Unemployment levels critical – BoB
- Gov’t too cautious about privatisation drive
- CEDA, LEA need monitoring for efficiency
- Economy in technical recession in 2015
The first quarter economic briefing from Bank of Botswana has highlighted unemployment in Botswana as the economy’s greatest challenge, and warns that it has reached critical levels. The Bank says the factors that exacerbate the situation are not new but that past interventions which have increased growth figures over time, have still not translated into tangible jobs. While some countries are awaiting a demographic dividend as youth become more educated with better financial freedom while bearing less children, Botswana is possibly sitting on a demographic time bomb, according to the Bank, if chronic youth unemployment is not addressed.
While the unemployment figure has hovered around 20 percent over many years, BoB acknowledges that lack of conclusive data and non-factoring of latest developments could mean that the figure is much higher. Some quarters put the figure as high as 50 percent. This is because the figure does not include those who are under-employed, engaged in part time work or actively involved in the informal sector.At the briefing hosted by Bank of Botswana yesterday, Matthew Wright, the Bank’s deputy director- research, said that productivity levels in Botswana are also not conducive for economic growth and together with the country’s work ethic credentials, have brought the country under scrutiny.
“Poor work ethic and an unrealistic expectation of high remuneration may be contributing to youth unemployment,” Wright quoted Rand Merchant Bank’s foreign direct investment attractiveness ratings on the continent which place Botswana at an average 13th spot on the continent, behind leaders, South Africa, Nigeria, Ghana, Ethiopia and others.Wright noted that Government has come up with empowerment schemes such as Local Enterprise Authority, Citizen Entrepreneurial Development Agency and specialised ones such as Botswana Innovation Hub, as well as policy interventions to alleviate unemployment concerns but the results have been checkered.
“The overall track record of these institutions is mixed; looking ahead, more independent assessment criteria and reporting could be deployed,” said Wright. “Inefficient investment can undermine anything, even infrastructure development,” he said adding that Botswana has fallen short in infrastructure development in recent years,” he said. Wright also said that Government lethargy and caution in implementing privatisation have cost the country opportunities and that some of the reasons for fearing privatisation are not well informed.
“The benefits of privatisation are overwhelmingly positive while the disadvantages are in many cases, exaggerated,” he said.In its latest annual report, the reserve bank, BoB, however notes that the problems perpetuating the unemployment situation are: a relatively undiversified economy; a large public sector that is possibly crowding out the private sector; a labour force that is inadequately trained and is not motivated; a challenging business environment and regulatory framework that tends to limit growth and productivity of business and a small informal sector for which growth is constrained by among others, lack of access to finance, and rigid trade regulations.
The mining sector, being the major contributor to Gross Domestic Product, is itself capital intensive and this means growth does not automatically create more employment. This is in converse to the declines in agriculture over the years which is labour intensive.Meanwhile Dr Kealeboga Masalila, BoB’s Director, Monetary and Financial Stability said that the country fell into a recession in 2015 when growth rates went negative in the third quarter.
UNDER THE RADAR
Some of the Institutions created to influence productivity, competitiveness and job creation are: the Botswana National Productivity Centre (BNPC) which “has a long way to achieve its mandate as it has not yet managed to translate productivity awareness into actionable programmes that improve workplace productivity,” as BoB notes.
Botswana Investment and Trade Centre is noted for exceeding its target of creating 2400 jobs in 2015 by 600, mostly through business expansions done by companies attracted by it. BITC attracted 16 companies with a capital investment of P462,9 billion.
The Local Enterprise Authority has made some progress, managing to register 114 new SMMEs in 2013/2014 for business training, mentoring and coaching. Since inception up to 2014, LEA has helped create almost 7000 jobs and trained over 43 000 in business awareness workshops.
Others include CEDA, Youth Development Fund, Botswana Innovation Hub, Competition Authority and Botswana Development Corporation.