Unpacking the UDC's economic and jobs rationale (Part 2)
Bakang Ntshingane | Friday September 27, 2019 15:28
The Umbrella’s compelling package of electoral promises, economic claims and plans must be tested against both reason and pragmatism.
The economic and jobs agenda plays an important role in the election ahead of the October 23rd vote. The Umbrella for Democratic Change’s (UDC) economic rationale is premised on addressing the issues referred to. Whether its opponents have constructively engaged with the Umbrella’s ideas based on their merits is an obvious negative.
The party has done a reasonably fair job in building an economic and jobs storyline that fills in all the required gaps but fails the pragmatism test on others. As a relatively new opposition political party with zero governance experience and having just recovered from a series of factional wars and chemistry-testing spates, I don’t expect the movement to perfectly check all the boxes.
But as a collective with one term in Parliament, and several of their legislators having several years of parliamentary experience, the party must demonstrate its compelling legislative and leadership experience, and the election cycle is a perfect opportunity to do so.
In general, a prospective UDC government projects an image of a moderate socialist democratic party. There are heavy undertones of heavy state involvement in the economy and jobs creation with, of course, relative private sector led growth.
The party does not outrightly dismiss capitalist free market ideas but has criticised the ruling Botswana Democratic Party (BDP) for neoliberal policies. In hindsight, and from a 30,000 feet bird’s eye view of the party’s manifesto, the same neoliberal undertones persist.
According to the manifesto, the Umbrella’s key signature pledges; 100,000 jobs in the first 365 days in office, a living wage of P3,000, old age pension of P1,500, free sanitary pads, tablets for learners, tertiary education student allowance of P2,500 and reopening of BCL Mine which will mainly come from major policy reorientations, new industries and infrastructure investments to prepare the country for a transition into a high wage economy.
In addition, the pledges include a construction boom, business friendly environment and accelerated domestic investments. I will attempt to tackle the issues as instructively as possible, all the while driving to the bottom-line of a debate on an inflated public spending bill, asking key questions of how the party’s government intends to foot the bill for the major but necessary shifts in Botswana’s structural governance mechanisms.
The reopening of the BCL Mine is a contentious issues riddled with controversy from its closing up till its liquidation. Government spent hundreds of millions of pula to liquidate the mine and lay off the thousands of workers the facility employed directly. That UDC placed it as a key election issue is both understandable and strategic.
The Selebi-Phikwe debate touches on several issues; primarily village and town economies, economic diversification, global markets for copper and nickel and others. However, the Umbrella’s justification for reopening the mine is as a matter of justice versus as a matter of productivity and profitability. It is possible that the mine ‘could’ve’ been profitable but that’s a debate for industry leaders.
There are few factors Presidents and political movements can’t control: global coal, oil, diamond, copper and nickel prices, and so, although it is necessary and just to give the people of Phikwe a lifeline, reopening the mine must be justified beyond one-liners.
In terms of the 4th industrial revolution, the party’s manifesto did a brilliant job of positioning the debate and linking it to human capital, infrastructure and business. It is indisputable that Botswana is ill-prepared for advances in technology and innovation.
But the gap in the Umbrella’s rationale is an overall picture of what advances in technology mean for economic growth. Evolutions in technology often make the economy more and more dependent on capital goods, which are generally owned by the wealthiest segments of the population. As a remedy, public policies that give the middle class more access to capital could boost growth and lower income inequality.
The UDC touts a lot heavy government involvement in the economy and regulation, which is also nothing different from the five-decade BDP-led governance. But more questions arise on whether the party favours deficit spending to revive the economy or altering money supply. Whether the economy will perform better under a UDC government is yet to be tested.
There’s ample evidence that jobs growth can be driven heavily by vibrant Small, Micro and Medium Enterprises (SMMEs). The UDC gets this rationale and taps into elements that make for successful SMMEs such as access to finance, markets, technology and business support services and removing the necessary bottlenecks which is a policy and regulation issue.
But on market access, there aren’t any comprehensive answers on how this will be done. Does the party favour further trade liberalisation policies, expanding the country’s already existing trade agreements? What do they think of the current rage on the African Continental Free Trade Area (AfCFTA)? Are they committed to getting any deal on the SACU revenue sharing formula to maximise Botswana’s position in the customs union? Will they begin negotiations on any new trade agreements or keep the old ones?
The other, and perhaps, critical aspect that forms the crux of the party’s manifesto is its ideas on infrastructure investments, macroeconomic and fiscal policy. This is where the foundation of any prosperous government lies, and I thought the party would lead with these in order to make some of their key pledges make sense.
Granted: the country’s fiscal space is ‘tightening’ and government hasn’t been very good at making smart investment decisions as they rightly put it. In terms of infrastructure, there’s ample economic evidence that links ‘aggressive’ infrastructure investment to economic growth.
The Umbrella gets the origination and reasoning of transport systems, their significance to connectivity and downstream economic activities brilliantly right.
A well-connected, efficient infrastructure system is the backbone of any strong economy. The benefits would be infinite for cities, towns and village economies, global value chain integration opportunities and more.
However, there are very little implementation aspects of their infrastructure investment programme, especially financing. From their heavy state-centric approach, maybe the state would continue to foot the bill. Oxford economics predicts that total infrastructure investment needs for Africa by 2040 would be in the region of $4.3 trillion, translating to $174 billion per year.
Will the Umbrella continue the BDP’s approach of borrowing from multilateral banks and the Chinese, or will they seek alternative financing models?
Governance isn’t an easy job. A lot of it is a mixture of trial and error. The UDC acknowledges the challenge of sustaining productivity at the same rate as wage growth. What is interesting and commendable from a state planning point of view is the party’s acknowledgement that it would commit to macroeconomic stability, adjusting micro/macro level strategies to target jobs growth in the medium to long term.
Some of the party’s signature promises have populist undertones, but their commitment to managing a stable fiscal environment through retaining current inflation rates, debt to GDP ratio and fiscal debt ceilings sort of balances out and dilutes the populist rhetoric.
The bottom-line is an obvious truth. Botswana has been punching below its weight and has the potential to be a high-performing economy.
The UDC’s economic and jobs rationale will require a government that has an incredible appetite for taking calculated risks, carefully maneuvering the global economy and labor market environment to foresee and mitigate the risk.
*Bakang Ntshingane is a graduate student at Chonbuk National University’s Department of International Trade in South Korea