Following months of intensified US –China Trade war which eroded business sentiments across the globe resulting in uncertainties, and subdued market in manufacturing and diamond industries amongst others, this week the world largest economies put pen to phase one of a historic trade agreement that is intended to put an end to the year-long geo political tension.
Representing the world‘s largest economy Donald Trump, President of the United States (POTUS), signed the landmark trade agreement alongside China’s Vice Premier, Liu He, representing the world most populated and second most powerful economy. According to American media houses, the agreement is a preliminary phase of a broader deal that President Trump says may come in as many as three sections. "Together, we are righting the wrongs of the past; it doesn't get any bigger than this," Trump said in a pomp-filled signing ceremony at the White House in Washington DC on Wednesday.
The US- China trade war was fueled by decades of complaints that Beijing was manipulating its currency and stealing trade secrets from American firms. This then was met by United State President Donald Trump putting up tariffs policy which White House said was to encourage US consumers to buy American by making imported goods more expensive.
So far, the US has imposed tariffs on more than $360 billion of Chinese goods, and China has retaliated with tariffs on more than $110 billion of US products. Washington delivered three rounds of tariffs last year, and a fourth one in September. The recent tariff punch by United States was 15 % duty on Chinese imports from meat to musical instruments China then hit back with tariffs ranging from 5% to 25% on US goods. Its latest tariff strike included a 5% levy on US crude oil, the first time fuel has been hit in the trade battle.
After more than two years of this rising tension, the two countries have signed a deal aimed at calming trade frictions. Economists say the agreement has been hard-fought, but it is unclear how much economic relief from their trade war it will offer. Experts say tariffs in most cases at a lower rate will remain in place. Analysts say it's unlikely that the deal will produce gains sufficient to outweigh the losses already suffered.
DOMESTIC EFFECT OF THE TRADE WAR
During this US-China trade war, Africa‘s 3rd world countries, frontier markets, emerging economies, and lower to middle income countries were the most hit economies, standing in the mix, vulnerable to the net effect of negative business sentiment and uncertainties as the leading economies went throat to throat.
Economic uncertainty generated by this unstable geopolitical climate led to widespread shock and a global downturn in the diamond industry during the first half of 2019. These have also fostered a heightened sense of caution among the banks that finance the trade, as well as diamond brokers and consumers of luxury goods.
The global diamond industry in the first half of 2019 faced a variety of challenges leading to widespread uncertainty and declining commerce across all segments. The uncertainty brought about by increased trade barriers and geopolitical risks weighed on business sentiment and activity.
Botswana in particular is a middle income country largely dependent on the mining sector as its economic nucleus, by in large the diamond industry. The sector accounts for more than 30 % of the country‘s GDP, it is the largest foreign income earner, largest private sector employer and second largest source of direct business for the private sector after Government.
According to Bank of Botswana (BoB) during this tough year Real Gross Domestic Product (GDP) have grown by 3.9% in the twelve months to June 2019, compared to a faster expansion of 4.9% in the corresponding period in 2018. The lower rate of increase in output is mainly attributable to a deceleration in growth of the mining sector. Growth in non-mining GDP also slowed in the review period. Mining output grew by 1.4% in the year to June 2019, compared to an increase of 5.6% in the corresponding period in 2018.
Due to by in large this uncertainty Botswana ‘s partner in diamond mining De Beers Group sold less rough diamonds during the year. Sales went down by over P14 billion. Botswana Government owns 15 % of De Beers Group, the mining behemoth is 60 % fed by local mining giant Debswana, a 50-50, 50 year old partnership between the two. Ministry of Finance & Economic Development noted in the Budget Strategy paper for the coming financial year that Botswana’s fiscal position faces potential headwinds.
“Weak diamond sales pose downside risks to mineral revenues, which remain low following the decision by Debswana to finance the Cut 3 and Cut 9 projects from the dividends. Furthermore, risks to the revenue outlook take into account the continued weak market for rough diamonds which has affected sales through De Beers Global Sightholder Sales.”
However some observers say the first deal between Washinton and Beijin means nothing .According to CNN economic experts the signing of phase one deal doesn't mean simmering conflicts and uncertainty over trade won't drag down the global economy this year. “Tensions between the world's two biggest economies are likely to persist in 2020 as Beijing and Washington enter a second round of trade talks that are expected to be more difficult than the "phase one" process that culminated in a deal Wednesday in Washington”.
Here is how one Permanent Secretary encapsulates the clear tension between democracy and bureaucracy in Botswana: “President Mokgweetsi Masisi’s Government is behaving like a state surrounded with armed forces in order to capture it or force its surrender. The situation has turned so volatile, for tomorrow is not guaranteed for us top civil servants.
These are the painful results of a personalized civil service in our view as permanent secretaries”. Although his deduction of the situation may be summed as sour grapes because he is one of the ‘victims’ of the reshuffle, he is convinced this is a perfect description of the rationale behind frequent changes and transfers characterising the current civil service.
The result of it all, he said, is that “there is too much instability at managerial and strategic levels of the civil service leading to a noticeable directionless civil service.” He continued: “Changes and transfers are inevitable in the civil service, but to a permissible scale and frequency. Think of soccer team coach who changes and transfers his entire squad every month; you know the consequences?”
The Tsunami has hit hard at critical departments and Ministries leaving a strong wave of uncertainty, many demoralised and some jobless. In traditional approaches to public administration, democracy gives the goals; and bureaucracy delivers the technical efficiency required for implementation. But the recent moves in the civil service are indicative of conflicting imperatives – the notion of separation between politicians and administrators is becoming blurred by the day.
“Look at what happened to Prisons and BDF where second in command were overlooked for outsiders, and these are the people who had sacrificially served for donkey’s years hoping for a seat at the ladder’s end. The frequency of the changes, at times affecting the same Ministry or individual also demonstrates some level of ineptitude, clumsiness and lack of foresight from those in charge,” remarked the PS who added that their view is that the transfers are not related to anything but “settling scores, creating corruption opportunities and pushing out perceived dissident and former president, Ian Khama’s alleged loyalists and most of these transfers are said to be products of intelligence detection.”
Partly blaming Khama for the mess and his unwillingness to let go, the PS dismissed Masisi for falling to the trap and failing to outgrow the destructive tiff. “Khama is here to stay and the sooner Masisi comes to terms with the fact that he (Masisi) is the state President, the better. For a President to still be making these changes and transfers signals signs of a confused man who has not yet started rolling his roadmap, if at all it was ever there. I am saying this because any roadmap comes with key players and policies,” he concluded.
The Ministry of Health and Wellness seems to be the most hard-hit by the transfers, having experienced three Permanent Secretaries changes within a year and a half. Insiders say the changes have everything to do with the Ministry being the centre of COVID-19 tenders and economic opportunities. “The buck stops with the PS and no right-thinking PS can just allow glaring corruption under his watch as an accounting officer. Technocrats are generally law abiding, the pressure comes with politically appointed leaders racing against political terms to loot,” revealed a director in the Ministry preferring anonymity.
The latest transfer of Kabelo Ebineng she says was also motivated by his firm attitude against the President’s blue-eyed Task Team boys. “The Task Team wants to own the COVID-19 pandemic and government interventions and always cry foul when the Ministry reasserts itself as mandated by law,” said the director who added that Masisi who was always caught between the crossfire decided on sacrificing Ebineng to the joy of his team as they (Task Team) were in the habit of threatening to resign citing Ebineng as the problem.
Ebineng joins the Office of the President as a deputy Coordinator (government implementation and coordination office).The incoming PS is the soft-spoken Grace Muzila, known and described by her close associates as a conformist albeit knowledgeable.
One of the losers in the grand scheme is Thato Raphaka who many had seen as the next PSP because of his experience and calm demeanour following a declaration of interest in the Southern African Development Community (SADC) Secretary post by the current PSP, Elias Magosi.
But hardly ten months into his post, Raphaka has been transferred out to the National Strategy Office in what many see as a demotion of some sort. Other notable changes coming into OP are Pearl Ramokoka formerly with the Employment, Labour and Productivity Ministry coming in as a Permanent Secretary and Kgomotso Abi as director of Public Service Reforms.
One of the ousted senior officers in the Office of the President warned that there are no signs that the changes and transfers will stop anytime soon: “If you are observant you would have long noticed that the changes don’t only affect senior officers but government decisions as well. A decision is made today and the government backtracks on it within a week. Not only that, the President says this today, and his deputy denies it the following day in Parliament,” he warned.
Some observers have blamed the turmoil in the civil service partly to lack of accountable presidential advisers or kitchen cabinet properly schooled on matters of statecraft. They point out that politicians or those peripheral to them should refrain from hampering the technical and organizational activities of public managers – or else the party (reshuffling) won’t stop.
In the view expressed by some Permanent Secretaries, Elias Magosi, has not really been himself since joining the civil service; and has cut a picture of indifference in most critical engagements; the most notable been a permanent secretaries platform which he chairs. As things stand there is need to reconcile the imperatives of democracy and democracy in Botswana. Peace will rein only when public value should stand astride the fault that runs between politicians and public managers.
Former Permanent Secretary to the President, Carter Morupisi, is fighting for survival in a matter in which the State has charged him and his wife, Pinnie Morupisi, with corruption and money laundering.
Morupisi has joined a list of prominent figures that served in the previous administration and who have been accused of corruption during their tenure in office. While others have been emerging victorious, Morupisi is yet to find that luck. The High Court recently dismissed his no case to answer application.
United States President, Joe Biden, is faced with a decision to make relating to the Covid-19 vaccine intellectual property after 175 former world leaders and Nobel laurates joined the campaign urging the US to take “urgent action” to suspend intellectual property rights for Covid-19 vaccines to help boost global inoculation rates.
According to the world leaders, doing so would allow developing countries to make their own copies of the vaccines that have been developed by pharmaceutical companies without fear of being sued for intellectual property infringements.
“A WTO waiver is a vital and necessary step to bringing an end to this pandemic. It must be combined with ensuring vaccine know-how and technology is shared openly,” the signatories, comprising more than 100 Nobel prize-winners and over 70 former world leaders, wrote in a letter to US President Joe Biden, according to Financial Times.
A measure to allow countries to temporarily override patent rights for Covid related medical products was proposed at the World Trade Organization by India and South Africa in October, and has since been backed by nearly 60 countries.
Former leaders who signed the letter included Gordon Brown, former UK Prime Minister; François Hollande, former French President; Mikhail Gorbachev, former President of the USSR; and Yves Leterme, former Belgian Prime Minister.
In their official communication, South Africa and India said: “As new diagnostics, therapeutics and vaccines for Covid-19 are developed, there are significant concerns [about] how these will be made available promptly, in sufficient quantities and at affordable prices to meet global demand.”
While developed countries have been able to secure enough vaccine to inoculate their citizens, developing countries such as Botswana are struggling to source enough to swiftly vaccine their citizens, something which world leaders believe it would work against global recovery therefore proving counter-productive.
Since the availability of vaccines, Botswana has been able to secure only 60 000 doses of vaccines, 30 000 as donation as from the Indian government, while the other 30 000 was sourced through COVAX facility. Canada, has pre-ordered vaccines in surplus and it will be able to vaccinate each of its citizens six times over. In the UK and US, it is four vaccines per person; and two each in the EU and Australia.
For vaccines produced in Europe, developing countries are forced to pay double what European countries are paying, making it more expensive for already financially struggling economies. European countries however justify the price of vaccines and that they deserve to buy them cheap since they contributed in their development.
It is evident that vaccines cannot be made available immediately to all countries worldwide with wealthy economies being the only success story in that regard, something that has been referred to as a “catastrophic moral failure”, head of the World Health Organisation (WHO), Tedros Adhanom Ghebreyesus.
The challenge facing developing countries is not only the price, but also the capacity of vaccine manufactures to be able to do so to meet global demand within a short time. The proposal for a patent waiver by India and South Africa has been rejected by developed countries, known for hosting the world leading pharmaceutical companies such US, European Union, the United Kingdom, and Switzerland.
According to the Financial Times, US business groups including pharmaceutical industry representatives, have urged Biden to resist supporting a waiver to IP rules at the WTO, arguing that the proposal led by India and South Africa was too “vague” and “broad”.
The individuals who signed the letter, including Nobel laureates in economics as well as from across the arts and sciences, warned that inequitable vaccine access would impact the global economy and prevent it from recovering.
“The world saw unprecedented development of safe and effective vaccines, in major part thanks to US public investment,” the group wrote. “We all welcome that vaccination rollout in the US and many wealthier countries is bringing hope to their citizens.”
“Yet for the majority of the world that same hope is yet to be seen. New waves of suffering are now rising across the globe. Our global economy cannot rebuild if it remains vulnerable to this virus.” The group warned that fully enforcing IP was “self-defeating for the US” as it hindered global vaccination efforts. “Given artificial global supply shortages, the US economy already risks losing $1.3tn in gross domestic product this year.”