Of Public Investments and Unemployment
Opinions
When the rest of the world went into a recession in 2008 and subsequently recovered from it, President Ian Khama lauded his administration for remaining steadfast in the face of calamity. This only tells part of the story. As the economy improved after the recession, our success in withstanding the storm was measured by non- job losses and return to economic growth due to increase in mining output. But the other part of the story is more sinister, the growth has been slow and the level of unemployment has been staggeringly high. According to the latest statistics, unemployment rate stands at 19.8 percent.
What we currently have in Botswana is a clear case of structural unemployment, a situation where at a given wage, the quantity of labour supplied exceeds the quantity of labour demanded due to the mismatch of the number of people who want to work and the number of jobs that are available. There is no easier way out of structural unemployment. It is a problem that is large in magnitude and painstakingly hard to solve. The end results of unemployment are not pretty at all: despair and dejection, social costs, economic losses, political and budgetary pressures.
Policymakers in Botswana are faced with challenges on how to formulate policies that create work for those who want to work in a country that currently has little to offer. And by creating jobs, we mean decent and meaningful jobs that bring dignity to the worker.
Surprisingly, the policymakers know what needs to be done, in fact it appears they have all the conventional ingredients: stimulate economic growth, improve education and skills transfer, embrace technology and innovation, deal with barriers to market entries, boost public investment, grow the private sector, promote citizen empowerment and entrepreneurship. So one is inclined to ask that despite all these efforts why is the Botswana economy faltering, more importantly, why they haven’t decisively dealt with the growing unemployment rate.
The answer may lie with the lackadaisical approach of the government and how they determine the rate of return on investments. Quite often, the government will talk about how much they have spent and little on what was achieved on that money spent. This could be solved by instituting strong structural reforms.
The most obvious structural reform that the government has to undertake is to build effective and sound institutions. Such institutions should be able to enforce good governance, transparency and accountability. If they are able to do that, the quality of supervision and monitoring will ensure the government gets a good return on its investments.
Consider this, if the government had sound institutions, it wouldn’t have lost hundredths of millions through corruption, project delays and cost overruns. And not only that, heads would have rolled for those responsible for the mess. In the absence of effective institutions, some people have acted with impunity: after all it’s only the government money they are wasting. But this is money that could have been put for better use and the purpose it was intended for, including curbing the unemployment rate.
Indeed much of the government’s failures can be largely blamed on poor implementation. To be sure, the Botswana government has some good policies that have set it apart from other African countries. This is the government that has spent lots of money on public investment, think of the free education and health. But the country has been caught wanting in terms of policy implementation, as we speak the country’s education is in crisis. The problem is much deeper as it was long in the making: putting emphasis on government expenditure and little on the returns on investments.
For example, over the years the government has largely focused on quantity rather than quality in the education sector. The end result has been proliferation of graduates with half baked degrees which have led to employers shunning them for their lack of skills. While this has contributed to the rising number of unemployed graduates, it has been manna from heaven to the profit oriented private schools that have benefitted from the government expenditure on education yet delivered so little.
A quick survey of the private institutions (particularly tertiary education providers) reveals that majority of the owners and lecturers are foreigners. This clearly shows that public investment is not sufficiently enough if it’s not properly monitored and evaluated. There is a need for a culture of transparency and accountability so as to ensure that everyone benefits from public investments as well as prevent any potential abuse by greedy business people.
Granted, the government of Botswana cannot alone create jobs for the unemployed. A robust private sector could prove to be a critical tool in helping the government deal with the unemployment rate. Without proper structural reforms that encourage private investment and entrepreneurship, the government would continue carrying the burden and on top of that having to deal with the ever increasing wage bill that has made it difficult for the government to adjust salaries.
While the government has some existing policies that could help grow the private sector, such as citizen empowerment schemes and other financing institutions (Citizen Entrepreneurial Development Agency, Botswana Development Corporation etc), the returns and benefits have not been forthcoming. Once again I will fault the government for not enforcing quality supervision and stricter monitoring.
The government needs to deal with problems facing start-up companies, in case policymakers are not aware, these problems transcends beyond the usual capital problems. What the government must do is confront large enterprises (monopolies, oligopolies etc) blocking fair competition from small medium enterprises (SMEs).
While at it, the government is best advised to ensure that it has effective tax systems for these huge enterprises. The most recent report from Global Financial Integrity (see http://www.gfintegrity.org/) has pointed to illicit financial outflows; such acts together with tax evasion are not good for the economy.
Furthermore the private sector and entrepreneurship in Botswana is built on sand. Their business operations are heavily dependent on doing business with the government. This is hardly surprising given the population (market size) and the fact that the government is the biggest spender. But in the long run this is unsustainable, especially when the government is looking at belt tightening measures. The government tenders have given birth to the wrong kind of entrepreneurs, entrepreneurs who lack good work ethics and productivity. Such entrepreneurs lack the innovation needed to grow the private sector.
These entrepreneurs (now popularly referred to as tenderpreneurs) have poor savings rate, weak human capital and zero plans for further expansion or diversification of their businesses. It does not help the situation that the tendering process in Botswana has been fraught with errors and given rise to corruption (bribery, inside trading etc). What the economy of Botswana needs is businesses that will not only add value to the economy (think industries like manufacturing which are exports oriented) but actually hire unemployed people.
It’s disheartening how a company which employs less than 20 people can win multimillion tenders. What is the government getting in return? While other than inflated prices they pay for doing business with the private sector, the government is not getting much in return. Growing the private sector should not equate to doling out tenders, the government must ensure that it does business with companies that have vested interest in growing the economy of the country, not companies that want to line their pockets. In addition the government should look at the supply chain and determine if citizens are benefitting from the tenders it gives out, it should also ask itself if there are any skills being transferred to citizens.
Any person with a decent grasp of economics will tell you the significance of statistics in dealing with the unemployment problem. Besides structural reforms, the government should look more into labour market policies. Such policies should be focused on relevant statistics: collecting the data which is needed in determining which skills are needed in the labour market, the required training and workplace flexibility.
This approach will have two aspects to it. Firstly it will ensure that students make well informed decisions on what to study and which skills to gain in order to improve their employment opportunities. Secondly labour market data will ensure policy makers are in tandem with education providers as well as employers on which fields to invest money in hence closing the gap between skills mismatch.
The labour market data could also be used to gauge the progress the country has made in terms of the localisation of certain job positions, how many citizens sit on executive management positions and more importantly if employers engage on training and transferring expertise skills to citizens. The national internship program is a welcome development despite the justified criticism.
The purpose of the program is to facilitate the integration of inexperienced workers into the workforce, while helping to correct skills mismatch and skills transfer from experienced workers. But the successes of the program lies in the government monitoring the progress to ensure that interns are gaining valuable knowledge as well as ensuring they are not being exploited as a form of cheap labour.
Implementing structural reforms and a renewed policy momentum remains integral to any successful growth strategy. Like anything else they will be challenges. Some of these challenges emanate from political posturing, when politicians with short term visions cannot get a clear picture of the economy, this happens when self interests precedes national interests. There will also be resistance from big companies and individuals that prefer the status quo because it benefits them. But should these challenges be ignored, the unemployment problem will deepen resulting in immense social, economic and political costs: increase in inequality, poverty, corruption and potential for political backlash.
To solve a problem, it is not enough to know what to do. You actually have to implement the solution and be willing to change course if it turns out that you did not know quite as much as you thought. Not only that, the government should be serious about return on their investments, and that starts with effective institutions that can properly supervise and monitor projects. On that regard, the government of Botswana has some fantastic policies but they require concerted efforts during implementation and evaluation stages.
Opinions
Fuelling Change: The Evolving Dynamics of the Oil and Gas Industry
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
Opinions
Brands are important
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
Opinions
The case for Botswana to ratify the ACDEG
The Ibrahim Index of African Governance (IIAG) is the most comprehensive dataset measuring African governance performance through a wide range of 81 indicators under the categories of Security & Rule of law, Participation, Rights & Inclusion, Foundations of Economic Opportunity, and Human Development. It employs scores, expressed out of 100, which quantify a country’s performance for each governance measure and ranks, out of 54, in relation to the 54 African countries.
The 2022 IIAG Overall Governance score is 68.1 and ranks Botswana at number 5 in Africa. In 2019 Botswana was ranked 2nd with an overall score of 73.3. That is a sharp decline. The best-performing countries are Mauritius, Seychelles, Tunisia, and Cabo Verde, in that order. A glance at the categories shows that Botswana is in third place in Africa on the Security and Rule of law; ninth in the Participation, Rights & Inclusion Category – indicating a shrinking participatory environment; eighth for Foundations of Economic Opportunity category; and fifth in the Human Development category.
The 2022 IIAG comes to a sweeping conclusion: Governments are less accountable and transparent in 2021 than at any time over the last ten years; Higher GDP does not necessarily indicate better governance; rule of law has weakened in the last five years; Democratic backsliding in Africa has accelerated since 2018; Major restrictions on freedom of association and assembly since 2012. Botswana is no exception to these conclusions. In fact, a look at the 10-year trend shows a major challenge. While Botswana remains in the top 5 of the best-performing countries in Africa, there are signs of decline, especially in the categories of Human Development and Security & Rule of law.
I start with this picture to show that Botswana is no longer the poster child for democracy, good governance, and commitment to the rule of law that it once was. In fact, to use the term used in the IIAG, Botswana is experiencing a “democratic backsliding.”
The 2021 Transparency International Corruption Perception Index (CPI) had Botswana at 55/ 100, the lowest ever score recorded by Botswana dethroning Botswana as Africa’s least corrupt country to a distant third place, where it was in 2019 with a CPI of 61/100. (A score closer to zero denotes the worst corrupt and a score closer to 100 indicates the least corrupt country). The concern here is that while other African states are advancing in their transparency and accountability indexes, Botswana is backsliding.
The Transitional National Development Plan lists participatory democracy, the rule of law, transparency, and accountability, as key “deliverables,” if you may call those deliverables. If indeed Botswana is committed to these principles, she must ratify the African Charter on Democracy Elections and Governance (ACDEG).
The African Charter on Democracy Elections and Governance is the African Union’s principal policy document for advancing democratic governance in African Union member states. The ACDEG embodies the continent’s commitment to a democratic agenda and set the standards upon which countries agreed to be held accountable. The Charter was adopted in 2007 and came into force a decade ago, in 2012.
Article 2 of the Charter details its objectives among others as to a) Promote adherence, by each State Party, to the universal values and principles of democracy and respect for human rights; b) Promote and protect the independence of the judiciary; c) Promote the establishment of the necessary conditions to foster citizen participation, transparency, access to information, freedom of the press and accountability in the management of public affairs; d) Promote gender balance and equality in the governance and development processes.
The Charter emphasizes certain principles through which member states must uphold: Citizen Participation, Accountable Institutions, Respect for Human Rights, Adherence to the principles of the Rule of Law, Respect for the supremacy of the constitution and constitutional order, Entrenchment of democratic Principles, Separation of Powers, Respect for the Judiciary, Independence and impartiality of electoral bodies, best practice in the management of elections. These are among the top issues that Batswana have been calling for, that they be entrenched in the new Constitution.
The ACDEG is a revolutionary document. Article 3 of the ACDEG, sets guidance on the principles that must guide the implementation of the Charter among them: Effective participation of citizens in democratic and development processes and in the governance of public affairs; Promotion of a system of government that is representative; Holding of regular, transparent, free and fair elections; Separation of powers; Promotion of gender equality in public and private institutions and others.
Batswana have been calling for laws that make it mandatory for citizen participation in public affairs, more so, such calls have been amplified in the just-ended “consultative process” into the review of the Constitution of Botswana. Many scholars, academics, and Batswana, in general, have consistently made calls for a constitution that provides for clear separation of powers to prevent concentration of power in one branch, in Botswana’s case, the Executive, and provide for effective checks and balances. Other countries, like Kenya, have laws that promote gender equality in public and private institutions inscribed in their constitutions. The ACDEG could be a useful advocacy tool for the promotion of gender equality.
Perhaps more relevant to Botswana’s situation now is Article 10 of the Charter. Given how the constitutional review process unfolded, the numerous procedural mistakes and omissions, the lack of genuine consultations, the Charter principles could have provided a direction, if Botswana was party to the Charter. “State Parties shall ensure that the process of amendment or revision of their constitution reposes on national consensus, obtained, if need be, through referendum,” reads part of Article 10, giving clear clarity, that the Constitution belong to the people.
With the African Charter on Democracy Elections and Governance in hand, ratified, and also given the many shortfalls in the current constitution, Batswana can have a tool in hand, not only to hold the government accountable but also a tool for measuring aspirations and shortfalls of our governance institutional framework.
Botswana has not signed, nor has it acceded or ratified the ACDEG. The time to ratify the ACDEG is now. Our Movement, Motheo O Mosha Society, with support from the Democracy Works Foundation and The Charter Project Africa, will run a campaign to promote, popularise and advocate for the ratification of the Charter (#RatifytheCharter Campaign). The initiative is co-founded by the European Union. The Campaign is implemented with the support of our sister organizations: Global Shapers Community – Gaborone Hub, #FamilyMeetingBW, Botswana Center for Public Integrity, Black Roots Organization, Economic Development Forum, Molao-Matters, WoTech Foundation, University of Botswana Political Science Society, Young Minds Africa and Branding Akosua.
Ratifying the Charter would reaffirm Botswana’s commitment to upholding strong democratic values, and respect for constitutionalism, and promote the rule of law and political accountability. Join us in calling the Government of Botswana to #RatifyTheCharter.
*Morena MONGANJA is the Chairperson of Motheo O Mosha society; a grassroots movement advocating for a new Constitution for Botswana. Contact: socialcontractbw@gmail.com or WhatsApp 77 469 362.