Botswana income gap not narrowing between citizens- Serame
It is unfortunate that despite its Upper Middle Income status, Botswana still remains one of the most unequal countries globally!
This is the candid admission by government’s purse master, Peggy Serame, the Minister of Finance to Parliament this Monday.
She said the income gap between the citizens is not narrowing as revealed by the latest statistics. The 2015/16 Botswana Multi-Topic Household Survey revealed a Gini- Coefficient of 0.522 for that year.
On a related matter, a planned new household income and expenditure survey was delayed by COVID-19 and the postponement of census, therefore the Gini- Coefficient is now expected to be determined in 2024/25, with the results available in 2026, and this will provide a better assessment of whether the inequality gap is narrowing or widening.
In answer to a question from Member of Parliament for Molepolole North, Oabile Regoeng to state what percentage of Botswana’s population is at par with the country’s upper middle income status - Serame said Upper Middle Income status is a World Bank classification that refers to a country as a whole as opposed to individual members of the population. This categorisation, therefore, would not be applicable to individuals., she said.
Asked whether owing to economic inequality, the gap between citizens, and between citizens and state/government is getting narrower or wider as the country grows to become upper middle income – Serame indicated that Botswana’s average income was 78.6 percent of the average for all Upper Middle Income countries in 2021.
That is according to the World Bank’s measure of average incomes - which is Gross National Income (GNI) per capita measured at purchasing power parity (PPP) prices.
She explained that the purchasing power parities are the rates of currency conversion that try to equalise the purchasing power of different currencies, by eliminating the differences in price levels between countries.
“The above income level is an indication that Botswana as a whole is well on the way to being at par with other upper middle income countries”, Serame said.
As to what percentage of the population is in poverty level relative to the status of the country’s upper middle income, the Minister answered that the multidimensional poverty rate is recorded at 20.8 percent in the 2021 Pilot National Multidimensional Poverty Index Report.
This index uses a variety of criteria related to living standards to measure poverty. Serame said that despite the country having achieved upper middle income status, “this poverty level is considered relatively high”.
Based on the various household income and expenditure surveys carried out over the years, Serame said the headcount poverty rate, which is a financial measure of living standards, has been on a long term downward trend, reaching its lowest point of 16.3 percent in 2015/16.
Regoeng also wanted to know if considering all other variables, the Minister is confident that by 2036 all or a significant portion of the citizenry will be at par with the country’s income status.
Serame said that in response to the inequality and other socio- economic challenges faced by Batswana, Government continues to strengthen policies and programmes across sectors aimed at expediting the implementation of key strategic priorities to address these challenges.
For example, the Economic Inclusion Act and the new Public Procurement Act are expected to increase participation of citizens in the economy and encourage the use of locally produced materials to promote local economic activities and promote citizen participation in the procurement process.
The passing of the Credit Information and Movable Property Acts by Parliament will also improve access to credit to micro, small and medium enterprises which are mostly run by citizens.
Other empowerment initiatives include the establishment of a Wealth Creation programme which has consolidated some empowerment programmes, such as micro enterprise projects in agriculture, housing, social protection and women empowerment.
The programme is also aimed at poverty eradication as well as creating employment and improving and sustaining livelihoods.
Serame said all things equal they expect that Botswana will have achieved high income status by 2036 but added that this will require achieving an average annual real GDP growth rate of 5.7 percent.
She said this is expected to lead to the creation of sufficient employment opportunities to raise average incomes, reduce the unemployment rate to single digits and significantly reduce poverty and inequality.