President Mokgweetsi Masisi in a desperate measure to turn around the fortunes of Botswana’s economy and create jobs has been trotting the globe in a bid to convince investors to come and set-up businesses in Botswana. While Masisi’s gesture is fundamental in re-energizing the economy which has been sluggish since the 2008 economic down turn, there are underlying factors that may thwart his ambitions, writes ALFRED MASOKOLA.
The latest Global Competitiveness Report ranks Botswana 90th most competitive economy out of 140 countries, far much worse off than it ranked in 2009, where it was number 56 in the world. In the latest Doing Business Report, Botswana is ranked 86 out of 190 countries far much worse than it did in 2006, when it was ranked 40th in the world.
These two reports — The Global Competitiveness Report and Doing Business Report, published by the World Economic Forum and World Bank respectively, are the best indicators that Botswana can use to see how it is faring when compared to its competitors and why investors may choose other countries over Botswana.
In 2018, the World Economic Forum introduced a new methodology emphasizing the role of human capital, innovation, resilience and agility, as not only drivers but also defining features of economic success in the 4th Industrial Revolution. As a result, the GCI scale changed to 1 to 100 from 1 to 7, with higher average score meaning higher degree of competitiveness. The report is made up of 98 variables organised into twelve pillars with the most important including: institutions; infrastructure; ICT adoption; macroeconomic stability; health; skills; product market; labour market; financial system; market size; business dynamism; and innovation capability.
The Global Competitiveness Report also looks into the private sector’s capacity to generate and adopt new technologies and new ways to organise work, through a culture that embraces change, risk, new business models, and administrative rules that allow firms to enter and exit the market easily. The report recognises that an agile and dynamic private sector increases productivity by taking business risks, testing new ideas and creating innovative products and services.
In an environment characterized by frequent disruption and redefinition of businesses and sectors, successful economic systems are resilient to technological shocks and are able to constantly re-invent themselves. With the business dynamism and innovation capability recognised a key indicator in the 4th industrial revolution, Botswana is not among leaders in this respect and it there are emerging countries such as Kenya and Rwanda, who despite ranking inferior to Botswana in overall rankings, have entered the space with much needed agility.
Botswana Innovation Hub (BIH) Director of Marketing and Partnerships, Tshepo Tsheko contended last week at Botswana International Trade Centre (BITC) media engagement session that Botswana should build capacities in the ICT to attract tech giants to set-up in Botswana. He said failure to do so would not make Botswana an attractive place to do business in as ICT is the driver of business for government and other organisations, noting that countries like Kenya and Rwanda are doing what Botswana had the opportunity to do in its economy.
“Botswana should make a decision on what we want to invest in. Investors will not do it for us, they are looking for market,” he said. “We want to be known for something in ICT and innovation, and we still have the opportunity to decide.” Tsheko said, what we say we are to the world does not matter, what matters is what people from other countries experience the moment they set their foot in the country.
He said currently there is credibility gap in ICT and innovation efforts in Botswana, because the local market is apprehensive which has resulted in local digital solutions not being taken. Tsheko expressed confidence that Botswana has necessary skills in ICT to solve challenges facing the country.
WHY HAS BOTSWANA LAGGED BEHIND IN ICT AND INNOVATION?
Although Botswana performs better than most countries in the Sub-Saharan Africa, with South Africa, Mauritius and Seychelles ranking ahead — there is a compelling need to invest in ICT and innovation in Botswana, according to the The Global Competitiveness Report. Soon after being sworn in parliament in 2016, Bogolo Kenewendo, then a backbencher highlighted that Botswana’s snail progress was hindering the country from transforming its economy.
“Like I said in parliament during my contribution, businesses and investors do not care that we are a landlocked country, they are looking for a place where they can easily do business hassle free and reap the best rewards,”Kenewendo told WeekendPost then. Kenewendo observed that Botswana lacks agility and is moving at a snail pace, hence other countries such as Rwanda are able to perform better. In the past 10 years Rwanda economy grew at 7.2 percent on average, and also attracted foreign investment of 4.2 percent of its GDP over the same period, according to the Global Competitiveness Report.
In the same period, Botswana’s economy only experienced an average of 3.6 percent growth and attracted 2.8 percent in FDI. . “Some of them came here to benchmark in Botswana, then went back to implement because they have agility. The world is moving faster, so we need to be agile,” she said. Today, Kenewendo is the custodian of Botswana’s business environment as the Minister of Investment, Trade and Industry, a position she assumed after Masisi became president in April last year.
After taking over the reins, the youthful legislator admitted that that a lot has to be done in business reforms. She has since embarked on policy and regulatory reforms at her ministry to improve the business land scape in Botswana in order to improve the doing business rankings. Chief among the reforms were the adoption of the 2014 Doing Business Roadmap and Action Plan, whose objective is to reduce the cost of doing business in Botswana as well as create an environment where business is not hindered by unnecessary regulation and bureaucracy.
Last year parliament passed amendments to both companies and the registration of Business Names Acts as well as introduction of new pieces of legislation that allows for re-registration of both the existing companies and business names, paving way for the implementation of the Online Business Registration System (OBRS). The system is expected to be launched during the first quarter of 2019 and is expected to bring with it benefits such as improve data integrity, reduced turnaround times, less paperwork and improved overall efficiency.
WHAT IS THE STATUS OF BOTSWANA’S INFRASTRUCTURE?
Botswana is ranked 108 in infrastructure pillar in the Global Competitiveness Report. The infrastructure pillar looks at the quality and extension of transport infrastructure (road, rail, water and air) and utility infrastructure. This is so because the report indicate that better-connected geographic areas have generally been more prosperous. Well-developed infrastructure lowers transportation and transaction costs, and facilitates the movement of goods and people and the transfer of information within a country and across borders. It also ensures access to power and water—both necessary conditions for modern economic activity.
In 2017, Head of South African Development Community (SADC) Public Private Partnership (PPP) Network, Kogan Pillay warned that Botswana and Africa will go into recession in the next 10 years if the country does not adequately invest in its infrastructural needs. Pillay, who has vast experience in the implementation of PPPs and has previously worked for the South African government, is of the view that Africa’s big investors will shun the continent because of lack of infrastructure necessary for doing business.
“World Bank has warned about this happening,” he said at a workshop organised by Ministry of Finance and Economic Management. “Africa would not attract FDI (Foreign Direct Investment) because nobody would want to do business in a country which does not have infrastructure. It makes doing business difficult,” Pillay stated. According to Pillay, Africa needs US$ 90 billion to fund its infrastructural needs but it only has US$45 million availed for such.
It is believed that Botswana’s infrastructural needs can be resolved by developing an effective PPPs framework. Pillay believes that Botswana is not ready for PPPs until it develops a legal frame work which will guide investment and implementation of PPPs. “What Botswana has now is a policy, but you need to put it into law like other countries including South Africa,” he said. Pillay said PPPs are long term concessions to the private sector and should be done in a prudent manner to avoid forcing the country into bad commitment.
RESTORING INVESTOR CONFIDENCE
Botswana’s Foreign Direct Investment (FDI) ambitions have been met with counterproductive policies in the past decade which has led to frustrations and dent on Botswana as investment destination. In 2016, then BITC CEO, Letsebe Sejoe made shocking revelations that foreign investors are still finding it hard to pick Botswana as an ultimate place to do business because of the complications associated with running businesses in the country.
Sejoe then told the Parliamentary Committee on Statutory Bodies and Enterprises that Botswana is entirely opposite to what it has the world perceiving it as. Sejoe listed Permits and VISAs as the biggest challenge facing investors as he noted that delays in issuing the two frustrates inventors who end up going to other countries such as Rwanda, which has built a more conducive environment for investors.
The issue of permits and VISAs were reportedly handled by the Directorate on Intelligence Security (DIS), which has unlimited discretion on who is accepted or rejected. The parliament committee also heard that there was no turnaround time agreed on, and that the premises and VISAs can be rejected without explanation. Sejoe, who has since left the BITC then advised that part of solving the problem is to create a legal framework or policy which will guide certain procedures needed to facilitate business for companies lured by BITC to do business in Botswana.
He said while they have relationships with different stakeholders over facilitating the ease of doing business for foreign investors in Botswana, such partnerships are not binding and sometimes some institutions just ignore a request because they are not compelled by the law to do so. For instance, in countries like Mauritius they have what they call silent means approval. If a permit is supposed to be processed within 24 hours and there is no response after that time, the applicant has the right to go ahead because lack of response shows no objection,” he said.
Sejoe said Botswana should do the same, and design laws which promote business and protects investors if it is to continue being attractive to foreign investors. “Government does not appreciate the enormous impact the foreign direct investment can make in the country’s economy. We have this attitude of treating everyone the same,” he said. “There is also lack of appreciation of frustration experienced by these investors,” Sejoe added.
Sejoe said not only are new investors facing problems of permits, but that foreign owned companies, some which have employed hundreds of citizens are facing the same problem when they want to renew their permits. “Botswana is not an open economy like we say we are to the world. There are people who have been doing business in Botswana for over 30 years and government rejected their application for citizenship over the period and all of a sudden they were told to go,” he said.
“Investors are cagey on this. Some who are already doing business in Botswana are sceptical about expanding their business because their future in Botswana is uncertain. Investors need certainty and some level of predictability,” he further advised. Sejoe narrated that some companies with operational businesses in Botswana but with their directors residing outside Botswana have had their directors’ VISAs rejected when they wanted to attend a business meeting in Botswana; he said this recount proved that Botswana is a difficult environment to do business in. Masisi has however admitted to this problem and has moved swiftly to act, the first step being to relief Director General of DIS Colonel Isaack Kgosi and further promising to embrace the policy of open economy.
WHICH COUNTRIES ARE FARING BETTER IN SUB-SAHARAN AFRICA?
Mauritius ranks 49th globally. With a score of 63.7 out of 100 it achieves the best performance in Sub-Saharan Africa, in line with 2017. Mauritius’s leading position in the region is reflected in a GDP growth consistently above 3 percent since 2006, and above 4 percent over the past three years.
The competitiveness performance of Mauritius is relatively strong in eight of 12 GCI pillars, where it ranks 67th or higher. Among these eight pillars Mauritius has achieved its best score on the Product market pillar (65.6, 19th), thanks to a high degree of openness (6th) and a non-distortive fiscal policy (62.6, 16th). In addition, Mauritius is characterized by strong business dynamism (66.5, 35th) and sustained by lean administrative requirements (83.2) that enable companies to open and close with relative ease.
Finally, Mauritius has achieved a strong performance on the Institutions pillar (38th, 62.9), second only to Rwanda in the region. This is a considerable competitive advantage in SubSaharan Africa, where 65 percent of economies score below 50. On the other hand, the pillars where Mauritius delivers a weaker performance are those related to human capital: the Labour market (58.3, 74th), Skills (61.0, 74th) and Health (77.7, 83rd) pillars.
In particular, Mauritius is penalised by high redundancy costs (73.6 weeks of salary, 136th) and limited participation in the various levels of the educational system (6.8 mean years of schooling, 106th). South Africa ranks 67th globally—with a score of 60.8—and attains the second spot in Sub-Saharan Africa. Among its strengths, South Africa is home to a large market size (68.4), good infrastructure (68.6) and a well-developed financial system (82.1, 18th). More specifically, South Africa’s financial sector offers a Chapter 2: Regional and Country Analysis 36 | The Global Competitiveness Report 2018 relatively balanced access to various sources of finance, including credit (100.0, 11th), venture capital (33.0, 63rd), equity (100.0, 2nd) and insurance (100.0, 3rd).
In addition, South Africa’s innovation capability is relatively advanced (44.3, 46th), although limited by insufficient research and development (37.5). Among its weaknesses, South Africa’s performances on the Health pillar (43.2, 125th) and Security (43.7, 132nd) sub-pillar are among the worst in the world. Driven by high incidence of communicable diseases and high rate of homicides (34 per hundred population, 135th), these factors are major challenges for the economic and human development of the country. Low ICT adoption (46.1, 85th) is another important restraint on South Africa’s competitiveness.
Only 54 percent of the adult population has access to the internet, and only 70 out of 100 people have subscribed to mobile-broadband services (66th). Similarly, the digital skills (116th) and critical thinking skills (78th) of the current workforce are inadequate for the progress of a successful economy in the Fourth Industrial Revolution.
While it takes a lot to penetrate and thrive in the male dominated political space in Botswana, Block 3 Ward councillor Motamma Horatius, is one of the few females defying the odds.
Driven by passion, Horatius has always worn many hats and today she has become one of the few women who are thriving in the political space in Botswana. Prior to pursuing politics, she was an active participated in the creative space.
Horatius, a beauty queen, notably famous for her reign as Miss World Tourism Botswana represented Botswana in a television show famously known as Big Brother Africa. During her stay in the house, she got termed darling of the continent for an outstanding performance that promoted unity, humility and culture.
After serving for some time in public space, and making a name for herself as well as serving as a brand ambassador she decided to step in a career that will forever challenge her. This was after she had travelled the world and demonstrated her unique leadership skills and brilliance.
“I stopped and asked myself why am I not incorporating this brilliance back home. And wherever you go worldwide Botswana with all her faults is a beacon of hope in everything. And even successful countries came here to benchmark and implemented our policies and are flourishing such as Rwanda. So I decided to join active politics and go straight to the ruling party to add a youthful feel to an already existing force and help modernise it to serve better not from afar but from within,” she clarified.
“So my ample experience in civic leadership across countries around the world catapulted me to join active politics because I wondered, if I can do as much as an individual even across nations, how much can I do whilst in office, locally. And I chose to start from the ground up, in order to avoid leaving the locals behind.”
The stern and tenacious young leader, currently sit as the Chairperson of Finance Committee at Gaborone City Council, and also chairs Performance Monitoring Committee.
While a typical girl would dream of becoming either a nurse or choose a ‘girl’ orientated deemed career, she had a heart for politics from a very young age. By the time she left the creative space, she had already made a name for herself, that she needed no introduction.
“I had to acknowledge first that I am a woman, and being a woman means you have to work 200 percent more than your male counterparts. So it took sleeplessness nights, and a massive amount of working smart to win legitimately,” she said.
She acknowledges that she faced a lot of challenges during the 2019 elections which she had to overcome through the assistance of her loved ones and family.
“Politics is expensive but I managed by God’s grace, family, friends, acquaintances and good Samaritans but my mind helped. I am a very good planner when it comes to execution,” she said.
“Another hurdle is, being a young woman, I had conceived during the time of primary elections; so campaigning whilst expectant, managing your emotions through betrayals, insults, stress, house-to-house then giving birth and having to hit the ground in less than two weeks having given birth via C-section, was a hurdle I overcame by God’s mercy and I am thankful to my family for helping me with the kids because politics means a lot of time away from home.”
“Another hurdle was to portray an all rounded culturally grounded Motswana woman soft but yet stern, respectful but can articulate issues well. Because even though we are civilized our society still upholds unwritten yet practiced values of what a woman is and what a man is, and if you defy societal expectations, it judges you harshly. But thankfully I remained focused on who I was and didn’t try alternate anything When I lost some of the original members of my campaign team. The pain was deep. But I wiped my tears. Soldiered on, and God increased twice the initial number.”
At some point she had to face demeaning words from other male contestants, but the best to do at the time was to shun negativity and stay focused. Male intimidation never tugged her down.
“My experience with 2019 elections was rather inclined to learning as it was my first time running for office as a politician, so I wanted to see if really hard work has results because I always hear stories of how people are bought,” she said.
“So since I was not buying anyone, I was on a learning curve to test my hard work style of delivery against what is believed out there. So it was exciting and again I say it was a learning curve as most NGOs fighting to increase women participation in politics were continuously training us.’
Despite everything she feels women political participation in Botswana is still low. She has pleaded with the media to cover them more often as she believes maybe it will help more women to run for office.
Botswana has few women in parliament, giving men dominance in policy decisions. In a 63-seat parliament, Botswana has only seven female MPs, four of them being specially elected lawmakers.
According to the 2019 edition of the biennial Inter-Parliamentary Union (IPU) Map of Women in Politics. Among the top African countries with a high percentage of women in ministerial positions are Rwanda (51.9%), South Africa (48.6%), Ethiopia (47.6%), Seychelles (45.5%), Uganda (36.7%) and Mali (34.4%).
The lowest percentage in Africa was in Morocco (5.6%), which has only one female minister in a cabinet of 18.
Other countries with fewer than 10% women ministers include Nigeria (8%), Mauritius (8.7%) and Sudan (9.5%).Other African countries with high percentages of women MPs include Namibia (46.2%), South Africa (42.7%) and Senegal (41.8%), according to the report.
Though a slight increase, Botswana is still lagging behind when it comes to women political participation.
According to a report made by IEC for the 2019 elections, there is 11.1% women representation in parliament. There has been a 1.6% slight increase from the 2019 election compared to the 2014 elections.
According to United Nations, there are two main obstacles that prevent women from participating fully in political life.
These are structural barriers, whereby discriminatory laws and institutions still limit women’s ability to run for office, and capacity gaps, which occur when women are less likely than men to have the education, contacts and resources needed to become effective leaders.
As it stands though, Botswana has continued to recognize gender equality as central to socio-economic, political and cultural development through its National Vision 2036.
Following the adoption of the National Policy on Gender and Development in 2015, the National Gender Commission was established in September 2016, to monitor implementation of the policy.
Government ministries and departments have moved to cut expenditure in the last quarter of financial year in order to survive the economic hardship occasioned by the covid-19 pandemic. Since the outbreak, Government and the private sector have been hard hit financially due to limited economic activity brought about by government response to fighting the pandemic.
In an urgent savingram by the Permanent Secretary in the Ministry of Local Government and Rural Development, Molefi Keaja addressed to all council secretaries and town clerks, the government informs that it is facing unprecedented budgetary challenges for Financial Year 2020/2021.
“This has necessitated measures to be put in place to conserve cash and ensure that government is able to honour its financial obligations in the remaining (3) months of the financial year,” said the savingram dated 24 December 2020.
The Government has cut all travel by Ministries, Departments and Agencies (MDAs) including State owned entities (SOEs) and Local Authorities until the next financial year in April 2021. It has also taken a decision that all meetings, interviews, seminars, workshops, conferences, retreats, annual ceremonies and hospitality events should be conducted virtually, which save on the cost of securing venues, conference facilities and meals/refreshments.
“No replenishment of refreshments for the Executive Cadre (E2 salary scale and above) until the end of the financial year,” Keaja directed. Last year government also resolved that due to the financial effects of Covid-19 the government will no longer recruit for any jobs during the 2020/2021 financial year.
The Cabinet directed that the 2020/2021 provision for vacancies be withdrawn from Ministries, Departments and Agencies recurrent budgets to cater for supplementary estimates. According to the saving gram then by the Directorate on Public Service Management (DPSM) said the country faces fiscal challenges which have been accentuated by the emergence and the spread of the COVID-19 pandemic.
Amongst key ministries and departments affected were the Botswana Defence Force, National Strategy Office, Directorate of Intelligence and Security (DIS), Commissioner of Police, Commissioner of Prisons, Clerk of National Assembly and the Directorate on Corruption & Economic Crime (DCEC).
It further deliberated that all various institutions that had begun recruitment for existing vacant positions be frozen for the remaining period of the 2020/2021 financial year. “Since funds for the vacancies will only be recruited in the next financial year 2020/20121, Ministries, Department and Agencies are advised to discontinue recruitment into such vacancies until 1st April 2021. Those who are already at an advanced stage of recruitment process are advised to withhold appointments until further notice.”
The Director of Directorate on Public Service Management (DPSM), Goitseone Mosalakatane, told the parliamentary Public Accounts Committee (PAC) in September that despite the high unemployment rate, they cannot hire for the posts because part of the funds have been withdrawn to fight the Coronavirus.
With just a few days into the New Year, Covid-19 seems to be taking its toll and its effects will be felt vastly in the long run. Countries worldwide, including Botswana are injecting in millions of money in the fight against the deadly virus therefore placing immense uncertainty on country’s economy.
When delivering his speech at last year’s State of Nation Address President Mokgweetsi Masisi said during 2020, the domestic economy was expected to contract by 8.9 percent indicating that this is attributed to an expected sharp decline in major sectors such as mining, (minus 24.5 percent); trade, hotels and restaurants (minus 27.4 percent); construction (minus 6 percent); manufacturing (minus 3.9 percent); and transport and communications (minus 2.5 percent).
However, he assured that the economy is expected to rebound during 2021, with overall growth projected at 7.7 percent. The anticipated recovery will be driven by a rebound in growth of some major sectors such as mining (14.4 percent), trade, hotels and restaurants (18.8 percent), and transport and communications (4.2 percent).
Furthermore, Masisi pointed out that the recovery will also be supported by the Economic Recovery and Transformation Plan currently being implemented by Government. “It is critical to note that these projections are dependent on, among others, the duration of the COVID-19 pandemic and related restrictions.
These containment measures have the effect of reducing spending by firms and households and causing supply-chain disruptions. Beyond this, the recovery phase will be influenced by confidence effects on households and businesses; sectoral transformation and changes in work patterns; as well as prospects for the recovery of global financial markets and commodity prices.”
Emphasising this, he explained that despite the challenges of COVID-19 there still remains the delicate balance of opening the economy whilst containing the disease burden. “Inflation according to the latest data from Statistics Botswana, inflation fell significantly from 2.2 percent in September 2019 to 1.8 percent in September 2020, remaining below the lower bound of the Bank of Botswana’s medium-term objective range of 3 to 6 percent,” he said.
The significant decline in inflation mainly reflects the downward adjustment in fuel prices in June 2020. However, inflation may rise above the current forecasts if the international commodity prices increase beyond current projections and in the event of upward price pressures occasioned by supply constraints due to travel restrictions and lockdowns.
The Botswana Democratic Party (BDP) last year had to cancel its elective congress due to the strict measures that had to be put in place due to Covid-19 pandemic outbreak.
Two other party events Women’s Wing Congress including the much anticipated victorious election celebration were also postponed due to the pandemic as gatherings were cancelled indefinitely. However the BDP is adamant that the party will be able to hold its National Congress and all other events that had been frozen this year.
Speaking to this publication chairman of BDP Communication & International Relations Sub-Committee Kagelelo Kentse said that the party was readying itself for the congress with the main objective being to review resolutions that were taken at their 38th National Congress in Mochudi in 2019. Emphasising this, Kentse said it was commendable that most of the resolutions taken in 2019 have by far been fulfilled.
Moreover, he said it would mean a lot for the party to be able to meet at the congress, this he said would give them the opportunity to introspect and reflect with regards to their manifesto. In 2019 the BDP made about eleven resolutions of which five of these were resolved and gazetted. The abridged resolutions were that the amendment of the law to allow agricultural land owners to use up to 50 percent of their land for non-core purposes, to amend the law to cancel transfer duty on property transferred between the spouses.
President Masisi also passed a law to allow married couples to be independently allocated land and increase threshold for non-payment of transfer on property acquired from P250k to P750k. On the resolution in the tourism sector, Kentse said efforts are very advanced to have local play a part. He said there is ongoing work with the Ministry of Lands on concessions that will be allocated to citizens.
According to the BDP communications chair the Ministry of Tourism has availed more opportunities in dams for tourism thus far, having already issued expression of interest for Letsibogo, Dikgatlhong, and Gaborone dams. Citizens are said to have applied for tenders which are currently under evaluation. There are about 45 campsites set aside for citizens in game reserves and forest reserves for tourism.
The resolution on the declaration of assets and liabilities law which was passed and amended this year, was supported by all legislators including those from opposition. Emphasising this he explained that contentions were on issues to do with valuations, and leaders have started declaring.
With the Congress comprising of the elective congress, the BDP is yet to embark on it an objective Kentse said is on their to do list this year even though the calendar of events has not yet been made. The elective congress has aroused interest, especially the Secretary General position which has attracted a number of participants of which observers believe will accord the incumbent, Mpho Balopi, the current secretary general, the opportunity to buy time if at all he will seek re-election in the position.