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The proliferation of parastatals by the government is said to be dampening potential growth of private businesses in some sectors of the local economy.
This was said by former cabinet minister Charles Tibone during the Private Business Growth Awards which are organised annually by Grant Thornton in collaboration with Business Botswana. Tibone was the guest speaker at the event on Wednesday. Tibone - who has held several ministerial portfolios and is now a businessman - said a case has been made that the Botswana economy is over dominated by government’s involvement to a point where the private sector feels throttled. Tibone said what is even more concerning is that the majority of these parastatals businesses are loss making, questioning their existence as they operate on negative returns on investments and are continually bailed out by the government through subsidies. He said a case can be made for those parastatals that exist to provide social services such as the likes of Water Utilities Corporation (WUC) or those which regulate sectors such as the telecommunications sector.
According to Tibone, the rationale of having commercial parastatals has become weak 50 years after the country attained independence. “One may ask – do we really need a national airline? Have we not done enough to demonstrate that passenger traffic exists?” he asked rhetorically, adding that the likes of Nigeria, The United States, Hong Kong and many other countries do not have national airlines and yet airline traffic into these states remain strong. Tibone probed the existence of a number of public enterprises in their current form such as BMC, NDB, BDC and BSB among others. Massive injection of state resources into some public enterprises is said to have not guaranteed growth which Tibone said leads one to the observation that there is a distinct prospect that the privatisation of a number of government parastatals would not simply lead to quantitative growth of the private sector but possibly to a dramatic transformation of the local economy.
The problem that seems to be impeding the development of the economy, Tibone noted, is implementation of policies. “In Botswana we seem to make the right policy pronouncements about private enterprise but on the ground, we have failed to resist the gravitational pull of welfare state programmes,” he said.
The reason the economy finds itself in the current state is said to be a result of rooted culture whereby government is the initiator of everything, but Tibone said in the economic circumstances that the country is now, what is required is to rapidly transition from a welfare state into a truly private sector led economy. “This will mean that we have to accelerate the privatisation of parastatals. For over two decades we have been talking privatisation. But not much has happened.” Tibone said back then there was no sense of urgency because then there were budget surpluses, but things have changed now with budget deficits expected for the next three financial years.
The awards, which were being staged for the second time after the inaugural ones last year, produced two winners after being divided into two categories – medium sized enterprises and large enterprises. The first category finalists were Chobe Marina Lodge, Parts Sales Botswana and Nashua Botswana with latter emerging the overall winner of the group. The three that made it to the top in the large medium enterprise are Motovac, Flo-Tek and Security Systems and was won Flo-Tek. The winners received an award, media and advertising promotion, one year membership to Business Botswana for the 2016/17 financial year. The winners will also receive outsourcing, taxation and advisory services courtesy of Grant Thornton to the value of P25, 000.