The reality of an economy going on its knees came last week with the release of Gross Domestic Product (GDP) for the second quarter of 2020 with a decrease of 27 percent. While government expects the economy to shrink by 8.9 percent this year, commercial Rand Merchant Bank maintains an expectation of 10.5 percent contraction in growth in 2020.
All industries in the domestic economy contracted, save for General Government which became the major contributor to GDP for the first time in many years by 19.7 percent. When the domestic economy was hit, “due to the impact of measures that were put in place to combat the spread of the COVID-19 pandemic,” all industries fell except Government, Agriculture and government owned utilities; Water & Electricity.
According to Statistics Botswana, Botswana Government business survived a huge contraction because it “instigated robust fiscal policy responses in order to influence macroeconomic conditions.” There was also aggregation of demand of goods and services, employment, inflation and economic growth. This was done despite contributing to deficits or drawing down of budget surpluses. Government also created new Covid-19 focused employment in the Public Administration sector in order to adhere to the disease protocols like recruitment of teachers, Safety and Health Employees (SHE) and other temporary employees across Ministries.
Most private sector players felt the scourge of Covid-19 especially in Mining and Quarrying where there was a decrease in the real value added of Mining by 60.2 percent which was mainly influenced by Diamond and Coal real value added. There are many private companies in the coal and mining business which are losing value, some are listed in the local stock exchange. Diamond production in carats went down by 67.0 percent while Coal production in tonnes decreased by 40.7 percent.
Companies in the industry of Trade, Hotels and Restaurants felt it when its real value added went down by 40.3 percent in the second quarter of 2020 compared to an increase of 5.1 percent registered in the same quarter of the previous year. The Manufacturing industry recorded a decline of 31.3 percent in real value added during the second quarter of 2020, compared to a growth of 3.5 percent registered in the corresponding quarter of 2019 and this sharp reduction is attributed to a massive decline in the sub-industries of Beverages and Other Manufacturing. These sub-industries include diamonds processing by 58.5 percent and the production of beverages (chibuku and beers) which declined drastically by 84.2 percent due to lockdown during the quarter under review.
It was tools down in the construction industry with all that was coming with the Covid-19 containment measures and lockdowns, the industry recorded a decline of 36.0 percent. The Finance and Business Services industry was also not spared and registered a negative growth of 11.9 percent due to the decline in the real value added of Business Services and Real Estate by 24.4 and 17.8 percent respectively.
All the firms in the transport business also suffered, the Transport and Communications value added decreased by 16.9 percent in the second quarter of 2020,compared to 5.4 percent recorded in the same quarter of the previous year. This steep decline was most significant in the sub-industries, and was attributed to the lockdown measures that restricted movement of passengers and permitted limited goods freight traffic.
Last week when parliament moved to extend the State of Emergency (SoE) for a further six months, the private sector took a firm stance against SoE before exposing its negative implications on the local economy. In a statement released this week, Business Botswana leader of the private sector, stopped short of calling SoE a draconian anti-progressive law which will weigh heavily on the already feeble economy.
According to Business Botswana, such an extension would, without a doubt cause further damage to an economy that is already on its knees. In the 2020/21 – 2022/2023 Economic Recovery and Transformation Plan (ERTP) much more emphasis, at least on the document, was on jumpstarting the economy by igniting the private sector. But many critics are already sceptical on the ERTP implementation, in the specified time frame. Some economists believe implementation of ERTP will further open the economy.
According to a report seen by this publication, government is expected to publish ERTP in 4Q:2020. But the implementation of ERTP is expected to begin in 2021. “With its success relying heavily on prudent project management by government,” says the report. In the ERTP BusinessPost made a scientific observation that words “sector,” “informal” and “private” were the most used, meaning the mentioned were in the minds of those who made the fiscal plan. But this is not a reflection of what is on the ground, with many companies crying for rescue.
Meanwhile the Business Expectation Survey done during this country’s first lockdown stated that the businesses are ‘credit-shy.’ Also, companies are failing to hold on to jobs, they hanging onto these jobs because they are forced to by SoE laws despite the stinging financial implication from Covid-19. Already more than 400 local companies have officialised an intent to purge jobs at the Commissioner of Labour according to information received by this publication last month.
“Several instruments were put in place to support businesses but a number of these are not in place and for those that are, it is impossible to access them; the question therefore is what is government going to do in the next 6 months different from the previous 6 months?” said Business Botswana president Gobusamang Keebine. Business Botswana President said the Covid-19 pandemic has caused a lot of damage to the economy as businesses are currently operating at bare minimum.
He said that while most companies have folded others are continuing by way of liquidations to avoid the extended debt the SoE places on these companies. “Most employees, though not retrenched as it would be contrary to the SoE are home without pay; any further disturbance to the business environment will kill enterprises and they are certainly going to find it difficult to start all over again,” said Keebine.
Keebine said it is best to deal with the results of lifting the SoE than to postpone these where there will be even greater negative consequences. He said unemployment is going to reach peak levels, crime is going to dramatically increase and social ills are going to increase when people lose their properties. Business Botswana advised that rather government should have used the Public Health Emergency (PHE) Act, which is a tool which can achieve the same objective as SoE but without exposing the economy to very stringent restrictions as it is the case now.
“Using the (PHE) tool will relief Government of the need to lay out a lot of money to mitigate loses arising from businesses having to close temporarily due to lockdowns, etc.; money that the economy and Government does not have. Government must be bold and open the economy now and rescue whatever remains and can be rescued than to extend that action by another 6 months,” said Keebine.
The P250 million National Petroleum Fund (NPF) saga that has been before court since 2017 seems to be losing its momentum with a high possibility of it being thrown out as defence lawyers unmask incompetency on the part of the Directorate of Public Prosecution (DPP).
The Gaborone High Court this week ruled that the decision by the State to prosecute Justice Zein Kebonang and his twin brother, Sadique Kebonang has been reviewed and set aside. The two brothers have now been cleared of the charges that where laid against them three years ago.
The United States (US) will on the 3rd of November 2020 chose between incumbent Donald Trump of the Republicans and former Vice President Joe Biden of the Democrats amid the coronavirus pandemics, which has affected how voting is conducted in the world’s biggest economy.
Trump (74) seeks re-election after trouncing Hillary Clinton in 2016, while Biden (77) is going for his first shot as Democratic nominee after previous unsuccessful spells.
US Presidents mostly succeed in their re-election bid, but there have been nine individuals who failed to garner a second term mandate, the latest being George W H. Bush, a Republican who served as the 41st US President between 1989 and 1993.
Dr Mark Rozell, a Dean of the School of Policy and Government at George Mason University in Arlington, Virginia describes the complex US electoral system that will deliver the winner at the 3rd November elections.
“The founders of our Republic de-centralised authority significantly in creating our constitutional system, which means that they gave an enormous amount of independent power and authority to State and local governments,” Dr Rozell told international media on Elections 2020 Virtual Reporting Tour.
Unlike parliamentary democracies, like Botswana the United States does not have all of the national government elected in one year. They do not have what is commonly called mandate elections where the entire federal government is elected all in one election cycle giving a “mandate” to a particular political party to lead, and instead US have what are called staggered elections, elections over time.
The two house Congress, members of the House of Representatives have two-year long terms of office. Every two years the entire House of Representatives is up for re-election, but senators serve for six years and one third of the Senate is elected every two years.
For this election cycle, US citizens will be electing the President and Vice
President, the entire House of Representatives and one third of the open or contested seats in the Senate, whereas two thirds are still fulfilling the remainder of their terms beyond this year.
An important facet of US electoral system to understand given the federalism nature of the republic, the US elect presidents State by State, therefore they do not have a national popular vote for the presidency.
“We have a national popular vote total that says that Hillary Clinton got three million more votes than Donald Trump or in Year 2000 that Al Gore got a half million more votes than George W. Bush, but we have what is called a State by State winner takes all system where each State is assigned a number of electors to our Electoral College and the candidate who wins the popular vote within each State takes 100 percent of the electors to the Electoral College,” explained Dr Rozell.
“And that is why mathematically, it is possible for someone to win the popular vote but lose the presidency.”
Dr Rozell indicated that in 2016, Hillary Clinton won very large popular majorities in some big population States like California, but the system allows a candidate to only have to win a State by one vote to win a 100 percent of its electors, the margin does not matter.
“Donald Trump won many more States by smaller margins, hence he got an Electoral College majority.”
Another interesting features by the way of US constitutional system, according to Dr Rozell, but extremely rare, is what is called the faithless elector.
“That’s the elector to the Electoral College who says, ‘I’m not going to vote the popular vote in my State, I think my State made a bad decision and I’m going to break with the popular vote,’’ Dr Rozell said.
“That’s constitutionally a very complicated matter in our federalism system because although the federal constitution says electors may exercise discretion, most States have passed State laws making it illegal for any elector to the Electoral College to break faith with the popular vote of that State, it is a criminal act that can be penalized if one is to do that. And we just had an important Supreme Court case that upheld the right of the states to impose and to enforce this restriction”
There are 538 electors at the Electoral College, 270 is the magic number, the candidate who gets 270 or more becomes President of the United States.
If however there are more candidates, and this happens extremely rarely, and a third candidate got some electors to the Electoral College denying the two major party candidates, either one getting a majority, nobody gets 270 or more, then the election goes to the House of Representatives and the House of Representatives votes among the top three vote getters as to who should be the next President.
“You’d have to go back to the early 19th century to have such a scenario, and that’s not going to happen this year unless there is a statistical oddity, which would be a perfect statistical tie of 269 to 269 which could happen but you can just imagine how incredibly unlikely that is,” stated Dr Rozell.
BLUE STATES vs RED STATES
Since the 2000 United States presidential election, red states and blue states have referred to states of the United States whose voters predominantly choose either the Republican Party (red) or Democratic Party (blue) presidential candidates.
Many states have populations that are so heavily concentrated in the Democratic party or the Republican party that there is really no competition in those states.
California is a heavily Democratic State, so is New York and Maryland. It is given that Joe Biden will win those states. Meanwhile Texas, Florida and Alabama are republicans. So, the candidates will spent no time campaigning in those states because it is already a given.
However there are swing states, where there is a competition between about five and 10 states total in each election cycle that make a difference, and that is where the candidates end up spending almost all of their time.
“So it ends up making a national contest for the presidency actually look like several state-wide contests with candidates spending a lot of time talking about State and local issues in those parts of the country,” said Dr Rozell.
High Commissioner of the Federal Government of Nigeria to Botswana, His Excellency Umar Zainab Salisu, has challenged President Dr Mokgweetsi Masisi to move swiftly and lobby Africa’s richest man, Nigerian Billionaire, Aliko Dangote to invest in Botswana.
Speaking during a meeting with President Masisi at Office of President on Thursday Zainab Salisu said Dangote has expressed massive interest in setting up billion dollar industries in Botswana. “We have a lot of investors who wish to come and invest in Botswana , when we look at Botswana we don’t see Botswana itself , but we are lured by its geographic location , being in the centre of Southern Africa presents a good opportunity for strategic penetration into other markets of the region,” said Salisu.