All things being equal, this should merely be a headline in the "international" section of a newspaper. However, Botswana's precarious economic set-up means a strike within a section of the South African workforce portends trouble and deserves more prominent headlines. Fuel and supermarket retailers are already scrambling to beef up stocks and/or secure alternative routes for their products, as previous experience has shown how calamitous certain strikes can be to the local economy. Available statistics underline Botswana's heavy reliance on imports through South Africa: between January and November last year, Botswana imported P25.4 billion in goods and services from South Africa, representing 71 percent of the total import bill. In 2008 - the year before the recession - Botswana's imports from South Africa were valued at P27.6 billion or 78 percent of total imports. Imports range from strategically critical goods such as fuel and electricity to toilet paper and fruit juices, hence the "precarious economic setup" referred to earlier. As a result of this, the disproportionate role South Africa plays in the import bill has become the domestic economy's soft underbelly. Strikes, industrial unrest, policy shifts and adverse operating conditions in South Africa have come to mean economic commotion in Botswana. The result is an economic imbalance where earnings from strong diamond exports ultimately wind up in South African banks and in the pockets of South African industrialists, businessmen and workers. In fact, some of the striking truckers are employed in South Africa solely to transport fuel and consumer goods to Botswana! The situation is nothing new, stemming from Independence...The solution is also nothing new - higher import substitution, faster economic diversification and varied import routes to cushion the underbelly. But economic changes such as these often take decades with economists estimating a 40-year minimum for a change from primary production to labour intensive and capital intensive manufacturing in an economy. Besides the numerous political, financial and market-related challenges within this route, Botswana has also had whatever gains made partly unravelled by the recession. As a result, government's political focus shifted momentarily to propping up the general economy, then to cutting back on spending and project prioritisation. Long-term strategies such as economic diversification and import substitution, almost naturally decelerated but the dire need for them is once again being exposed by incidents such as the strikes in South Africa in 2010 and this year. The warming regional economy will result in more demands from labour on governments wrestling with deficits; more strikes are inevitable in South Africa and Botswana. These should act as a reminder to government to continue pursuing the various initiatives such as the Economic Diversification Drive, citizen economic empowerment legislation and import substitution policies. We also note and praise the importance being given to the Trans Kalahari Railway and the Morupule B power station, both of which are essential in covering up the soft underbelly. In the short term, however, diversification of fuel sources and routes should receive top priority from government and private sector stakeholders, as shortages in this strategic asset have the potential to return the recovering economy to its knees.
Today's thought
"Pressure would come to bear on fuel supplies, the longer the strike takes"
