Job creation and unemployment conundrum: crisis or not?
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President Mokgweetsi Masisi has this week reiterated that it is not the responsibility of government to create jobs amid unprecedented rising levels of unemployment, following the release of the latest unemployment figures by Statistics Botswana.
About 200 000 Batswana are actively seeking employment while 68 000 have given up on getting a job, according to Statistics Botswana, who this week released results of a first of its kind Quarterly Multi-Topic Survey on Labour Force. While it has been a trend to see unemployment decreasing, this time the percentage took a backflip, increased, producing a likely worrisome trend due to possible grievous consequences to the economy.
“It is never a good indicator when you are regressing. If you see a situation where unemployment numbers are increasing, it can never be a good indicator. It is not a movement in a right direction,” First National Bank Botswana (FNBB) Chief Economist Moatlhodi Sebabole told WeekendPost on Wednesday. “It is a challenge to the economy because people are economic agents. When people are unable to find jobs; and their salaries are stagnant, and there are no new entrants in the job market and there is no new generation of income, it has ripple effects in the economy.”
Moatlhodi, who also chairs the National Transformation Strategy, said unemployment means that the private sector, which has to create job opportunities is unable to do so, which may be due to various reasons such as demand and opportunities.“It is not [unemployment] a crisis but it is increasing the pressure that people feel, [that] the economy feels, and definitely [that] the entire country feels. The multiplying effect of it has got the implication on the day-to-day standards of living,” Moatlhodi said.
“It can go on to impact government because whereas government should be focusing on capital investment, there could be consideration to spend more on social welfare for those who are affected. It could [also] balloon the social expenditure.” Masisi, who inherited an ailing economy from his predecessor, Lt Gen Ian Khama, has been styled as “Jobs President” following his ascendance to the throne. Incidentally, the mandate of job creation was within Masisi’s orbit as Vice President a few years ago.
While Masisi has promised to create jobs, and has travelled the world in a bid to lure investors to set-up businesses in Botswana, his statements relating to job creation, continue to betray his probable ambition. Masisi has continuously indicated that there is “no need to set targets on number of jobs to be created under his government”, as well as asserting that government’s role in job creation is peripheral, while the bulk of it remains with the private sector.
This week, Masisi when addressing the media following his return from Davos summit in Switzerland, said his government’s responsibly is “to create enabling environment” hoping that the private sector will then strive under such circumstances and create jobs. The vagueness relating to “creating enabling environment” is that, it is never pronounced. Creating enabling environment, under strict terms, essentially means taking care of all the necessary requirement for a competitive economy, which includes, but not limited to investing in infrastructure i.e. roads, power, internet, telecommunication and others.
This also means repealing laws that are anti-business, such as monopolies, permits and other laws are barriers to entry in business. Botswana has been declining in rankings as far as the competitiveness of its economy is concerned. For instance, in 2019, Global Competitiveness Report ranked 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 same year, Doing Business Report, said Botswana is ranked 86 out of 190 countries far much worse than it did in 2006, when it was ranked 40th in the world. Botswana has fared poorly in pillars such as infrastructure, ICT adoption, and innovation capability, an indication that Masisi has more work to do, before he can confidently say, “he has created an enabling environment.”
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.
Government has however been reluctant to either pursue PPPs, or borrow from the Botswana Public Officers Pension Fund (BPOPF), as advised by experts, to finance its infrastructural deficiency. In view of the realities on the ground, Masisi’s claim for enabling environment will prove to be more difficult than the creation of jobs itself because it needs financing as well as time to take shape.
This is so because, in order for business or the private sector to thrive, it will depend on the agility of government in investing in infrastructure. Botswana, like any other country faces infrastructure financing gap, which then provides a challenge for Masisi to meet his obligations.
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Batswana owe banks P79 billion
The Minister of Finance, Peggy Serame, has disclosed that the total bank credit extended by commercial banks amounted to P79 billion, out of which P53.4 billion was retail loans and advances to households.
Parliament was informed this week in response to a question by the Member of Parliament for Selibe-Phikwe West and Leader of Opposition (LOO), Dithapelo Keorapetse.
“As at 31st December 2022, loans and other advances extended to households by banks constituted the largest share of bank-lending at 67.6 percent, the majority of which was unsecured personal loans at P36.2 billion (67.8%),” said Serame.
She added that the total household Debt to GDP ratio was 21.9%, while the total private business credit to Gross Domestic Product (GDP) ratio was 10.8%.
On the other hand, it was noted that outstanding mortgage loans extended to households were P14.2 billion (26.6% of household debt) or 5.9% of GDP. Overall, total bank credit as a ratio of GDP stood at 32.7 percent.
It was acknowledged that there are 10 deposit-taking banks in the country, that is, nine commercial banks and one statutory bank (Botswana Savings Bank). This statistics excludes the National Development Bank (NDB), which is a development finance institution. The nine commercial banks include an indigenous bank, Botswana Building Society Bank Limited (BBSBL), which was issued with a commercial banking license by the Bank of Botswana in October 2022.
Still in December 2022, it was recorded that there were 376 non-bank lenders in Botswana consisting of 246 micro lenders, 66 finance companies, three leasing companies and 61 registered pawnshops.
According to Minister Serame, the loan book value representing the principal amount lent by these entities to individuals and to small, medium and micro Enterprises (SMMEs) is collated by the Non-Bank Financial Institutions Regulatory Authority (NBFIRA), which at 31st of December 2021, the loan book values were P5.6 billion for micro lenders, P1.6 billion for finance companies, P225 million for leasing companies and P14 million for pawnshops.
Government policy is that price control is not effective or desirable, and, as such, interest rates are not regulated. Non-regulation may, among other things, result in an increase in non-interest rate fees and commissions, reduced price transparency, lower credit supply and loan approval rates.
“It is important to note that, from a macroeconomic perspective, household debt in Botswana is neither a pandemic nor considered to be excessive. Indeed, the Bank of Botswana’s periodic and continuous assessments of household debt, including through the annual Household Indebtedness Surveys, suggest moderate household indebtedness and therefore, is of no apparent risk to the safety and soundness of the domestic financial system,” said Serame.
She also alluded this assessment is validated by the recently concluded Financial Sector Assessment Programme (FSAP) on Botswana undertaken by the International Monetary Fund and the World Bank Group.
Keorapetse however rebuked the issue of debt not being excessive and noted the Minister thinks it’s fine for Batswana to be debt burdened in a way that their debts diminishes their quality of life.
“A significant portion of Batswana’s salaries go to servicing debts and because she doesn’t see this as a challenge, there can never be any intervention from her side. There is no price regulation on interest, which can go up to 30%+ a month. Since President Masisi ascended to the high office in 2018, 2 384 Batswana were put in prison for failure to pay debts, that is 467 Batswana every year. So, for us, debt problems are big and concerning,” said Keorapetse.
He said they are worried because Batswana are drowning in debts because of relative poverty, slave wages and unemployment/underemployment, they buy basic needs and services with borrowed money and noted predatory and unethical lending has become a major problem in Botswana’s financial sector.
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How to fleece P14 million from Chinese investor
The modus operandi of how five men allegedly swindled a Chinese national P14 million last week continue to unravel. Highly placed sources from the intelligence, the Directorate on Corruption and Economic Crime (DCEC) and Botswana Unified Revenue Services (BURS) revealed to this publication how the whole scam was concocted.
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ENVIRONMENT ISSUES: Masisi asks Virginia for help
President Mokgweetsi Masisi says the issue of sustainable natural resources management has always been an important part of Botswana’s national development agenda.
Masisi was speaking this week on the occasion of a public lecture at Virginia Polytechnic, under theme, “Merging Conservation, Democracy and Sustainable Development in Botswana.”
Botswana, according to Masisi, holds the view that the environment is fragile and as such, must be managed and given the utmost protection to enable the achievement of Sustainable Development Goals (SDGs).
“It is necessary that we engage one another in the interchange of ideas, perspectives, visualizations of social futures, and considerations of possible strategies and courses of action for sustainable development,” said Masisi.
On the other hand, dialogue, in the form of rigorous democratic discourse among stakeholders presents another basis for reconfiguring how people act on their environments, with a view to conserving its resources that “we require to meet our socio-economic development needs on a sustainable basis,” Masisi told attendees at the public lecture.
He said government has a keen interest in understanding the epidemiology and ecology of diseases of both domestic and wild animals. “It is our national interest to forestall the dire consequences of animal diseases on our communities livelihoods.”
President Masisi hoped that both Botswana and Virginia could help each other in curbing contagious diseases of wildlife.
“We believe that Virginia Tech can reasonably share their experiences, research insights and advances in veterinary sciences and medicines, to help us build capacity for knowledge creation and improve efforts of managing and containing contagious diseases of wildlife. The ground is fertile for entering into such a mutually beneficial partnership.”
When explaining environmental issues further, Masisi said efforts of conservation and sustainable development might at times be hampered by the emergence and recurrence of diseases when pathogens mutate and take host of more than one species.
“Water pollution also kills aquatic life, such as fish, which is one of humanity’s much deserved sources of food. In this regard, One Health Approach imposes ecological responsibility upon all of us to care for the environment and the bio-diversity therein.”
He said the production and use of animal vaccines is an important space and tool for conservation, particularly to deal with trans-border animal diseases.
“In Botswana, our 43-year-old national premier pharmaceutical institution called Botswana Vaccine Institute has played its role well. Through its successful production of highly efficacious Foot and Mouth vaccines, the country is able to contain this disease as well as supply vaccines to other countries in the sub-region.:
He has however declared that there is need for more help, saying “We need more capacitation to deal with and contain other types of microbial that affect both animals and human health.”