Moupo on the budget
| Friday February 15, 2008 00:00


* Introduction
Before dealing with substantive issues raised by the Minister in the Budget Speech, I wish to raise certain general issues some of which I did raise last year but were not satisfactorily responded to. The first one is that of the huge foreign exchange reserves that we keep in foreign banks. While it is understandable both for the purpose of financing the import of goods and services and for reasons of economic prudence that substantial foreign exchange reserves should always be kept, it does not seem to make any economic sense to keep such excessive amounts of money idle in foreign banks. The huge challenges of development that we face necessitate the use of at least part of funds to finance development projects or for productive investment.
The second issue is that of fiscal rule. In my intervention in last years budget session I did point out that while it is necessary to be cautious in spending our money in the particular context of our country where we face such huge development challenges, committing ourselves to such rigid formulas like the fiscal rule of 40% is far too constraining and the third issue of is that of the cost of credit in this country. The world Bank study of 2004/2005 identified the high cost of credit as some of the factors inhibiting investment in the country. While it is important to keep inflation down, it is also important that interest rates should be kept at such levels to render credit so expensive, as to discourage investment. These should be a differentiation in terms of interest chargeable between consumer and commercial/industrial credit.
* Development Objectives
The fundamental basis for evaluating macroeconomic strategy in general and the budget in particular is the extent to which it meets critical development objectives. The debate on this year grants an opportunity to assess our country's progress on key issues of Poverty Eradication, Rural Development, Job Creation, Rural Development etc
* Poverty Eradication
Although the poverty levels have gone down to around 23 % in recent years, the situation of our people especially in the rural areas and in particular in areas like Kgalagadi, Letlhakeng, Okavango, Chobe is still very serious. The figure of 23% would easily more than double if we use 2.00 per day as a yardstick making poverty levels in our society a very serious problem indeed. Poor people must be granted access to income and assets through granting them jobs or basic income. We need a comprehensive social security system jointly financed by the state, the employers and employees to cater for the old age pensioners, orphans, disabled, the urban and the rural poor. This should also have a component of unemployment benefit to award a minimum amount to the unemployed to enable them to put food on the table and escape poverty.
* Rural Development
In Botswana's modern economy the urban areas are the nerve centres of socio-economic development. Most major development projects tend to be concentrated there. The rural areas where most of our people live are centres of economic stagnation and social decay. Agriculture, which used to be the mainstay of the rural economy has collapsed throwing thousands of our people into grinding poverty and despair. It is these desperate conditions which fuel rural urban migration and overburden the already overstretched facilities (like housing) in the towns. We are disappointed that the budget has not said much about government intends tackling the problem of Rural underdevelopment. We believe that is what is needed massive infrastructural development in the rural areas as well as a well thought out strategy of reviving agriculture. The availability of well developed network of roads, water, telecommunications, electricity would render the rural areas more attractive for investment thus enhancing the possibility of creating jobs there and stemming the tide of rural-urban migration.
A strategy for the revival of agriculture must be premised on the recognition of the social differentiation of the rural population, which has been at work for many years. In the arable sector, the majority of the small subsistence farmers are faced with the problem of lack of inputs access to draught power, irregular and inadequate rainfall. The old methods of tilling the land for decades without vital inputs like fertilizers lead to soil nutrient exhaustion and poor yields.
The emerging agrarian petty-bourgeoisie is faced with under-capitalisation and lack of market. Programmes such as NAMPAAD are theoretically misconceived as they are primarily targeted at big farmers who can afford to utilise the minimum agreage set out in the Master Plan. To address and really revive the agricultural sector, a strategy of availing inputs such as seeds, fertilizers and draught power, is needed. The Botswana Agricultural Marketing Board has to be restructured and expanded to purchase all the agricultural produce (including, vegetables, and dairy produce) from farmers who otherwise have no access to the big market like chain stores and supermarkets. It is also important to seriously consider accelerating the programme for constructing dams to provide water not just for domestic and commercial use, but for irrigated agriculture.
* Privatisation
The Minister reiterates his Governments commitment to privatisation. At the time of independence Botswana had no viable indigenous capitalist class, meaning that it was the state that had to both provide the infrastructure and provide vital services. Thus several state-owned enterprises were created to provide infrastructural support for economic development and vital services for the people. The BDP government has now adopted a reactionary neo-liberal agenda and wants to strip the Botswana state of these assets under the pretext that these enterprises can only be run 'efficiently' when they are privately owned by and also that the state is inherently inefficient in running businesses. The truth of the matter is that the BDP wants to sell off state asserts at a give away price to some of its supporters. The BNF also believes that 'efficiency' is a function of management, not ownership, and therefore the alleged inefficiency of state corporations cannot be the basis for their privatization. In any event the Minister himself has indicated that most of the parastatals are profitable. The BNF therefore rejects privatization because it will:
(a) Undermine national self-determination- it may result in the take over of such vital sectors by the foreign capital because of the weak and relative undeveloped character of the national capitalist class. The idea that ordinary Batswana will be empowered by acquiring a stake in newly privatized enterprises is fraudulent and unrealistic. The majority of Batswana are either too poor or barely survive on meagre incomes and neither have the inclination nor capacity to buy shares. In economy already overwhelmingly dominated by foreign capitalist interests, a policy which is likely to further entrench such foreign domination is misguided and inappropriate. Apart from its economic benefits, the state control and operation of the strategic sectors of the economy makes social and political sense in that it ensures that such sectors are not foreign controlled and relatively more affordable and accessible services are provided to the public. Our objection to generalized privatization by no means totally excludes the possibility of entering into partnerships or joint ventures with foreign capital in selected areas in order to obtain access to capital and technology. This however would be done in context of a general economic programme of transformation of the economy which includes strengthening of the public sector, developing and nurturing cooperatives, assisting small and medium size enterprises, encouraging private capitalist investment, and not as part of a generalized sale and disposal of public assets.
(b) Deny the poor vital services- Botswana ranks among the most inequitable and poverty stricken countries in the world, and electricity, water and telecommunications are already reputed to be expensive by regional standards. Privatization is likely to lead to an increase in charges for such services and hurt the poor.
(c) Undermine development-people-centered development requires fundamental restructuring of the economy. This cannot be left to the market forces, which are only driven by profit maximization. State control of vital assets provide a strategic lever to stimulate development, both by extending infrastructure and production and by maintaining cross-subsidies for poor, small and medium scale enterprises. Privatization rules out this strategic intervention.
(d) Worsen unemployment and poverty- Botswana's economy is characterized by unacceptably high levels of unemployment and poverty, which have persisted despite impressive economic growth rates. The restructuring of various parastatal corporations in preparation of privatization has already resulted in job losses. Full-scale privatization is likely to lead to further job losses.
(e) Erode democratic control- Public enterprises are the embodiment of public funds, they were set up with the tax payer's money hence in principle they can be held accountable by the electorate. But as private business they operate under a cloak of 'commercial confidentiality' because of cut-throat competition. Hence privatization means that the affairs of the nation will be entrusted to undemocratic, unelected and therefore unaccountable private businesses.
* Housing
Thousands of our working people live in overcrowded unhygienic conditions in SHHA houses. Yet the Minister is completely silent on how the Government intends tacking this problem. The main problem of housing in Botswana is that it is a commodity for profit making rather than a basic right of every citizen. The fact that land in the urban areas land particularly serviced land is also a commodity sold at artificially high prices makes it impossible for the majority of the people earning low wages to have homes of their own. Comprehensively defined housing means much more than the physical structure of the house. It includes the services like water, toilets, waste disposal, transport between houses and work place and community facilities. The capitalist system has given rise to land speculation with landlords owning several houses in order to make profits from the payment of rents by workers who cannot afford to buy land or houses. The Botswana Housing Corporation (BHC) which was originally supposed to build houses for people has become a real estate agency building 400 houses per annum, which are not even affordable by the workers or the majority of the urban residents. The BHC needed to build at least 54, 542 units per year to get rid of its massive backlog yet it has now abandoned that waiting list. There has been a mushrooming of real estate agencies some of them with dubious credentials, which added to the housing crisis in the urban areas. Capitalist land hoarding and speculation by those who own multiple plots only artificially fuels and distorts market prices for houses.
SHHA is supposed to cater for the poorer members of the society. It was founded as a Self-Help Housing Agency Scheme (SHHA) financed by the International Development Agency of Canada and the Netherlands Interdenominational Coordination Community for Development Projects and the Botswana Council of Churches. One of its problems is that the scheme is under-resourced and the quality of housing is sub-standard. It is disturbing to note that more money is allocated to BHC than SHHA and yet it is SHHA which caters for 'a larger proportion of the urban population and needier group'. SHHA accounts for about 52% of total housing provision and accommodates 62% of households in urban areas.
Poor residents also find it difficult to service the SHHA loans and pay service levy, which was P2.50 in 1980. The service provided is also poor with over 10, 000 households still using pit latrines in Gaborone. Lack of street lighting, tarred streets and irregular collection of litter in the SHHA areas makes residents are not only unable to pay but also reluctant to pay for levy for a service which is patently shoddy.
As a result of profit motive that governs housing slums and so called illegal or squarer settlements have become a permanent feature off all towns. The number of urban households who do not own their dwellings is growing. The 1984/1985 Household, Incomes and Expenditure Survey (HIES) found that 50% of the urban households rented their houses. The 1993/1994 HIES found that numbers of urban households renting their houses had risen to 60%. Indeed only 2 in every 5 urban dwellers owned their houses, and nationally only 59% of the households own their houses.
* Towards solution of Housing crisis
The housing crisis can only be solved and residents helped to own their own homes if the government commits itself to set of principle such as the right to housing by every citizen, equitable distribution of housing, a ban on multiple ownership of houses and ban an private renting and the diversification of the institutions providing housing. A restructured BHC, empowered councils, cooperatives, the state, the Private Sector should be mobilized to provide houses for the people. Decent and affordable housing for every citizen would stimulate production of cement (lime and clay soil), production of timber, building tiles, pipe manufacturing, electrical wiring. The copper nickel mine would supply raw materials for some of these industries.
* Job Creation
The problem of unemployment is a serious one. If we include those who are no longer actively looking for jobs, the unemployment rate would easily exceed 30%. Young people including the well-educated young university graduates roam the streets looking for jobs with no hope for the future. One of the major weaknesses of the Government economic strategy is lack of a well throughout employment creation strategy. Yet Botswana spends hundreds of millions of Pula in importing food, fruits and vegetables from South Africa. The strategy of import substitution coming with programmes aimed at empowering Botswana to grow vegetables, fruits and would create thousands of jobs and revive the rural economy.
On the other hand, the Government either through the BDC or through supportive programmes of small to medium scale entrepreneurs could set up factories to process various agricultural products and also create more jobs.
* Cost - Sharing
We want to reiterate our opposition to the reintroduction of so-called cost sharing in education. This programme is misconceived as it humiliates children from poor families and deprives them of the opportunity to get education. Hundreds of them are being returned from school for failure to pay school fees, and are condemned to a life of misery and hopelessness. There is altogether no reason either socially or economically to justify this kind of treatment of some of our poor people.
* Mineral Beneficiation
We are disappointed that except for a few lines about the movement of DTC and a few diamond companies, the Minister has not said much about mineral beneficiation, yet it is through mineral beneficiation that we will add value to our diamonds and other minerals, accelerate the process of industrialisation, create thousands of jobs and equip our people with important industrial skills.
The expansion of Seretse Khama Airport (among others) must be proceeded with expeditiously to facilitate the movement of diamond between here and London and other diamond centres. The Government must also undertake other measures to drive this process. A beneficiation unit must be set up in the Ministry of Minerals Energy and Water Affairs, manned with highly skilled Geologists specialising in diamonds and other minerals to carry out research and assist Government plan for this process to ensure that it succeeds. Because our future success in the beneficiation of other minerals will depend on whether we succeed with diamonds in the first place.
* Lack of Implementation Capacity
We are concerned about the perennial problem of failure to timeously implement and complete Government projects. Our people in the rural areas need these projects for the betterment of their lives and grave injustice is occasioned to them by the unjustified delays in delivering projects in time. Millions of pula of public funds are lost through cost-overruns. Is it on account of shortage of project managers or some people are sleeping on their jobs in the Ministries. Ministers must adopt a more hands on approach in the supervision of projects, and ensure that those who cause the public so much inconvenience by failing to drive projects are appropriately brought to book.