Dr Keith Jefferis
The perennial power outages are not only a menace to households, but it also affecting business confidence as it disrupts normal business activities. Dr Keith Jefferis and Thabelo Nemaorani wrote in Econsult Economic Review for the second quarter of the year (April-June) that one of the biggest detractors from economic performance and confidence in Q2 was the continuation of widespread electricity “load-shedding”, or power outages. “This has been highly disruptive across the private sector, with inevitable implications for costs and productivity,” the researchers said.
Botswana faces its worst power crisis in history despite the P11 billion investments in the Morupule B power plant, which is undertaken by a Chinese contractor. The 600 MW power project has failed tests and missed the December completion deadlines.
“Botswana Power Corporation has given assurances that supplies will be restored to normal by the end of July with the full commissioning of the new Morupule B power station, but given their failure to honour such commitments in the past, actions will speak louder than words”.
Econsult noted that power outages are being compounded by water shortages and restrictions in the south of the country, a problem that will take much longer to resolve.
There are concerns that the ongoing power and water shortages are indicative of a deeper problem of poor planning and project management in the public sector. Econsult pointed out that while Morupule B may be the most extreme example, there are other major projects that have been started late, completed late or not at all, been badly designed, have gone over budget, or not delivered the benefits or services that had been anticipated. Such projects are the National Stadium in Gaborone, Sir Seretse Khama International Airport amongst others.
“The long and the short of it is that public money is being wasted, and the nation is being deprived of essential infrastructure, which is in turn holding back development.”
“It is essential that proper attention is devoted to proper planning, selection, design and management of public sector investment projects. Maybe this means doing fewer projects, but doing them better. It certainly means developing improved capacity within government and parastatals to plan and manage projects. If not, it is certain that future growth will be hindered, and Botswana’s reputation for good governance and management will be in jeopardy.”
Econsult said there was a range of conflicting economic data and developments that made it difficult to draw a clear overall picture of where the economy is heading.
However, overall GDP growth slowed down to 3.6% over the year to March 2013, due to reduced growth in both mining and non-mining sectors of the economy.
Despite the diamond market showing robustness, other commodity price developments are less favourable, with copper, nickel and gold prices reaching multi-year lows – not good for Botswana’s other mineral exporters. “Exchange rates were volatile during the quarter, driven by the weakness of the SA rand against the US dollar. This has provided some relief for mining exporters, whose revenues are mostly in US dollars but many of whose costs are in rand or Pula.”
