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Private sector should boost job creation

patriot by patriot
November 21, 2020
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The time has come to have more job creators in the local and regional African market, says founder of LCM Capital, Lindiwe Mafavuneh


As the old adage goes, “the grass is always greener on the other side”, but I cannot help play the devil’s advocate to say the grass is always green where you water it. It has been my wish to attend the World Economic Forum after many years of following the event religiously from the comfort of my computer. This year was not different, as I still managed to catch a few panel discussions of key global issues whether it was climate change, the President of Botswana interview on CNBC with the backdrop of the Swiss Alps or the keynote opening address of the United States of America President that was full of impressive, big and iconic economic achievements in the USA’s 50 year history. Key takeaways from the opening address was how the USA managed to achieve 3-4% unemployment rate, the lowest in 50 years, 2 million millennial jobs for the 25-34 demographic group and how 3.5 million people joined the workforce.

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I was astonished by the world economic powerhouse’s ability to generate jobs within its borders. What was the driving force for these remarkable statistics? A further drill down to the statistics suggests that manufacturing, low tax regime, change in trade reforms and independent energy industry were the drivers and fuel to delivering the enviable results. The ripple effect of the low unemployment rate resulted in the stock market appreciation of 50% and US$90 trillion household wealth boosting pension funds. The deregulation market and tax cuts attracted investors from all over the world resulting in the USA taking 1/4 of foreign direct investment market share. Evidently, it is plain to see why unemployment is everyone’s problem not just the government. Single digit unemployment rates is a signal of a thriving economy were everyone benefits. But how do developing economies arrive in Botswana?


High unemployment mostly affecting the youth is quite an enigma in developing countries that has left everyone overwhelmed to bring tangible solutions forward. With the level of entrepreneurship activity that has engulfed the African continent you would expect direct and indirect creation of jobs emanating from these activities. However, there are a few jobs created every year that can absorb the thousands and thousands of youth in search of decent living and wages. There is also limited room for traditional companies to create more jobs with the current economic climate calling for more nimble and agile companies.

Botswana’s government, which is carrying a P5.22 billion expenditure deficit, will instil austerity measures in the 2020/2021 financial year to curl the administration bill which is mostly civilian servants’ salaries. With government and incumbent companies shrinking their wage bill, where will jobs come from?
The solution lies with the private sector primarily the Small, Medium and Micro-Sized Enterprises (SMMEs) that already form the bulk of emerging companies in the current low productivity and economic activity business climate to take the lead in creating jobs to stimulate the economy and catalyse economic growth. As the government weans itself from being the front runner in job creation and gives way to the private sector to take the lead, there will be a need for reforms and new policies that should facilitate these new aspirations and goals. SMMEs in Botswana are heavily dependent on government for funding, procurement and services. When the government catches a cold due to micro and macro-economic factors, the whole local SMME ecosystem catches a cold.


This over dependence of SMMEs on government has resulted in government competing against itself and not leaving room for SMMEs to grow independently and innovatively. SMMEs cannot compete with a well-resourced and funded government but by allowing SMMEs to thrive in a business friendly environment we will see more sustainable growth of SMMEs that will absorb the youthful educated workforce, in turn will boost   economic growth especially pension funds, insurance and other service providers. A single digit unemployment rate is not a pipe dream or building castles           in the sky. It can be achieved through government concerted efforts to provide and enable a business friendly environment                 that recognize   the importance                  of allowing their young citizens                  to participate in economic growth. Lessons can be learnt from the world biggest economies such as the USA who have consistently achieved low unemployment rates by simply allowing the participation of SMMEs in economic growth as a result uplifting a million people out of poverty.

Lindiwe Mafavuneh is a financial entrepreneur and the Founder & CEO of LCM Capital, an alternative investment company in Botswana with primary focus on Risk, Investment and Governance.

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