In the past three years, Minister Kenneth Matambo has done a good job in preserving Botswana’s much-celebrated financial prudence image with rolling budget surpluses.
The enviable trend is set to continue this year even though the budget will sustain a slight P4.03 billion deficit.
Despite the accolades Botswana has been showered with for sustainable economic growth and pragmatic financial management, the log in Government’s eye still remains the lack of adequate employment opportunities, poverty eradication and income inequality.
As Matambo goes about his business of sharing the country’s resources next February, we urge him to give tackling narrow growth priority as it has emerged as an albatross on the development history of Botswana.
In our edition yesterday, we carried grim research indicating that Botswana is the third most unequal country in the world. According to the World Bank report, despite significant economic growth in the past decades, striking disparities remain among socio-economic groups in income, wealth and living standards. The highest income inequality was recorded in the North-West and Kgalagadi regions, North-East and South-East. While improvements have been noted in poverty alleviation and other interventions, the inequality essentially means Botswana is a country of two faces, one rich and the other desperately poor.
For an upper middle-income country, an assessment of Botswana’s social upliftment indicators shows that the country is lagging behind its peers. According to Statistics Botswana, the proportion of the population living below the poverty datum line (PDL) stood at 19.3 percent in 2009/10.
In absolute terms, the number of persons living with income below the poverty line declined from around 500 thousand in 2002/03 to about 373 thousand in 2009/10. On income disparity, the latest available estimate of the Gini coefficient of per capita consumption is 0.49 in 2009/10, one of the highest in the world. On the other hand, the unemployment rate is also very high at 17.8 percent in 2009/10, although according to the IMF the number can be as high as 30 percent if discouraged workers were taken into account.
Despite the rapid economic growth over the past four decades after independence, it is worrying that Botswana still faces these fundamental development challenges. While the need to maintain consistency of a balanced balance cannot be taken lightly, we also expect Matambo to take up the challenge and commit to the new fiscal rule, which is meant to ensure posterity through buffering of financial savings.
The 2008 financial crisis exposed our vulnerability to global economic shocks when our financial assets dipped to negative balances.While it might be impractical to save 40 percent of diamond revenues and maintain a budget surplus simultaneously, we still expect Government to waste no further time. Toll out this plan now and implement it over the next two to three years. In addition, the World Bank’s recommendations on raising the quality of education and skills to close the inequality gap need to be given urgent attention and top priority.
“The good we secure for ourselves is precarious and uncertain until it is secured for all of us and incorporated into our common life.”
- Jane Addams