My comments on the budget speech will be in the context of job creation and private enterprise development.
As a quick introduction, Stanbic Bank is a member of Standard Bank Group, the largest banking institution on the continent. We have called Botswana home for over 27 years and our passion is to improve the lives of Batswana. Our signature social impact intervention is on Youth Employability and Enterprise Development, which you will agree with me are co-depend and co-related. Our investment on this challenge is the creation of AcceleR8, a co-working, networking, incubation and thought leadership center at the Fairgrounds Mall. On this project we will spend on annual basis, P2m on interventions and a further P2m on running costs. May I invite you to visit the facility and to support the fight to reduce unemployment to a single digit.
The Question therefore is: What are the key drivers of private sector investment in the 2020 Budget?
• If you look beyond certain allocations to certain sectors which will obviously create political debate and sentiments, my initial observation of the budget is that it is founded on very sound principles and priorities. I am impressed with the push for Fiscal discipline, efficiency in government and creating room for private sector to lead execution of economy growth interventions. The only challenge will be the capacity of government to implement these sound principles. It will all come down to execution, execution and execution!
• The urgency to raise the rate of real GDP growth from 4% to the range of 6-8% is beyond debate. Without that, it will be impossible to achieve the high-income status by 2036, and more importantly, to create sufficient jobs to bring down unemployment and poverty.
• This growth has to be private sector-led, with government as a facilitator;
• Transformation of the basis of the economy and drivers of growth is essential;
• The growth model has to be transformed from mining-led to knowledge-led. There is a lot of research and data to back this model and government has widely accepted this model.
• This has to be done while achieving fiscal consolidation by reducing the budget deficit to ensure long-term fiscal sustainability. The emerging deficits are structural, not cyclical, and hence the appropriate policy response has to be adjustment, rather than borrowing. Again the Honorable Minster is firmly aware of this fact. The countries financial institutions, including Stanbic Bank, are willing and able to fund viable Public Private Partnership programmes.
Again, the transformation we must execute must result in a diversified export-led growth.
• Only export markets have the size necessary to facilitate continued, high growth and job creation. The domestic market is too small, notwithstanding some potential for import substitution.
• Penetrating export markets requires intensified focus on competitiveness, productivity and efficiency … this must happen if we must win. I dare say that only private capital and interest can achieve this. The decision by government on Botswana Meat Commission is therefore a sound one. Government will have to replicate this principle of “private sector-led economic growth” more aggressively.
As we all know, export-led growth is one of the four policy priorities in the MTR of NDP 11, and is complemented by the other three which are:
• Investment in appropriate infrastructure;
• Investment in human capital;
• Making government more efficient.
It is clear therefore, that the four MTR policy priority areas are inter-related and self-reinforcing. They all need to be implemented for the growth strategy to succeed – it is not a “pick and choose” agenda.
Now, allow me to highlight some of the positive proposals in the Budget Speech, to stimulate the private sector-led, knowledge-based, diversified export economic growth agenda to drive the transformation we seek. These are
• The Development of SEZs – with fit for purpose infrastructure, and relevant incentives packages;
• Other economic infrastructure (roads, water, electricity, railways);
• Parastatal reform (downsize, focus on core public goods delivery, increase efficiency, get them out of activities that the private sector can deliver more efficiently);
• PPPs (seems to be a renewed emphasis) – private sector can partner with government in the financing and management of public infrastructure;
• Support for citizen-economic empowerment, through a CEE law (although care has to be taken to ensure that that focus is on Empowerment and not Enrichment or Entitlement, and does not conflict with the need for export-led and increased FDI);
• Further improvement in the business environment;
• e-Services (will help private sector efficiency);
• support for creative industries will open up a new area of economic activity with government taking on some of the risk;
• focus on manufacturing and agriculture as sectors with growth potential (although details of how that support will be provided are still to be provided);
• Local Economic Development (LED) framework.
Bagaetsho, the budget has set the right tone and lets all support it as private sector and specifically as accountants. There are only three recipes for success on the side of government and these are execute, execute and execute.
*Remarks by Stanbic Bank Botswana Chief Executive, Samuel Minta at ACCA Budget Review held in Gaborone on Friday 7th February 2020