Joblessness to slow poverty reduction - World Bank

Brian Benza | Friday October 20, 2017 14:32

Botswana’s poverty levels, which depicts the number of people living on $1.9 or less per day, currently stands at 12.7%.

In a Macro Poverty outlook report released recently, the World Bank projects poverty levels to decline by 0.7 percentage point annually to reach 10.6% of the population by 2019.

“Fiscal spending will continue to advance at today’s more-rapid pace, with priority for areas identified in the recently announced National Development Plan 11 (NDP11) which are tackling poverty, inclusive growth and job creation.

“Over the medium term, the country is expected to reduce poverty by 0.7 percentage point annually, to 10.6% by 2019. Achieving further poverty reduction will be challenging with the pace of progress constrained by limited private sector job creation, particularly in urban areas, and reliance on low productivity agricultural jobs in rural areas, combined with reduced credit growth and high levels of household indebtedness,” reads the report.

Government has been the dominant player in the local economy leaving the private sector heavily dependent on government spending and little capacity to create new jobs.

Economic activity is expected to reach 4.5% in 2017, up to 4.8 by 2019 driven by the mining activity, construction, services sector and intensified public investments.

In the next few years, the World Bank sees mining activity returning to close to its pre-crisis level in line with the expectations for a gradual recovery of the global demand for diamonds and the possible restructuring and startup of parts of the BCL copper and nickel mines.

Due to a sustained performance of the economy, Botswana poverty levels have been declining gradually although they are still high for a country of an Upper Middle Income Status.

Between 2002/03 and 2009/10, the share of the population living on less than $1.90 a day at the 2011 exchange rate, declined steadily from 29.8% to 18.2%.

According to the World Bank, this reflects a combination of equitable growth; demographic changes such as decreasing fertility rates and dependency ratios, increased credit and expansion of social assistance schemes.

On the other hand, progress in rural poverty reduction has been rapid, as it was almost halved from 45.2% in 2002/03 to 23.7% in 2009/10.

However, the World Bank says inequality in Botswana remains high with a Gini coefficient of 60.5 in 2009/10, down slightly from 64.7 in 2002/03.

Despite significant economic growth in the past decades, the World Bank says striking disparities remain among socioeconomic groups in income, wealth and living standards.

From independence in 1966 to the late 1990s, Botswana was one of the world’s fastest-growing economies, comparable only to China, with average annual gross domestic product growth above 10%.

But analysts say the phenomenal economic growth has not comparably translated into improved social-economic welfare with high levels of poverty, inequality and unemployment prevalent. According to the report, Botswana’s regional pattern of inequality generally follows the regional poverty distribution, with the highest inequality in the north and the southwest region and lower inequality in the central and southern regions.