When assuming the presidency on April 1, 2018, Masisi would never have imagined that his tenure would experience the sharpest economic drop the economy has suffered since Independence or the largest loss of jobs since that time.
Economists have penned an expression for such “bolt from the blue” occurrences: black swan event. Lebanese-American finance professor, Nassim Nicholas Taleb, who coined the expression, says black swan events are “extremely rare with severe consequences,” and cannot be predicted beforehand, “though after the fact, many falsely claim it should have been predictable”.
Other experts note that black swan events can cause catastrophic damage to an economy by negatively impacting markets and investments and that even the use of robust modelling cannot prevent a black swan event.
Masisi’s black swan event was the arrival of COVID-19 on March 30, 2020, nearly two years to the day he had delivered a hopeful inauguration speech setting out his economic priorities.
These, broadly, included: l Scaling up access to technical and vocational education and training opportunities, in order to avail the requisite skills for the labour market;
* Promoting digitisation across both the public and private sectors
* Ensuring that Development Financing Institutions become more proactive and responsive
* Continuing with measures to ensure the Ease of Doing Business, for foreign and domestic investors alike
* Implementing cluster development across various sectors, particularly the prioritised sectors of diamond beneficiation, tourism, beef, mining and financial services.
* Speeding up implementation of the Special Economic Zones
* Pursuing more market access through trade agreements
* Boosting infrastructure investment in sectors such as ICT, water, energy, transport and roads
* Revitalising the SPEDU economy
* Initiatives to boost output from agriculture as well as citizen empowerment in tourism and game farming
Masisi’s first year saw the economy grow by just below four percent, before dropping to about three percent in 2019, both of which were more or less in line with the NDP 11 base case growth target of four percent.
The black swan event of 2020 saw the economy contract by a record 8.5 percent, while nearly all other indicators of economic performance similarly tanked. The government reserves, built over the decades to support the budget emergencies, fell from P31.5 billion in April 2018 to just P3.3 billion by December 2020, as fiscal authorities withdrew the savings to fund emergency spending on the COVID-19 pandemic.
The extent of the economic contraction caused by COVID-19 meant whatever plans Masisi had prior to the pandemic, had, of necessity, to change. His administration put together a P14.5 billion intervention known as the Economic Recovery and Transformation Plan (ERTP) in mid-2020, designed to not only support the economy through the pandemic but also set it on a path to achieve the priorities Masisi had been championing.
The ERTP was passed in September 2020 as part of the Mid Term Review of NDP 11 and represented the sharpening of priorities in the wake of the pandemic. Early in 2021, Masisi further honed in these priorities, introducing the RESET Agenda which in part sought to respond to the rising disapproval from ordinary Batswana about the path the economy was taking.
At a Botswana Democratic Party retreat held to brainstorm on the RESET Agenda, Masisi noted that it was critical to assuage the fears of Batswana who felt the ruling party had used them for votes in 2019 and had since lost direction.
“Batswana must rely on you as democrats to say even if it’s dark, I can trust you. “They must be able to hear that voice, that respectful, loving voice and they must know that ‘I can go with these ones’. “It must be a voice of trust and one that Batswana can put their hope in,” he said.
Masisi’s economic approach has been particularly marked by robust, if not ambitious, policymaking. Besides the ERTP and the RESET Agenda, his administration has produced the Botswana National Informal Sector Recovery Plan, Citizen Economic Inclusion Act, Middle-Income Strategy and others. Existing documents such as the Tourism Policy, Energy Policy, Minerals Policy and CEDA guidelines, have also been updated.
The President’s efforts have met with mixed results and the fact that the interventions come as the pandemic pushes ordinary citizens to their limits, has meant most reviews of Masisinomics have been negative.
The policy-based approach has also meant that the positive results of Masisi’s economic interventions may not be immediately felt by the targeted recipients. Certain interventions such as Middle-Income Strategy, have targets set over 10 years, while the results of the shorter ERTP will be clearer when it ends in March 2023.
The P1.3 billion Industrial Support Fund created as a bailout facility for struggling businesses, is meeting with mixed outcomes, with at least P560 million yet to be utilised by the intended beneficiaries.
A damning Auditor General report into COVID-19 spending increased the volume of the voices cynical towards Masisi’s administration, while the one economic indicator that remained benign after the black swan hit in March 2020, has also been misbehaving. Inflation reached record lows in early 2020 at 0.9 percent before beginning a sharp rise from April 2020 as the impact of tax and levy increases came into effect.
The interventions are also yet to stem the jobs bloodbath triggered by COVID-19, with the last data from Statistics Botswana indicating that the national unemployment rate amongst those aged 18 and over, rose from 21.9% at the end of 2019, to 24.5% by the end of 2020 and 25.8% by the end of 2021.
The 2021 economic growth figures due to be released at the end of April are expected to show a significant rebound from the distressed caused by the black swan event. Masisi will be hoping the recovery of 2021 adds winds under the sails of his policies and helps deliver the promises he made four years ago.
One key factor will be ensuring that the civil service, as the primary purveyor of Masisinomics to Batswana, plays its part. Besides prioritising civil service efficiency under the RESET Agenda, Masisi’s administration is implementing the long-delayed rationalisation of parastatals and ministerial reorganisation this year.
The President is also implementing a form of civil service wage bill cut backs, biting the bullet and stopping a buck that his predecessors have been passing in their tenures. The move will not win him new friends, but unlike his predecessors, Masisi has less fiscal room to delay the much-needed reforms.
Like his other economic interventions, the positive results may not be immediately felt. He will, however, take comfort from the fact that all his predecessors have faced similar economic trials, a fact he alluded to in his April 2018 inauguration speech.
“Since Independence, Batswana have been uniquely blessed with capable and committed leaders who through their selfless patriotism have carried our nation forward through often difficult times.
“To paraphrase the words of the great physicist, Sir Isaac Newton, if our vision is to be clearer, if we are to advance further, it is because we are standing on the shoulders of giants.”
