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Inefficiency and corruption cripples Botswana’s economic diversification

Ndulamo Anthony Morima

EAGLE WATCH

As gleaned from this year’s Budget Speech, Government, at least at a policy and programme level, prioritises economic diversification. The question is: does Government, in effect, do enough to attain economic diversification?   

According to the Minister of Finance & Economic Development, Honourable Kenneth Matambo, “… efforts by the Government to diversify the domestic economy continue to yield positive results, as evidenced by the decline in the share of mining sector in the value addition, with a corresponding increase in the contribution of the non-mining sectors…”

He continued to say that “… mining sector’s share to the Gross Domestic Product (GDP) declined from 25 percent in 2008 to 18 percent in 2018, while the contribution of non-mining sectors increased from 75 percent to 82 percent over the same period…” What this means is that, for a period of ten years, the mining sector’s share to the GDP declined by seven percent, while the contribution of non-mining sectors increased by seven percent. The question is: is this percentage the best that Botswana could have attained, all factors considered.

In my view, though the first half of the period 2008 to 2018 was during the world economic recession, Botswana could have attained ten percent or more were it not for the inefficiencies and corruption bedevilling Government. The Selibe Phikwe Economic Diversification Unit (SPEDU) project, which failed to diversify the economy of Selibe Phikwe and surrounding villages away from copper and nickel reliance until the closure of the Selibe Phikwe mine, is one typical example of how inefficiency cripples Government’s economic diversification goals.

That Government has approved a set of incentives for the SPEDU region, which include five percent corporate tax rate for the first five years and ten percent thereafter, for companies setting up in the SPEDU region, under the sectors of tourism, agriculture, and manufacturing, as Honourable Matambo assets, has long been known.

The same applies to the fact that twelve companies were assessed and ten have been approved. The question is: has there been stimulation of economic activity in the Agri-business; Manufacturing; Infrastructure Development; and Information, Communication and Technology sectors as had been envisaged?

The fact is that since 2008 when the SPEDU programme was established Government has failed to diversify the economy of Selibe Phikwe and surrounding villages. Therefore, Government’s pledge to intensify its effort to facilitate such growth in the coming years rings empty.
It, therefore, cannot be correct, as Honourable Matambo claims, that this, that is, the seven percent performance, is consistent with the Government’s efforts to reduce the dependence of the economy on the mining sector, which is susceptible to external shocks.

That there is need to intensify efforts to diversify the country’s exports and government revenue sources as Honourable Matambo assets is stating the obvious. In Honourable Matambo’s own admission, “… diamonds exports continue to dominate the trade account, while mineral and customs revenues account for over two-thirds of government revenues…”  Since we have known this from time immemorial, the question is: how many manufacturing industries, for instance, has Government played a role in establishing?

Granted, government needs to be commended for assisting some entrepreneurs to, through the African Growth and Opportunity Act (AGOA) programme, venture into the textile industry, but there has been little or no progress in the manufacturing sector. Despite the fact we have two abattoirs which supply a market as large as Europe with beef, Government has failed to facilitate or promote the establishment of a manufacturing industry for such products as leather, glue, etc.    

In one of the few instances that government attempted to use manufacturing to diversify the economy, that is, the Fengyue Palapye Glass Project, inefficiency and corruption had the upper hand, resulting in loss of millions of Pula since the project was sponsored by the public purse through the Botswana Development Corporation (BDC). Consequently, as Honourable Matambo admits, “… the country’s dependency on one commodity for exports, and two major sources of revenues, i.e. mineral and customs revenues, poses a systemic risk to our economy…”

Though Honourable Matambo claims that Government pledges to continue with efforts to diversify the economy in general, and its exports and government revenues, in particular, there is little evidence to support that. As Honourable Matambo stated during this year’s Budget Speech, “… one of the strategic initiatives identified to promote economic diversification is the Economic Diversification Drive (EDD), which was established in April 2010…”

The question is: did Government maximally use its purchasing power to support local production of goods and services as per EDD’s dictates? In my view, the fact that only P17.2 billion or 53 percent of the total cumulative amount of P32.5 billion worth of goods and services purchased by Government since the inception of the programme, was from local manufacturers and service providers leaves a lot to be desired. There is no reason why we should not have scored at least 80 percent in this area.

The only reason why such a noble economic diversification tool as the EDD has not been adequately leveraged on is that the award of tenders to local manufacturers and service providers was hampered by either inefficiency or corruption or both. When the Special Economic Zones (SEZ) policy was adopted in 2011 many had hope that it would bring a bumper harvest in as far as economic diversification is concerned. Indeed, it was Government’s hope that the SEZ would contribute to the diversification of the economic and export base of the country.

Yet, in Honourable Matambo’s own admission, to date, about nine years since the SEZ policy was adopted, the only thing we have done is to identify the Special Economic Zones. Other than that, the only thing the minister could report to the nation is that the Special Economic Zones will be developed in two Phases. If this is not inefficiency, I do not know what inefficiency is.Government has, as another initiative aimed at promoting economic diversification, the Cluster Development Initiative (CDI) which, as Honourable Matambo asserts, is aimed at improving business productivity, value chains and competitiveness.

But, just like with the SEZ we have not gone beyond prioritisation. According to Honourable Matambo, preparatory work is underway to develop business case studies and implementation plans for the first three clusters selected for implementation, namely; tourism, beef and finance and knowledge intensive business services. We are yet to do something as basic as conducting detailed studies which, according to Honourable Matambo, will include the assessment of capacity building needs for the identified sectors as part of measures to enhance their domestic and global competitiveness.

As a result of Government’s failure to implement the CDI, Small, Medium and Micro Enterprises (SMMEs) with potential to grow this economy, lack the capacity to effectively compete with multinational and regional industries. The noble plans that Government had to assist SMMEs with such infrastructural intervention as power distribution, water reticulation, telecommunication and drainage and pollution control have remained a pipe dream.

The same applies to the plan to set up common facility centres for balancing or improving production lines such as marketing centres. How then can the private sector, which is critical for economic diversification, grow? Without a vibrant private sector, how can there be employment creation? No wonder our unemployment rate is as high as 20%. Without employment creation, how can there be poverty eradication?

In view of the aforegoing, one can conclude that Botswana’s failure to diversify its economy away from diamonds is not because it has no viable plans to do so, but it is because of either inefficiency or corruption or both. Botswana missed an opportunity to diversify its economy when it used the Economic Stimulus Package (ESP) for populist and unsustainable projects for political expediency. These projects hardly had any impact on economic growth and diversification since they were mainly sustenance based.

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DIS Parley Committee selection disingenuous 

25th November 2020

Intelligence and Security Service Act, which is a law that establishes the Directorate of Intelligence and Security Service (DIS), provides for establishment of a Parliamentary Committee. Recently, the President announced nine names of Members of Parliament he had appointed to the Committee.

This announcement was preceded by a meeting the President held with the Speaker and the Leader of Opposition. Following the announcement of Committee MPs by the President, the opposition, through its leader, made it clear that it will not participate in the Committee unless certain conditions that would ensure effective oversight are met. The opposition acted on the non-participation threat through resignation of its three MPs from the Committee.

The Act at Section 38 provides for the establishment of the Committee to examine the expenditure, administration and policy of the Directorate. The law provides that the Parliamentary Committee shall have the same powers and privileges set out under the National Assembly (Powers and Privileges) Act.

On composition, the Committee shall consist of nine members who shall not be members of Cabinet and its quorum shall be five members.  The MPs in the Committee elect a chairperson from among their number at their first meeting.

The Members of the Committee are appointed by the President after consultation with the Speaker of the National Assembly and Leader of the Opposition in the National Assembly. It is the provision of the law that the Committee, relative to its size, reflect the numerical strengths of the political parties represented in the National Assembly.

The Act provides that that a member of the Committee holds office for the duration of the Parliament in which he or she is appointed.  The Committee is mandated to make an annual report on the discharge of their functions to the President and may at any time report to him or her on any matter relating to the discharge of those functions.

The Minister responsible for intelligence and security is obliged to lay before the National Assembly a copy of each annual report made by the Committee together with a statement as to whether any matter has been excluded from that copy in pursuance of the provision of the Act.

If it appears to the Minister, after consultation with the Parliamentary Committee, that the publication of any matter in a report would be prejudicial to the continued discharge of the functions of the Directorate, the Minister may exclude that matter from the copy of the report as laid before the National Assembly.

So, what are the specific demands of the Opposition and why are they not participating in the Committee? What should happen as a way forward? The Opposition demanded that there be a forensic audit of the Directorate. The DIS has never been audited since it was set up in 2008, more than a decade ago.

The institution has been a law unto itself for a longtime, feared by all oversight bodies. The Auditor General, who had no security of tenure, could not audit the DIS. The Directorate’s personnel, especially at a high level, have been implicated in corruption.  Some of its operatives are in courts of law defending corruption charges preferred against them. Some of the corruption cases which appeared in the media have not made it to the courts.

The DIS has been accused of non-accountability and unethical practices as well as of being a burden on the fiscus.  So, the Opposition demanded, from the President, a forensic audit for the purpose of cleaning up the DIS.  They demand a start from a clean slate.

The second demand by the Opposition is that the law be reviewed to ensure greater accountability of the DIS to Parliament. What are some of the issues that the opposition think should be reviewed? The contention is that the executive cannot appoint a Committee of Parliament to scrutinize an executive institution.

Already, it is argued, Parliament is less independent and it is dominated by the executive. It is contended that the Committee should be established by the Standing Orders and be appointed by a Select Committee of Parliament. There is also an argument that the Committee should report to Parliament and not to the President and that the Minister should not have any role in the Committee.

Democratic and Parliamentary oversight of the intelligence is relatively a new phenomenon across the World. Even developed democracies are still grappling with some of these issues. However, there are acceptable standards or what might be called international best practices which have evolved over the past two or so decades.

In the UK for instance, MPs of the Intelligence and Security Committee are appointed by the Houses of Parliament, having been nominated by the Prime Minister in consultation with the Leader of the Opposition. This is a good balancing exercise of involvement of both the executive and the legislature. Consultation is taken for granted in Botswana context in the sense that it has been reduced to just informing the Leader of Opposition without much regard to his or her ideas; they are never taken seriously.

Furthermore, the current Committee in the UK has four Members of the ruling party and five MPs from the opposition. It is a fairly balanced Committee in terms of Parliamentary representation. However, as said above, the President of Botswana appointed six ruling party MPs and three from the opposition.

The imbalance is preposterous and more pronounced with clear intentions of getting the executive way through the ruling party representatives in the Committee. The intention to avoid scrutiny is clear from the numbers of the ruling party MPs in the Committee.

There is also an international standard of removing sensitive parts which may harm national security from the report before it is tabled in the legislature. The previous and current reluctance of the executive arms to open up on Defence and Security matters emanate from this very reason of preserving and protecting national security.

But national security should be balanced with public interest and other democratic principles. The decision to expunge certain information which may be prejudicial to national security should not be an arbitrary and exclusive decision of the executive but a collective decision of a well fairly balanced Committee in consultation with the Speaker and the minister responsible.

There is no doubt that the DIS has been a rogue institution. The reluctance by the President to commit to democratic-parliamentary oversight reforms presupposes a lack of commitment to democratization. The President has no interest in seeing a reformed DIS with effective oversight of the agency.

He is insincere. This is because the President loathes the idea losing an iota of power and sharing it with any other democratic institution. He sees the agency as his power lever to sustain his stay in the high office. He thought he could sanitize himself with an ineffective DIS Committee that would dance to his tune.

The non-participation of the opposition MPs renders the Committee dysfunctional; it cannot function as this would be unlawful. Participation of the opposition is a legal requirement. Even if it can meet, it would lack legitimacy; it cannot be taken seriously. The President should therefore act on the oversight demands and reform the DIS if he is to be taken seriously.

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The Maccabean Uprising

25th November 2020
Jewish freedom fighters

 Jews drive away occupying power under the command of guerrilla leader Judas Maccabees but only just

Although it was the Desolation Sacrilege act, General Atiku, that officially sparked the Maccabean revolt, it in truth simply stoked the fires of an already simmering revolution. How so General?

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Atomic (CON)Fusion

25th November 2020

For years I have trained people about paradigm shifts – those light-bulb-switch-on moments – where there is a seismic change from the usual way of thinking about something to a newer, better way. 

I like to refer to them as ‘aha’ moments because of the sudden understanding of something which was previously incomprehensible. However,  the topic of today’s article is the complete antithesis of ‘aha’.  Though I’d love to tell you I’d had a ‘eureka ‘, ‘problem solved’ moment, I am faced with the complete opposite – an ‘oh-no’ moment or Lost Leader Syndrome.

No matter how well prepared or capable a leader is. they often find themselves facing perplexing events, confounding information, or puzzling situations. Confused by developments of which they can’t make sense and by challenges that they don’t know how to solve they become confused, sometimes lost and completely clueless about what to do.

I am told by Jentz and Murphy (JM) in ‘What leaders do when they don’t know what to do’ that this is normal, and that rapid change is making confusion a defining feature of management in the 21st century.  Now doesn’t that sound like the story of 2020 summed up in a single sentence?

The basic premise of their writing is that “confusion is not a weakness to be ashamed of but a regular and inevitable condition of leadership. By learning to embrace their confusion, managers are able to set in motion a constructive process for addressing baffling issues.

In fact, confusion turns out to be a fruitful environment in which the best managers thrive by using the instability around them to open up better lines of communication, test their old assumptions and values against changing realities, and develop more creative approaches to problem solving.”

The problem with this ideology however is that it doesn’t help my overwhelming feelings of fear and panic which is exacerbated by a tape playing on a loop in my head saying  ‘you’re supposed to know what to do, do something’. My angst is compounded by annoying motivational phrases also unhelpfully playing in my head like.

  • Nothing happens until something moves
  • The secret of getting ahead is getting started

and

  • Act or be acted upon

All these platitudes are urging me to pull something out of the bag, but I know that this is a trap. This need to forge ahead is nothing but a coping mechanism and disguise. Instead of owning the fact that I haven’t got a foggy about what to do, part of me worries that I’ll lose authority if I acknowledge that I can’t provide direction – I’m supposed to know the answers, I’m the MD!  This feeling of not being in control is common for managers in ‘oh no’ situations and as a result they often start reflexively and unilaterally attempting to impose quick fixes to restore equilibrium because, lets be honest, sometimes we find it hard to resist hiding our confusion.

To admit that I am lost in an “Oh, No!” moment opens the door not only to the fear of losing authority but also to a plethora of other troubling emotions and thoughts:  *Shame and loss of face: “You’ll look like a fool!” * Panic and loss of control: “You’ve let this get out of hand!” * Incompetence and incapacitation: “You don’t know what you’re doing!”

As if by saying “I’m at a loss here” is tantamount to declaring “I am not fit to lead.” Of course the real problem for me and any other leader is if they don’t admit when they are disoriented, it sends a signal to others in the organisation stating it’s not cool to be lost and that, by its very nature encourages them to hide.  What’s the saying about ‘a real man never asks for direction. ..so they end up driving around in circles’.

As managers we need to embrace the confusion, show vulnerability (remember that’s not a bad word) and accept that leadership is not about pretending to have all the answers but about having the courage to search with others to discover a solution.

JM point out that “being confused, however, does not mean being incapacitated.  Indeed, one of the most liberating truths of leadership is that confusion is not quicksand from which to escape but rather the potter’s clay of leadership – the very stuff with which managers can work.”

2020 has certainly been a year to remember and all indications are that the confusion which has characterised this year will still follow us into the New Year, thereby making confusion a defining characteristic of the new normal and how managers need to manage. Our competence as leaders will then surely be measured not only by ‘what I know’ but increasingly by ‘how I behave when I accept, I don’t know, lose my sense of direction and become confused.

.I guess the message for all organizational cultures going forward is that sticking with the belief that we need all-knowing, omni-competent executives will cost them dearly and send a message to managers that it is better to hide their confusion than to address it openly and constructively.

Take comfort in these wise words ‘Confusion is a word we have invented for an order not yet understood’!

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