Inside Boko's briefcase
Staff Writer | Thursday February 5, 2015 17:00
Leader of Opposition, Duma Boko of the Umbrella for Democratic Change (UDC) has urged Bank of Botswana (BoB) to be firm with commercial banks.
Responding to the Budget Speech yesterday, he said that while it is commendable that BoB has managed to control inflation to foster economic growth, it has failed to rein in commercial banks.
“Our biggest concern is the failure of BoB to regulate commercial banks. It is clear that by and large, commercial banks tend to undermine efforts by BoB by continuing with various types of charges to the customers despite lower interests rates.
“This totally undermines the efforts to growth the economy through expansionary monetary policy.
“Despite the lower lending rates by the Central Bank, customers continue to face higher borrowing rates through numerous charges by commercial banks,” he said in his maiden speech on the national budget.
He said that household debt has grown rapidly in recent years, higher than the increase in nominal Gross Domestic Product (GDP), a clear indication that Batswana are wallowing in debt.
“The Governor of BoB said the rapid increase, which currently exceed growth of incomes could result in future repayment difficulties.
“Market data indicated that the burden of household borrowing mainly for consumption has been rising, with the ratio of debt to disposable income increasing from 24 percent in 1999 to 33 percent in 2012,” he said.
He said there is clear evidence that some households are defaulting on their monthly payments of mortgages and other loans resulting in property market decline.
This is exacerbated by the government’s refusal to adjust civil servants salaries over the past six years, he said.
Boko said that Botswana has failed to diversify her economy and therefore needs broad measures to ensure competitive, productive and equitable economy overall by improving infrastructure and skills development, have a more competitive currency, reduce unnecessary obstacles to investment, support Small, Medium and Micro Enterprises (SMMEs) and increasing industrial financing.
“Diversifying the economy beyond Botswana’s principal export – diamonds – is proving to be impossible under BDP.
“Diamonds account for 83 percent of total merchandise exports, 35 percent of GDP and about one half of government’s revenues. “This, in fact, has been one of the major challenges in Botswana,” he observed.
He said there is need for strong linkages between SMMEs and big companies if economic diversification is to be achieved.
He also attributed lack of economic diversification to government failure to put mechanisms in place to ensure that its investment accrues to companies that add value to the economy and contribute to skills development and job creation.
Boko said that to address unemployment, which stands at 17.8 percent, the government should invest more on human resource development and putting in place such endeavour would be coupled with strategies to develop the private sector.
“We need to have targeted measures to support employment creation. There is need to identify areas where job creation is possible – which we term “jobs drivers.”
“Specifically, the UDC economic agenda points to employment opportunities in infrastructure development, the agricultural and mining value chains, tourism and other value-added services, the public services, rural development, the knowledge economy and SADC regional development,” he said.
The Leader of Opposition stated that youth unemployment could only be addressed through a legislation that compels government procurement to have a certain percentage set aside for youth and women.
On parastatals, Boko said that the minister has failed to state how the government will monitor their operations except to mention that each ministry will be required to sign a shareholder’s agreement with parastatals.
“This is a clear lack of appreciation of strategic importance of parastatals to economic growth and job creation in Botswana,” he said.
He said that the country is faced with a serious problem of lack of leadership and governance, as annual budgets reflect ineffective prioritisation, excessive supplementary budgets and misappropriation of public resources with impunity.
“These have resulted in increase in poverty, poor maintenance of public infrastructure, a severely overburdened justice system and violation of public institutions.”