When legalising citizen empowerment, the government must note failures of the citizen economic empowerment policy (CEEP) and take corrective action.
Citizen economic empowerment is one of the concepts through which citizens are given an opportunity to access and derive advantage from their country’s economy. In Botswana, citizen empowerment began at the birthplace of the citizen economic plan, that is, the Transitional Plan for Social and Economic Development (1966- 1971) and moved to the several national development plans and relevant pieces of legislation up to the Citizen Economic Empowerment Policy of 2012.
TPESD was designed to guide the economic and social development of Botswana during the two-year period following independence. Ironically, the TPSED was silent on the notion of citizen economic empowerment. On 26 July 2012, the government promulgated the Citizen Economic Empowerment Policy. It was premised on a strong belief that if the economy continued to be dominated by non-citizen interests, it could ultimately lead to instability and even greater calls for protectionism. It aimed to equip citizens with the necessary competencies which would enable them to take better advantage of economic opportunities and have a stake in the economy. These objectives have not been achieved.
Citizen economic empowerment faces an array of challenges. When the CEE policy was introduced, it was acknowledged that although a number of initiatives had contributed towards business development in Botswana, citizen participation in major economic activities and opportunities was hardly there. The persistent challenges of citizen economic empowerment in Botswana can be attributed to a number of factors. First, there are scattered pieces of legislation, policies and directives which contain citizen economic empowerment provisions but with little coordination. To resolve this there is a need for consolidation. Further, the institutions responsible for spearheading this policy are fragmented and disjointed. This fragmentation not only makes it difficult to manage and monitor the success of the schemes but also result in duplication and overlapping of functions.
This leads to poor implementation and delivery of the benefits of the schemes to targeted recipients. The solution to this lies in creation of one institution that focuses on developing, implementing and monitoring delivery of citizen economic empowerment by various government departments. Uncomfortable as it is to discuss this topic, the CEEP failed because it may have benefitted the wrong people, mainly non-indigenous Batswana.
Hence another challenge that citizen empowerment should address is the definition of the word “citizen.” It is a fact that indigenous Batswana are spectators in their country’s economy. This is in spite of numerous government efforts at economic empowerment of Batswana and CEEP. It can only mean that the policy did not benefit indigenous Batswana. To sum this up, the World Bank reports that Botswana’s top 10 percent earned 67 percent of the national income while the bottom 40 percent earned only 4 percent. This means that while citizen empowerment was supposed to benefit those at the bottom and reduce income inequalities, it has failed. The top 10 percent in Botswana are almost exclusively foreigners and the naturalised Batswana. For citizen empowerment to work, the government must acknowledge that it is indigenous Batswana who need empowerment.
To ensure that the citizen empowerment law becomes a success, government must explain what it means by “Citizen Empowerment.” This would enable the law to benefit specifically those intended. Otherwise this law will fail just like EDD. That should be the reason that it is under review in the first place. Government should blatantly and unapologetically acknowledge the historical economic disadvantages that indigenous Batswana have always suffered.
As things stand currently, Botswana’s economy, as acknowledged by the Government when establishing the CEEP, is in foreign hands. Critical economic sectors like the minerals, tourism and financial sectors are controlled by foreign multinationals.
In the development of the citizen empowerment law, there are models which Botswana can adopt. The country can derive guidance from the Zambian Citizen Economic Empowerment Act, the South African Broad Based Economic Empowerment Act and the Tanzanian National Economic Empowerment Act.
These laws share the following features: they establish an institution that is designed to regulate economic empowerment with powers necessary to meet that goal, criminalize conduct that defeats the goal of economic empowerment and provide for funding of the entity. Invoking powers vested in his office by the Public Procurement and Asset Disposal Act, the Minister of Finance and Economic Development, Dr. Thapelo Matsheka, has decreed that all government works, supplies and services tenders up to P10 million would henceforth be reserved for 100 percent citizen-owned, medium and micro enterprises with a maximum annual turnover not exceeding P10 million. It is a good step in the right direction.
However, there seems to be a pattern that emerges from the reserved trades in both the Trade Regulations and the Industrial Development Regulations.
The trades are mostly low capital trades which require low technology and tend to be low profit generating. The scope of reservations does not extend to high profit and high-tech trades, which have the potential to significantly empower citizens of Botswana. Yet the country has a good supply of first rate engineers across a spectrum of fields. Among these are mining engineers and IT experts some of whom have grown frustrated after years of being underlings understudying expatriates.
There are also no mechanisms to ensure that the benefits of citizen economic empowerment flow to the intended beneficiaries. When non-citizen contractors are required to subcontract citizen contractors, there is no mechanism to monitor and determine whether there is a transfer of skills. There are also no mechanisms to determine the extent of fronting under the Trade Act. The new law must address these challenges if indeed the aim is to empower citizens.
The CEEP failed because it left out very fundamental policies that are relevant for citizen empowerment. The CEEP did not take concrete cognizance of other strategies of the government, such as the Economic Diversification Drive (EDD) which provides a framework for diversifying Botswana’s economy. While the policy mentioned the concept of citizen economic empowerment, there was no attempt to merge and explore the synergies between the two.
Another area that was ignored was Botswana’s policy on foreign direct investment. Government strategy on foreign direct investment functions to attract non-citizens to invest in Botswana while the CEEP acts to prevent entry or participation of non-citizens into certain sectors of the economy. The fact of the existence of a conflict between these two policies ought to have become a relevant factor in the CEEP. While it is doubtlessly important that both prospective and existing foreign investors are assured of the protection of their investment and investment opportunities in Botswana, the conflict between these policies and laws should have been clearly identified and demarcated.