Almost 12 months ago, on 2nd April 2020, a National Lockdown was announced by His Excellency Dr Mokgweetsi Masisi. The lockdown lasted 7 weeks, finally being relaxed on 21st May 2020. During this time movement was restricted and due to the restrictions, the Government of Botswana attempted to assist businesses and individuals against the resultant economic knock. Through the Ministry of Trade and Investment, an Economic Response Plan was instituted that attempted to assist businesses with the resultant short term cash flow problems resulting from the health restrictions imposed on the economy. Whilst the plan was multi-pronged and comprehensive, unfortunately it had a major blind spot of “missing” the informal sector in Botswana and hence potentially overlooking the biggest category of people affected by the lockdowns.
According to the United Nations Economic Commission for Africa (2020) “Covid19 in Africa: Protecting Lives and Economies”, between 60-75% of adults in Africa are employed in the informal sector in Africa. This number is not as drastic in Botswana, with a 2018 Statistics Botswana survey showing that there are about 105,445 businesses categorized as informal and employing just under 200,000 people (other estimates go as far as 500,00 people). 50% of these businesses are estimated to be retail businesses (think hawkers etc) who would be affected directly by a lockdown restricting movement. It was also seen that the majority of them are women with close to 70% of them categorised as single (i.e. supporting a household). 65% of these businesses earned less than P36,000 a year meaning majority of these businesses are very vulnerable to any income shocks. A study by MITI found that close to 52% of the informal sector recorded zero revenue during the lockdown with a further 25% earning less than P1,000 while 80% of informal businesses registered losses during this period.
It is for these reasons that, as many of us were calling for the assistance of this crucial sector which makes up 30% of all working people in Botswana, that Ministry of Trade and Investment, with the assistance of the UNDP, embarked on a research and policy formulation that culminated in the launch of the Botswana National Informal Sector Recovery Plan 2021 by the Honourable Minister of Minister of Trade Peggy Serame on 16th March 2021. While this launch seemingly went under the radar, this policy and plan is one of the most important to come out of the past 12 months simply because of the number of people it directly and indirectly affects and its resultant effect on potential poverty indicators.
The policy is written with 2 primary strategic goals.
1. Strategic Goal 1: Establishment of Informal Sector Facilitation Structures within first year of Covid19 Pandemic. The aim of this goal is put in place all of the structures which made it impossible to assist the informal sector during the lockdown. The main result would be the formulation of an Informal Sector Agency which would run all things informal sector related going forward.
2. Strategic Goal 2: Economic Revitalization of the Informal Sector: this would entail actioning all policy recommendations that would be housed under the Informal Sector Agency to try and recapitalize and capacitate the informal sector to be more resilient to economic shocks going forward.
These strategic goals were underpinned by 6 guiding principles being:
1. Transition to formalization
2. Informal sector facilitation
3. Economic resilience
4. Support for women and youth
5. Entrepreneurial mobility
6. Health first
These principles then captured specific recommendations below them, with the most significant being the below:
- Introducing an Informal Sector Agency to engage with the informal sector, manage all government interventions related to the sector and to create and manage the informal sector business database. This agency would likely sit under the Department of Industrial affairs in MITI working in conjunction with the Economic Diversification Drive Unit.
- The first big focus of this unit would be to create and maintain a business intelligence database. A lack of such a database was the main reason the informal sector could not be assisted in 2020. Going forward this database and analysis from it would inform policies and show niches of the informal sector and inform targeted interventions including capacity building and training, funding etc. The database would allow for evidence based decision making as well as be able to categorise the many different subsectors in the informal sector to avoid a one size fits all approach when it comes to assisting the informal sector.
- In order to “jump start” and assist with recovery of the sector, an initial amount of P1000 would be distributed to businesses to recapitalize businesses with the Informal Sector Agency. This is estimated at an expenditure of about P200 million.
- The Informal Sector Agency would also focus on building and transferring technology innovation and investment clusters. Employing a cluster model, the agency would build regional production and service centres to house and create hubs for the informal sector. This will make delivery and access to coaching skills development, innovation and financial assistance easier. Market access centres could also be created that could also focus on leveraging available technologies like digital finance and innovation.
- In order to build resilience and provide better livelihoods of informal sector workers, leveraging off the intelligence database, the Government could look at the possibility of building social insurance like pension and medical aids. This can only be done or informed by data and information which currently doesn’t exist.
A welcome development included in the policy is an action plan which sets targets, timelines and the people responsible and accountable for execution. Monitoring and evaluation of policy implementation has always been decried in Botswana and to see policies including action plans is a welcome development (that said, most of the targets like formulation of the Informal Sector Agency have a target date of September 2020, either implying this policy has been launched late or there’s a significant typing error in the document).
In conclusion, I am happy that the Botswana National Informal Sector Recovery Policy has come to fruition albeit, possibly belatedly. I applaud the recommendation to set up a new Informal Sector Agency and would possibly encourage that as we are rationalizing state owned enterprises, this could possibly be merged into the LEA mandate to remove the possibility of having to start a fresh new entity. LEA has already been running capacity building and facilitation of the sector and this could possibly give it a sharper focus. The most important component of this policy is the need and recognition to build a database that would inform all actions, policy interventions and capacity building actions going forward. As a company involved in the data analytics and transformation space, Spectrum Analytics welcomes this move and would be excited to assist the Ministry in delivery of this recommendation. It is central to our beliefs that for Botswana to move into the 4th Industrial Revolution and attain all ideals of Vision 2036, focusing on enabling evidence-based decisions is a step in the correct direction and we applaud the Ministry for this. Lastly, another ideal we strive for is for creating actionable insights from monitoring and evaluation and we hope to see this improve the delivery and execution of this policy.
