BOTSWANA

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BOTSWANA
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Agenda

• Introduction
• History / Institutions
• Natural Resources
• Future Challenges
• QA

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From 1966 to Today
GDP per capita over time (Nominal PPP)
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Similar to other Sub-Sahran countries

• Tiny African country (less than 2 million
  population)
• British colonial rule
• Minerals Diamonds
• Aid

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GDP decomposition by sectors
Adapted from Tregenna, Fiona, Explaining
Botswanas Growth With a Comparison to Chile
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Presentation plan

• History / Institutions
• Why didnt other countries develop them?
• How did they survive the colonial rule?
• Use of mineral resources
• Why diamonds were not a curse?
• Current problems and challenges ahead
• High economic dependency on diamond mining
• HIV

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Introduction - Botswanas history

• The Batswana, a term used to denote the
  citizens of Botswana, also refers to the
  country's major ethnic group (the "Tswana" in
  South Africa), which came into the area from
  South Africa during the Zulu wars of the early
  1880s.
• Prior to independence, decades of unrest.
  Hostilities grow between various factions , the
  Tswana inhabitants and the Boer settlers from the
  Transvaal.
• March 31, 1885 Asked for assistance, the United
  Kingdom puts "Bechuanaland" under its protection.
• North of Bechuanaland becomes Botswana, south of
  the country in integrated to South Africa.
• 30 September 1966 Botswana gain independence
  from the United Kingdom.
• Independence leader Seretse Khama becomes
  Botswanas first president. Ruling party is the
  Botswana Democratic Party ( BDP).

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The Botswana Miracle Importance of institutions

• Since 1969 Botswana begins to play a more
  significant role in international politics,
  putting itself forward as a non-racial, liberal
  democratic alternative to South African
  apartheid. One of its main contributions is the
  SADCC ( Southern African Development
  Coordination Conference), that aims to promote
  economic development, encourage conflict
  resolution and good governance in the area.
• Economic Boom Since its independence, Botswana
  has transformed itself from one of the poorest
  countries in the world to a middle income
  country, with an annual economic growth of 9 a
  year and one of the fastest growth rates in per
  capita income in the world. It has grown
  considerably thanks to the mining of Diamond and
  other minerals, sale of beef to Europe and the
  World market and extensive development of
  educational and health facilities.
• Botswana's impressive economic record has been
  enabled by the governments prudent fiscal
  policies, by international financial and
  technical assistance and by a cautious foreign
  policy. Botswana has been rated as the least
  corrupt country in Africa, according to an
  international corruption watchdog.
• The Good underlying political and economic
  institutions were a result of Pre-colonial
  political institutions, all facilitated by
• Limited British colonialism
• Strong political leadership since Independence
• Elites motivation to reinforce institutions

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"...we intend to conserve our resources wisely
and not destroy them. Those of us who happen to
live in Botswana in the 20th century are no more
important than our descendants in centuries to
come. - Hon. Sir QKI Masire,former President
of Botswana
Managing the Resource Curse
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Pitfalls of Natural Resource Wealth

• Discord and conflict among domestic stakeholders
• politicians, developers, local tribes, and
  citizens
• Resource rents tend to induce corruption
• Reduced accountability pressure
• In developing countries large resource rents may
  have the same negative impact as massive foreign
  aid inflows.
• Reduced taxes and reduced fiscal discipline.

Therefore, resource management could produce
economic prosperity
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Managing the Resource Curse

• A long term natural resource extraction plan
• An effective mechanism for spending revenues on
  the social and economic infrastructure for
  sustained growth
• Resource rent is invested to develop
  infrastructure
• electricity and water distribution networks,
  primary schools and hospitals
• Creating an industry around diamonds

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Governance Research Indicator Country Snapshot
(GRICS), 2002

• Voice and Accountability is measured by political
  process, civil liberties and political right and
  indicates the ability to discipline those in
  authority for revenue extraction
• Government effectiveness is measured by the
  quality of public services and the competence of
  civil servants
• Anti corruption policies are essential for fair
  and transparent distribution of resource benefits

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Growth Contribution by Mining, 1980/812003/04
(Percent change)
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The Road Ahead

• Key Challenges
• Need for Economic Diversification
• Diamond contribution to the GDP (33) set to slow
• World Prices, New Mines
• HIV infection
• 40 of adult population infected
• Life expectancy 61yrs (1995) to 35yrs (2006)
• Social / Economic Costs
• Actively fighting the disease, with success
• Growing authoritarian politics
• Indigenous tribes discrimination San
  Global Insight

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Summary

• Botswanas Success
• Good Institutions Good Leaders
• Diamonds Proper Resource Management
• Luck?

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Thank you for your attentionQA
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The odds against success

• Botswana is a predominantly tropical, landlocked
  country
• When the British left, there were 12 kilometers
  of paved road, 22 Batswana who had graduated from
  University and 100 from secondary school
• Abundant natural resource with the potential to
  impede economic growth

So how did Botswana do it?