public sector reforms and others that would assist Botswana to achieve economic structural change.

Mmegi: Much has been made of African states' continuing reliance on fossil fuels as opposed to renewable power. With Botswana possessing 200 billion tonnes of coal, what would be your advise in light of this debate?

Ezekwesili: I think it is important to have empirical evidence-based understanding that a move towards a green growth trajectory will ultimately be more beneficial and to put in place a transitional arrangement to help Botswana diversify its sources of power. Botswana also has huge possibilities in coal-bed methane and photovoltaic power and it would be important to ensure diversification and the build-up to a transition.

The consequences of staying in the same coal path for too long will catch up with the economy. This economy suffers from drought and other climate change variabilities, but it also has the immediacy of energy needs. This is going to be a part of the whole comprehensive approach: to balance the benefits of fossils and the clear recognition of the dictates of climate change.

Mmegi: What are the major threats to the five percent forecast for sub-Saharan African growth? Are there any chances for a double dip rising from the emerging crisis in Europe and the recent US Fed actions?

Ezekwesili: What is obvious is that the recovery is not homogenous across the globe, and even where recovery has started, it's not that strong. We are still fragile, which means efforts must continue being made across the globe and that's why the G20 (who control over 80 percent of the world's output) are meeting together to see how to responsibly coordinate policy responses so that the globe does not (go on) a negative growth path.

This five percent will depend on what happens with the rest of the world. There are a number of African countries with direct linkages with the Eurozone and are feeling the impact of the troubles in that zone. Ensuring that these OECD countries are stable is important for Africa's own sustained growth.

Mmegi: A recent World Bank Report criticised heavy indebtedness and low savings rate in Botswana. What threats do these pose for Botswana and how can the status quo be transformed?

Ezekwesili: This is a result of the dominant public sector in Botswana. The effort at ensuring realignment of the composition of the public and private sectors is going to be part of the shift in consumption.Much deeper reforms of the public sector to position Botswana to embrace private capital are going to be key. These would lead to capital accumulation, which deepens the market for investment and citizens could take the opportunities that private enterprise offers.

Right now, it's not obvious for citizens because the government is very dominant in the national economy. Reforms should aim at reducing the government's high spending as a percentage of GDP. This would then give space to the private sector to be a provider and driver of growth.

Mmegi: The World Bank has previously said Botswana's civil service is bloated and that its social spending needs to be qualified by research into recipients. What's your comment on Government's position as the second largest employer in the economy and the major driver of development programmes?

Ezekwesili: It's a complex situation, and when you have a complex problem, you try to analyse and understand its drivers. One of the drivers is that whereas the public sector has been effective and efficient as seen over the years, it has come to the limits of what it can offer in terms of long-term growth and capacity to absorb more people in active economic engagement. Jobs that the public sector can create are maxed out. Where are they going to come from? The urgency of the situation is that despite the great success in national incomes over the years, you still have a huge percentage of poor people in a high middle-income country.

The level of poverty and unemployment means a focus on broadening the economy's base is key, and that's possible through private sector participation in the economic space and that must be provided by the public sector. For social spending, the public sector effectiveness of that spending could be much higher than we see. In terms of the results and outcomes of this spending, there's a lot that needs to be achieved.

Public spending management reforms, budget reform and quality of spending are very important areas that Botswana needs to grapple with. The best thing we have is the state of mind where citizens and their leaders are looking for the next cycle of decades of growth that will take them on a new journey of success.

The action that must be taken will require transformation - changing things that have stopped delivering as much as in the past. We need new ideas, new approaches and we should embrace these and learn from those that went ahead of us. Smart investments, smart partnerships between government, the private sector and civil society can lead to another Botswana miracle for the next two or three decades.