Not so perfect After all, courtesy of the ECONOMIST

Before I paste the article from the ECONOMIST, I would like to mention that this is one of the most unbiased, 'tell like it is' article on the civil servants' strike in Botswana.

FOR the past four decades or so, Botswana has been Africa’s golden boy. The former British possession has grown as fast as almost any country in the world. It has built an enviable reputation for good governance and political stability. It has a decent record on civil liberties and a relatively free press. Once one of the world’s poorest countries, it now ranks among the richer middle-income ones. A lot has to do with the discovery of diamonds, of which it is the world’s biggest producer, soon after independence in 1966. But unlike many other mineral-rich countries, it has invested wisely. It has been ranked as Africa’s least corrupt country.

But for the past two months it has been shaken by its first nationwide public-sector strike. Botswana’s 2m people, generally a deferential lot, were shocked when their normally unarmed police used tear-gas and rubber bullets to disperse rioting secondary-school pupils after they went on the rampage in April. The government closed all state schools, though they have since reopened.

The affair started as an ordinary pay dispute. Permitted for the first time to join trade unions under a new law, the country’s 120,000 public-sector workers promptly demanded a 16% pay rise after a three-year wage freeze. The government, pleading poverty following a slump in the diamond market during the global recession, offered just 5%, conditional on future economic growth. Eager to flex their muscles, the newly formed unions stood their ground. But the government, the country’s biggest employer, accounting for 40% of formal jobs, also refused to budge.

The three main opposition parties along with some members of the ruling Botswana Democratic Party (BDP) have sought to jump on the bandwagon by coming out in support of the strikers. The BDP, in power for the past 45 years, was recently hailed by President Ian Khama, son of its founder and the country’s first president, Sir Seretse Khama, as “one of the most successful ruling parties in the world”. But it has been riven by factions. Last year a group of BDP backbenchers, claiming that the president, who used to run Botswana’s army, had become too authoritarian, broke away to form the Botswana Movement for Democracy (BMD). But this still left the ruling party with a fat majority.On April 18th the unions called an all-out strike, claiming that 80% responded. Even at its peak, says the government, no more than half of its employees walked out, leaving most ministries and services operating more or less normally. But the government has dealt with the dispute with a heavy hand, firing 1,400 striking health workers, including some 50 doctors, claiming they were providing an “essential service” and as such were banned under the constitution from striking. Worn down by almost two months without pay, the unions have agreed to accept the government’s revised unconditional 3% offer, provided all sacked workers are reinstated. This the government is refusing to do.

Fired by the strikers’ determination, the three main opposition parties, hitherto divided and fractious, have been trying to form a united front in alliance with the unions. A new generation of opposition leaders believe they at last have a sporting chance of breaking the BDP’s grip, though few people think it could happen soon.

One way or another Botswana is facing change. Its diamond bonanza, which accounts for nearly half the government’s revenue and over a third of its GDP, will not last much longer. Production has peaked and deposits may be exhausted by 2030. Growth has been slowing from an average annual rate of 13% in the first five years after independence to 5% in 2000-05 and 3% since then, including a 5% contraction in 2009-10. Last year it bounced back to 7% and is expected to remain at about that level for the next two years. But the government may not be able to keep spending at its present level of 40% of GDP.

For the first time since independence, the budget is in deficit. The World Bank has urged the government to slash its bloated public workforce by a quarter. But Mr Khama is resisting. With an official jobless rate of 17% (and a real one probably closer to 30%), he says he is loth to turf more people out of jobs. But neither, he insists, can Botswana go on living beyond its means.

http://www.economist.com/node/18806159?story_id=18806159

A DIAMOND SOCIETY

The 19th century pure capitalist model of society was a pyramid, concentrations of enormous wealth in a small group at the top, a not very big middle-class in the middle, and an enormous percentage of the population in the bottom part of the pyramid. And the job of the not too big middle-class was to sort of act as a go-between, on the one hand carrying money back up to the top and orders down to the bottom. Now, a diamond shaped society is what most people are aiming for and what some countries have achieved; a small upper class, a big middle class and small lower class (which if ‘wishes were horses’ would get swallowed into the larger middle class) making the society more equal.

The ugly head of income inequalities is about to rear its head once again in our country. This is not to say it didn’t exist before but with an increase across the board, the disparity between the highest paid and lowest paid becomes wider, and it’s no wonder the labour unions in their latest demands are asking for a pyramid distribution of the 3% increase of the total wage bill suggesting that the lowest paid get a higher increase while the highest paid receive a low or no increase. There most certainly is a big disparity in wages of management and the lowest paid employees and closing in on that gap even by a few Pulas could create a difference. A boost to the lower class income could see growth in the middle class and drive consumption not only for food but for other assets, moving away from hand to mouth spending, economically empowering people.

Africa’s middle class has been growing modestly in the past decade, but ADB admits that it is difficult to define who exactly falls into this group, and even harder still to establish how many middle class people there are in Africa, however, it has come up with a definition that middle income class constitutes of those spending between $2 and $20 and Botswana is among one of the countries with the biggest middle class in the continent but some growth in it wouldn’t hurt. Many have asserted that long term economic growth in the region is inexorably linked to the rise of the middle class consumer. The true test of progress is whether new riches trickle down from the elite to create a group of consumers large enough to sustain broad economic spurts in the service and manufacturing sectors which will create a virtuous circle of budding industries, more jobs, eventually benefiting the poor.

If William Thackeray is to go by, IT IS to the middle class we must look for the prosperity of Africa and so prosperity of our country, Botswana.