COVID budget: Can challenges become opportunities?
Mphoeng Mphoeng | Friday January 29, 2021 16:47
To frame our discussions, I always find it useful to go back to that guiding North Star of Vision 2036 and remember what we are pushing for and to remember that our long-term goals will only be achieved by short-term efforts.
Though Vision 2036 is 15 years away, this is a very short time if we consider the momentous cultural shifts we will need to attain the aspirations of being a First World country that is globally competitive with a diversified economy and sustainable engines of economic growth, whilst promoting good governance and a sustainable environment, without forgetting the peace and security that is the foundation of our society.
The aspirations of Vision 2036, as has been continuously reiterated by President Mokgweetsi Masisi since he took office, require a transformation in how Botswana does business. This cultural shift and transformation require changes in how we work as a country. From how we plan and budget to monitoring and evaluation of projects, to our relationship with accountability at all levels, to the rewards, incentives and remuneration of workers, to how we educate our children, how we take care of our sick and how we present opportunities to our vulnerable and marginalised. If Botswana is to reach its aspirations (I wrote last year), everything has to change.
In last year’s Budget Speech, Minister of Finance and Economic Development, Thapelo Matsheka gave the same prognosis. His main message last year was, “Botswana cannot afford to continue with ‘business as usual’”. Unfortunately for him, whilst he was speaking, on the horizon was the biggest global disaster to hit humanity in the last 100 years. The novel coronavirus (COVID-19) swept through the world and put the world into the worst recession in a century. For Botswana, COVID-19 was the perfect storm. It shut down international travel, which is essential for diamond trading, meaning our largest revenue driver was now in danger. It exposed our crippling dependency on South Africa (SA) as trade ground to a halt, damaging Southern African Customs Union (SACU) revenues and making costs of imports and doing business rise. It also reduced the country’s tax earnings.
Therefore, the country was faced with the largest budget deficit recorded since independence. The Ministry of Finance’s Budget Strategy Paper published in October 2020 forecasts that the budget deficit for 2020-2021 will be P15.2 billion (7.98 percent of GDP) against an initial plan of P5.2 billion. This deficit is a result of budgeted mineral revenues being close to 50% lower than expected whilst SACU and tax revenues are also down about 10% each. Coupled with this, the country has increased unforeseen expenditures as a result of the medical, social and economic toll of the pandemic on the country of Botswana and the world at large. The country has therefore been forced to readjust the budget and try to find savings in different places to reduce the fiscal damage brought by this unforeseen spending.
The big question now is, where to? That is the challenge that Matsheka is faced with next week. How do we, as a country, continue to focus and chase our aspirations of Vision 2036 amidst the worst crisis of our lives? Can we afford to chase those dreams or should we simply try to keep the ship afloat and defer any dreams for now? Can Botswana really afford to try to transform now or should we focus on funding access to vaccines and getting our economy back in order? To these questions, I posit, can we afford not to? Rather, as a country can we continue with business as usual or should these challenges be forcing us to spring into life and use the crisis as an impetus to force us through the challenges we have been debating for the past decade?
So whilst most people view this crisis and want to get defensive concerning it, my view is that as a country, we must take the ideals that Masisi has been pushing for, get on the offensive and push through our Digital Transformation Agenda.
What would be the key priority areas I would want to see happen as a country?
Investing big in eGov and Digital Transformation
To become a country that can take advantage of the Fourth Industrial Revolution (4IR) technologies, which would allow us to be competitive in the global market place and fulfil our aspirations of being an export-led economy, we have to invest substantially in the different elements that will allow us to move to the next level in terms of technology. The first basic principle is infrastructure. We need cheap widely available high-speed internet that will support any efforts when it comes to eCommerce, eHealth, eEducation, eAgriculture, eBusiness etc. This will also only work if the cheap high-speed fibre that is being rolled out, becomes available countrywide and not just in Gaborone. Currently, Botswana is considered as having one of the most expensive data costs in Africa at about $8/GB when countries like Egypt are at $1.24/GB, Mozambique at $2.19 and Zambia at $3.24. This can only be brought down by significant investment in our development budget to IT infrastructure. This infrastructure will cause an explosion in innovation and IT-related companies and work that will create jobs. It will also make delivery of basic services and goods much cheaper, which will improve the productivity and competitiveness of Botswana goods and services.
The investment in infrastructure will also enable a feasible roll-out and investment in eGov. This would allow the cheap, efficient rollout of services to Batswana. It would create an inclusive environment in health and education whilst reducing turnaround times for services such as awarding of land, licences etc. It would bring down the cost of services in the country whilst improving productivity. Another principle we need to invest in is transforming our education landscape. No amount of infrastructure will transform the country when the digital skills and our education are still lagging. Budgets must be set aside to completely overhaul our education system. Another basic investment is setting aside funds for research and development as a country. A rule of thumb is that R&D expenditure should be about two percent of GDP (around P4 billion). This would foster innovation, competitiveness, efficiency and job creation. Other softer basic principles include things such as market access for local technology providers, a conducive environment for funding and investment and enabling business environment.
Investing in enabling infrastructure for commerce
With the advent of the Africa Continental Free Trade Area in January 2021, Botswana needs to prioritise infrastructure that makes it easier to trade with other countries. The infrastructure projects we embark on must be prioritised by the value that factors ease of doing business in Botswana e.g. fast-tracking the railway line that connects Lephalale, SA to Palapye, a track from Mosetse to Kazungula, potentially a railway track between Francistown and Bulawayo, Zimbabwe. Our infrastructure planning should be based on ‘value’ to overall economy; with projects selected due to value-added when looking at the principles espoused in Vision 2036 and those in NDP11.
Better strategic, monitoring and evaluation, accountability systems
The past decade was littered with lamentations of how projects were always over cost and time budgeted if ever completed. This showed a serious deficiency in management and work ethic in both government and private sector delivering the projects. More efficient monitoring and evaluation systems are required (technology eases this and I am aware that the National Transformation Team is working on this). It is also a fact that Botswana is ‘over-policied’. It has too many standalone strategies and policies that do not speak to the main ideals of the country. It is therefore imperative that all of our policies be consolidated and simplified with a view of focusing purely on ideals of Vision 2036. Our budgeting process should also follow this, with priorities linked to specific policy ideals that fit into Vision 2036. The last key would then be ensuring there is accountability and rewards and recognition based on these. Performance management for a Ministry must be based on achievements related to Vision 2036 i.e. does what a Ministry is prioritising fit with where we are going? Does the expenditure reflect those priorities etc? This should cascade from Minister and Permanent Secretary right down to the messenger and driver. They should also be rewarded commensurately for their good work and taken to task for their failings. Botswana can no longer afford to lose money on wastage and lack of productivity.
In conclusion, my hopes are thus; though we are in unprecedented times in terms of challenges we face, it is time the country takes a radical approach to budget and how we focus our resources. It is not good enough anymore that a project should be prioritised because it is in one of the NDPs. Nothing should be sacred. For us to become globally competitive, we need to reduce our service turnaround times and make doing business easier. This will only be brought on by aggressive investment in technology infrastructure, investing heavily in capacitating our workforces in digital skills, investing in research and development, choosing infrastructure projects that will add value and reduce the cost of doing business locally and then ensuring we have the right culture of working that incentivises excellence as a result of good monitoring and evaluation systems coupled with good performance management systems.
If I were the finance minister, I would take advantage of this pandemic and push through a change management process that would radically transform how Botswana does business.
*Mphoeng is a partner in a 100%
Botswana citizen-owned company called Spectrum Analytics. Spectrum Analytics specialises in consulting and providing enterprise solutions in Data Analytics and Digital Transformation. To contact Mphoeng and give feedback on the article, email him on mphoengm@spectrumcs.co.bw