BOTSWANA: Unemployment Surges as Government Plans Fail to Take Off

By IPS Correspondents Reprint | | Print |

Bester Gabotlale

GABORONE, Nov 2 2006 (IPS) - Botswana is still widely cited as Africa’s economic success story, but fears are emerging of a reversal because of soaring unemployment and the sluggish implementation of government plans.

The landlocked Southern African nation, sandwiched between South Africa, Namibia, Zambia and Zimbabwe, boasts good democratic credentials and investment ratings; corruption levels in the country are also perceived to be low.

Nevertheless, unemployment is estimated at 23.8 percent, up from 13.9 percent in 1991. According to the most recent Bank of Botswana report, job losses occurred mostly in the construction, transport and communication industries. Manufacturing, commercial agriculture and education also registered declines in employment.

The drop in employment can be ascribed to the decline in growth in non-mining sectors, dropping from 5.5 percent in 2003/04 to 1.9 percent in 2004/05. This is bad news for a government which has acknowledged the need for economic diversification. Diamond revenues still generate up to 80 percent of foreign exchange earnings.

The Botswana Federation of Trade Unions, an umbrella body of the labour movement, says the most worrying trend is the high prevalence of unemployment among the youth.

Of great concern is the high unemployment among university graduates, which shows a mismatch between the skills on offer and the demands of the market.

In response, the government has been reconsidering ways to attract new investment with a view to boosting economic growth and creating jobs. A survey by the Botswana Institute for Development Policy Analysis identified several constraints to investment.

The survey, commissioned by the foreign investment advisory section of the World Bank, found the legislative environment to be problematic. It was counteracting efforts at investment promotion, making it difficult to do business in Botswana.

This prompted the government to review its laws and policies. A new strategy on foreign direct investment was subsequently launched.

However, a year after Botswana President Festus Mogae said the review would boost the flow of foreign direct investment, little progress has been made.

The Ministry of Trade and Industry has admitted that efforts to attract investment into the country were being frustrated by a backlog in the issuing of work and residence permits, as well as by a shortage of serviced commercial and industrial land.

Keith Jefferis, former deputy governor of the Bank of Botswana, believes that economic prospects will seem less gloomy if the government does more to assist foreign investors.

More should be done to address cumbersome bureaucratic processes and the delays in issuing licenses and making land available. He also points out that the shortage of skilled personnel has been worsened by the effects of HIV/AIDS.

“We therefore need to make it easier for skilled workers to come to Botswana. But what we are doing is making it more difficult,” says Jefferis. According to him some of the legislative reviews have had the opposite effect to what was intended and. If anything, “getting work permits has become even more difficult”.

According to the Joint United Nations Programme on HIV/AIDS, the adult HIV prevalence rate in Botswana stands at just over 24 percent.

Alwin D’Souza, owner of WD Engineering, a company specialising in the manufacture of paving tiles, recently imported Russian technology. Now he is unable to hire people with the requisite skills because of the difficulties in getting work permits.

Due to these problems, a Russian engineer whom he recruited to operate the technology had to return to his home country. D’Souza’s complaint is one of many.

Igbal Ibrahim, president of the Botswana Confederation of Commerce, Industry and Manpower, says the government does not listen to businesspeople’s concerns.

According to him, less than one-fifth of the budget allocated to removing obstacles in the way of business has been spent, more than eight months into the financial year. When they talk to government about such issues they are told “you guys are scaring away investors”, says Ibrahim.

The 2006 International Monetary Fund report on Botswana has also called on the government to improve the pace of reforms to sustain the country’s economic performance.

According to the report, “structural reforms to develop the domestic private sector and attract foreign direct investment will have to be accelerated, and broad-based efforts to prevent and combat HIV/AIDS reinforced, to sustain rapid growth, further reduce poverty, and reverse the decline in social indicators”.

In the meantime, the government is studying yet another report with recommendations on enhancing Botswana’s attractiveness as investment destination.

Last November, Mogae established a business and economic advisory council to present proposals on investment policy. The council’s report has been concluded and is with the government.