Gaborone – Economists have advised Botswana’s incoming president, Mokgweetsi Masisi, to consider tapping into the regional market to boost the country’s economic prospects.
End of next month, President Khama Ian Khama’s 10-year term comes to an end, and the current vice president, Masisi, is expected to assume the Presidency under the automatic succession provision of the Constitution. A smooth transition is expected, with the next national elections due in late 2019.
Economists at a leading consultancy firm, Econsult Botswana, have advised Masisi to prioritise putting the economy back on the path of economic openness, realising that integration into regional and global markets for goods, services, capital and labour is essential for the long-term health and prosperity of the Botswana economy.
“This recognises that creeping protectionism against imports of goods and services, barriers to inward foreign investment, and immigration restrictions on foreign investors and skilled workers are counter-productive, and indeed have contributed to the lack of dynamism and job creation in the domestic economy in recent years,” economists Keith Jefferis and Sethunya Sejoe stated in their latest report.
They stated that given the magnitude of the unemployment problem, large-scale job creation can only come from the growth of regionally and globally oriented, competitive producers of goods and services for export.
Jefferis and Sejoe said the alternative of inward-looking policies focusing on the small domestic market and import substitution cannot hope to address the unemployment problem.
“And export-led growth obviously requires integration into global markets and economic openness. Second, we hope to see a more rational basis for policymaking, with policies based on evidence and analysis, rather than just being driven by political considerations,” state the two economists.
According to the duo, policy decisions are often complex, with both predictable and unpredictable consequences.
“For policies to be effective, they need to carefully considered, subject to analysis based on data, trialled through pilot programmes and refined accordingly. Policies need to be subject to regular evaluation using evidence to ascertain their impact; such evaluations should be published, and the government should be accountable enough to accept and act on their results. If policies are not having the desired or anticipated impact, they should be changed or wound up,” said Jeffries and Sejoe.
While acknowledging that government would always have to take into account both political and economic/technical considerations in making policy choices, the duo believes the balance needs to shift in the coming years, so as to improve the nature of policies being pursued.
“Third, it will be essential to re-establish much better public finance discipline. This reflects a general problem in that the quality of public financial management has deteriorated over many years, with poor spending decisions and an increasing level of waste and inefficiency. However, the issue was brought home by the scandal over the diversion of monies from the National Petroleum Fund that blew up in December 2017,” they said.
This resulted from a particular weakness in Botswana’s public finances, which has been the tendency for a proliferation of “special funds” (there are now 33 in total). These funds are permitted under the Public Finance Management Act, but once the order to establish a fund has been approved by Parliament, they are then subject to relatively little scrutiny.
“Crucially, these funds are “off-budget”, in that they do not appear in the normal government budget documents that are presented for Parliamentary approval and are made available to the public. Inflows and outflows do not generally form part of recorded government revenues and spending,” Jeffries and Sejoe noted.
They said in contrast to the detailed line-by-line reporting of authorised and actual expenditure for the government budget, virtually nothing is available regarding these special funds, where the funds come from and how they are used.
“Cleaning up these special funds and bringing them on-budget should form part of a more general reform and modernisation of public finance policies, laws and practices,” they said.