A budget for the ages: Time for Botswana business plan change

Overhaul needed: The country’s economic model needs a revamp PIC: THALEFANG CHARLES
Overhaul needed: The country’s economic model needs a revamp PIC: THALEFANG CHARLES

Last week Friday 21st January 2022 edition of Mmegi, ran an article quoting a World Inequality Database Report showing that the richest one percent of Batswana earned more than 20 times the average Motswana.

This statistic has been steadily worsening with Botswana ranked one of the most unequal countries in the world. Unemployment has steadily been climbing over the past 15 years to reach 24% officially (unofficially I suspect if you remove Ipelegeng and other 'internship' programmes you probably get close to 35% and maybe even 45%-50% when only looking at youth).

The COVID-19 pandemic has also shot inflation through the roof, with no respite expected as oil prices continue to soar, Botswana Power Corporation (BPC) continues to lobby for tariff increases, parastatals like the Botswana Housing Corporation (BHC) push up rentals and food prices continue to rise whilst incomes remain stagnant and retrenchments loom.

Botswana’s crown jewels of 'free' healthcare and education also continue to deteriorate as government struggles to fund the recurrent budget on the back of misplaced decisions to grant public sector salary increases during a pandemic. Real economic growth is stagnant and everywhere one looks, it feels like doom and gloom are on the horizon.

The reality is Botswana is not what it used to be and the sooner we all come to terms with it the better.

That said, from the time of President Mokgweetsi Masisi’s inauguration, he has championed big ideas like the National Transformation Plan (lead by the National Transformation Team), transforming Botswana into a knowledge economy, speeding Botswana into the Fourth Industrial Revolution and introducing the Reset Agenda. He has also passionately pushed through the Economic Inclusion Act, championed more results from specific Special Economic Zones in an attempt to fast-track citizen participation in the economy via value chain economic development and encouraging policies that grow wealth among indigenous Batswana. A lot of these efforts though have been dampened by the economic tailwinds, which the country has faced since the Financial Crisis of 2008.

This leads me to the point of this article (which is hardly original).

In both the 2020 and 2021 Budget Speeches, the then Finance and Economic Development minister, Thapelo Matsheka, bemoaned that Botswana cannot continue on the same path of 'business as usual'. The Botswana Business Model is no longer sustainable. Some of the habits and luxuries we built into our working model during the presidencies of Their Excellencies Ketumile Masire and Festus Mogae, and then persisted with stubbornly during the terms of His Excellency Ian Khama, need to be reevaluated and reupholstered to come to terms with the Botswana we now live in: a Botswana with a ballooning government wage bill, an unsustainable growth in expenditure, declining government revenues, depleted foreign reserves, growing national debt, increasing corruption, wasteful procurement, poor productivity and little to no real economic growth.

Therefore the time is now for President Masisi’s ambitious transformation proclamations to be reflected in the National Budget. Below are some specific issues I hope the Honourable Minister of Finance and Economic Development, Peggy Serame, touches on during her speech on February 1, 2022:

1. Building a budget that is focussed around clear priority areas that will encourage the growth and competitiveness of the country as a whole. Botswana needs to reexamine herself and focus on industries that give the most value with regards to economic growth and employment; then put her full might of resources behind these. The focus should be on industries we have relative competitive advantage in compared to other countries, such as mining and tourism and a focus be built on building value chain economies around these. Funds should therefore be clearly focussed on expediting Special Economic Zones such as Selebi Phikwe and Pandamatenga. Our budget should reflect employment creation. 2. The budget should show a clear message of rationalisation of spending. Moves to curtail the ballooning Recurrent Budget must be made and tough decisions made. Can we continue to offer 'free' education and health? Can we continue to run a welfare state with things such as Ipelegeng and a whole host of other subsidies and entitlements? When do we start to wean off Batswana from these entitlements and encourage more cost-sharing and then focus our budget on productive purposes that encourage economic growth and in turn increased employment? This should also include the rationalisation of parastatals and ministries as promised in the 2020 Budget Speech. This shouldn’t only be done to reduce costs but also to update mandates to make them fit-for-purpose considering the challenges we have as a country. The parastatals should not reflect Botswana of the 1980s (BHC, Botswana Savings Bank, Botswana Building Society, National Development Bank, Botswana Telecommunication Corporation Limited, I’m looking at you) but rather be focussed around the specific focus industries of the day and the future. 3. The budget needs to start reflecting value i.e. show the element of monitoring and evaluation. Previous speeches tend to omit what was promised in the past. The government shies away from evaluating itself and rather just focusses on promises going forward. Long-term narratives are therefore difficult to follow unless you consciously read the National Development Plans but what you will never get is progress reports and challenges. We also fail on the point of value where projects are chosen and embarked upon without a clear evaluation as to whether they have the greatest value to the overall citizenry. For example, Devil’s Advocate question: which has the bigger economic value to the overall country? Rolling out internet fibre across the country or building a road between Dibete and Machaneng or Serule and Mabeleapudi? In the current system, it is tough to answer one way or the other because we do not have clear metrics to answer this as a country. This cannot continue.

If we are to continue to give hope of change, improved livelihoods, economic transformation and a 'reset' culture, President Masisi has to change everything about how we work. Just as we are about to embark on a constitutional review, it is important that we transform how we plan, execute and monitor. This is not the Botswana of 2005 and we cannot behave as if it is ' business as usual' and the budget must be the first thing to reflect that.

*Mphoeng is a director at MP Consultants, a local citizen-owned corporate finance, economics and business consultancy. Previously, he worked for the University of Botswana as a Lecturer in Accounting and Finance, Botswana Investment Fund Management (BIFM), Standard Chartered Bank and Bank of Botswana.

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