The new Botswana Private Sector Diagnostic (CPSD) report has identified gaps in infrastructure, access to finance and skills as key constraints to employment and productivity growth.
The report, which was launched on Wednesday by the International Finance Corporation (IFC) and the World Bank, says despite relatively high public investment spending, Botswana’s quality of infrastructure has fallen, and the country significantly lags behind.
Trade barriers are also a major constraint for the private sector, and a greener path for the economy could be unlocked by facilitating improved trade in environmental goods and services.
The CPSD outlines regulatory gaps that hamper competition and productivity and suggests boosting access to finance for smaller businesses and increasing investment in skills development suited to the needs of the job market. The CPSD also suggests increasing investments in transport and digital infrastructure, which lag behind other countries in the region.
The CPSD, however, highlights opportunities for investment and growth in Botswana and ways the country can achieve a more resilient, green, and sustainable economic future, including through regulatory improvements and diversification.
Delivering the report, World Bank Country Manager for World Bank Country Director for Botswana, eSwatini, Lesotho, Namibia and South Africa, Marie Francoise Marie-Nelly said Botswana can transform its economy, create jobs, reduce inequality, and achieve a resilient recovery from Covid-19 by increasing private sector participation and investment in its energy, water and sanitation, tourism, and other sectors.
These three sectors, she said support the productivity and competitiveness of other sectors while reducing costs of public services, which in turn supports diversification and upgrading of the economy with greener and more future-orientated modes of production.
“The COVID-19 pandemic disrupted economic activity in Botswana and sharply reduced revenues from the diamond and tourism sectors,” Marie-Nelly said, adding that the World Bank is committed to supporting the government to enact reforms aimed at attracting private investment to diversify the economy and create jobs.
The report also states that a revitalisation of private sector-led growth in the tourism sector can be catalysed through a three-pillar approach, firstly streamlining and harmonising the tourism enabling and business environment.
This approach would include undertaking a regulatory review of permits, licenses, fees and processes for tourism firms to reduce barriers to entry and growth.
Another aspect concerns catalysing private investment into new products and markets, while the third pillar is concerned with improved local economic links and sector sustainability.
According to the report, energy is a growing industry in Botswana with potential and importance as an input to other industries. To address the energy supply shortage, Botswana has set ambitious targets to grow domestic power generation capacity and to accelerate the move toward renewable energy resources contributing at least one-half of total electricity by 2016.
The report suggests that introducing private sector participation in the water sector could help address weaknesses in the sector. Among opportunities are performance-based contracts for nonrevenue water reduction, collection and energy efficiency.
Opportunities also lie in concessions for wastewater treatment and water recycling service, as well as water savings performance contracts for large users.
IFC Senior Country Manager for Botswana, Carlos Katsuya said increasing private sector participation can help to unlock the investment needed to support the country’s economic diversification agenda, create jobs, reduce income inequality, and bolster economic growth.
CEO of Business Botswana, Norman Moleele said the three sectors that have been identified by the study, energy, water and sanitation, tourism are among the 10 that have been identified and outlined in the Private Sector Recovery Plan.
“It is good that even the recommendations of how to go about the three, can also be applied to the other seven,” he said.
He said what remains critical for the private sector, alongside support from government and other development partners is for something to be done following the release of this report and others released before it.
“The reason the same recommendations keep coming up is because nothing is ever done, and there are no effective follow up monitoring instruments,” Moleele said.
The CPSD suggests specific interventions that Botswana can take to accelerate economic diversification and private sector participation, including by developing a dedicated investment policy and investment law, strengthening formal mechanisms to address investor grievances, addressing corruption, and enhancing government effectiveness.
The report is in line with commitments made under Botswana’s Economic Recovery and Transformation Plan and Vision 2036 to expand the domestic economy by diversifying away from diamonds and refocusing on an export-oriented, labour intensive, and private sector-driven model.