Botswana’s ERTP is in trouble
As soon as it became apparent that COVID-19 was not only a deep health crisis but an economic one too, the world’s leading economists gave countries two related pieces of advice:
• ‘Act fast and do whatever it takes’, a euphemism for the deployment of heavy fiscal artillery to minimise the economic damage from COVID-19;
• Build back better
Both require bold and decisive action, elements of which include unprecedented levels of public investment to:
• Minimise corporate and personal bankruptcies, stop the descent of national economies into deep depressions, and lay the foundation for a speedy and strong post COVID-19 recoveries, and;
l Transform the economy and imbue it with greater dynamism and resilience.
Neither advice was suited for the overcautious whose first instinct is to balance the books. They were meant for the bold and ambitious who seek to turn adversity into opportunity. Botswana’s preeminent economic response to COVID-19 is the Economic Recovery and Transformation Plan (ERTP) of July 2020. The architects of the ERTP seemed to understand the critical imperatives. They wrote: “While the COVID-19 pandemic could exacerbate some of the country’s existing economic and social challenges… there is a window of opportunity to implement accelerated structural reforms to transform the economy, and achieve key objectives…”
They then added, “The ERTRP, therefore, needs to be designed and targeted for maximum impact”.
The ERTP sets five priorities, namely: l Promoting export-led growth;
• Improving the efficiency of government spending and financing;
• Developing human capital;
• Investment in infrastructure, and;
• Economic resilience.
I won’t argue with these, though one could conjure more up-to-date formulations of the same priorities. It is possible to make transformational investments and build back better within this framework of priorities. The key strategies for the pursuit of these priorities are developing economic clusters, for example, agriculture, tourism and services; expediting digital transition; SME development; improving health and education outcomes; developing productive infrastructure; and fast-tracking the improvement of the business environment. I expected government effectiveness to feature prominently but the objectives and the strategies are hardly the reason I believe the ERTP is in trouble. What bothers me is the disconnect between our promise and actions. First, we undermined the ERTP from the onset by not doing enough to minimise the economic impacts of COVID-19. We underinvested in fiscal expansion at both the household and firm levels, risking more corporate and personal bankruptcies than would otherwise have been the case.
The wage subsidy component of the short-term stimulus package, which proved useful whilst it lasted, was just too brief at three months to have lasting impact. We underinvested in COVID-19 containment. The exceedingly discomforting eyesores for me were public transport, where no measures were taken to achieve social distancing, and the near total neglect of the boots-on-theground type of social mobilisation that builds community agency in vulnerable communities.
We got decision-making and execution on COVID-19 wrong at a critical juncture. Allowing mass movement in December 2020 gave the monster a big push. Locking down Gaborone as a hot spot and turning a blind eye to the large-scale falsification of departure information in order to beat BSafe, would be the stuff of good comedy had it been not so calamitous.
Then we failed to avail ourselves of science-based options, e.g., testing, to allow necessary travel by economic agents. All these factors undermined the ERTP to the extent they occasioned more severe economic depression and prolonged and deeper economic dislocation. Second, the budget for the ERTP is a paltry P14.5 billion! It is an insult to transformation, even allowing for the fact that it was incremental to the regular development budget. A suitably ambitious infrastructure agenda alone would gobble up the entire ERTP budget. As things stand, the ERTP had only P2.9 billion for productive infrastructure, a pittance in the transformation calculus! For purposes of comparison, the USA is discussing a $4.5 trillion infrastructure spend in a $21 trillion economy.
That is more than 20% of the Gross National Income on infrastructure alone. In short, the ERTP lacks ambition. Transformation requires unprecedented levels of effective public investment in infrastructure, education, health, connectivity and SME development amongst others, and profound reformation of the regulatory regime.
The third challenge for the ERTP is the execution gap. The delivery mechanism, government, is defective. We move too slowly and without the discipline necessary for transformation. Witness how the private sector quickly moved services online in response to COVID-19 whilst government departments imposed service quotas rather than devise alternative means of sustaining effective service provision.
We have not mobilised the partnerships necessary for transformation. It is telling that whilst the government was developing the ERTP, the private sector developed its own COVID-19 recovery plan.
In many ways, the latter plan is more transformative. Its infrastructure proposals are bold, especially with regard to what it calls economic roads, turning Botswana into a regional transport and logistics hub, connectivity, education, health, and competitiveness.
For the ERTP to be successful, the government and the private sector must reasonably be in accord. The logic is simple: depending on the execution model, the private sector can provide a significant amount of the funding required for an ambitious ERTP. Furthermore, there must be willingness to meaningfully reform government.