Botswana’s productivity and competitiveness in the red

Country ranks poorly in inward direct investment stocks Low in export concentration by product

COVID- 19 has posed a severe threat to both Botswana’s productivity and competitiveness, according to the newly released Institute for Management Development ( IMD) World Competitiveness Yearbook for 2021.

The report, a collaborative effort of Botswana National Productivity Centre ( BNPC) and IMD in assessing the local economy and core indicators of competitiveness, states that competitiveness is under duress due to the challenges brought about by the COVID- 19 pandemic.

Botswana ranks 61st out of the 64 economies included in the 2021 Yearbook, with a competitiveness index score of 38.822 out of 100.

When observing the individual factors, Botswana ranks 62nd in the Economic Performance, 42nd in the Government Efficiency, 61st in the Business Efficiency factor, and 63rd place in the infrastructure factor.

The economic performance factor assesses the effectiveness of a country’s macro- economic environment in promoting competitiveness.

Some of Botswana’s key strengths under this factor include a competitive cost of living index at second position, a high gross fixed capital formation as a percentage of GDP at fourth position, low office rentals at fifth position, and low gasoline prices at 11th position.

According to the report, which features Botswana as a first timer, the major identified weaknesses in this factor, relative to other economies, are low inward direct investment stocks at 64th position, low level of commercial service exports at 64th and low export concentration by product at 64th.

While Vision 2036 envisages a diversified inclusive export led growth, and already several initiatives are being undertaken to achieve this, the results, however, indicate that Botswana’s export promotion efforts still require additional attention.

Other causes of concern are the high levels of unemployment at 62nd position and youth exclusion at 63rd.

“It is therefore imperative for Botswana to urgently intensify employment creation efforts especially regarding youth employment,” the report says.

Botswana’s best rank and score was attained under the government efficiency factor, which assesses the extent to which governmental policies, regulations and legislations are conducive to overall competitiveness. In comparison to other countries, Botswana performed well in this factor due to low employer social security tax rate at first position, high levels of new business entry in the market at third, and low government debt at fourth.

Other commendable indicators include a conducive legal and regulatory framework at 26th position and freedom of the press at 27th.

However, Botswana ranks poorly in terms of number of days required to open a business at 63rd position, despite the high level of new business entries. The assessment further revealed that the competition legislation is not efficient in preventing unfair competition, and is ranked 59th.

According to the report Immigration laws are also prohibitive as they do not promote the employment of foreign talent where local skills are unavailable, and is ranked 58th. The report recommends that improving Botswana’s performance in this factor can be achieved by ensuring in- depth regulatory impact assessments are conducted prior to implementing and modifying all government regulations and policies. It further adds that a move of this nature would result in the implementation of only the most optimal policy options enhancing national competitiveness. The business efficiency factor captures the extent to which the national environment encourages the private sector to perform in an innovative, profitable, and responsible manner.

Botswana’s strengths in this factor include a high participation rate of females in the labour force ranked at first position, low entrepreneurial fear of failure at second and high compensation levels at fourth position.

Under this factor, Botswana did not perform well in the following components: productivity and efficiency at 60th position, labour market at 58th, management practices at 60th, and attitudes and values at 60th.

“It should be noted that the labour market component assesses the availability of skills and the cost of labour, while the attitudes and values component accounts for how values in the general society shape and affect the efficiency of firms”.

The report attributes poor performance to low digital transformation and inadequate use of digital tools and technology. Moving forward in this area, Botswana is advised to urgently expedite its digital transition agenda, as indicated by the Economic Recovery Transformation Plan. Another worrisome issue that BNPC has long acknowledged to be a serious impediment to productivity in Botswana is low worker motivation that now ranks a dismal 64th position.

This concern was also emphasised by President Mokgweetsi Masisi during the recent Post Retreat Speech. Even though BNPC has put in place several initiatives to address this, like the Smart Work Ethics programme, the institute believes more work is required in this area. The infrastructure factor score of 14.126 is Botswana’s worst factor performance. This factor assesses the extent to which tangible and intangible assets available in the economy meet the needs of businesses.

Botswana performed relatively well in terms of public investments in education at first position, share of energy produced by renewable resources at 20th and water use efficiency at 20th.

Identified challenges in this factor were in the provision and availability of basic infrastructure at 63rd position, technological infrastructure at 64th and scientific infrastructure at 64th.

Other depicted weaknesses include the low speed of internet connections at 63rd, the low level of investments in telecommunication at 64th, and the low technological development at 63rd.

While Botswana’s investment in education is the best among the 64 countries, the report recommends that it is worth undertaking an evaluation to establish whether this investment is being channelled in appropriate initiatives that provide value for money.

It indicates that top performing economies are characterised by varying degrees of investment in innovation, diversified economic activities, and supportive public policies.

Strength in these areas, prior to the pandemic, allowed top performing economies to address the economic implications of the crisis more effectively.

To improve national competitiveness and to build resilience in the long term, Botswana is advised to embark on policies that strengthen these aspects.

This year’s rankings are topped by Switzerland at first position, Sweden at second, Denmark at third, the Netherlands at fourth, and Singapore at fifth.

BNPC will be hosting a Stakeholder Competitiveness Workshop in August this year whose objective is to bring all relevant stakeholders together to deliberate further on these results, interrogate possible actions to rectify the current situation, and to map the way forward in terms of Botswana’s competitiveness. The IMD World Competitiveness Centre will also release the IMD World Digital Competitiveness Ranking 2021 on 29 September 2021 and the IMD World Talent Ranking 2021 on 9 December 2021.