Gov’t accused of stifling private sector growth

The government of Botswana has been accused of stifling growth of the private sector by creating state owned enterprises that compete directly with private sector companies. The accusation was repeated on Friday by Leta Mosienyane, president of Botswana Confederation of Commerce Industry and Manpower (BOCCIM) at a gala dinner held under the theme “nurturing a private sector led economy.” Mosienyane said proliferation of state owned enterprises will stifle private sector growth and independence. “We are of the view that the private sector as the engine of growth should not be crowded out by government in a market led economy. We continue to advocate for a process of scaling down government and allowing the private sector to grow. In that way, most of the skills and resources that are in government will be put to optimal use in the hands of the private sector,” he said. He added that nurturing a private sector led economy is the key ingredient required to achieve accelerated economic growth. Mosienyane said more jobs will be created, levels of poverty will be reduced and more Batswana will become millionaires only if the private sector is in charge of private business. He also challenged government to restrict its operations to administration and regulation, saying the time is ripe for the private sector in Botswana to take the drivers’ seat and steer the national economy forward. At a High Level Consultative Committee (HLCC) meeting last week, Mosienyane expressed concern at government’s expansion as evidenced by the formation of new state owned companies such as Okavango Diamond Company, Mineral Investment Company and Botswana Oil Limited. “A number of local authorities have also set up investment companies that will operate privately. We are concerned about the impartiality of these local authorities in adjudicating between companies that they own and privately operated ones,” he said. It is not the first time that the private sector has complained about increased government involvement in the national economy. Concerns were also raised at the recent launch of BOL, a state owned enterprise that will be tasked with ensuring the security of Botswana’s fuel supplies, facilitating citizen economic empowerment in the petroleum sector, managing government strategic petroleum stocks and procuring oil on behalf of government. BOL will also construct a 149 million litre strategic storage facility at Tshele Hills in a bid to increase the national strategic reserves. Its launch was met with skepticism by players in the petroleum industry who said it was unfair for government to establish a company that will effectively compete with the private sector. “This will stifle private sector growth. Obviously that company is owned by government and will take away all the business that government agencies have been giving to private sector companies,” they said. There are already fears that BOL is using its close ties with government to arm wrestle parastatals and other government departments into giving them lucrative contacts that were previously awarded to the private sector. Already, allegations abound that Botswana Oil has approached Botswana Power Corporation (BPC) in a bid to secure a multi million Pula fuel supply contract. There are fears that private sector companies will also be closed out of lucrative fuel supply contracts in the Botswana Defense Force and Air Botswana. Pundits have however opined that such a development will derail efforts at achieving economic growth. They believe stifling private sector growth will result in limited taxes and royalties being paid to government which will affect government spending. “Government spending is not sustainable without private sector growth because government depends on private sector income, through taxes and customs duties. If the private sector is stagnant, or declining there can be no increase in government spending. GDP growth at every level depends on private sector activity. If we want to see robust growth in the economy, then we need to have robust private sector growth,” they said.