The deiminishing role of the state sector in Botswana’s economy
Currently Botswana’s economy is experiencing a hard downturn as several industries are folding up. Amongst the giants of the economy is the BCL mine whose closure has heralded the loss of more than 5 000 jobs in the mine itself and there is still a cascading effect felt as far away as the capital city of Gaborone.
We all know that at the time of independence in 1966, Botswana was among the world’s poorest countries. There was grinding poverty in the country and as the case was, we largely depended on handouts from donors such as the United States of America.
A decision was arrived at by cabinet in early 1970 to establish the business arm of government. It was clear that handouts were far from sufficient and we as a country had to have control on the course of our economy. Then Botswana Development Corporation was established the same year as an arm of government in business.
BDC was set up as the state’s limited liability company and was mandated to drive business in the country in the areas of industry, commerce and agriculture. The budget for establishing BDC was a paltry P25 000 and that investment has since paid off as the state company now can boast of investments well over P4 billion.
When Botswana was putting this model of investment to trial, half a world away in the east, China was equally doing the same. China has indeed achieved to perfect the great leap because to this day, their state owned enterprises have been growing their economy at a tremendous speed.
If China has managed that great leap from absolute poverty to a point where they are now the world’s second biggest economy, we equally could do the same to become Africa’s second biggest economy at the turn of the century.
BDC was set up for government economic development because at the time there was hardly any private sector in the country. It was not only BDC, other state-owned enterprises were brought in to focus on certain specific areas of the economy. One such company is Botswana Housing Corporation.
We still have a great deal to work on in order to get our economy moving forward. When you read China’s success story, you don’t hear of retrenchments and the selling of state assets as it is the case with us now. Of course they have also sold some of their state assets. But it was never for the reason of addressing losses, rather it was a matter of selling of matured assets.
Therefore it should worry us handsomely for the fact that we are seeing an accelerated decline in the role of the state sector in our economy. We cannot achieve any form of economic growth if we are still shedding off business under the pretext that is best in the hands of the private sector.
BDC, BTC, BMC, BHC and others under the arm of government should never at any point be talking of retrenchment. All these are state-owned entities and if copper is not selling well, government should source finances from proceeds of other corporations to sustain BCL. Similarly, if BMC is not doing well because of an animal disease outbreak, they should be sustained and avoid discharging workers.
The primary role of any state-owned business in any part of the world is to participate meaningfully in the economy of the country. And that begins with creating and sustaining jobs.
In our situation in Botswana, we see state-owned entities being sold for a song to private hands. In actual fact, it is the same bureaucrats and the ruling class who end up benefiting from the sales of state-owned assets.