Besides balancing, budget also needs greening

Mbongeni Mguni | Monday July 8, 2024 06:00

Joshua Sibonge, the chairperson of the Green Finance Mainstreaming Working Group, has a delightfully compact and enlightening explanation of why sustainability needs to be incorporated into the country’s budgeting process.

As a principal economist at the Bank of Botswana, Sibonge understands the link between natural resources and whatever definition of economic growth one holds.

“We are talking about sustainable development but the question is ‘what is development’.

“This is an elusive concept but there are certain elements we can consider such as the increase in real income per capita, access to resources, improvements in health and nutrition, equitable income distribution, and increase in freedoms.

“But what is sustainable about development.”

As he explained recently at the first meeting of the working group, the buzzword of sustainable development presupposes that there should be economic growth, which involves growth in goods and services.

“When we increase goods and services, we use resources that can be depleted,” he explained.

“So for sustainable economic growth and development, there is a need for renewal of resources and conservation.

“It is therefore important that you should not experience a decrease in natural resources and environmental quality and we should always make efforts to renew resources or conserve.”

For the working group, one of the broad tasks is to “embed sustainable development into national financial planning”.

“It behoves us to make sure our financial system is aligned to sustainable growth,” Sibonge said.

“Our mission is to mainstream green finance and our work has far-reaching implications.

“It can contribute to a more sustainable and resilient world.”

Government is the biggest economic player, annually spending billions across sectors and activities. Botswana also has numerous environmental impact commitments to various organisations and at various levels, including different United Nations entities.

Measuring the sustainable impact of each thebe spent in the budget is a mammoth task, but one that can be guided through policies and frameworks being developed by entities that include the working group.

An example of the complexity can be seen in the billions of pula channelled towards Botswana Power Corporation (BPC) subsidies each year. Under the Transitional National Development Plan which ends next March, the BPC has been allocated P4.13 billion in subsidies.

On the one hand, this injection of funds boosts electricity availability in the country, which enables citizens, corporations, and SMEs to engage in various economic activities. On the other hand, the BPC’s two power stations are both coal-fired, which contributes to harmful carbon emissions.

This impact, both positive and negative, needs to be measured and accounted for in the national books of accounts, experts say.

In addition, greening the budget has to emerge as much of a consideration for government as balancing it. This is in order to not only minimise the harmful environmental impact of some well-intended developmental actions but also to preserve biodiversity, a key natural resource.

United Nations Development Programme (UNDP) Botswana economic advisor, Etienne de Souza, explains the work involved for both government and the private sector.

“It’s about scaling up green investment, enhancing financial institution capacity such as through the development and deployment of green bonds.

“It is also about financial innovation, which goes together with accountability and transparency as well as strengthening policy and regulatory frameworks.”

To its credit, the Government of Botswana is amongst the most proactive on the continent in terms of acknowledging the need to address environmental sustainability in its activities and actually addressing this. In February, for the second year running, Finance Minister Peggy Serame spelt out how much of the budget would be directed towards green initiatives in the economy. The figures shared show that P1.37 billion of the development budget will go towards this thematic area, up from P1.36 billion the prior year.

“The economy has become highly vulnerable to climate change, which affects mainly the agricultural and tourism sectors,” she said earlier in the year. “This therefore calls for urgent and targeted responses to climate change.

“Government is aware that fostering sustainable green growth requires adequate climate adaptation and mitigation measures.

“Consequently, building on the progress made in reviewing existing environmental legislation and integrating climate change requirements into our public finance management strategies, the 2024–2025 budget will also focus on projects and programmes that mitigate climate change shocks as well as ensure that we sustainably adapt to the emerging adverse situations.”

Just last week, the Ministry of Minerals and Energy announced a commitment of P20 million for the pioneering biogas programme, a gaseous renewable energy source produced from raw materials such as agricultural waste, manure, sewage, green waste, wastewater and food waste.

A novel idea in Africa, the project has already seen the construction of 231 digesters and the training of hundreds of masons countrywide. The biogas project is the perfect example of the circular economy, where rather than waste going to waste or harming the environment, it is transformed into renewable energy.

Government’s commitment to greening the economy is also clear in the first phase of the National Transformation Strategy which runs to 2030 and is the country’s blueprint for national planning, policy formulation, programmes and projects for the period.

“Achieving environmental and economic sustainability requires the preservation of ecosystems while guaranteeing a high quality of life for Batswana,” the Strategy reads.

“The latter condition implies that the needs of both the environment and human society should be met sustainably.”

The Strategy lists 16 green targets government, the private sector and civil society will push to meet by 2030, including breaking into the Top 20 of the global Yale Environmental Performance Index. Botswana was ranked 35th in the world in the 2022 edition of the Index.

One of the thrusts of the latest project supported by the UNDP is that the greening of the economy needs to be accounted for in the budget itself, or demonstrated in terms of publicly accounting for the impact of public spending on the environment.

Analysts agree that measuring, accounting for and reporting the impact of the various green initiatives stemming from the budget will be a tough task.

However, fiscal authorities will be assisted by the political will to environmental sustainability as well as partners such as the UNDP.

Abigail Engelton, the deputy permanent secretary in the Ministry of Environment and Tourism, expects the country to also leverage its culture. “When we were growing up, we had totems, songs, dance, and food as part of our culture and this was all to conserve our biodiversity,” she said.

“We have to domesticate these international protocols and be able to track them through the partnerships we have like with the UNDP.”