BOTSWANA’S COMPETITIVENESS POSITION IN THE ECONOMIC PERFORMANCE FACTOR
The Botswana National Productivity Centre (BNPC) recently partnered with the Institute of Management Development (IMD) to undertake an assessment of Botswana’s overall competitiveness’ landscape.
The partnership resulted in the country’s inclusion in the 2021 IMD World Competitiveness Yearbook, which provides competitiveness rankings and scores for 64 nations. Though similar to the World Economic Forum’s (WEF) Global Competitive Reports (GCR), the IMD assessment provides a more in-depth analysis capable of adequately guiding focused actions aimed at improving competitiveness. The assessment is conducted by examining four areas, referred to as factors, considered critical in promoting a nation’s overall competitiveness. These four factors are economic performance, government efficiency, business efficiency, and infrastructure. This article is the first in a series of four articles that will provide an overview of Botswana’s competitiveness position in the various factors. The discussion in this article focuses on the economic performance factor.
According to the IMD World Competitiveness Yearbook, the economic performance factor assesses the effectiveness of a country’s macro-economic environment in promoting competitiveness. It considers aspects such as performance in the domestic economy, general prices, international trade, foreign investment and employment levels. Botswana’s rank in the economic performance factor is 62nd out of the 64 economies, included in the 2021 IMD World Competitiveness Yearbook, with a competitiveness score of 31.7 out of 100, see Figure 1. When observing the remaining factors, Botswana ranks 42nd in the government efficiency factor, 61st in the business efficiency factor and 63rd in the infrastructure factor. The country’s overall competitiveness rank is 61st out of the 64 economies, with a competitiveness index score of 38.9 out of 100.
Botswana's major strengths in the economy performance factor are anchored in prices, with remarkable rankings in indicators such as the cost of living (1st), office rent (5th), and gasoline prices (9th). According to data from Statistics Botswana, Botswana’s inflation decreased considerably from 2.2 percent in September 2019 to 1.8 percent in September 2020. The 2020 State of the Nation Address indicates that the decrease in inflation was mainly due to the decline in fuel prices that occurred in June 2020. Unfortunately, this accomplishment has recently been offset by the fuel levy increase which has resulted in the transport consumer price index increasing by 7.2% between March 2021 and June 2021.
Unsatisfactory performance in the economic performance factor is due to the country’s low level of total exports (64th), low level of commercial service exports (64th) and undiversified export base measured by the export concentration by product index (64th), see Table 1. Although Vision 2036 envisages a diversified inclusive export led growth, these results signal that the country’s export promotion efforts still requires urgent attention. The recent ratification of the African Continental Free Trade Area (AfCFTA) agreement and the Tripartite Free Trade Area (TFTA) agreement have the potential to intensify exportation given the provision of a wider market for Botswana’s goods and services. The concern, however, has always been whether local businesses are in a position to effectively compete in these foreign markets and fully exploit the opportunities that may exist therein. In order to address this, last year the Botswana Investment and Trade Centre (BITC) launched the Revised Botswana Exporter Development Program, aligned to the National Export Strategy, with the objective of increasing and diversifying national exports. The program provides targeted interventions aimed at building the capacity of both potential and current exporters. It also seeks to link and connect exporters to foreign buyers and improve the local business environment. These initiatives are definitely commendable as they can have massive effects on Botswana’s overall competitiveness if implemented constructively.
Table 1: Botswana’s Economic Performance Factor Weaknesses
| Weakness | Rank |
|---|---|
| Direct investment stock inward | 64 |
| Exports of commercial services | 64 |
| Export concentration by product | 64 |
| Youth exclusion | 63 |
| Current account balance | 63 |
| Export of goods | 63 |
| Unemployment rate | 62 |
| Youth unemployment | 61 |
Another disturbing aspect is the low rank in the level of direct inward investment stock (64th). Yet foreign direct investment is extremely important given its potential to create much needed employment. As shown in Table 2, Botswana struggles with high levels of unemployment (62nd) and high youth unemployment (61st). According to the 2021 IMF Country Report, unemployment increased from 22.2 percent in the last quarter of 2019 to 24.5 percent in the last quarter of 2020. Irrespective, efforts have been made to advance employment creation and these need to be duly acknowledged. Last year, the Citizen Entrepreneurial Development Agency (CEDA), the Botswana Development Corporation (BDC) and the Youth Development Fund (YDF) collectively created 6290 jobs through the provision of credit to local businesses.
In conclusion, Botswana’s competitiveness rankings in the economic performance factor are less than satisfactory mainly due to (i) the poor export indicators, (ii) the low levels of inward foreign investment and (iii) the high levels of unemployment. It is recommended that the implementation of ongoing policies and interventions to improve these aspects, such as the initiatives outlined in the Revised Botswana Exporter Development Program, be fast-tracked. It is worth pointing out that Botswana is not short of good ideas and initiatives needed to improve competitiveness. The National Development Plan (NDP) 11, the Economic Recovery Transformation Plan (ERTP) and even the Post Retreat Speech all highlight a couple of great interventions, programs and reforms that have the ability to achieve outstanding results and transform the economy. The challenge, however, has always been in the poor implementation of these identified initiatives. Poor project implementation at national level has been attributed to ineffective project planning and management, lack of accountability, inadequate institutional capacity and the lack of trained personnel, amongst other things. It is important that these constraints be urgently addressed if Botswana is to successfully implement projects that can have the desired effects of improving national competitiveness.
