Lessons From Botswana

The job of policymakers is to choose policies with more advantages than disadvantages for most people.

I had not been aware that in December 2021 the government of Botswana banned all South African imports of vegetables and citrus into that country. This was so it could develop its own domestic production.

In theory this was a great decision. The previous year Botswana’s vegetable and citrus import sales amounted to about $35m, so it would really be great if all this revenue went to Batswana. By the end of last year, imports of the same products amounted to $12m, which means that in theory, Batswana must have had a windfall of $23m (nearly R500m).

I suspect this had a lot of support from many Batswana, as there probably would be lots of support for such policies in nearly every country on the planet. This idea of tariffs, which is as old as the hills, is part of what propelled Donald Trump back into the US Presidency.

During the same period, however, vegetable inflation exploded, which is what usually happens when supply of any product is constrained. By November last year, vegetable inflation, the rate at which prices increase, was 13% while in South Africa they were reducing by 2.6% during the same period.

In essence, the government of Botswana made a conscious choice that to develop its domestic production, its citizens would pay higher prices for vegetables even in the face of unemployment. Although this is unlikely to have been communicated at the time, this is the real choice the government made.

I pass no judgment on the former Botswana government’s decision, except to say that the same government is no more – and higher food prices may have been one of the reasons. One of the dilemmas of policymaking is who your policies will advantage, and who they will disadvantage. Another government may have decided against the decision out of fear that higher food prices would lead to general unhappiness. These are all political choices.

Tariffs and other forms of protectionism are very popular the world over because they accommodate many delusional assumptions. One of these is that domestic production and pricing would immediately replace imports. In other words, most of us assume that replacement will be quick, easy and without price implications.

Included in the assumption may also be employment opportunities with decent wages for all workers. These are all things most of us want for our fellow citizens. Of course, it is not easy to replace products that already have an established place in the market especially if a country does not have the capacity to produce, distribute and sell at similar prices.

What usually happens is that those few businesses that were already involved in domestic production experience good revenue growth. Because it takes time to increase production, the reduced supply often leads to price increases, which consumers end up paying for.

Tariffs and other protectionist interventions are not the only case where most people appear to believe that a country can make policies that have not negative consequences at all. There are many more examples.

For example, Donald Trump has threatened to impose a 50% tariff on Canadian imports. This means that US consumers will pay 50% more for the same goods, such as fuel, mined commodities and wood, among others. The way Trump talks about it, he sees tariffs as a bonanza, but they won’t be for consumers – only for the American companies that will hike prices simply because supply is short.

The point I want to make here is that policymaking needs sober minds who will carefully weigh advantages and disadvantages, immediately and in the future. There are almost always disadvantages, and if these are not anticipated and plans put in place to manage them when they arise, there could be devastating consequences.

For instance, many major political parties do not want any private investment in infrastructure because it is “privatisation”. This is fine, but the correct way of expressing this view must be that these parties are making a conscious choice to build infrastructure over a longer period than would be if private sector funds were to be used. Again, it is a political choice.

Late last year I rode the Prasa train from Naledi to Park Station. The train itself is modern and comfortable, but the trip took nearly 1h30min instead of 40min. Transport minister, Barbara Creecy told Parliament’s Standing Committee on Public Accounts (Scopa), which I chair, that Prasa needs over R100bn to meet its public mandate. That kind of money is not available.

Those that believe there should be no private investment in our rail infrastructure whatsoever, while not placing on the table any viable plan, are also saying that for the privilege of only investing public funds, the people of Soweto must wait longer for a service they deserve. Again, this is a political and policy choice to which they are entitled, but it is wrong to sell policy choices as magic bullets or free of negative consequences.

South Africa suffers a great deal from ideological and nationalistic dogmas. It is not just whether there can be private investment in one or other sector – but many other areas. Every country must find ways of making use of the total resources available within for the good of all.

In our case, we have no shortage of capital in South Africa. It just does not all belong to the government. Tax is not the only way to access that capital. The important thing is that the rules for private sector involvement in public goods must be public and the application of those rules must be transparent to prevent the problems of state capture and concentration of power among a few.

What we must not do is to cut our noses to spite our faces at the expense of the South African people. That is what the Botswana example tells me. That is what the Donald Trump example will also teach Americans.

Leadership should be about achieving tangible results, not massaging ideological and other feelings. People don’t eat and survive on feelings and sentiments.

Songezo Zibi is an author and Member of Parliament in South Africa.