World Bank casts doubt on growth targets
Lewanika Timothy | Monday November 20, 2023 06:00
The study looked at historical economic figures and the growth forecast going into the future, given the prevailing and forecast macroeconomic circumstances. The study was undertaken as part of a periodic obligation by the World Bank to member states, to carry out research and advice on policy actions to safeguard economic growth.
Unveiling the report last week in Gaborone, lead economist at the World Bank, Jacques Morisset, said that it will be difficult for Botswana to reach its medium-term targets as stated in national plans such as the Trans National Development Plan (TNDP). According to Morisset, Botswana has reached a plateau of economic growth with rates rising by diminished values since 2010.
“GDP growth rates have been on a downward trend dating as far back as 2008 and economic growth has hit a plateau,” he said. “Our findings reveal that it will be tough for Botswana to reach TNDP goals due to a combination of both local and international pressures.”
The report noted that the country is plagued by high levels of unproductivity, with the economy operating below the full employment of its resources, and its human capital functioning below full productivity levels.
“The public sector-led growth model built on diamond rents shows signs of exhaustion, while the economy has become more vulnerable to financial, climate and health shocks. “The country needs to generate productivity gains of about two percent per year while investing more and above all better in both physical and human capital,” the report reads.
Morisset further said the vulnerability of Botswana to external shocks has become more alarming, leaving the economy at risk of crumbling in the wake of international pressures such as wars and disruptions in global supply value chains.
“TNDP assumes an all-things equal assumption and as the world becomes more unstable, it will be tough for growth to be achieved in the next two years. “The war in Ukraine and global instability will continue to add pressures and undermine growth prospects,” he said.
Gloria Somolekae, the acting Botswana Institute for Development Policy Analysis (BIDPA) executive director, said public service inefficiency has worsened with the majority of government institutions, especially parastatals, operating from a “bed-ridden state”.
According to Somolekae, this has hurt enhancing economic growth through high productivity levels.
“There is just so much inefficiency in state-owned enterprises. “At BIDPA, senior research management level is vacant by 80% and this affects the ability of the institute to carry out its mandate fully,” she said.
The country has battled the challenge of productivity in all of its manifestations over the decades, which has impacted diversification, employment creation, and growth. A review of NDP 11 noted that “low levels of productivity had impeded real income growth and the progression to high-income status”.
The TNDP, which ends in March 2025, points out that “innovation and the digital transition are central to the challenge of diversifying the economy and raising productivity, which is a pre-requisite for raising real incomes”.