Civil servants' strike threatens Botswana budget

GABORONE — A public workers' strike in Botswana threatens to derail government efforts to rein in spending as it tackles a budget deficit while trying to shore up a nascent economic recovery.

The Botswana Federation of Public Sector Unions launched a 10-day strike Monday to demand a 16 percent wage increase, against the government's offer of five percent.

About 93,000 workers have joined the strike, according to the union, forcing schools, clinics and public offices to operate on skeleton staff.

The diamond-rich country was hit hard by the global financial crisis in 2008 as demand for its gems plunged and revenues from a regional customs union also dived.

But after contracting by 4.9 percent in 2009, the economy grew 7.2 percent last year, making Botswana one of Africa's top performers and enhancing its reputation for sound economic management.

Now the government is struggling to balance the demands of the newly strident unions, which argue that after a three-year pay freeze, public servants should benefit from the economic gains.

"There is no commitment from government. We were mindful of the economic downturn, hence we delayed to demand a pay hike. Now the economy is on the rebound," said union leader Andrew Motsamai.

"We play a part in generating the money that we use as a country," Motsamai added.

President Ian Khama has flatly rejected workers' demands, insisting that hefty raises could reverse Botswana's economic recovery.

"I find it ironic that the government employees, equipped with better knowledge that our economy is running at a deficit, continue to demand a salary increment," Khama said last week.

Botswana is running a seven billion pula ($1 billion, 746 million euro) public deficit, about 11.5 percent of Gross Domestic Product.

Much of the debt was accumulated during the global recession, when government boosted spending to counter the effects of the downturn.

Analysts say that meeting the unions wage demands will hobble plans to slash the budget deficit in the 2012 fiscal year.

"As it stands, the economy is fragile," said Bogolo Kenewendo, an economist at eConsult Botswana.

She said the government has been advised to cut wage bills by international economists, adding that it could only consider salary hikes after reviewing the country's second quarter performance.

Diamond sales, which account for about half of government revenue, are rising again and the International Monetary Fund predicts the economy will grow by six percent in 2011.

But Botswana is also struggling to digest sharply reduced revenues from the Southern Africa Customs Union, a regional scheme in which five nations pool their customs revenue in South Africa and then split it up.

Revenue from the customs scheme is expected to drop by 2.1 billion pula this year.

Under the customs sharing regime, regional powerhouse South Africa collects duties from the five members, pools them and then divides them under a formula that sees Pretoria essentially subsidising the budgets of its neighbours.

Weaker customs returns have already hit poor neighbours like Swaziland, where the government is seeking to cut salaries for civil servants, sparking protests over the last month.