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Can P 1.6 billion stimulate the economy?

Ndulamo Anthony Morima
EAGLE WATCH

When the Minister of Finance & Development Planning, Honourable Kenneth Matambo, presented this year’s budget speech many expected that the funds allocated for the Economic Stimulus Programme (ESP) projects will be significant enough to stimulate the economy.

However, Hon. Matambo intermittently mentioned ESP projects across ministries worth a meagre P1.6 billion. If this is all that has been reserved for the ESP this year the question is: can P1.6 billion Pula stimulate the economy which experienced a mere 1% growth in 2015?

At P1.6 billion, ESP projects constitute a mere 2.8% of the estimated expenditure of 54.44 billion Pula for 2016. The question is: can 2.8% of a country’s annual expenditure really fast track its infrastructure development, job creation and human capital development as envisaged under the ESP?

Before answering this question it is only fair that we consider the areas that will be targeted by the ESP. According to the budget the projects include rural electrification (P257 million); road projects (P250 million); and eradication of backlog of primary school facilities, village infrastructure and construction of customary courts (P 315.04 million).

The ESP projects also include building of teachers’ houses, classrooms and laboratories (P440.35 million); accelerating ongoing programmes at the Ministry of Lands & Housing (P272.9 million); Grey water re-use, Lotsane irrigation project, Glenn Valley infrastructure rehabilitation, grading of roads and Agriculture Service Centers (P35 million) and poverty eradication (P50 million).

The question is: are these projects of such a magnitude and nature that they would breathe new life into our economy? I am inclined to believe that they won’t because the funds are so insignificant that they will be spread so thinly that they will not make much difference. At least 10% of the estimated expenditure for 2016, i.e. P 5.4 billion is required to stimulate Botswana’s economic growth.

P1.6 billion for a government is equivalent to about P 160.00 for an individual. Can P 160.00 really stimulate an individual’s economy? One may say it depends on an individual’s financial position but the objective truth is that P 160.00 cannot meaningfully stimulate in individual’s economy. Similarly, P1.6 billion cannot stimulate the economy of a country as Botswana. It can be a stimulus for such small economies as Lesotho and Swaziland, not Botswana.      

This is true especially because about 10% will go towards administrative expenditure which will not necessarily improve our people’s lives. Also, while another 5% will be lost through wasteful expenditure and other unforeseen circumstances the other 5% will be lost through corruption and economic crime.

Also, the projects earmarked for the ESP are not of such ‘outside the box’ nature that they can bring growth to the economy. These are ‘business as usual’ projects and the only thing that government can achieve through the ESP is completion of delayed or abandoned projects, not economic stimulation. In its current form the ESP is more of a Project Completion Plan (PCP) than an economic stimulus plan.

By way of illustration, among all the ESP allocations Agriculture is the lowest at P35 million. Is it not Agriculture that, if properly funded and implemented, would really stimulate our economy? Has government not lamented the fact that the percentage contribution of Agriculture to the Gross Domestic Product (GDP) has continued to decline. According to the World Bank, value added Agriculture (% of GDP) in Botswana was last measured at 2.37 in 2014. Certainly, P35 million, especially against the backdrop of a deficit budget cannot raise this to acceptable levels.

That notwithstanding, the Grey water re-use, Lotsane irrigation project, Glenn Valley infrastructure rehabilitation, grading of roads and up grading Agriculture Service Centers have to be commended for they will go a long way in promoting Agriculture in the respective arears. Rural electrification and road projects too have to be commended for they will also go a long way in promoting Agriculture in rural arears.  

While building of teachers’ houses, classrooms and laboratories is commendable the question is: will it bring the economic stimulation that warrants the 34% allocation it got from the ESP pie? Put bluntly, is the P440.35 million allocated for building of houses, classrooms and laboratories really meant for economic stimulation or appeasement of teachers for the ruling Botswana Democratic Party(BDP)’s political mileage? In my view, it is meant for the latter.

The eradication of backlog of primary school facilities, village infrastructure and construction of customary courts will not stimulate the economy, but are mere efforts by government to complete the projects it failed to complete during the time they had been budgeted for. The same applies to the P 272.9 million allocated for the so-called “accelerating on-going programmes” under the Ministry of Lands and Housing.

The other question is: can you stimulate the economy through the poverty eradication projects that have failed to boost our economy for the past ten years now? It is common knowledge that despite President Lieutenant General Seretse Khama Ian Khama’s emphasis on poverty eradication projects our people’s lives have hardly improved.

Many villages are littered with failed back yard gardens and poultry projects which cost government a lot of money, but fail to improve food security for our people. The only people who benefit are civil servants who are paid such allowances as mileage, subsistence and meal allowances when visiting the projects, suppliers who sell the equipment and consumables used for the projects and government which collects income tax and Value Added Tax (VAT).

Would it not have been better to allocate the P50 million allocated for poverty eradication to such production based sectors as manufacturing? I have never understood why we cannot manufacture such leather products as bags, belts, shoes and such adhesives as glue despite slaughtering thousands of cattle yearly at the Botswana Meat Commission (BMC). If P50 million were allocated for this it will go a long way in stimulating the manufacturing sector.

There is no doubt that rural electrification, roads construction and land servicing are important, but they do not necessarily result in economic stimulation. Government has, even in 2015, spent billions of Pula in these undertakings yet we suffered poor economic growth.              

The other factor that will make the P1.6 billion ESP budget of little or no consequence is the P6 billion budget deficit. The fact that Hon. Matambo has stated that the budget deficit is expected to be financed from domestic and foreign borrowings augmented by drawings from our foreign reserves ( which stood at P35 billion as at December 2015) does not make the situation better in my view.

It is common knowledge that any form of borrowing comes at a cost in the form of interest and other credit related costs. Therefore, financing a budget deficit through borrowings does not necessarily result in real economic growth. It only results in artificial short term growth since the ‘growth’ is invariably reversed when repayments are made.

In my view, therefore, it would have been better to have a surplus or at least a balanced budget rather than creating a budget deficit in part due to the P1.6 billion for the ESP projects that are unlikely to jump-start our economy in any meaningful way.

I know that according to British Economist, Richard Ferdinand Kahn (1905-1989)’s ‘multiplier effect’ theory though government’s P1.6 billion spending will generate new consumption, it will also generate "new" tax revenues in the form of VAT, for example. In theory, it is this revenue that will be used to stimulate the economy.

According to Kahn, although the government will spend P1.6 billion, it is likely to receive a significant proportion of the P1.6 billion in due course, making the net expenditure much less than P1.6 billion. Indeed, in theory this is possible if the initial expenditure is targeted well, but I am not persuaded that these ESP projects are well targeted.

Therefore, in my view, instead of stimulating the economy this P1.6 billion will only further enrich the 1% being our country’s rich moguls and further impoverish the 99% being our country’s poor. Put differently, the ESP will only further widen the gap between the rich and the poor.

Politically, especially in rural arears and among the poor, the ESP may win the BDP short-term support because it gives such people the impression that the BDP government cares about their lives. While there is no doubt that the BDP government cares about their lives, the truth is that this ESP is an ill-conceived way of demonstrating such care and the ill-gained voter support will be lost the moment the voters realize that they have been taken for a ride.

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Export Processing Zones: How to Get SEZA to Sizzle

23rd September 2020
Export Processing Zone (EPZ) factory in Kenya

In 2005, the Business & Economic Advisory Council (BEAC) pitched the idea of the establishment of Special Economic Zones (SEZs) to the Mogae Administration.

It took five years before the SEZ policy was formulated, another five years before the relevant law was enacted, and a full three years before the Special Economic Zones Authority (SEZA) became operational.

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Egypt Bagged Again

23rd September 2020
Samson

… courtesy of infiltration stratagem by Jehovah-Enlil’s clan

With the passing of Joshua’s generation, General Atiku, the promised peace and prosperity of a land flowing with milk and honey disappeared, giving way to chaos and confusion.

Maybe Joshua himself was to blame for this shambolic state of affairs. He had failed to mentor a successor in the manner Moses had mentored him. He had left the nation without a central government or a human head of state but as a confederacy of twelve independent tribes without any unifying force except their Anunnaki gods.

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‘RO, ‘RO ‘RO YOUR ‘BOT

23rd September 2020

If I say the word ‘robot’ to you,  I can guess what would immediately spring to mind –  a cute little Android or animal-like creature with human or pet animal characteristics and a ‘heart’, that is to say to say a battery, of gold, the sort we’ve all seen in various movies and  tv shows.  Think R2D2 or 3CPO in Star Wars, Wall-E in the movie of the same name,  Sonny in I Robot, loveable rogue Bender in Futurama,  Johnny 5 in Short Circuit…

Of course there are the evil ones too, the sort that want to rise up and eliminate us  inferior humans – Roy Batty in Blade Runner, Schwarzenegger’s T-800 in The Terminator,  Box in Logan’s Run,  Police robots in Elysium and  Otomo in Robocop.

And that’s to name but a few.  As a general rule of thumb, the closer the robot is to human form, the more dangerous it is and of course the ultimate threat in any Sci-Fi movie is that the robots will turn the tables and become the masters, not the mechanical slaves.  And whilst we are in reality a long way from robotic domination, there are an increasing number of examples of  robotics in the workplace.

ROBOT BLOODHOUNDS Sometimes by the time that one of us smells something the damage has already begun – the smell of burning rubber or even worse, the smell of deadly gas. Thank goodness for a robot capable of quickly detecting and analyzing a smell from our very own footprint.

A*Library Bot The A*Star (Singapore) developed library bot which when books are equipped with RFID location chips, can scan shelves quickly seeking out-of-place titles.  It manoeuvres with ease around corners, enhances the sorting and searching of books, and can self-navigate the library facility during non-open hours.

DRUG-COMPOUNDING ROBOT Automated medicine distribution system, connected to the hospital prescription system. It’s goal? To manipulate a large variety of objects (i.e.: drug vials, syringes, and IV bags) normally used in the manual process of drugs compounding to facilitate stronger standardisation, create higher levels of patient safety, and lower the risk of hospital staff exposed to toxic substances.

AUTOMOTIVE INDUSTRY ROBOTS Applications include screw-driving, assembling, painting, trimming/cutting, pouring hazardous substances, labelling, welding, handling, quality control applications as well as tasks that require extreme precision,

AGRICULTURAL ROBOTS Ecrobotix, a Swiss technology firm has a solar-controlled ‘bot that not only can identify weeds but thereafter can treat them. Naio Technologies based in southwestern France has developed a robot with the ability to weed, hoe, and assist during harvesting. Energid Technologies has developed a citrus picking system that retrieves one piece of fruit every 2-3 seconds and Spain-based Agrobot has taken the treachery out of strawberry picking. Meanwhile, Blue River Technology has developed the LettuceBot2 that attaches itself to a tractor to thin out lettuce fields as well as prevent herbicide-resistant weeds. And that’s only scratching the finely-tilled soil.

INDUSTRIAL FLOOR SCRUBBERS The Global Automatic Floor Scrubber Machine boasts a 1.6HP motor that offers 113″ water lift, 180 RPM and a coverage rate of 17,000 sq. ft. per hour

These examples all come from the aptly-named site www.willrobotstakemyjob.com    because while these functions are labour-saving and ripe for automation, the increasing use of artificial intelligence in the workplace will undoubtedly lead to increasing reliance on machines and a resulting swathe of human redundancies in a broad spectrum of industries and services.

This process has been greatly boosted by the global pandemic due to a combination of a workforce on furlough, whether by decree or by choice, and the obvious advantages of using virus-free machines – I don’t think computer viruses count!  For example, it was suggested recently that their use might have a beneficial effect in care homes for the elderly, solving short staffing issues and cheering up the old folks with the novelty of having their tea, coffee and medicines delivered by glorified model cars.  It’s a theory, at any rate.

Already, customers at the South-Korean  fast-food chain No Brand Burger can avoid any interaction with a human server during the pandemic.  The chain is using robots to take orders, prepare food and bring meals out to diners.  Customers order and pay via touchscreen, then their request is sent to the kitchen where a cooking machine heats up the buns and patties. When it’s ready, a robot ‘waiter’ brings out their takeout bag.   

‘This is the first time I’ve actually seen such robots, so they are really amazing and fun,’ Shin Hyun Soo, an office worker at No Brand in Seoul for the first time, told the AP. 

Human workers add toppings to the burgers and wrap them up in takeout bags before passing them over to yellow-and-black serving robots, which have been compared to Minions. 

Also in Korea, the Italian restaurant chain Mad for Garlic is using serving robots even for sit-down customers. Using 3D space mapping and other technology, the electronic ‘waiter,’ known as Aglio Kim, navigates between tables with up to five orders.  Mad for Garlic manager Lee Young-ho said kids especially like the robots, which can carry up to 66lbs in their trays.

These catering robots look nothing like their human counterparts – in fact they are nothing more than glorified food trolleys so using our thumb rule from the movies, mankind is safe from imminent takeover but clearly  Korean hospitality sector workers’ jobs are not.

And right there is the dichotomy – replacement by stealth.  Remote-controlled robotic waiters and waitresses don’t need to be paid, they don’t go on strike and they don’t spread disease so it’s a sure bet their army is already on the march.

But there may be more redundancies on the way as well.  Have you noticed how AI designers have an inability to use words of more than one syllable?  So ‘robot’ has become ‘bot’ and ‘android’ simply ‘droid?  Well, guys, if you continue to build machines ultimately smarter than yourselves you ‘rons  may find yourself surplus to requirements too – that’s ‘moron’ to us polysyllabic humans”!

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