New administration seizes opportunity to reform Botswana economy

Botswana President Mokgweetsi Masisi

Botswana President Mokgweetsi Masisi

from ODIRILE TOTENG in Gaborone, Botswana
GABORONE, (CAJ News) NOW that the dust has settled after months of grueling campaigns ahead of a fiercely-contested general election, the retained government of Botswana has hit the ground running in creating a diversified and more inclusive economy.

The Southern African country of over 2 million people, lauded as Africa’s model democracy, must rid itself of its over-reliance on vast diamond wealth in order to fulfill its economic potential.

After overcoming infighting rocking his party and a determined opposition, Dr Mokgweetsi Masisi and the Botswana Democratic Party (BDP) have retained power on a campaign premised on advancing the nation towards a more inclusive economy.

There was a pledge to transform Botswana from a resource-based to a knowledge-based economy.

Following the general elections held on October 23, BDP surpassed the 29-seat parliamentary requirement for a majority, by garnering 38 seats out of a total of 57.

The ruling party’s popular vote, at 52,77 percent, has increased from 46,5 percent in 2014.

“We believe that the outright majority will ensure smoother policy implementation,” said Gomolemo Basele, Quantitative Analyst at First National Bank (FNB) Botswana.

Objectives laid out under Botswana’s National Development Plan 11 and Vision 2036 commitment support the financial house’s macroeconomic forecasts.

“The new government will have to overcome challenges related, among others, to the lack of economic diversification, high unemployment and weak private-sector growth,” Basele added.

Diamond revenues account for 76 percent of Botswana’s export revenue and 45 percent of government revenue as well as 33 percent of gross domestic product (GDP) of US$19,65 billion, the 21st highest in the continent.

The World Bank stated that the limitations of Botswana’s diamond-led development model had become more apparent with growth slower, inequality remaining high and job creation is limited.

However, the economy is still good enough to be currently one of the world’s fastest growing economies, averaging about 5 per annum over the past decade.

“Inflation has remained persistently low over the course of this year, despite several measures enacted to induce a higher headline figure,” said Neville Mandimika, Rand Merchant Bank (RMB) economist for Sub-Saharan Africa.

These measures included higher salaries for government workers and an August cut in the bank rate.

Last week, the Bank of Botswana’s Monetary Policy Committee (MPC) kept the bank rate at 4,75 percent despite low headline inflation.

The headline figure has breached the central bank’s 3 percent lower inflation bound for the most part of 2019, while core inflation remained lacklustre, averaging just 1,9 percent, Mandimika added.

The central bank cited a favourable medium-term inflation outlook associated with moderate domestic demand, as the reason for its monetary-policy decision.

However, with a Gini coefficient of 0,52 according to the World Bank, Botswana’s income inequality is one of the highest in the world. The Gini coefficient measures the income or wealth distribution of a nation’s residents.

After his swearing-in by Chief Justice Terence Rannowane, Masisi pledged the ruling party’s determination to improving the lives of Batswana, who he said were yearning for the social and economic transformation of the country.

“I wish to emphasise here that Batswana should always remain at the epicentre of our development agenda,” Botswana’s fifth-elected president said.

Masisi said government would leverage on the Economic Diversification Drive (EDD), to give citizens an opportunity to set up industries to empower them and in turn create much needed jobs.

Government would enact legislation to enforce compliance by relevant institutions including the private sector, in order to implement economic diversification and citizen economic empowerment initiatives.

“This is why I am happy to announce that the EDD strategy is being reviewed to close the existing gaps and help us to achieve in full, the goals of the Citizen Economic Empowerment Programme,” the president said.

Masisi’s BDP reiterated a pledge to serve in accordance with its manifesto.

“With the assistance of economists, we’re going to prioritise the manifesto, budget accordingly and implement these (citizenship economic empowerment laws) as the building blocks for the next five years,” the ruling party stated.

– CAJ News

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