Wanetsha Mosinyi
9 November 2009
Bank of Botswana governor Linah Mohohlo has urged local businesses to lobby for changes that reduce production costs because it is one of the challenges that hampers the country in attracting Foreign Direct Investment (FDI) outside the mining sector.
"The time has come to address the remaining constraints to broad-based investment," she said last week at the official opening of the just-ended Global Expo.
She said the cost of doing business in Botswana is high compared to other landlocked countries. At international level, she said Botswana scores highly in indicators of competitiveness such as economic freedom, ease of doing business, global competitiveness, and corruption perception index. But despite these impressive scores, challenges remain in attracting FDI. Mohohlo advised businesses that in their lobbying, production costs reduction should not mean that they seek generous subsidies or imposition of additional obstacles that favour a particular interest group. "Equally important, businesses should always look up to the government for solutions to their problems, as such an approach tends to entrench a culture of dependency."The governor said business should embrace the benefits that accrue from increased productivity in a global economic environment because "it is only this path that will sustain our country's long-run broad-based economic and social prosperity".
Despite the Botswana economy rebounding in the third quarter due to government spending, monetary policy easing and the ongoing global economic recovery, Mohohlo warned that the world economy remains fragile. "For a strong rebound in economic activity to be sustained, there is a need to learn from the current crisis and to take corrective measures, if we are to avoid a recurrence of the recent economic and financial turmoil."
At global level, she said there is discussion of the need to create a new economic order as evidenced by the G20, which is no longer an obscure talking shop for finance ministers and central bank governors of advanced economies.
"Although there is practically no developing country participation, we should take comfort from the fact that it has now been transformed into a serious forum for world leaders to take collective global decisions," she said.
The central bank governor raised concerns regarding slow progress made in reforming the regulation and supervision of financial institutions.
"There is a need to curb the excessive risk-taking by these institutions. After all, it was their behaviour, which threatened the collapse of the global financial system in 2008, that triggered the recession."
Similarly, Mohohlo said there is little sign of reviving the global trading system under the Doha round of talks. She said there is little progress even though it is clear that even-handed trade relations can emerge through these negotiations to boost world trade and fulfill the G20 commitment to discourage countries from pursuing policies that restrict trading via protectionist measures.
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