banner_9.jpg
banner_274.jpg
Home » News » General » Corruption starts to sting Botswana companies

Corruption starts to sting Botswana companies

Publishing Date : 03 October, 2017

Author : AUBREY LUTE

The latest Global Competitiveness report (2017-2018) has pegged corruption in the top five most problematic factors for doing business in Botswana. It is ranked fifth by respondents who were engaged in the World Economic Forum’s Executive Opinion Survey.


World Economic Forum invites policymakers, business leaders, civil society leaders, academics, and the public at large to consult the performance of their countries in the Global Competitiveness Index and, together, identify the main challenges and barriers to growth facing their economies. The Forum invites all stakeholders to look beyond rankings and to analyze the evolution of each indicator and each concept covered, identifying areas of improvement and areas where economies are lagging.


According to the Global Competitiveness report the number one problematic factor to doing business in Botswana is ‘Poor work ethic in national labour force’ ranked at a score of 19.0 out of 20. This indicates that poor work ethic is a major problem in Botswana and it contributes to failing businesses and just outright rejection by potential investors to set up in Botswana. Poor work ethic was still top of pile in the last report but the big difference is that it jumped from a score of 16.2 out of 20. Business executives are concerned with low productivity level and negative attitude towards work.


Access to Financing come a distant second at 11.1 score out of 20. The report suggests that it is very difficult for businesses to secure funding for their businesses in Botswana. Access to financing has maintained the same spot as last year but there is a significant improvement in the score from last year’s 13.3 out of 20.  


Corruption, which used to rank very low, is now third in the list scored at 10.5 out of 20. To some observers this should be a major concern to Botswana because business executives are starting to feel the pinch as a result of corruption. There has been selected reports of government officials demanding bribes to help businesses or suggestions of people’s business ideas being stolen. Most of the perceived corruption is in the procurement system where there are reports of inside trading, bribery, nepotism and favoritism. Last year corruption was ranked 8th with a score of 7.9 out of 20, this is a significant jump and it is evident that it is fast becoming a big concern for the “least corrupt country in Africa”.


Restrictive labour regulations are also viewed as a problematic factor in doing business in Botswana. Some businesses have in the past engaged Business Botswana on the country’s labour regulations and the matter was escalated to the Ministry of Labour for possible review of some of the laws or regulations. The Global Competitiveness report scores restrictive labour regulations at 10.0 out of 20. This factor was number six last year with a score of 8.6 out of 20. This year’s score demonstrates that business executives and other stakeholders are frustrated by the labour regulations has the drop.


Inefficient government bureaucracy keeps spot number 5 with a score of 8.8 out of 20. There is a slight improvement when compared to the 2016-2017 report Botswana it was scored at 9.5 out of 20. Inadequately educated workforce continues to be identified as one of the problematic factors and this year it is scored 8.7 out of 20. Businesses have always complained that Batswana are not adequately trained or they lack the requisite skills for most specialized jobs. Last inadequately trained workforce factor featured in the top 3 with a score of 10.4 out of 20, this year 2017-2018 there is a big improvement. Inadequate supply of infrastructure also features at in the top six this year, scored 8.7 out of 20.


Other problematic factors to doing business in Botswana identified by respondents were Insufficient capacity to innovate (7.7); Crime and theft (3.6); Policy instability (2.3); Inflation (1.5); Poor public health (2.0); Tax rates (3.0); Government instability (2.1); Foreign currency regulations (0.9); and Tax regulations (0.5).


Botswana is perceived as the least corrupt country in Africa and followed by Cape Verde, followed closely by Seychelles and Rwanda, a country among fastest growing economies in Sub-Saharan Africa comes in fourth place. But the Global Competitiveness report paints a disturbing picture if the factor of corruption continues to rank high as one of the problematic issues for doing business in Botswana. It remains to be seen what the next report of Transparency International would say with Botswana’s perceived growing corruption and whether it would reflect this growing concern.


By all accounts in the past corruption was seen as a moderate risk in Botswana. Petty corruption was not a risk for businesses, but in this year’s Global Competitiveness report the stakes have risen. Nevertheless, the opinion of some has always been that nepotism and patronage pervade the government sector, which makes corruption a very high risk for public tenders.

Corruption is real in Botswana


There is a high risk of encountering corruption in the Botswanan public procurement sector, most commonly in form of patronage.  Family members and friends often own companies that government ministries have tendered with, and conflicts of interest are often not disclosed (TI, Nov. 2014).

Just as an example recent reports indicated that eight out of ten Batswana believed that government officials are involved in corruption, and 75 percent believe that it has increased over the past year (Afrobarometer, Mar. 2015). Literature review by this publication suggest that businesses operating in Botswana report that they experience favoritism in relation to decisions from government officials (GCR 2015-2016). Petty corruption in form of irregular payments or bribes in connection with the awarding of public contracts or licenses are less common, but occur at times (GCR 2015-2016).


The Global Competitiveness Index (GCI) tracks the performance of close to 140 countries on 12 pillars of competitiveness. It assesses the factors and institutions identified by empirical and theoretical research as determining improvements in productivity, which in turn is the main determinant of long-term growth and an essential factor in economic growth and prosperity.


The Global Competitiveness Report 2017–2018 comes out at a time when the global economy has started to show signs of recovery and yet policymakers and business leaders are concerned about the prospects for future economic growth.  Governments, businesses, and individuals are experiencing high levels of uncertainty as technology and geopolitical forces reshape the economic and political order that has underpinned international relations and economic policy for the past 25 years. At the same time, the perception that current economic approaches do not serve people and societies well enough is gaining ground, prompting calls for new models of human-centric economic progress

Cartoon

Polls

Do you think the closure of BCL will compel SPEDU to double their efforts in creating job opportunities in the Selibe Phikwe?

banner_14.jpg
banner_12.jpg

POPULER BRANDS