ABSTRACT This paper discusses the negative influence inadequate infrastructure development has on the level of investment in the industry and service sectors in Botswana
This paper discusses the negative influence inadequate infrastructure development has on the level of investment in the industry and service sectors in Botswana. It highlights the negative influence it had, on telecommunication, transport (rail, road and air) and water and sanitation. The paper further analyses the strategies put forward by the Botswana government in refining infrastructure across the country to boost the level of investment on the sectors.
Adequate infrastructure development is key in economic development as it facilitates effectiveness and production of the country. It also increases employment creation and stimulates the economy (Sunday Standard, 2016). According to export.gov (2017), Botswana being a diverse economy has opened a number of sectors for investment which are agriculture, mining, education, health and transportation sectors. In addition, the government saw great opportunity investment in the following sectors; water, power, transportation, and information communication and telecommunication infrastructure. However, Botswana has been experiencing a decline in infrastructure development since 2007 to date which in turn is affecting the level of investment in industry and service sector.
This paper will discuss how inadequate infrastructure development is negatively affecting the level of investment in industry and service sectors. Firstly, it will highlight the achievement made thus far, followed by the inadequacies then lastly the impact on the level of investment, by transport, Information Communication and Technology and water and sanitation respectively.
As reported by Ekundayo P. Mesagan and Amarachi C. Ezeji (Ezeji, 2016), Nigeria is facing cases of inadequate infrastructure. Some of which are patchy supply of electricity, bad roads, fuel scarcity and piped water deficit, resulting in highly negative impact on the manufacturing sector such as low production of goods and services due to irregular supply of electricity, good water system, bad roads and also poor communication system which overall has depleted economic growth and development. The current state of infrastructural facilities has caused the relocation of some manufacturing industries to other countries or regions and subsequently hindering foreign investors from investing in the economy. Mesagan and Ezeji further explain that well developed infrastructure will boost performance of the sector hence increasing and refining economic growth and development. Evidence from data collected from a number of countries has shown that infrastructure services have assisted in enhancing economic growth. The level of infrastructure deficit in Nigeria has been identified by Sanusi (L.S., 2012) as the biggest setback towards achieving the nation’s economic visions. Better infrastructure can boost the productivity of the economy by increasing the quality and quantity of such infrastructure.
According to Zahid Hussain (Hussain, 2015), Infrastructure impacts investment adjustment costs, by maintaining high quality of public infrastructure we witness a positive growth in investment levels. That is, expanding government infrastructure maintenance spending results in the private sector to spending less to retain its own capital and consequently administering its investment capacity to other uses, thereby generating an additional growth effect. Better infrastructure improves access to health-care and education which magnifies the growth impact of public infrastructure due to the interconnected relationship between education and health. The quality of Botswana’s overall infrastructure has declined badly over the past five years, making the country one of Africa’s “Top 5 Deteriorators” in the latest edition of the Rand Merchant Bank Where to Invest in Africa report. For investors this is bad news because poor infrastructure increases the cost of doing business.
Transport comprises of three modes, which are:
A railway runs through the country and functions as a link in the Southern African rail network between South Africa, Zimbabwe and Zambia and the Belgian Congo (Zaire). The Botswana Railways train functions as a means to transport goods and people. Botswana has managed to keep railway infrastructure in good condition throughout the years and kept it up to regional standard. Over the years, Botswana Railways took a decision to suspend the passenger train due to certain reasons inclusive being safety. This saw the passenger train has being revamped making travelling less strenuous for the public and bringing it back to service. This has improved the efficiency of rail transport in the country. Rail transport has now increased the different modes of transport hence moving from area to area has been made easier and more accessible.
According to the Sustainable Development Unit from the World Bank, Botswana is more susceptible to logistical shortcomings, charges at foreign borders and other administrative problems. It also goes on to explain that Botswana experiences high export and import charges when compared to other Sub Saharan countries. This may influence investors to shy away from investing in Botswana as it will be costly for their businesses due to high transport costs affiliated with rail transport hence a negative influence on the level of investment. In this situation investors may opt to invest in a different country with the same benefits and service provision but lower costs of transporting.
The single railway line currently runs from the North to the South bringing up yet another challenge faced by the rail transport in terms of development. The adequacy of rail infrastructure has led to the need to build railway lines across the country in order for the passenger train to cover other towns and villages instead of the 7 main locations it currently covers. This will lead to not only an increase in revenue but will also open up more doors for investment opportunities. The negative effect brought about by the single railway line is that it limits the transportation of goods for trade. This will influence investors against investing in the country with limited transportation because transport plays a big role.
Air transport in Botswana has been growing at a snail’s pace scale with Air Botswana as the only provider of this transport service. Air Botswana dominates air transport in the country, carrying over 75 percent of capacity, with an additional capacity of roughly 18 percent provided by South African Airlink Express. (Open data for Africa)
There are a few airports in Botswana (Gaborone, Francistown, Maun and Kasane) hence air transport is limited according to geographical location. Local business owners and investors therefore shy away from using this mode of transport as it would be costly to use. It also only connects to South Africa and no other Southern African countries proving how limited and isolated the air transport is when compared to other African countries which have a greater number of airports and city pairs as shown in graph 1 (Henry, 2009). The low city pair’s means investors have to travel out of Botswana then connect flights elsewhere to get to their end destination which is taxing in regards to time and cost. Causing investors to rethink investing in Botswana.
Graph 1: air transport statistics in Africa (Henry, 2009)
Botswana rose from having 12 km of tarred roads at the time of independence in 1966 to now having the total road network measured at 31,746.7 km. Road transport has now become the most popular mode of ground transport (93%). The remaining roads are mainly unengineered earth/sand roads. Bitumen and gravel roads make up majority of the roads at 33% and 35% respectively (Botswana, 2016).
Expansion and maintenance of existing roads has been one of Botswana’s main focuses since Independence evident in Table 1, showing amounts of money spent in different periods on improving the level of road infrastructure in the country. Recently, the road entering Francistown was expanded in order to accommodate the increasing traffic. The A1 road is also getting expanded in order to better connectivity among areas internally.
Table 1: Past investments on road infrastructure in Botswana (Botswana Government).
NDP DURATION (YEARS) AMOUNT SPENT (PULA)
1966-1986 260 000 000.00
NDP 7 1991-1997 870 746 599.00
NDP 8 1997-2003 2 661 274 384.00
NDP 9 2003-2009 2 467 660 000.00
Maintenance fund securing for road infrastructure is lagging behind resulting in inadequate development of road infrastructure being a major problem in the country. The maintenance of roads is divided, (58.3 percent) under the care of Central Government while (41.7 percent) maintained by Local authorities (Botswana, 2016).
Most rural areas in Botswana lack tarred roads. Making transport to these areas difficult, not only for businesses but people too. A study carried out on road transport in rural areas showed that roads in rural areas are deteriorating at a fast rate due to lack of maintenance (Roads Department, 2007) Chobe being an example, has about 309.5 km of roads of which 49% are tertiary, 89% are unpaved roads, 79% gravel and earth roads in the network (2012). Some of these rural areas have the potential to be future business hubs but the poor road infrastructure is what keeps investors and other local business owners away from these areas.
Information Communication and Technology Industry
According to ICT in education in Botswana, ICT infrastructure has improved through the years and has increased mobile penetration through an effective liberalization sector. However, only a small population fully utilize such for example internet usage stands at 5%. A major difference exists between urban and rural access to ICT services. Also, ICT is not widely used in businesses, however it is lengthily used in the retail and mining sector within foreign-owned companies. Botswana’s ICT sector is small and generally focused on local market opportunities. Table 1 below shows the ICT infrastructure that is already there in Botswana and that the country has managed to develop to date.
Table 1: ICT Infrastructure in Botswana
Fixed-line subscribers 69.7 per 1,000 persons (2004)
Mobile subscribers 708 per 1,000 persons
Dial-up subscribers 6,000 (2005)
Broadband subscribers 0 (2004)
Internet users 7.167 (2004)
Television broadcast stations 1
Radio stations 41
• Mobile Subscribers: Table 1 above shows that the government of Botswana has achieved 708 per 1000 person’s connectivity to mobile phones. Even though that is the case, given the geographical spread of Botswana this is not enough to cater for and accord investors a trading platform. Investors need to be guaranteed of unlimited connectivity to keep track of their business which currently is a struggle in Botswana more especially in far flung areas. This as such comes across as inadequate infrastructure development that hinders effective trade and service delivery within the country.
• Broadband subscribers and Internet users: Botswana has made a major stride in ensuring that there is adequate provision for internet usage and broadband connectivity as per the submissions of table 1, there is still more that can be done to make the infrastructure adequate. The quality of service provision is quite inadequate as its coverage across the country is still low. Only 152 localities are connected to the optic fibre as of current, and other localities are still awaiting connection. This affects service delivery in localities awaiting optic fibre connection as they are still exposed to the old slow internet connection.
Water and sanitation
The Botswana Core Welfare Indicators Survey 2009/2010, results showed that 88.9 percent of households had access to piped water at national level. This was an advance from the findings of the 1993/94 and 2002/03 Household Income and Expenditure Survey, which had indicated 83.3 and 86.9 percent of households as having access to piped water, respectively. For rural areas, 44.2 percent of households had piped water as their source of water. Additionally, 30.6 percent had access to communal taps within their localities. This was an improvement equated with the findings from Household Income and Expenditure Survey 2002/03, which revealed 67.9 percent of rural households having access to communal taps within their localities, and implications of this are that fewer households used communal taps in 2009/10. According to National Development Plan 11 (2016), three multipurpose dams were constructed namely; Thune, Lotsane and Dikgathong. In addition, a groundwater development completion of Masama East, which increased the water supply in the Greater Gaborone.
1. Water Quality
Even though infrastructure for water has improved in Botswana, the quality of most water supplied to Batswana has been found unsafe for human consumption as per the Botswana Bureau of Standards drinking water requirements. 14 out of 23 Districts in Botswana did not meet the approved standards, including Gaborone, Ghanzi and Hukuntsi (Botlhoko, 2015). Currently there are only two wastewater treatment plants in Botswana, in Francistown and Gaborone, therefore some areas end up having access to untreated water. Other contributing reasons for failure to meet the BOBS standards is bacterial infections, rusty pipelines and contamination of water sources due to inadequate management of pit-latrines and leakages. For instance Maun and surrounding areas, there is bad quality water characterized by bad smell, discolor and sediments.
According to Sunday standard reporter (Sunday Standard, 2018), tourists are mainly affected by the water crisis as they have to use discolored or bad smelling water, sometimes have no access to tap water. Therefore negatively affecting the tourism industry.
2. Water shortage and sanitation
According to Botswana daily news, some villages are experiencing high rates of water shortages where they can go close to a week without access to tap water. Such villages include Maun: the situation is very disturbing as there is also no place to discharge wastewater (kayawe, 2015).
• Currently, Princess Marina and Bamalete Hospitals do experience water shortages (Mokgosi, 2018). According to Kayawe (2015), shortage of water in Marina has led to instances where patients who are not critical are sent back home when their operation procedures require water and operations are prioritized.
• Letsholathebe Memorial Hospital too experiences water shortages so much that it is forced to take laundry to Kasane and Gantsi for washing (Keakabetse, 2011). Letsholathebe is also not connected to any sewer network, raising a question of where wastewater dumped.
• In some instances when there is a water shortage or no water at all, tourists are left stranded at Maun airport as they cannot use the rest rooms (Keakabetse, 2011), this alone taints the image of the tourism industry in Botswana and drives both investors and tourists away.
The level of infrastructure development in Botswana is of great concern for a developing country. Botswana’s infrastructure was well developing until 2007 where it started declining to date, thus leading to inadequate infrastructure development. The major contributing factors resulting in inadequate infrastructure development is lack of financial funding and budget constraints. Furthermore, our research revealed that air transport is the most affected infrastructure as over the years, there is no significant changes. Its routes are still limited to local locations and South Africa only. Secondly, water and sanitation hit a downturn after the privatization of water affairs, where now more loopholes in this sector are being visible. Lastly, ICT is the most promising infrastructure contributing towards investment, even though it still has minor setbacks which are making it inadequate. This show that Botswana has a long way to go in regards to infrastructure development and consider it one of its major priorities, since infrastructure development is an anchor to economic growth.