A decade spent on a tightrope
Mbongeni Mguni | Friday November 8, 2019 14:22
Where his predecessor, the late Baledzi Gaolathe was reserved, renowned for being expressionless and restrained, Matambo during his decade at the helm, built a culture of something approaching ‘fearsome’ around him.
“Gaolathe was quiet but that doesn’t mean he couldn’t see that someone was doing something wrong around him,” a long time Finance Ministry insider says.
“He just would prefer to keep his peace. You wouldn’t hear that he yelled at someone.
“When Matambo came in, people were surprised by the new culture he came with. They were not free around him.
“There was a perception that he was hard but he was a very straight talker. He would tell you immediately if you were wrong and commend you if you were right.
“He was very particular about things being done a certain way, done right.”
Coming from a corporate background at the Botswana Development Corporation where he had spent nearly a decade, Matambo’s reputation in those early years at Finance was bolstered by the widely held view in economic circles that he was a fiscal conservative.
This stance was reinforced by the fact that his entry into the Ministry coincided with the 2009 global recession, the economy contracting by 7.8 percent in that year, diamond mines closing and thousands of jobs shed.
Matambo’s response to the crisis is still hailed today, even by the notoriously miserly Bretton-Woods institutions. The new finance minister adopted a countercyclical fiscal policy in which public spending on water and energy projects was prioritised, maintained and even increased, through and after the global recession, resulting in budget deficits for the first three years of his tenure.
The spending was made possible through a $1.5 billion African Development Bank loan Matambo negotiated, one of the few times in the 21st Century Botswana had reached out to borrow from supranational bodies.
Today, Botswana Power Corporation has not only stabilised supply, but is due to be weaned off public subsidies within a few years, while the South is well watered by the reinforced pipeline from the north. A second pipeline to the mammoth Dikgatlhong Dam, which was built under Matambo's countercyclical policy, is due to reach Gaborone next year.
Matambo’s response to the global recession counts amongst his successes, says Econsult managing director and former Bank of Botswana deputy governor, Keith Jefferis.
“In terms of achievements, he managed the aftermath of the global financial crisis when he came into office,” Jefferis told Mmegi yesterday.
“He (also) contributed to the maintenance of macroeconomic stability over the past decade and kept budget deficits within manageable limits.”
From a deficit of P9.5 billion in the 2009-2010 fiscal year, Matambo swung the economy to a surplus of P7.2 billion in 2013-2014, the highest during his tenure. Perhaps he cracked a smile at the turnaround. His aides say despite his reputation, the former finance minister was known for surprising, unfettered laughter. “On trips, perhaps to places like Kasane, when he was out of the office, you would hear loud laughing and be shocked to discover it was him.
“He was quite jolly when he felt like it. He was not serious all the time,” an aide told Mmegi.
The laughter would die down in the tail end of Matambo’s tenure. He guided the economy over yet another recession in 2015, approving the Economic Stimulus Programme (ESP) to tap into the country’s savings and support growth.
However, with the advent of the National Development Plan (NDP) 11 in the 2017-2018 fiscal year, Matambo witnessed public finances slowly unravel. Since that year, the running budget deficits have cumulatively totalled P16.1 billion, excluding the P7.8 billion shortfall forecast for the current fiscal year.
Initially, it had been expected that the first half of NDP 11 would carry deficits, before a balancing out and surpluses for the rest of the years to 2022/23. “The biggest shortcoming (of Matambo’s tenure) is that government spending has become increasingly inefficient, with vast amounts of waste,” said Jefferis.
The P7.8 billion deficit forecast for the current fiscal year is the largest Matambo incurred in his tenure, driven mainly by lower mineral revenues particularly the diamond downturn.
As he signs off, the straight shooter that he is, he will no doubt reflect on the tattered state of the budget, but perhaps take heart that growth continues positive despite the troubles.