Why Botswana's Perennial Investment In Infrastructure Is Not A Good Idea

The other day I came across an article on a local newspaper stating that the Sir Ketumile Masire Teaching hospital—formerly known as the University of Botswana Hospital—was still yet to be open because of a recurring leak on the roof of the P2.1 billion facility.

The hospital, which was originally slated to open its doors to the public in 2017, joins a long list of the government's infrastructure projects ranging from schools to sports facilities which have either overrun their budget, have been many months behind schedule or worse—both.

Sir Ketumile Masire Teaching Hospital— as is mostly the case with the government's infrastructure projects—was devised with good intentions in mind. The 450-bed facility was meant to not only help reduce the load on Princess Marina Hospital and other hospitals around the country but also boost the country's aspirations of becoming a medical tourism hub by providing world-class medical services.

Half a decade since the commencement of the facility's construction, it is nowhere close to achieving its mandates and has pretty much become a white elephant with the maintenance bill being footed by the taxpayers. Instead of having been a means of providing quality healthcare and also a way of diversifying the country's economy by throwing medical tourism in the mix, it has become a liability, just like the many infrastructure projects before and after it.

Infrastructure projects are always seen as the step in the right direction even by the public and even the ever opposing political sides. Watching the fancy ribbon-cutting ceremonies which are always graced by the highest dignitaries always brings hope to the citizenry that the project— be it a bridge, school or hospital—will be a precursor for that locality's development.

Sentimental and seemingly logical as that notion is, most of the time it turns out to be false, leaving both the government and the people disappointed, disheartened and in debt. On their unputdownable and highly recommended book The Prosperity Paradox, Harvard scholars Clayton Christensen, Efosa Ejomo and Karen Dillon argue that pushing infrastructure into a middle-income economy like Botswana's before there are markets to utilize that infrastructure is always bound to fail and after reading their research, I am inclined to agree with them.

Infrastructure is the most efficient mechanism by which a society can store or distribute value. For example, an infrastructure like a school distributes a value that is education. An electricity project like a new substation both distributes and stores a value which is electricity. A new water treatment plant also stores and distributes a value which is water. Simply put—contrary to popular belief— infrastructure projects themselves do not create value but rather store or distribute it so expecting them to be precursors to development in the locality they are situated in is an illogical and very costly mindset.

Built using mostly debt funding and always running into budget overruns that go into the hundreds of millions, infrastructure projects are expensive and hence have to always be worth it. With no clear key performance indicators in place to determine whether an infrastructure project is justifying the public funds spent on it, the government continues to waste money on projects which have no significant and justifiable return on investment.

Some might argue that welfare projects like clinics and schools in rural areas do not need to have a return on investment as they are done for the good of the people but I believe that is an incorrect stance. A return on investment does not always necessarily mean a profit in the monetary sense. A return on investment from a clinic built in a remote village can mean a rising number of people getting healthcare or a reduction in mortality rates. A return on investment from a school project can be an increase in literacy rates around that locality. In short, every infrastructure project built using taxpayers' money should have some tangible benefit otherwise it would have been a waste of public funds and in Botswana, it is hard to find evidence of the benefits of infrastructure projects.

In order to reduce the load of creating, managing and maintaining infrastructure which has in the past and up to now proved to be too much of a daunting task for the government to properly handle, it can allow all these costs to be internalized by the markets that the infrastructure should have been created to serve in the first place.

The argument here is not that the government should totally not engage in infrastructure projects but rather, it should first help to create the value to be stored or distributed by the planned infrastructure projects before embarking on constructing the infrastructure itself. For example, before spending billions of public funds on constructing a teaching hospital, maybe let us have enough skilled manpower available to be able to utilize and maintain that hospital. Maybe instead of spending millions constructing a state of the art senior school, let us first ensure that the learners and staff who are going to utilize that school are going to do so as efficiently as possible. All this is to prevent situations where public funds are spent on infrastructure which is going to be underutilized despite having been very expensive to construct and maintain.

The first and probably most important step to preventing underutilization of infrastructure is to stop the all too familiar trend of benchmarking projects from developed countries. There is no sense in copying a senior school design from say Sweden when our education system is in no way identical to the Swedish education system. There is no sense in implementing a hospital design similar to the one in Norway when our way of life and hence health needs are in no way similar to that of Norway. If it is going to be of any use to them, infrastructure should be designed to suit the needs of the people it is intended to serve or else it is just going to be a fancy waste of money.

As aforementioned, infrastructure does an excellent job of either storing or distributing value but it is terrible at creating value. As a matter of fact, it is useless at creating value. Because it is also so expensive to both implement and maintain, infrastructure should always be efficient and this can be done by ensuring that before the projects are implemented, there are markets in place to fully harness that infrastructure. Failure to do this would mean that the only tangible gains from infrastructure projects will continue to be the be aesthetics and headlines during the handing-over ceremonies and nothing else.