Business Botswana President Moleta Mosienyane fields questions on the 2017 Economic Outlook
Towards the end of last year we saw widespread loss of jobs in different sectors of the economy. In your view, how is this likely to affect the economy going forward?
Moleta Mosienyane (MM): Loss of jobs also means loss of incomes for those without jobs. This will reduce consumption demand which will worsen economic growth in the future unless other new jobs are created. The job losses will also worsen poverty and income inequality. Government could however mitigate these negative effects by intensifying job creation efforts and getting more social safety nets for those without income.
There are widespread calls for government to diversify the economy away from mining, and this has been the case for many years now. Do you believe government is doing enough to diversify the economy i.e. are there any tangible results to speak of?
MM: Economic diversification is a mixed bag. Efforts in terms of policies and programmes are there. We have examples such as EDD, creation of BITC to drive FDI, diversification of exports, etc. But the results are quite something else due to some of the major challenges. Some of these relate to poor implementation and monitoring and evaluation of programmes. The environment for development of businesses is still quite a challenge and more can be done to make the private sector develop. We still have challenges with issues such as resident and work permit system, slow privatization, etc.
We also witnessed a standoff between government (Ministry of Investment, Trade and Industry) over the issuance of trading licences for some South African investors multi-nationals. Have you resolved the issues? What is the current status of the dispute and what are the major talking points i.e. your position of the matter?
MM: Two workshops were held in 2016 with SA Retailers to develop a framework to address local procurement, value chain linkages, employee development and local equity participation in the retail sector, with an aim to grow and diversify the economy of Botswana. As the voice of Business, we will continue to engage and work with the SA Business Forum to develop a framework that will address and commit foreign retailers to;
• Local procurement
• Skills development enhancement programs ( in terms of training, technology transfer)
• Job creation
• Contribution to initiatives to up skill local suppliers
Once concluded the framework will be shared with the Ministry for Investment, Trade & Industry (MITI) for implementation.
In different fora the private sector (including parastatals like BITC) has publicly complained about our immigration policies in recent years, particularly the issuance and cancellation of work and residence permits, requirement for VISAs together with deportation of foreigners without disclosing reasons or a fair judicial process which creates uncertainty. What is your (Business Botswana) position in this matter? How are helping to resolve this issue which threatens to render Botswana a closed economy?
MM: The issue of work and residence permits is a burning issue for the business community in Botswana. It has been an item of heated debate for the Sectoral Level Consultative Council (SLCC), Main HLCC and National Business Conference. This is despite the introduction of the Point Based System (PBS) in 2012. As the voice of the private sector we are equally concerned about the high rate of rejections of Work and Residence Permits applications. We continually engage with government on the matter as it impedes the ease of doing business, foreign direct investment and we are therefore in support of the proposed quota system by BITC on improving the point based system.
Late last year Business Botswana announced that you will dispatch a high level delegation to investigate the BCL liquidation matter to take an informed position on the matter and advise on the way forward. Now, the liquidator recently announced that he will return to court on February 07 to advise the shareholder to close the mine because it cannot be saved. How far is your investigation? What are your preliminary findings? What is your reaction to the announcement by the liquidator? Who are the members of the team carrying out the investigation?
MM: The report has not been made public yet as it is still work in progress, however, our role as the private sector was to give input and guidance to government on how to support employment creation in Selibe Phikwe and the region and also how to revitalize the socio economic environment following the recent announce by the liquidator to close the mine. Therefore we cannot disclose the finding of the report until it has been endorsed by the BB Council. However, the task force comprised of five (5) members led by Mr Oabile Mabusa. With regards to the report by the liquidator, we believe the mine still has a life and instead of shutting the mine, it should be sold to an investor with financial muscle to run and make sure the mine is profitable in an effort to have an economic value for the region, however, vigorous restructuring would have to be implemented.
Some people still argue that there are other alternative ways in which BCL could have been saved from total collapse e.g. they point to the forecast recovery in global copper prices as recently demonstrated by the 20% jump due to demand in China, they also suggest restructuring or placing the mine under care and maintenance? Your views on such suggestions?
MM: The mine has 35 million tonnes of slag which has a potential to kick-start the iron (steel) manufacturing, and this can create new opportunities and employment for the region.
The Minister of Finance recently presented the 2017/18 budget. What are your expectations as Business Botswana i.e. in view of the current performance of the economy which areas do you expect the minister/ government to focus on going forward?
MM: 2016 was a challenging year for the economy, loss of jobs across various sectors. Therefore, the 2017/18 Budget Speech must contribute to improving the business environment, increasing investor’s confidence, produce long term sustainable programs, privatization, improved service delivery, reforms aimed at improving the business environment, water and electricity situation are all expected to be fast tracked. One major expectation from Business Botswana is to ensure policies which will create long term sustainable programs are enhanced. There is need to accelerate and diversify the following sectors; manufacturing, tourism, SMMEs. Moreover, we also expect Government to focus on amongst others:
• Education: improving quality of education which also affects labour productivity in the long run. The poor performance of the public education system is a source of concern and poses a grave risk to our competitiveness. Thus quality of education needs review and with a market demand driven curricular development strategy. Private sector involvement to ensure that available skills match the dictates of the market should be at the fore front of the budget this year.
• Privatisation: We appreciate the historical reasons on state owned enterprises and government’s initiation with working towards privatization, however, government needs to accelerate the pace of privatisation and let the private sector run businesses whilst government focus more on reforms and policy initiations and monitoring.
However, Business Botswana commends government for its continued dialogue and engagement with the private sector. However, in order to compete with the world, the ease of doing business in Botswana should be favourable. Issues with visas, work & residents permits should be discussed during the budget speech.
In your view, what has been the performance of the Economic Stimulus Programme since it was launched?
MM: ESP was smaller than what was anticipated when announcements were made. It probably created some few jobs but most of these were not sustainable when you look at what was funded under ESP. The impact on employment was probably very small- far too smaller than the noise made about it. But of course the difficulty is the lack of data to reasonably assess the impact. The latest labour force data which also gives us the unemployment estimates was done in 2009/10 and therefore very old. Even the estimates from BIAS published in 2013 are very old to give us the status of the current scenario.