- Banker identifies balancing export growth with reducing imports as a challenge
- Points out contradiction between industrial policy and SACU rules of origin
TLOTLO KEBINAKGABO
Botswana continues to grapple with the persistent challenge of import substitution as the country pushes for an export-led economy in the midst of a high import bill.
Speaking at the First National Bank (FNB) budget analysis event in Gaborone recently, the Acting CEO of the Companies and Intellectual Property Authority (CIPA), Joel Ramaphoi, highlighted the complexities of balancing export growth with efforts to reduce imports.
“How do we strike a balancing act between export-led growth and import substitution?,” he queried.
Not synchronised
Ramaphoi identified lack of alignment between Botswana’s industrial and trade policies as a major obstacle.
While industrial policy has largely focused on two key areas of strong infrastructure investment and attracting foreign direct investment (FDI), these efforts have not been synchronised with trade policy.
However, Ramaphoi cited the country’s strong emphasis on infrastructure – including roads, water systems, telecoms, and pre-built factory shells – as a step toward boosting industrialisation.
Contradictions
Even so, he said, Botswana has also prioritised setting up industries and attracting FDI to fill gaps left by the absence of dynamic local firms.
He asserted that the real challenge lies in the contradiction between industrial policy and the Southern African Customs Union’s (SACU) rules of origin, saying they have led to the collapse and/or relocation of many industries.
“This problem is compounded by unsynchronised industrial and trade policies,” Ramaphoi said, pointing to past industrial casualties such as water tank maker Flotek and Hyundai and Volvo vehicle assembly plants.
Poor linkages
Beyond policy misalignment, he argued that Botswana has failed to emphasise key development factors that could support manufacturing and enhance export performance.
Ramaphoi underscored the lack of backward and forward linkages with local firms, noting that roughly 80% of Botswana’s exports remain raw materials, with principal suppliers and customers often located outside the country.
“We need stronger connections within our value chains, rather than relying on franchises and original equipment manufacturers (OEMs) abroad,” he said.
Slow skills transfer
He identified slow transfer of skills and acquisition of technology and knowledge across industries as another challenge. Lack of transparency along the entire value chain is another issue that prevents local firms from benefitting from data-driven innovation.
To achieve sustainable industrialisation, Ramaphoi urged policymakers to identify a “target revolutionary path” that goes beyond reliance on FDI and multinational firms.
He emphasised that traditional growth determinants – including healthcare, agriculture, infrastructure and digital innovation – must be improved to create a thriving industrial sector.
He called for domestic firms to develop their own technologies and work towards early-stage technological advancements. “We must push local businesses to leapfrog to the technological frontier,” he said, adding that SMEs should be supported in moving into high-tech sectors.
Research and development
Among Ramaphoi’s recommendations were fostering innovation ecosystems, strengthening public research institutes, and increasing funding for research and development.
He called for development of a dedicated policy framework to support SMEs that are export-oriented and outlined three core objectives for such a framework, namely enhancing SME capacity for local innovation, promoting high-growth, innovation-based startups and establishing diversified, competitive and value-adding industries to drive job creation.
“Creating vibrant and competitive industries is the only way we can build a truly export-led economy,” Ramaphoi said.