The first annual job summit was a success. It was a success in a sense that it gave a platform to business leaders, entrepreneurs and industry experts to discuss ways of creating jobs. But all the brilliant suggestions from panellists and participants were nothing new. It was a talk we have all heard often.
In fact I have written before that people know what needs to be done in reviving the economy so it could accommodate the unemployed. Talking and doing are two different things, what we fail to achieve is to implement all the brilliant ideas.
But it was the Vice President Mokgweetsi Masisi’s remarks that really made me wonder if he really understands the true nature of the country’s problems. This country’s problems run deeper, as they have been long in the making. The vice president remarked that the government has done enough to facilitate for the private sector to create jobs. On the surface he is correct, but on deeper inspection, the government has not only failed the private sector but citizens who dream of better lives. I will explain.
It goes without saying that Batswana are no longer hopeful about their future prospects. The economy is still dependent on diamonds, government has put a freeze on hiring, and salary increments haven’t been inspiring, the lethargic relationship between the private media and government, the dysfunctional politics, unemployed graduates, water and power crisis and the ever rising cost of living.
Indeed, it would appear that the realization that Botswana is no longer the land of opportunity that it has long claimed to be. To be sure, Botswana has many opportunities that are yet to be explored and enjoyed by the majority of citizens. But it is the economic inequality that has left so many dejected. They wonder why there is no longer trickledown economics anymore. Despite their hardwork and contributions, they are not getting their fair slice of the pie.
The things that they are told to be grateful for, free education and free health, are equally failing them. They have to endure long queues in hospitals and clinics and only to find out that the doctor is not there or their medications is not in the inventory. The pride and joy of receiving a degree has been replaced by nervousness as they contemplate what to make of their lives.
Batswana have become fearful and distrustful of the government. They doubt the government’s commitment towards them, when they speak of the government they do so in hushed tones lest they get sidelined in sharing the pie. Whether this fear is justified or not, is neither here nor there. It’s not exactly as if the government itself inspires trust and renewed hope. In fact the government has allowed for this fear and distrust to continue unabated. But we need to talk about this.
We should be having a deep debate on the growing inequality that threatens to tear our society. Inequality of opportunity has become pervasive, so has corruption both in the private and public sector. In terms of inequality, it’s like we have a two tier economy, for them and for us. The same could be said about the courts of law. We live in disparate worlds of economic freedom.
It hasn’t always been like this. Those who have seen the golden era of Botswana’s economy look back to those days with great fondness. That Botswana era had been exciting; it was the darling and envy of neighbouring countries. There was a powerful sense of belonging, people could actually see their lives improving for the better. They had hope and on equal measure they could pin those hopes in their children to be successful. But that era is gone. The Botswana of today has become a cash cow. Money seems to be the only thing that matters.
People who prized developing the country and improving the quality of life of every citizen are being sidelined; they have been replaced by the ones that are more ruthless in the individualistic pursuits. They are cutting deals and looking out for themselves. They are consumed with avarice.
The private sector cannot create jobs given the prevailing circumstances. Those who are affected mostly are the youth, as the vice president rightly pointed out. Tenders have killed the innovative entrepreneur, he has been replaced by the tenderpreneur who is looking out on fleecing the government.
After all one can instantly become rich through tenders, but that wealth accumulation does not trickle down to the majority of citizens. Needless to say, the business of tenders is not sustainable in the long run. But the greatest danger lies in the citizenry resigning to the fact the only way to make it is through tenders.
The proliferation of briefcase companies that get millions of pula through tenders, yet do little in terms of expanding to build sustainable companies has done little to create employment. It’s shocking when the government encourages such behaviour, even encouraging people to engage in these get rich quick schemes.
Those with strong connections to the government and private businesses wield so much power. They are the ones that control the flow of capital, they disregard laws and ethics all in pursuit of personal gains. Thomas Piketty, the controversial French economist, argues that the disparity between economic growth and investment growth, is the manifestation of inequality. Basically, Piketty is saying capital begets capital, on the same though chain, the rich will continue getting richer while the poor suffer.
We should never allow inequality to be the new normal, it’s not something that we can view as being inevitable. The government should come out strong against corruption, this could help in instilling hope amongst the citizens. The pursuit of money should never make us forget that we should coexist together, and that means acting honourably not gainfully. We need to reawaken the Botswana were hope filled the air, when people genuinely believed that if they work hard enough they will make it in life.
This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.
The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.
Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.
He was speaking in Parliament on Tuesday delivering Parliament’s Finance Committee report after assessing a motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.
Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.
The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.
The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.
The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.
This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.
Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.
Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.
However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.
Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.
When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.
This as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.
Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.
The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.
Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.
In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.
Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.
Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.
Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.
Acknowledging the need to draw down from GIA no more, current Minister of Finance Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”
He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”