Matambo’s budget – a BNF perspective (Part 2)

SHARE   |   Tuesday, 29 March 2016   |   By Comrade Moore
Matambo’s  budget – a BNF perspective (Part 2)

On several pages (1, 2, 3, 4, 5) the minister laments the effects of the periodic global capitalist  crisis which stems from the unplanned and anarchic nature of capitalist production. In the wake of the neo-liberal counter-revolution  these periodic crises have become more frequent and much more deeper and devastating for third world countries. In some aspects of the speech figures are rotted out as if the budget is about things and not real human beings.  Virtually all budget speeches  lament this ruinous crisis of capitalist over-production without offering any solution. While there is no disputing the fact that the free trade version of the World Trade Organization (WTO) is inimical to the aspirations of most developing countries, and that its governance mechanism is undemocratic and benefits advanced capitalist countries, it is wrong to assume that WTO rules and regulations are immutable and cast in stone.  Chang and  Grable argue that WTO rules can be actively interpreted through dispute settlement panels if developing countries act collectively. Acting in concert third world countries can rewrite some of the rules and render them more amenable to interventionist trade policies. There are types of subsidies that are permissible or ‘non-actionable’ under WTO such as subsidies for basic research and development (R&D).


 Minister Matambo says ‘Government will continue to implement public sector reforms and undertake other structural reforms’  (page 6).While the speech does not elaborate on  ‘public sector reforms’ we know that this regime is ideologically wedded to only one form of ‘public sector reforms’, namely moving resources and enterprises from public to private ownership. The BNF is strongly  opposed the policy of privatization of public enterprises. If anything, the  BNF will establish even more public enterprises. The Minister then goes on to list profit making public enterprises as Botswana Development Corporation, Botswana Telecommunications Corporation Limited, Botswana Communications Regulatory Authority, Botswana Housing Corporation and Botswana Savings Bank. The fact that these corporations are making a profit means that they are ‘efficient’ and therefore do not need to be privatized.   The assessment of public enterprises in terms of whether they are profit-making-making is a misleading hallmark of the neo-liberal counter-revolution. These state owned enterprises were not initially set up for purposes  of making profit, per se. They were set up primarily to meet the needs of the people and facilitate national development. Some were set up in sectors of the economy not attractive to the private sector or sectors of the economy which have  long gestation periods and  are therefore not particularly amenable  to profit making.


The position of the BNF is that the state must pro-actively intervene in certain strategic sectors of the economy. Furthermore, resources that are essential to human life such as water, utilities, sanitation, basic education and communications must not be commoditized. They must always be in the public domain under national control. The danger of placing them under private capital is that if the capitalists realize that they can make more profits in another county they may close shop and relocate to that country leaving the nation stranded, sometimes without informing the government or the workers or even paying them. If these services are provided by the state it can not run away and the nation can hold them accountable where service delivery is poor and shoddy. State owned enterprises are the best way of dealing with natural monopolies which require large scale investment e.g. electricity distribution.  If, however, there are compelling reasons for government to give up its control of state owned enterprises  the BNF suggestion is that it is better to hand them over to public service provision cooperatives rather than the private sector.

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The BNF has a strong commitment to cooperative development. Cooperatives are better placed to manage public enterprises  because they are considered to be in the public interest and are not driven by the profit motive. They are driven by the desire to satisfy the needs of their members.  Public service provision cooperatives are found in counties like Argentina, Canada, the USA and Finland. In the USA rural electricity supply cooperatives run more than half of the electricity lines, carrying power to more than 26 million people in 46 states. In Canada public service provision cooperatives supply 150 000 households with electricity, gas, telephone services, sewage and water supply. The only challenge is that under the BDP regime cooperatives have not been given the support they deserve.  Given that this country is endowed with  enormous resources for the generation of electricity – the  waters of the Okavango which flow freely throughout the year into the Indian Ocean, the over 200 billion tones of coal we are sitting on, the excessive sunshine and plenty of winds, to name but a few,  the shortage of electricity epitomizes the spectacular  failure of the BDP regime. Emphasis must be on renewable sources of energy and every house should be having a solar panel on its roof by now. Huge wind turbines must be used to tap into this natural resource to generate electricity.  Electrification of the entire country, including farms and cattle posts, is a pre-requisite  for the development of the country. Such is the incompetence of the BDP regime that it is still struggling with this first step of development 50 years into our independence!


Minister Matambo goes on to list loss-making public enterprises as  Water Utilities Corporation, the National Development Bank and the Botswana Meat Commission.  By attributing the losses made by the BMC to ‘measles outbreak in 2014, and inadequate supply of cattle to the Commission’ (page 7) while remaining mum about the corruption visited upon the  parastatal by the bourgeoisie  the Minister is being economic with the truth.  The BNF position is that loss-making public enterprises must be reformed without being privatized. Some of these enterprises need organizational reform in order to clarify their mandates for us to hold management accountable to well defined mandates and realistic objectives.  Improving  the flow of information and  the establishment of a single and competently staffed agency dedicated to the supervision and monitoring of these enterprises might be another solution. When the Department of Water Affairs provided water to rural communities there was relative efficiency but when Water Utilities Corporation took over they seemed to be overwhelmed by their new mandate. They also blundered by selling water as a commodity and service delivery plummeted until  we find ourselves subjected to water rationing in the southern part of the country.

Privatization of water systems in the developing countries has always been an unmitigated disaster for the ordinary people.  Part of the solution to the water crisis  is to make water a basic right of every citizen exempted from capitalist profit-making. The Minister observes  that , ‘The level of the country’s foreign exchange reserves stood at P84.9 billion  in December 2015’ and adds that, ‘This represents an equivalent of 19 month of import cover of goods and services’  (page 5). No rationale is given for this conservative policy of keeping huge amounts of money stashed in foreign banks when the country is bedevilled by a litany of problems.  The long-standing BNF position on foreign reserves is that the amount the country keeps should be enough to cover three or four months of import cover, as most economists advise. The rest of the revenue should be used to tackle the myriad  development problems that bedevil  the country.  Finance Minister Matambo  concedes that ‘The country is currently faced with water and electricity challenges’ (page 8) while on page 12 he alludes to  ‘the declining education performance’.  Still on page 12 the Minister says, ‘An early Childhood Policy Framework will be developed in partnership with the United nations Children’s Fund’ . The use of the word ‘will’ is indicative of a government which lacks a sense of urgency on matters of national importance. Given that pre-primary enrolment statistics were estimated at an abysmal18.9% in 2010/11 the Minister’s statement is disappointing.

On children with access to pre-school education Botswana is beaten  by other middle income countries - Jamaica at 113%, Costa Rica 72% and South Africa 65%. Pre-primary education continues to be a privilege enjoyed by children of the rich and this only helps to widen the gap between the rich and poor. The BNF believes in the right of every child to 12 years of school base on the theory of education production, including two years of pre-school education. The position of the BNF is that the provision of pre-primary education for all children will not only help bridge the gap between the haves and have-nots and raise the quality of education but it will release women from their enslavement in the hearth so that they can pursue carriers hitherto dominated by men. The development of a country is impossible without the bridge-head of physical and social infrastructure – roads, telecommunications network,  railways, schools and hospitals.  What we find astonishing is that 50 years into our ‘independence’ the BDP regime is still struggling to provide the nation with appropriate infrastructural development. Fifty years is long enough for the country to  be on the third or fourth level of development – having successfully developed consumer goods industries, capital goods industries and moving towards the production of  electronic goods and services.

The BNF believes that unless and until the country clearly identifies and actively supports national strategic industries and protects infant industries   that help grow the economy and employ many of our workers Botswana is doomed to remain stuck at step one  of providing infrastructural development. The BDP’s fixation with the notion of the private sector as the engine of development is naive and  problematic. Statements like. ‘The private sector plays a key role in the delivery of development programmes’  are as  ill-advised as they are misguided. How can a private sector driven by  cut-throat competition and the profit motive ‘play a key role’ in development? There are many instances where the private sector kills more jobs than it creates because of the quest for profits. Botswana is the leading producer of diamond by value in the world and yet this industry employs only 6 000 workers thanks to profit maximization by De Beers through capital intensive production methods. Compare that to India which has no diamond mines but employs a million people in the diamond industry.


It is deeply disappointing that 50 years into the country’s ‘independence the Minister still makes a statement like, ‘Other initiatives include exploring the possibilities of accessing water from ...the Chobe-Zambezi area’. We are not told how long the regime will take ‘exploring’ the possibilities of accessing the Chobe-Zambezi area.  Considering the growing shortage of rainfall as a result of global warming and the fact that the BNF has been calling for the use of the waters of the Okavango for irrigation purposes for the past 50 years, the regime’s lack  sure-footedness is alarming, to say the very least. In Botswana we have yet to see bold steps designed to address the growing water crisis.  Other semi-arid countries like Libya have developed long term water development projects. Libya’s water development project has been added to the Guinness Book of records as one of the wonders of the world or the biggest civil engineering project ever undertaken in human history.  It is high time Botswana considered buying water from the DRC which is blessed with huge rivers. The water pipes would be buried underground, and if need be, our soldiers can be deployed to look after them.


Minister Matambo says that ‘Government approved  the Strategy on Private Sector Participation in Land Servicing in April’ (page 13). You cannot accelerate land servicing by adding another layer of capitalists to this important and urgent task. By roping in the private sector the BDP regime will make it harder for people to enjoy their basic right to shelter and only serve to deepen the housing crisis. An average BHC house costs a whopping P500 000 – well beyond the wages of the average worker. The involvement  of the private sector will almost definitely escalate the costs of housing. From the point of view of the BNF the best way of lowering the costs of housing is, firstly, to declare housing as a  basic human right not open to capitalist profit making. Secondly, the state must assume primary responsibility for housing provision. Thirdly. the fact that land  is  a commodity bought and sold on the market at artificially high prices in towns compounds the problem and makes it impossible for the majority of the people earning low wages to have any realistic hope of ever owning  homes of their own.  Private ownership of land must be prohibited and all citizens given usufructuary rights. Fourthly, the provision of housing for all must be diversified to include housing cooperatives, building cooperatives, trade unions, employers, the brigades and economically and politically empowered and decentralized councils as well as a restructured BHC.


The fact that the Minister unashamedly states that ‘cash allowances were increased effective from April 2015 as follows: old age pensions allowances increased from P300 to P330; world war veterans allowances increased from P420 to P450; while destitute person’s allowance was increased from P120 to P150’ is not only mean and penny-pinching, but an outright insult to the people concerned. How can an upper middle income country celebrate ludicrous increases of P30 while this very budget is going to  put millions of Pulas into the pockets of a number of individual exploiters? For instance, the massive  allocation of P3.59 billion to the Ministry of Defence and Security is an excuse for transferring the country’s hard earned revenue into the pockets of individuals who corruptly enjoy exclusive access to BDF tenders.  The P1.41 billion allocated to Ministry of Transport and Communications to ‘cater for construction of secondary roads, bridges, bitumen and trunk roads’ (p. 18) will obviously line the pockets of  mainly foreign capitalists in the construction sector who dominate all big government tenders. And the Minister is silent on how many jobs will be created and what he is going to do about the starvation wages they earn. How many of the millions from this budget will end up in the private bank accounts of the unaccountable DIS operatives?

For the Minister to celebrate the negligible  P30 increase of the miserly allowances of the poverty stricken recipients of government hand-outs without telling the nation how many millions of Pulas his budget is going to put into the private bank accounts of individual capitalists is not only disingenuous but obfuscation, par excellence.  There is complete silence about transactional monopolies that haemorrhage billions of Pulas of this country through tax evasion and transfer prizing. Wilderness Safari is one of the cuprites and some people of high standing in society are share holders in this company.   It is reported that De Beers tax evasion costs this country no less than P10 billion per year and the Minister is remarkably silent on this massive theft by the rich. The BNF’s  comprehensive social security welfare programme will address the needs of the poor and underprivileged, including the payment of unemployment benefits. Minister Matambo makes this utterly disappointing statement; ‘the tourism sector has the potential to contribute positively to growth and job creation in the country’ (page 10).  Firstly, we are not told why 50 years into our independence we are still talking about tourism’s ‘potential’ to create jobs. Secondly, we are not told when this ‘potential’ will be realized. Thirdly, we are also not told what the costs to the country are in terms of lost jobs and revenues repatriated to other counties from the exploitation of our own resources by foreign safari companies and foreign tourists and  investors.


Using the example of the Okavango Delta Professor Mbaiwa demonstrates clearly that the tourism sector is under foreign ownership and opportunities for employing Batswana and growing the economy are being squandered. The tourism sector does not  contribute to poverty alleviation and has no backward and forward linkages to the rest of the economy. High paying managerial posts are dominated by foreigners. International tourists who dominate this industry make their bookings and payments for tourism services in Washington, Frankfurt, London, Pretoria, Johannesburg  and other foreign cities and are then transported by international airlines to hotels and enclave resorts controlled by foreigners. Hence very little tourist revenue accrues to the country. At the end of their stay Air Botswana, lacking an international airliner, only takes them to Johannesburg hence the bulk of their travel money remains in their countries of their origin. Foreign investors and companies are involved in 73% (11) of the  15 concession areas leased by the Tawana Land board. Up to 85% of the tourism companies registered in Maun and the Delta are foreign owned. In 1997 70% of the tourism revenue generated was repatriated outside Botswana while only 29% remained in the country. Put differently, of the P1.2 billion made in that year a massive P605 million accrued to foreigners, while only P320 million was spent in the country. And of the 70 tourism companies listed under the Hotel and Tourism Association of the Botswana (HATAB) in 1999 only 23 of them were liable to pay tax in Botswana. What we find equally disturbing is that the Minister presiding over this neo-colonial tourism, Tshekedi Khama, is nursing ambitions of becoming the next president of Botswana!.   The BNF will have to nationalize this neo-colonial tourism industry for our natural resources to begin to create jobs for Batswana and for more revenue to accrue to this country.


Not surprisingly, Matambo is virtually mealy-mouthed about the much vaunted Economic Stimulus Package (ESP) because it has been high jacked from his office by the giant octopus called the Office of the President. And yet on page 15 the Minister makes some flimsy statement to the effect that ‘The implementation of the ESP will be done prudently to ensure continued fiscal sustainability’.  There is no elaboration on how ‘continued fiscal sustainability’ will be ensured. If the ESP has been taken over by the Office of the President instead of being housed in the Ministry of Finance where it rightly belongs, and the usual government tendering procedures have been subverted and bypassed it is difficult to persuade Batswana that there will ‘strict discipline’ and ‘continued fiscal sustainability’ in the implementation of ESP. On the contrary, there is likely to be unprecedented looting of the national coffers by the comprador bourgeoisie and their hangers-on. The Minister says ‘ERSP is embarking on fast-tracking backlog eradication, which covers construction of classrooms, staff quarter, and customary courts; upgrading of health faculties; and rural electrification’ (page 9). We all know that all big projects are dominated by foreign companies  and the bulk of this money will end up in foreign hands while Batswana companies are shunted to building toilets and workers are paid starvation wages.


The Minister alludes to some green shoots of  recovery by forecasting that  ‘a modest recovery in the domestic economy is expected in 2016, and with growth rates projected to be 4.2% and 4.3%, respectively, underpinned by recovery in both the mining and non-mining’  (page 4). In our view even if there is economic recovery opportunities for greater revenue generation for the country, employment and  poverty eradication  for communities in around the mining areas will continue to be lost through wrong and  misguided policies of the BDP regime. The abject poverty of people living in an around the mining areas speaks volumes about the failed policies of the BDP regime. Think about Basarwa of Mesti-a-ela in Letlhakeng living in abject  poverty  right in the middle of about five diamond mines. Imagine the criminal forced eviction of Basarwa from CKGR, without compensation,  to prevent them from claiming any mineral royalties from the diamond mining on their ancestral homeland. These BDP policies are completely outdated and the BNF shall overhaul them, root stem and branch.

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Guided by the International Council on Mining and Metals (ICMM),  ILO Convention 169 on Indigenous and Tribal Peoples, the UN Declaration on the Rights of Indigenous People,  the Benchmarks Foundation, the experiences of  the mutually beneficial relationship between Bafokeng and Impala Platinum company in South Africa as well as the experiences of  Northern America and Canada, the BNF shall carry out a fundamental  restructuring of the relationship between mining companies and communities directly and indirectly impacted by mining. The BNF will encourage communities to negotiate  the terms and conditions under which mineral development will take place on their land. The BNF will fundamentally redefine the relationship  between companies and local communities  based on mutual respect and mutual benefit as well as meaningful engagement through all the phases of the mining project life cycle, from prospecting through to closure and reclamation. At the profit-making phase communities affected by mining must be entitled to mineral royalties.

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That means that on the boards of  De Beers in the Ngwaketse and Boteti areas, for example, local communities must be represented to be part of the decision-making processes.  Mining companies will be obliged to compensate for the land, grazing areas and the water they have taken away from  communities. For instance, the people of Maboane have a water crisis caused by the De Beers boreholes in the area and yet under the BDP regime the company is  not obliged to compensate the people of this village. Mining companies  must employ or train workers from those communities. Companies that have benefited so much from our recourses will be required to make significant contributions to corporate social responsibility. These changes will contribute significantly to employment creation and improvement of the material lives of communities directly and indirectly impacted by mining. According to David van Wyk it is disturbing to note that in 2007 De Beers made a profit of P18 billion but only contributed 9 million, (which is an infinitesimal 0.05%),  as corporate social responsibility to a country that gives them 3/4 of their profits. Clearly De Beers is not a good corporate citizen.