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Transformation from the Mid-income to High Income Status

DR RAPHAEL DINGALO

Vision 2036 seeks to transform Botswana from a mid-income to a high-income country by the Year 2036. The country finds itself trapped in the Middle-Income status, attained in the 1990’s before many African countries could achieve the feat. “The transition to high-income status requires us to introspect and be bold in charting our way forward. We need to put in place conditions that will allow dynamic transformation” (Vision 2036, p11).

The transformation to high-income status will be anchored on the transition from a resource to a knowledge-based economy. According to the World Bank, ‘knowledge economies’ are defined by institutional structures that provide incentives for entrepreneurship and the use of knowledge; skilled labour availability and good education systems; ICT infrastructure and access; and finally, a vibrant innovation landscape that includes academia, the private sector and civil society.

Botswana has laid out plans for transformation to a knowledge economy, i.e. in providing for good education systems, the country has developed the Education and Training Sector Strategic Plan (ETSSP), and is also finalising the National Human Resource Development Plan. On ICT infrastructure, Botswana Communications Regulatory Authority (BOCRA) and Botswana Fibre Network (BofINET) have since been established to champion same ICT infrastructure and access.

On the innovation landscape, the Botswana Innovation Hub (BIH), Botswana Institute for Technology, Research and Innovation (BITRI), Botswana International University of Science and Technology (BIUST), etc. have been set up to champion the transformation. All these should be looked at within the context and the centrality of their contribution to the high-income status.

The transformation to a high-income status entails accurately putting together pieces of a jigsaw puzzle, namely Infrastructure, Doing Business and Competitiveness, Human Capital, ICT Infrastructure and access, etc. Infrastructural development alone without the complement of Doing Business and Competitiveness support will not produce the desired results, nor will Infrastructural Development and Infrastructure lead to the desired results without the backing and support of thriving Human Capital.

Whilst human capital, driven by knowledge is key in raising the returns on investment, by stimulating more efficient methods of production organisation and as well stimulating new and improved products and services, human capital alone without the intrinsic support of others will not lead to the desired outcome of transformation from mid-income to high-income. ICT comes in as a bedrock and foundation as the world transits to the 4th Industrial Revolution.

We must therefore, as a matter of urgency take deliberate steps to overhaul the current economic growth model as highlighted in Vision 2036. The economic growth model is not in harmony with the radical economic transformation intended in Vision 2036. The growth model served the country well against adverse effects of the global economic downturn. Despite the stability, and modest growth, the model comes with a baggage, i.e. high unemployment rate especially amongst the youth, low productivity, unsustainably high public spending, etc.

There is however optimism, with His Excellency the President Dr MEK Masisi taking the button against the backdrop of a relatively strong performance in a number of areas. The Country has maintained high overall rankings in Africa i.e. 3rd in sub-Saharan Africa on the UNDP Human Development Index, 3rd overall out of 54 African countries, in the 2017 Ibrahim Index of African Governance (IIAG) with a score of 72.7 etc. Furthermore Botswana has experienced the doubling of per capita gross national income to US$ 7 058 in 2014.

HE the President Dr MEK Masisi is on a renewed path to attract Foreign Direct Investment, pushing to the limit the reform agenda aimed at facilitating and motivating investors’ passion into doing business in Botswana. This past week, HE the President attended the World Investment Forum 2018 hosted by United Nations Conference on Trade and Development, seeking to promote Botswana as an investment destination. 

Whilst in Geneva, HE Dr MEK Masisi met with the Secretary General of WIPO, as well  with the Geneva Chamber of Commerce. He also held meetings with Mr Michael Reybier, owner of La Reserve Hotel to discuss among others, interest of the Reybier Group in the hospitality business in Botswana. The President also attended the Botswana Tourism, Investment and Cultural night, once more sending a clear message that attracting FDI remains one of his key priorities. This drive by HE will positively “grow Botswana’s population” as empirical evidence tells us that the population size is a key determinant of FDI inflows.

Marija Petrović-Ranđelović, Vesna Janković-Milić, Ivana Kostadinović  of the University of Niš, Faculty of Economics, Serbia undertook studies to examine the impact of foreign direct investment inflows in the Western Balkans countries in the period 2007-2015. Their results show that the highest relative impact on the foreign direct investment inflows was recorded for variable population size (beta coefficient is 0.569); whereas, statistically significant impact on the foreign direct investment inflows was recorded for market size and market growth (significance ˂0,001 and ˂0,015, respectively). These studies tell us that with a population of a little over 2 million, Botswana finds itself at crossroads, in a bid to attract FDI inflows.

But it is not all doom and gloom because other Countries with the population size less than, equal to and slightly more than Botswana have done it. The fundamental is to learn how they achieved the feat and adapt to our circumstances. This is not in any way suggestive that we should swallow the ‘hook, line and sinker’ in our learning journey.  

In our learning journey, Journalist and author Daniel Brook, tells us that “96 percent of Dubai’s population is ‘foreign born’, Dubai makes even New York City’s diversity — 37 percent of New Yorkers are immigrants — seem mundane. As a pair of American observers put it, Dubai is a city where “everyone and everything in it — its luxuries, laborers, architects, accents, even its aspirations — was flown in from someplace else.” 

Daniel Brook characterises the growth as orchestrated in the following manner: “that in 1974, Sheikh Rashid tasked the young Mohammed with overseeing the growth of Dubai International Airport. In the 1980s, Mohammed tapped British Airways veteran Maurice Flanagan to launch Emirates airline, which would become an archetype of the Dubai model: A state-owned company managed by Western experts that would thrive in open international competition”.

He goes on: “By 1990, Emirates was flying to major hubs like London, Frankfurt and Singapore, taking advantage of the fact that most of the world’s population lives within a reasonable flying time of the city-state. As Emirates grew, it became a kind of octopus, grabbing ever more far-flung parts of the world and drawing them to Dubai. Lured by the prospect of tax-free salaries, some of the international businessmen who visited, stayed”.

“In 2002, Mohammed issued a land reform decree allowing foreigners to own real estate in Dubai — a first in any Gulf state. Before the reforms, Dubai had no real estate market. Land was given out under a quasi-feudal system; all land was held by the sheikhs or by favored Emirati friends upon whom the sheikhs had bestowed parcels. Everyone else — including every foreigner — was a renter. With the 2002 reform, anyone could buy a home in Dubai”.

We can thus draw a no of lessons to assist us in our endeavour to drive towards high-income. The first lesson is that population increase can be attained by bringing in the ‘foreign born’ as 96% of Dubai population is the ‘foreign born’.  Through radical mind-set transformation, we need to acknowledge this reality which would in turn assist us in meeting the challenges associated with population size (the highest relative impact on the foreign direct investment inflows was recorded for variable population size (beta coefficient is 0.569).

Attracting FDI means Investors should be able to land in the country with relative ease, hence the necessity to introduce ‘Emirates Airline’ equivalent. As a priority, we need to, significantly revamp our air-transportation, both the Airline and the Airport. We could take a leaf from the Dubai model: “A state-owned company managed by Western experts that would thrive in open international competition”. This model of outsourcing the National Airline and building of the Iconic ‘International Airport’, (a design that is ‘ground breaking’ and one that sets new standards) will ensure that the Country reduces the unsustainably high public spending. The said Iconic International Airport will furthermore critically power one of the key priority areas for growing the economy, being the Tourism Sector. 

The other lesson is that we should reform our tax system.  As highlighted, in the Dubai experience, their ‘foreign born’ were lured by the prospect of tax-free salaries. The need for Land Reform is also one of the critical lessons to learn, as land pushes estate development, including the drive for Mega and outstanding iconic structures. Notwithstanding, we have had tax reforms as well as land reforms, but the impact of such in the transformation agenda to high income status has not paid much dividends. There is therefore need for radical approaches on the said, beyond what currently obtains. All entities, Public, Parastatals, the Private Sector etc. must see themselves as a part of the greater jigsaw puzzle.

HRDC’s contribution amongst others in this jigsaw puzzle, is through the development and operationalisation of National Labour Market Observatory and Information Management System that will be a one-stop-shop for employment/unemployment trends, rate of skill-job vacancy mismatches, educational attainment, as well as sector-employment-intensity, among others, to facilitate both local and foreign investors to determine availability of relevant skills. HRDC is also working with Local institutions and Industry to develop market responsive and internationally competitive programmes.

In conclusion, the views expressed in the Vision 2036 Preamble says it all: “We must take deliberate steps to overhaul the current economic growth model, moving away from resource-driven growth, to growth based on high productivity, innovation and competitiveness”. Business as usual is no longer an option. 

Dr Raphael Dingalo is CEO, HRDC

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Opinions

IEC Disrespects Batswana: A Critical Analysis

10th November 2023

The Independent Electoral Commission (IEC) has recently faced significant criticism for its handling of the voter registration exercise. In this prose I aim to shed light on the various instances where the IEC has demonstrated a lack of respect towards the citizens of Botswana, leading to a loss of credibility. By examining the postponements of the registration exercise and the IEC’s failure to communicate effectively, it becomes evident that the institution has disregarded its core mandate and the importance of its role in ensuring fair and transparent elections.

Incompetence or Disrespect?

One possible explanation for the IEC’s behavior is sheer incompetence. It is alarming to consider that the leadership of such a critical institution may lack the understanding of the importance of their mandate. The failure to communicate the reasons for the postponements in a timely manner raises questions about their ability to handle their responsibilities effectively. Furthermore, if the issue lies with government processes, it calls into question whether the IEC has the courage to stand up to the country’s leadership.

Another possibility is that the IEC lacks respect for its core clients, the voters of Botswana. Respect for stakeholders is crucial in building trust, and clear communication is a key component of this. The IEC’s failure to communicate accurate and complete information, despite having access to it, has fueled speculation and mistrust. Additionally, the IEC’s disregard for engaging with political parties, such as the Umbrella for Democratic Change (UDC), further highlights this disrespect. By ignoring the UDC’s request to observe the registration process, the IEC demonstrates a lack of regard for its partners in the electoral exercise.

Rebuilding Trust and Credibility:

While allegations of political interference and security services involvement cannot be ignored, the IEC has a greater responsibility to ensure its own credibility. The institution did manage to refute claims by the DISS Director that the IEC database had been compromised, which is a positive step towards rebuilding trust. However, this remains a small glimmer of hope in the midst of the IEC’s overall disregard for the citizens of Botswana.

To regain the trust of Batswana, the IEC must prioritize respect for its stakeholders. Clear and timely communication is essential in this process. By engaging with political parties and addressing their concerns, the IEC can demonstrate a commitment to transparency and fairness. It is crucial for the IEC to recognize that its credibility is directly linked to the trust it garners from the voters.

Conclusion:

The IEC’s recent actions have raised serious concerns about its credibility and respect for the citizens of Botswana. Whether due to incompetence or a lack of respect for stakeholders, the IEC’s failure to communicate effectively and handle its responsibilities has damaged its reputation. To regain trust and maintain relevance, the IEC must prioritize clear and timely communication, engage with political parties, and demonstrate a commitment to transparency and fairness. Only by respecting the voters of Botswana can the IEC fulfill its crucial role in ensuring free and fair elections.

 

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Opinions

Fuelling Change: The Evolving Dynamics of the Oil and Gas Industry

4th April 2023

The Oil and Gas industry has undergone several significant developments and changes over the last few years. Understanding these developments and trends is crucial towards better appreciating how to navigate the engagement in this space, whether directly in the energy space or in associated value chain roles such as financing.

Here, we explore some of the most notable global events and trends and the potential impact or bearing they have on the local and global market.

Governments and companies around the world have been increasingly focused on transitioning towards renewable energy sources such as solar and wind power. This shift is motivated by concerns about climate change and the need to reduce greenhouse gas emissions. Africa, including Botswana, is part of these discussions, as we work to collectively ensure a greener and more sustainable future. Indeed, this is now a greater priority the world over. It aligns closely with the increase in Environmental, Social, and Governance (ESG) investing being observed. ESG investing has become increasingly popular, and many investors are now looking for companies that are focused on sustainability and reducing their carbon footprint. This trend could have significant implications for the oil and fuel industry, which is often viewed as environmentally unsustainable. Relatedly and equally key are the evolving government policies. Government policies and regulations related to the Oil and Gas industry are likely to continue evolving with discussions including incentives for renewable energy and potentially imposing stricter regulations on emissions.

The COVID-19 pandemic has also played a strong role. Over the last two years, the pandemic had a profound impact on the Oil and Gas industry (and fuel generally), leading to a significant drop in demand as travel and economic activity slowed down. As a result, oil prices plummeted, with crude oil prices briefly turning negative in April 2020. Most economies have now vaccinated their populations and are in recovery mode, and with the recovery of the economies, there has been recovery of oil prices; however, the pace and sustainability of recovery continues to be dependent on factors such as emergence of new variants of the virus.

This period, which saw increased digital transformation on the whole, also saw accelerated and increased investment in technology. The Oil and Gas industry is expected to continue investing in new digital technologies to increase efficiency and reduce costs. This also means a necessary understanding and subsequent action to address the impacts from the rise of electric vehicles. The growing popularity of electric vehicles is expected to reduce demand for traditional gasoline-powered cars. This has, in turn, had an impact on the demand for oil.

Last but not least, geopolitical tensions have played a tremendous role. Geopolitical tensions between major oil-producing countries can and has impacted the supply of oil and fuel. Ongoing tensions in the Middle East and between the US and Russia could have an impact on global oil prices further, and we must be mindful of this.

On the home front in Botswana, all these discussions are relevant and the subject of discussion in many corporate and even public sector boardrooms. Stanbic Bank Botswana continues to take a lead in supporting the Oil and Gas industry in its current state and as it evolves and navigates these dynamics. This is through providing financing to support Oil and Gas companies’ operations, including investments in new technologies. The Bank offers risk management services to help oil and gas companies to manage risks associated with price fluctuations, supply chain disruptions and regulatory changes. This includes offering hedging products and providing advice on risk management strategies.

Advisory and support for sustainability initiatives that the industry undertakes is also key to ensuring that, as companies navigate complex market conditions, they are more empowered to make informed business decisions. It is important to work with Oil and Gas companies to develop and implement sustainability strategies, such as reducing emissions and increasing the use of renewable energy. This is key to how partners such as Stanbic Bank work to support the sector.

Last but not least, Stanbic Bank stands firmly in support of Botswana’s drive in the development of the sector with the view to attain better fuel security and reduce dependence risk on imported fuel. This is crucial towards ensuring a stronger, stabler market, and a core aspect to how we can play a role in helping drive Botswana’s growth.  Continued understanding, learning, and sustainable action are what will help ensure the Oil and Gas sector is supported towards positive, sustainable and impactful growth in a manner that brings social, environmental and economic benefit.

Loago Tshomane is Manager, Client Coverage, Corporate and Investment Banking (CIB), Stanbic Bank Botswana

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Opinions

Brands are important

27th March 2023

So, the conclusion is brands are important. I start by concluding because one hopes this is a foregone conclusion given the furore that erupts over a botched brand. If a fast food chef bungles a food order, there’d be possibly some isolated complaint thrown. However, if the same company’s marketing expert or agency cooks up a tasteless brand there is a country-wide outcry. Why?  Perhaps this is because brands affect us more deeply than we care to understand or admit. The fact that the uproar might be equal parts of schadenfreude, black twitter-esque criticism and, disappointment does not take away from the decibel of concern raised.

A good place to start our understanding of a brand is naturally by defining what a brand is. Marty Neumier, the genius who authored The Brand Gap, offers this instructive definition – “A brand is a person’s gut feel about a product or service”. In other words, a brand is not what the company says it is. It is what the people feel it is. It is the sum total of what it means to them. Brands are perceptions. So, brands are defined by individuals not companies. But brands are owned by companies not individuals. Brands are crafted in privacy but consumed publicly. Brands are communal. Granted, you say. But that doesn’t still explain why everybody and their pet dog feel entitled to jump in feet first into a brand slug-fest armed with a hot opinion. True. But consider the following truism.

 

Brands are living. They act as milestones in our past. They are signposts of our identity. Beacons of our triumphs. Indexes of our consumption. Most importantly, they have invaded our very words and world view. Try going for just 24 hours without mentioning a single brand name. Quite difficult, right? Because they live among us they have become one of us. And we have therefore built ‘brand bonds’ with them. For example, iPhone owners gather here. You love your iPhone. It goes everywhere. You turn to it in moments of joy and when we need a quick mood boost. Notice how that ‘relationship’ started with desire as you longingly gazed upon it in a glossy brochure. That quickly progressed to asking other people what they thought about it. Followed by the zero moment of truth were you committed and voted your approval through a purchase. Does that sound like a romantic relationship timeline. You bet it does. Because it is. When we conduct brand workshops we run the Brand Loyalty ™ exercise wherein we test people’s loyalty to their favourite brand(s). The results are always quite intriguing. Most people are willing to pay a 40% premium over the standard price for ‘their’ brand. They simply won’t easily ‘breakup’ with it. Doing so can cause brand ‘heart ache’. There is strong brand elasticity for loved brands.

 

Now that we know brands are communal and endeared, then companies armed with this knowledge, must exercise caution and practise reverence when approaching the subject of rebranding. It’s fragile. The question marketers ought to ask themselves before gleefully jumping into the hot rebranding cauldron is – Do we go for an Evolution (partial rebrand) or a Revolution(full rebrand)? An evolution is incremental. It introduces small but significant changes or additions to the existing visual brand. Here, think of the subtle changes you’ve seen in financial or FMCG brands over the decades. Evolution allows you to redirect the brand without alienating its horde of faithful followers. As humans we love the familiar and certain. Change scares us. Especially if we’ve not been privy to the important but probably blinkered ‘strategy sessions’ ongoing behind the scenes. Revolutions are often messy. They are often hard reset about-turns aiming for a total new look and ‘feel’.

 

 

Hard rebranding is risky business. History is littered with the agony of brands large and small who felt the heat of public disfavour. In January 2009, PepsiCo rebranded the Tropicana. When the newly designed package hit the shelves, consumers were not having it. The New York Times reports that ‘some of the commenting described the new packaging as ‘ugly’ ‘stupid’. They wanted their old one back that showed a ripe orange with a straw in it. Sales dipped 20%. PepsiCo reverted to the old logo and packaging within a month. In 2006 Mastercard had to backtrack away from it’s new logo after public criticism, as did Leeds United, and the clothing brand Gap. AdAge magazine reports that critics most common sentiment about the Gap logo was that it looked like something a child had created using a clip-art gallery. Botswana is no different. University of Botswana had to retreat into the comfort of the known and accepted heritage strong brand.  Sir Ketumile Masire Teaching Hospital was badgered with complaints till it ‘adjusted’ its logo.

 

 

So if the landscape of rebranding is so treacherous then whey take the risk? Companies need to soberly assess they need for a rebrand. According to the fellows at Ignyte Branding a rebrand is ignited by the following admissions :

Our brand name no longer reflects our company’s vision.
We’re embarrassed to hand out our business cards.

Our competitive advantage is vague or poorly articulated.
Our brand has lost focus and become too complex to understand. Our business model or strategy has changed.
Our business has outgrown its current brand.
We’re undergoing or recently underwent a merger or acquisition. Our business has moved or expanded its geographic reach.
We need to disassociate our brand from a negative image.
We’re struggling to raise our prices and increase our profit margins. We want to expand our influence and connect to new audiences. We’re not attracting top talent for the positions we need to fill. All the above are good reasons to rebrand.

The downside to this debacle is that companies genuinely needing to rebrand might be hesitant or delay it altogether. The silver lining I guess is that marketing often mocked for its charlatans, is briefly transformed from being the Archilles heel into Thanos’ glove in an instant.

So what does a company need to do to safely navigate the rebranding terrain? Companies need to interrogate their brand purpose thoroughly. Not what they think they stand for but what they authentically represent when seen through the lens of their team members. In our Brand Workshop we use a number of tools to tease out the compelling brand truth. This section always draws amusing insights. Unfailingly, the top management (CEO & CFO)always has a vastly different picture of their brand to the rest of their ExCo and middle management, as do they to the customer-facing officer. We have only come across one company that had good internal alignment. Needless to say that brand is doing superbly well.

There is need a for brand strategies to guide the brand. One observes that most brands ‘make a plan’ as they go along. Little or no deliberate position on Brand audit, Customer research, Brand positioning and purpose, Architecture, Messaging, Naming, Tagline, Brand Training and may more. A brand strategy distils why your business exists beyond making money – its ‘why’. It defines what makes your brand what it is, what differentiates it from the competition and how you want your customers to perceive it. Lacking a brand strategy disadvantages the company in that it appears soul-less and lacking in personality. Naturally, people do not like to hang around humans with nothing to say. A brand strategy understands the value proposition. People don’t buy nails for the nails sake. They buy nails to hammer into the wall to hang pictures of their loved ones. People don’t buy make up because of its several hues and shades. Make up is self-expression. Understanding this arms a brand with an iron clad clad strategy on the brand battlefield.

But perhaps you’ve done the important research and strategy work. It’s still possible to bungle the final look and feel.  A few years ago one large brand had an extensive strategy done. Hopes were high for a top tier brand reveal. The eventual proposed brand was lack-lustre. I distinctly remember, being tasked as local agency to ‘land’ the brand and we outright refused. We could see this was a disaster of epic proportions begging to happen. The brand consultants were summoned to revise the logo. After a several tweaks and compromises the brand landed. It currently exists as one of the country’s largest brands. Getting the logo and visual look right is important. But how does one know if they are on the right path? Using the simile of a brand being a person – The answer is how do you know your outfit is right? It must serve a function, be the right fit and cut, it must be coordinated and lastly it must say something about you. So it is possible to bath in a luxurious bath gel, apply exotic lotion, be facebeat and still somehow wear a faux pas outfit. Avoid that.

Another suggestion is to do the obvious. Pre-test the logo and its look and feel on a cross section of your existing and prospective audience. There are tools to do this. Their feedback can save you money, time and pain. Additionally one must do another obvious check – use Google Image to verify the visual outcome and plain Google search to verify the name. These are so obvious they are hopefully for gone conclusions. But for the brands that have gone ahead without them, I hope you have not concluded your brand journeys as there is a world of opportunity waiting to be unlocked with the right brand strategy key.

Cliff Mada is Head of ArmourGetOn Brand Consultancy, based in Gaborone and Cape Town.

cliff@armourgeton.com

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