BOTSWANA’S COMPETITIVENESS POSITION IN THE GOVERNMENT EFFICIENCY FACTOR
This article is the second in a series of four that provides an overview of Botswana’s competitiveness position by factor.
A factor, according to the Institute of Management for Development (IMD) World Competitiveness Yearbook, is an identified area critical in promoting a nation’s overall competitiveness. The four factors, as outlined in the World Competitiveness Yearbook, are economic performance, government efficiency, business efficiency, and infrastructure. This article discusses Botswana’s competitiveness position with regards to the government efficiency factor.
The government efficiency factor assesses the extent to which governmental policies, regulations and legislations are conducive to overall competitiveness. Ranked 42nd out of 64 countries, government efficiency is Botswana’s best factor rank with a score of 51.4 out of 100, (see Figure 1). The best government efficiency sub factor rankings are attained in tax policy (9th) and public finance (29th). While rankings in the other sub factors are as follows; 48th in the institution framework sub factor, 51st in the business legislation sub factor and 60th in the societal framework sub factor. The societal framework assesses the fairness of the judicial system, the distribution of income and gender inequality.
Overall, Botswana’s strengths in the various government efficiency sub-factor are low employer social security tax rate (1st), high levels of new business entry in the market (3rd), and low government debt (4th). Other commendable indicators include a conducive legal and regulatory framework (26th) and freedom of the press (27th).
Botswana’s worst rank in terms of this factor is the number of startup days required to open a business (63rd), see Table 1. According to the Ease of Doing Business Report (2020), it took 48 days to complete the nine ( 9) procedures required for starting a business in Botswana in 2019. Yet the same process in Mauritius comprises of only four (4) procedures collectively taking five (5) days to complete. In order to rectify the current situation, the National Development Plan 11 Midterm Review outlines policy reforms and programs to be adopted and implemented by 2022/23. It further sets an ambitious target of reducing the time to start a business to one day by 2022/23. Currently, the amendment and promulgation of some legislation and administrative reforms have already been undertaken to improve the regulatory framework. These include the introduction of an On-line Business Registration System and the introduction of the Industrial and Trade Regulations Act. This Act replaces licensing requirements with much simpler registration processes for businesses with no health and safety issues.
Table 1: Botswana’s Government Efficiency Factor Weaknesses
| Weakness | Rank |
|---|---|
| Start-up days | 63 |
| Gini coefficient | 62 |
| Sustainable Development Goals attainment | 62 |
| Government budget surplus/deficit (%) | 62 |
| Competition legislation | 59 |
| State ownership of enterprises (crowding out effect) | 58 |
| Immigration laws | 58 |
The assessment further revealed that the business legislation(51st) is not efficient in preventing unfair competition and immigration laws are prohibitive as they do not promote the employment of foreign talent where local skills are unavailable. Within this factor another major weakness worth emphasizing is the heavy presence of state-owned enterprises which according to IMD pose a threat to the private sector. It is for this reason, and others, that the 2021 Budget Speech indicates that a comprehensive review of these organisations is to be conducted. A State-Owned Enterprise rationalization strategy has also been developed to address issues of duplication and overlapping mandates.
To improve inequality (Gini coefficient) and the attainment of the Sustainable Development Goals (SDG), Botswana needs to reassess and evaluate the effectiveness/ineffectiveness of the current social safety net programs. Such an assessment will assist the government to identify the key challenges and gaps that these programs face in attaining their intendent effective level. The proposed re-engineering of Ipelegeng to improve its productivity level is also a step in the right direction. Irrespective, there is also a need to ensure sustainability in the administration of such programmes.
Though Botswana’s government efficiency competitiveness position is somewhat more satisfactory in comparison to other factors, there is still room for improvement. The IMD World Competitiveness Report illustrates numerous weaknesses and challenges in the government efficiency factor which constrains Botswana’s ability to create and maintain an environment which sustains the competitiveness of domestic enterprises. In order to propel the ranking of Botswana’s government efficiency factor, there needs to be emphasis on enhancing mechanisms for delivering public services, including increased digitization of services that enhance business set- up and immigration. It is worth noting that the earlier mentioned digitization of the business registration system is a commendable initiative in this regard.
