BW economy at 'critical juncture'

SHARE   |   Tuesday, 20 September 2016   |   By Linah Mohohlo
BW economy at 'critical juncture'

The 2016 National Business Conference assumes a particular significance since it is held on the eve of the 50th Anniversary of Botswana’s Independence. Appropriately, the Conference theme is “Botswana at 50, Celebrating Success and Strengthening the Public-Private Sector Partnership For Sustained Prosperity”. The theme underpins the realisation that, in as much as mineral resources have served the country well over nearly 50 years; particularly diamonds, these resources are non-renewable. Indeed, after attaining the middle-income status, the next stage of the country’s development will need to be driven by efficiency and innovation. It is these twin pillars of efficiency and innovation that will enable the country to compete at regional and global levels. For we should make no mistake; while the 50th Anniversary of Independence is a great source of national pride, and should be celebrated as such, the development of the economy has reached a critical juncture, as indicated by the slowing pace of economic growth, chronic unemployment and mounting pressure on the Government budget. Effectively addressing these challenges will be key to the successful implementation of the National Development Plan 11 and, looking further ahead, Vision 2036.

In this respect, we look forward to advice on, among others, the challenges we face in overcoming the structural limitations to private sector growth and development in Botswana. I trust that the Keynote Speaker will also share views on how we can better chart the course of sustainable private sector-led growth that the country so urgently needs. Needless to add, this is the lynchpin for the creation of productive employment opportunities necessary for not only alleviation of poverty and fostering inclusive growth, but also for making the transition to high-income status on a sustained basis. In exploring the Conference theme, we will need to take a hard look at the topical issue of overcoming the challenges of implementing large projects that will be key in finding long-term solutions to the power, water and other infrastructure challenges that constrain opportunities for private sector development in the country. Indeed, and consistent with past practice, the Conference break-out sessions are expected to address, in more detail, the issues that flow from the theme topic.

These include competitiveness of the country’s industries, as well as how an enabling environment needed for businesses to prosper can effectively be in place. This will necessitate a focus on undertaking a collaborative public-private sector effort of regulatory reforms that are well-adapted to the needs of business. It is just as important to focus on how to boost productivity and job creation, for instance, by moving people from unemployment and under-employment into productive employment. This is fundamental and would impact directly to sustained improvement in living standards of the populace. It will also be equally important to consider how best to promote trust between public and private sector entities, since this will be crucial in developing and implementing mutually beneficial public-private partnerships. I believe that the Conference will want to address how we can improve ways and means of attracting increased and more diversified levels of foreign direct investment. In this context, there is a role for supportive and complementary fiscal, monetary and exchange rate policies. There is also a role for the regulation and supervision of banks and the broader financial sector, in the best interest of attaining and maintaining financial stability, and in support of sustainable economic growth. Indeed, as indicated in the recently published Mid-Term Review of the 2016 Monetary Policy Statement, the current environment of benign inflation means that the maintenance of an accommodative monetary policy is consistent with achieving the medium term inflation objective. The environment also has potential for sustainable economic growth.

Having said this, we must be alert to current and prospective dynamics in the global and regional economies that could impact on Botswana. The recent decision by the United Kingdom to withdraw from the European Union, the so called Brexit, is a case in point. Although its impact is yet to unfold, there is growing uncertainty. Similarly, the consequences of the 2007/08 financial crisis linger on to this day. Interest rates in major financial markets are at historic low levels and in some cases they are negative; global economic growth remains anaemic; and the search for an inclusive global financial architecture and macroeconomic governance that gave so much hope, appears to have receded. No doubt the Conference participants will occupy themselves with the implications of these external challenges on the economic performance of the country in the immediate future and over the medium to long term. I derive comfort from the fact that much has been achieved in the last half century, and Batswana have every reason to be proud. We owe our gratitude to Botswana’s forefathers and foremothers with the four successive Presidents of this great Republic at the helm. They deserve the accolades. Admittedly, much remains to be done, and this Conference provides another opportunity for a careful appraisal of what has worked in the past and what has not, so that we are able to chart the way forward. The successes achieved so far should sustain our determination to face the future with confidence.
*Mohohlo is the Governor of Bank of Botswana. She was speaking at the Business Botswana 14th National Business Conference