The announcement by the Minister of Finance and Development, Kenneth Matambo that the economy is facing more than P6 billion deficit should be a wake-up call for us to take economic diversification much more seriously. The country can no longer afford to rely on two sources of income which are subject to shocks. The economy relies on mineral revenues through taxes, royalties and dividends with the other big contribution coming from SACU receipts. Secretary for Economic Affairs at the ministry of finance, Dr Taufila Nyamadzabo was honest enough this week to admit that the two sources face a bleak future due to the nature of their exposure and vulnerability to external shocks.
Nyamadzabo said the two are now declining due to various reasons hence we now found ourselves in a situation where expenditure is way above the budget. Government efforts to diversify the economy by coming up with initiatives such as Economic Diversification Drive (EDD) should be appreciated, but what remains a concern is the pace and manner in which they are implemented. Sectors such as agriculture which used to be the mainstay of the local economy now contribute close to zero if not anything at all while manufacturing is still failing to take off. In announcing the Economic Stimulus Programme (ESP) President Ian Khama had singled out agriculture and manufacturing as some of the targeted sectors. But as Matambo presented his speech on Monday, finer details of how those sectors are going to benefit were lacking.
Using Matambo’s speech as a yardstick to see where we are heading regarding economic diversification, it does not offer much hope that we indeed take this diversification agenda seriously. The government needs to offer sectors that have the potential to diversify our economy special assistance and let people who are capable to drive the agenda take control. We cannot achieve the diversification we crave for if the government continues to hold the monopoly of everything. In this case, the private sector should be empowered to an extent that it no longer has to rely on the government for survival. The private sector is the only source of hope for real economic growth and sustainable job creation and hence we hope the government will continue to engage in organisations such as Business Botswana to ensure better development of this economy.
We expected to see more resources invested in the manufacturing and textile sectors which can do well to raise employment levels while taking advantage of the lucrative AGOA market. We are aware that the textile industry has once more fallen on difficult times following the expiry of their bail-out programme. We do not in any way encourage bailouts. However, it matters most that our people’s jobs be protected. As such Government ought to look at this with that in mind. There is of course a huge price pay in pursuing the difficult route of diversification. The more we delay in pursuit of the easiest and most convenient of engagements the more we will have to pay. There is no any other way. Diamonds are not forever and we cannot rely on SACU earnings for ever. We need as a matter of urgency to engage in projects that are not temporary in nature but those that assure sustainable employment and most importantly those that can help secure this country against external economic shocks.