Review FDI directionBIDPA economist
Botswana Institute for Development and Policy Analysis ( BIDPA) financial economist, Dr Kelesego Mmolainyane said the country needs to assess the foreign direct investments as some of the FDIs are extractive.
Speaking during Budget Pitso last week, Mmolainyane said FDIs literature shows that some are extractive and some are really giving in. “As a country we need to asses our FDIs and check if they are really giving in or they are extractive. On the issue of skills transfer we should look at what skills are these FDIs transferring to our people in Botswana. She highlighted that as Botswana is on the transition to knowledge- based economy there is a need to look for FDIs that are transferring skills to the citizens. Mmolainyane said the deficit trend from both the current account deficit and from the fiscal account which has been the trend even before the outbreak of Covid 19. This is mainly contributed by the high amount of imports and lower exports. “We need to work hard on our export strategy to reduce the high volume of imports,” she said. Currently Botswana’s main export commodity is the diamonds and this is not sufficient as global diamond sales continue to decline due to Covid 19.
Government tried to fund local companies but deficit still persists. She said the nation needs to work hard on its export strategy to reduce budget deficit. “The issue of fiscal deficit has been with us for so long. This calls for all of us in Botswana to play a major role over and above the Ministry of Finance and Economic Development to address this because if we can go on like this our macro- economic stability is compromised.” Recently Botswana Investment and Trade Centre reported that they facilitated FDI to the tune of P1.38 billion against an annual target of P1.8 billion in the 2020- 2021 financial year despite the tough trading economic conditions and uncertainties in the global investor market.
BITC CEO Keletsositse Olebile said the performance for the last two years was slightly over the 80 percent target with a slight decline in the 2020- 2021 financial year. During the year, about P2.96 billion was realised as export earnings, against a target of P3.5 billion recorded from BITC facilitated companies. On his note BFTU Secretary General Thusang Butale , said the current economic model of Botswana is wrong because currently the export led growth policy results in deficits and low value added exports thus causing pressure on the currency to be devalued “As BFTU we believe that the current economic model is wrong because since independence the country has struggled with problem of unemployment, high income inequality and lack of economic diversification. These are neo liberal economies which were adopted 30 years ago. Neo liberal economies distressed that smaller economy must conform to higher economies with a smaller role to sustain markets.”