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Many positives from the budget, but fundamental problems remain

Publishing Date : 11 February, 2020

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Minister of Finance and Economic Development, Dr Thapelo Matsheka announced his maiden Budget Speech on Monday, the speech was also the first for the 12 Parliament.

Like Leader of Opposition Dumaleng Saleshando noted, there was an element of “fresh air” with regard to the presentation of the speech as opposed to what was obtained in the past, but nonetheless, the fundamental problems facing the nation remains.From the positives; the Minister mentioned the desire to change the country’s budgeting system from the incremental budgeting to zero budgeting system. There were many concerns with the current system because it delayed progress in terms of development, transformation and mainly contributed to the never ending problems associated with use of public funds.

Zero-based budgeting is a budgeting method where the current year’s budget is prepared from scratch, thus taking the base as zero as compared to incremental budgeting where the current year’s budget is prepared by just making changes in the past year’s budget. In the zero budgeting system, the previous and new activities of the government departments are categorised according to their importance and based on that, funds are allocated to each activity without considering the past budgets or achievements.

The zero budgeting will help government in justifying its spending, rather than working on a template that has breed inefficiencies, year-in-year-out. Dr Matsheka has also announced the intended merging of parastatals, because of duplication of mandates, a positive thing, but also there is a need to be careful when doing that. Naturally, a process like this one may lead to job losses, but if at the end of the day, it will create efficiencies that we need as a country, let it be.

It is however worrying that government is unable to deliver projects on time and on budget, something that delays development and create problems for the economy. This modus operandi is now part of the fabric, which is detrimental to the country’s aspirations. We can develop good policies, and avail funds for the projects that we want done, but if we are unable to deliver them on time and on budget, then it becomes a huge problem.

The Minister has indicated in his speech that in order to enhance implementation of projects, training on project management, including risk assessment, emotional intelligence and change management, is ongoing to build the requisite capacity across Government. He also implored the private sector, as one key stakeholders in project implementation, to up-scale their commitment to cost-effective, timely, as well as good quality project implementation.

Another worrying factor is government’s reluctance to pursue the Public-Private Partnership (PPPs), despite its potential to accelerate development in the country. The Minster announced that there are a number of activities to prepare some projects for private sector participation through PPPs, which will be undertaken during the coming Financial Year, however there was no commitment in terms of which projects and how they will be beneficial to the economy.

Executive Chairperson of PPADB is on record indicating that part of the problem relating to failure to deliver projects within time relates to lack of capacity in delivering projects. Government does not have many properly skilled people who can manage and deliver projects on time.  The same applies to government’s reluctance in pursuing PPPs as a model for rapid infrastructure development. We also need to brave and embrace the future with optimism. The structure of our economy, as well as its growth will not change unless we make radical decisions.

Part of the decision that we should make, as supported by other economists, is using available debt instruments as well as, using the Botswana Public Officers Pension Fund (BPOPF), borrowing of course, for the purpose of developing our infrastructure. There is no doubt that, Botswana, like many other African countries have deficiencies in infrastructure, something that makes it difficult for its economy to be competitive. We have a decision to make on this, otherwise we have possibility of regression.

World Bank has warned few years ago, that if Africa does not invest in infrastructure, it will go into economic recession. Botswana should not be caught in this problem. According to African Development Bank, the continent has a total financing gap of $52 billion (about P570 billion) to $92 billion (P1 trillion) per year. Yearly estimates of Africa’s financing requirements range from $130 billion (P1.4 trillion) to $170 billion (P1.9 trillion).

Water and sanitation has the largest financing gap of all the sectors, based on annual financing needs of $56-$66 billion and a 2016-2018 average commitment of $13 billion. In view of this, it is however important to note that Dr Matsheka mentioned the intention to shift the budget to slate towards development budget as opposed to recurrent budget.