A depressing budget speech, very few 'earth shattering' alternatives

LAWRENCE OOKEDITSE
Correspondent | Wednesday May 8, 2013 00:00

Finance Minister Kenneth Matambo did a 'cut and paste job' as they say, and yes there is nothing earth shattering about this budget - nothing new and innovative about it actually. As well, a great many people will miss the aura and charisma that came to be associated with the late Baledzi Gaolathe not least because of sheer nostalgia, but also because he usually presented a rosier picture of our economic outlook and gave hope to the nation. The pain of the current budget reading is that we were presented with problems: less with solutions.

From the onset the minister made it clear that 'the Paper was prepared amidst uncertainties regarding prospects of both the global and domestic economy. Such uncertainties led to constrained demand for, and a decline in prices of diamonds in the global market'. This statement was a great way to soften the ground, to set expectations low. Well, that it did with aplomb but it did not answer the critical question: where do we go from here? The closest it came to that was in saying that 'hence revenues available to government are expected to decline in the medium to long-term. This puts pressure on government to be more cautious in determining its expenditure profile in the short to medium term...'' But again, let us face it, that is merely presenting the nation with problems, not solutions, which I believe is what they are seeking.

I was looking out for what is in it for the youth, the future of this country and I will be brutally honest: Minister Matambo has nothing for them. All there is the promise of a Multi-Sectoral Forum that will mainstream youth matters at all departments of government. There is nothing like a new, wider and more accessible programme that will create employment for them. We are selling the same schemes that we have been selling. Yes, they have worked in some instances but you also get to realise that they have their limitations, such as access to land.

Expectations among many youth were that the minister would, for example, unveil a strategy that would see certain land reserved for young people wishing to access say funding from CEDA. That the minister would let all know that from now onwards, government has a plan for youth in urban areas to be somewhat subsidised in home ownership: something closer to a Botswana Housing Corporation (BHC) that builds houses with half of those reserved for youthful first-time buyers. Better still, if we are looking for job creation, we could be talking specifics like tax rebates for companies employing a certain percentage of fresh graduates. But we are not. Next, and this should be resonantly easy to do, modern states operate on the basis of measurable results. Everything works on this basis: Minister Matambo would know for example that if he requests funding from the World Bank for a particular project, key for that funding to be granted is for there to be a plan to measure results, evaluate how things have been working and show value for money. Now, we are failing to show how many jobs were created under the schemes geared towards creating employment and we are also not showing projections of what more could be created from the schemes we have going forward. This is reason for desolation and relative indifference to the budget speech. It is the duty of the Ministry of Finance and Development Planning to provide all these.

The modern state's economic affairs must be run like a modern company; this means there has to be greater forecasting and the shareholders (in this case the citizens) need the specifics on how their company will be taken into the future. Without some of these specifics, they will not be able to hold the rulers accountable. Talking of the rulers and accountability, I pity the Botswana Democratic Party (BDP) because it will take stick for actions of largely people who are technocrats. Why is it that the professionals at finance are not able to tally the number of jobs created by these projects and how many they expect to create from their future innovations?

Speaking of innovation, what innovation is in the budget? I will demonstrate why we need innovation. Matambo is well aware that we are headed for a period of uncertainty and depressed economic growth, that much he told the nation. What he did not tell the nation is aside from just belt-tightening how does he intend to return us to the days of hefty surpluses? 'Mr Speaker, overall, my ministry estimates a real GDP growth rate of 6.1 percent for 2012 and 5.9 percent for 2013. It is however unlikely that in the next few years the economy will reach the pre-financial and economic crisis real growth rates of nearly 9 percent. Nominal GDP is anticipated to reach about P120 billion in 2012 and P130 billion in 2013.'Well and good we shall have those growth rates at the current rate. The question is this: What does the minister and his experts at Finance House intend to do? We do not want problems, we want solutions and solutions from them since they monitor the markets and know what is happening around the globe. One need not be very intelligent to know that diamond sales will probably keep at depressed rates for some time and that we are geared towards barren times in terms of the natural abundance of the resource at what have been our reliable wells. This is the reality that we all must face: the fact that the miracle we received from nature is getting depleted and sales are also not what they should be. In which direction is the minister taking us given the current circumstances?This is the question we must answer.

The opposition, I am afraid, has done a shoddy and rather spurious job at coming up with a blueprint that is different from what the BDP is doing. At best, we seem to be seeing ideas that leverage much more on being efficient at using the current resources more than anything else. If you ask the opposition what strategy they have, the answer is always that there shall be beneficiation in the minerals sector - which current policy trends are headed to anyway. So it is nothing new what they will bring to the table.

Similarly, they say they will diversify the economy: but they will face the same constraints we have now of a small population, high costs of factors of production compared to say China in the manufacturing sector, closer to home Mauritius in terms of labour costs. Even worse, by the time they take over, if they do, they will be faced with even greater economic challenges, as it is likely to be at a time when diamond revenue would have dwindled even further. For these reasons then the opposition has a duty to present an alternative way that they would share the resources. They often argue that this is not a common thing in Commonwealth countries; and I agree. They also say they do not have all the information they need to have and also the resources to undertake such a mammoth task. And I agree. Similarly, our political terrain is like no other in the Commonwealth region: we have had single-party rule within a democracy for almost half a century now. This then calls for rather unorthodox ways of appealing to the populace if the Opposition is to have a chance at governing.

In light of the above constraints, all we are asking is for them to take the same budgeted for amount and show us a rough sketch of how they would do the allocations. That framework backed by a concise strategy to rev up the economy would be helpful. A concise strategy in this case means presenting to us something that is both comprehensive and realistic: a blueprint that takes into account the budgetary constraints, the competitiveness of the global economy and our comparative advantage. Basically, this should be something realistic and not driven by a high degree of optimism bias. That would greatly help the country.

It is no longer enough to say internship programme is a burden that does not help the country, it is inadequate to just say LIMID, YES and other empowerment schemes are not feasible while in actual fact some in opposition may be benefiting from the same. What we need are alternatives at improving access and direct plans of what they would replace such schemes with and to what effect. Once able to do that, then Batswana would know they have an opposition block that is ready to takeover and do a better job.

We really need not be thinking of the late  Gaolathe every February, but we do because much as the economy had challenges at times, he at least always gave a vision of where we were headed despite the challenges. On salary increments, I understand why there is nothing. There is simply not enough money for us to afford that. This realisation is what worries me: it says for half a decade now we have been having budget problems but we are failing to find solutions to them. We are failing at finding significant new revenue streams. Easier said than done I know, but that is why all stakeholders, including the political opposition - needs to come to the party.When economic collapse sets in, it does not discriminate between governor and the governed. Botswana can and should do better than this!