Modest economic growth seen in NDP11
Brian Benza | Tuesday May 10, 2016 11:00
But the targeted growth rate will not be enough to address the country’s development challenges, which include poverty, income inequality unemployment, finance minister Kenneth Matambo told a NDP11 consultative conference yesterday.
NDP11 kicks in next year covering the period from 2017 to 2022 to succeed the current NDP10 ending this year. “Though marginally better than in NDP10, the 4,4 percent average growth in the medium term will be insufficient to address the development challenges of unemployment, poverty and income inequality. Our challenge is to find measures that increase the growth of the economy beyond the projected level of 4.4 percent,” said Matambo.
Despite the country’s success in promoting sustainable economic growth prior to the global financial crisis of 2008/09, the three major development challenges of unemployment, poverty and income inequality have remained a millstone on Botswana.
According to Statistics Botswana (SB), the proportion of the population living below the poverty datum line (PDL) stood at 19.3 percent in 2009/10.
Although inequality as measured by the Gini-coefficient fell from 64.7 percent in 2002 to 60.5 percent in 2010, the World Bank says Botswana still remains the third most unequal country in the world after South Africa and Seychelles.
On the other hand, the unemployment rate is also very high at 17.8 percent, although according to the International Monetary Fund (IMF) the number can be as high as 30 percent if discouraged workers were taken into account.
In the NDP11 period, Matambo said revenues are estimated at P372, 3 billion against an expenditure of P370.2 billion resulting in an expected slight budget surplus of P2.079 billion.
The estimated surplus is however based on preliminary figures and government officials say it is likely to turn into a deficit when the final figures are compiled. The minister however said 90 percent of the projected revenues would come from mineral, customs and non-mineral income tax.
“Such a continued narrow base is unsustainable, hence the need to develop alternative revenue sources to diversify the revenue base,” said the minister. The two-day conference, which ends in Gaborone today was organised to provide a platform for discussing polices and strategies for development with a view to attaining the NDP11 theme of “ Inclusive growth for the realisation of sustainable employment and poverty eradication”.
Deliberations were based on a draft NDP11 document.
While finding new growth sources to enlarge the size of the economy is a priority target in the new plan, figures show that the economic rate of growth has been slowing down over the years.
According to the IMF, for Botswana to return to the era of strong growth and accelerating the country’s convergence to higher income levels would require policies to reinvigorate total factor productivity (TFP) growth.
These include improving the quality of public spending, notably in public investment projects and education to ensure the transformation of diamond wealth into sustainable assets.
Growth in labour productivity, as measured by value added per person employed, has been declining over the past two decades in the country from a negative of 1.45 in 1991 to a minus 1.64 in 2011.
Under the NDP10, which covered the period 2009-2016, the minister said the economy performed slightly better than original forecast achieving a growth rate of 3.9 percent from a target of 3.3 percent with the non-mining sector having driven growth.
“A structural transformation occurred with the non mining sector driving the economy. “In the period the mining sector declined by an average of 3.4 percent while the non-mining sector realised a growth of 5.6 percent helping to cushion the decline of the real GDP,” said Matambo.
The government budget in the current NDP10 is estimated to have posted a cumulative deficit of P6.37 billion (0.8 percent) with expenditure of P353.5 billion against revenues of P347.1 billion.