WB insists on trimming public service

| Friday November 12, 2010 00:00

 

The World Bank's Vice President for the Africa Region says Botswana's civil service has become 'maxed out' in terms of employment opportunities and its size and dominance are squeezing out the private sector from spearheading a new era of growth for Botswana.

Obiageli Ezekwesili's comments reinforce the World Bank and IMF's criticism of Botswana's 159,000-strong public service, which represents 44 percent of total formal sector employment.

She was speaking in an interview in Gaborone on Wednesday.

The Bretton Woods institutions say Botswana's civil service is weighing down the economy and stunting private sector growth.

Paradoxically, the institution's criticisms come at a time when trade unions are aggrieved by the government's decision to freeze recruitment for 11, 000 new civil service posts that would drive up the public service wage bill beyond P1 billion a month if included in next year's budget.

Ezekwesili said the size of the public sector was also to blame for the high levels of indebtedness among Batswana and low levels of savings as reflected in high household borrowings and rates of arrears.

'This high indebtedness is a result of the dominant public sector in Botswana,' she said. 'The effort at ensuring realignment of the composition of the public and private sectors is going to be part of the shift in consumption.

'Deeper reforms to assist Botswana 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 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.'

The World Bank executive said while the considerations involving reductions in the civil service were complex, reform was inevitable. 'When you have a complex problem, you try to analyse and understand its drivers,' she explained.

'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.'

Ezekwesili said the public sector's role would be to facilitate this transformation through appropriate institutions, regulations and incentives, boosting investor confidence and providing infrastructure.

'When I met President Khama, he was very clear on the importance of economic infrastructure to lay the ground for economic growth,' she continued. 'He spoke about energy, integrated transport, investment in water and agriculture.'

According to the Bretton Woods institutions, Botswana's public service wage bill is larger than Lebanon, Malaysia, Mauritius, Chile, Gabon and Costa Rica's.

However, locally, some observers have cautioned government to take the IMF and World Bank advice with a pinch of salt. Commentators at the recent Budget Pitso said the advice of the Bretton Woods institutions should be approached with caution. Said prominent economic commentator, Howard Sigwele: 'A word of caution about the IMF and the World Bank: The IMF played a big role in structural adjustments in Africa in the 1980s and '90s, and it was a big mess.

'Even if they say we are over-staffed, take that with a pinch of salt because their track record in Africa is not something to be proud of. Whatever they say, let's not look at it as if it's the Bible. That would be a terrible mistake.' Ezekwesili was due to leave Botswana on Wednesday for Lesotho as part of her official programme.