‘Bud­gets fail­ing to spur growth’

Lesotho Times - - Business - ’Marafaele Mohloboli

SUC­CES­SIVE bud­getary al­lo­ca­tions have tended to be for­mu­laic and failed to ad­dress the root causes of Le­sotho’s eco­nomic un­der­de­vel­op­ment. This was said by econ­o­mist and for­mer Na­tional Univer­sity of Le­sotho lec­turer Dr Frank Baf­foe in his anal­y­sis of the 2016/2017 fi­nan­cial year na­tional bud­get for the par­lia­men­tary port­fo­lio com­mit­tee on the eco­nomic and de­vel­op­ment clus­ter.

The M17.423 bil­lion bud­get was pre­sented on 19 Fe­bru­ary 2016 by Fi­nance Min­is­ter, Dr ‘Mam­phono Khaketla, with a strong em­pha­sis on rein­ing in the govern­ment’s run­away ex­pen­di­ture and ex­plor­ing new sources of rev­enue gen­er­a­tion among oth­ers.

Dr Baf­foe, who is also Ghana’s con­sular to Le­sotho, said suc­ces­sive Fi­nance min­is­ters had been singing from the same hymn sheet since 2000 with­out deal­ing with the is­sues stymy­ing eco­nomic growth.

“It is sig­nif­i­cant to note that since the 2000/2001 bud­get, ev­ery Min­is­ter of Fi­nance has tended to cap­tion the speech with a clar­ion call mes­sage, with no ex­pla­na­tion. My guess is that th­ese mes­sages are meant to gal­vanise the na­tion to­wards political con­sen­sus. The ques­tion is: how ef­fec­tive have th­ese slo­gans been?” he said.

For in­stance, Dr Baf­foe said, past gov­ern­ments at­trib­uted the agri­cul­ture sec­tor’s poor per­for­mance to ad­verse weather con­di­tions.

How­ever, in his view, the other causes were land ten­ure sys­tem as a lim­i­ta­tion on com­mer­cial farm­ing; na­ture and pat­terns of farm­ing sys­tems; live­stock farm­ing which is as­so­ci­ated with over­graz­ing, lead­ing to peren­nial soil ero­sion; lack of in­fra­struc­ture to har­ness rain wa­ter to ir­ri­ga­tion farm­ing and lack of ad­e­quate skilled ex­ten­sion ser­vices to the ru­ral farm­ing pop­u­la­tion.

With re­gards the de­clin­ing South­ern African Cus­toms Union (SACU) rev­enue, he said Dr Khaketla was “stat­ing the ob­vi­ous” since it had been noted by many of her pre­de­ces­sors.

“All past gov­ern­ments have recog­nised the pre­car­i­ous na­ture of (SACU) de­pen­dence of over 30 per­cent of to­tal govern­ment rev­enue with­out defini­tive and ef­fec­tive mea­sures to ad­dress the prob­lem,” said Dr Baf­foe.

He said the per­sis­tent short­fall in pro­jected govern­ment rev­enue could be at­trib­uted to the nar­row do­mes­tic tax base due to the lack of an en­abling busi­ness en­vi­ron­ment for the pri­vate sec­tor to op­er­ate and grow.

“It is only through the growth in the pro­duc­tive sec­tors, which are the do­mains of en­trepreneurs, that the lev­els of com­pany and per­sonal taxes will grow as a re­sult of ex­pand­ing pro­duc­tion and em­ploy­ment lev­els. Such de­vel­op­ments will ul­ti­mately re­sult in in­creas­ing VAT,” Dr Baf­foe said.

“. . . The bud­get did not crit­i­cally ad­dress the root causes of the poor per­for­mance of the pri­vate sec­tor in or­der to make the 2016/17 bud­get re­spond ef­fec­tively to them.”

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