24 January 2009

Botswana: from economic 'doom' to economic 'boom'



I’m pleased to introduce to you my friend & a guest writer – Boga Thura MANATSHA. MANATSHA is from the African country of Botswana and currently pursuing PhD at the Department of Cultural and Regional Studies, Hiroshima University, Japan. His research interests include: the political economy of land reforms, rural poverty, agrarian issues, economic development and peace & cultural studies. He is among some of the most interesting persons that I happened to meet here in Japan. Incidentally, he is the first citizen from Botswana to be awarded the Japanese government scholarship to pursue postgraduate studies in Japan. With these few words of introduction, I am tossing the keys of this blog over to Manatsha as he prepares to introduce his country and analyze the stunning success story of Botswana from one of the world's poorest countries to an 'economic miracle'. I hope you’ll all welcome him and encourage him as he takes over.


Africa, as a continent, has been described in a litany of pessimistic, but dull, phrases such as ‘the dark continent’, ‘place of hell’, ‘the mother of modern carnage’, ‘the poorest and dangerous place’, and so on. Although such prejudiced descriptions, without much scrutiny, are widely and religiously accepted, one wonders why the good things about this continent go unmentioned. Is it because some of our friends still believe in the distorted and discredited Charles Darwin’s ‘Theory of Evolution’? However, I also notice (d) that ‘painting Africa with the same brush’ has become fashionable in the contemporary media and academic world. But, there are some ‘success stories’ in Africa---where liberal democracy, political stability, economic prosperity, respect of human rights, impressive social indicators, and freedom of speech, have been entrenched in the ‘state culture’. Botswana, Seychelles, Mauritius and, to some extent, South Africa, Senegal, and Namibia, to name but few, have impressively done ‘well’ as far as their economies and politics are concerned. For the sake of the scope of this post, I do not dwell on all these countries. My focus is on Botswana (where I originate). Botswana is arguably one of the most “successful” and “stable” countries in Africa and beyond; politically and economically. Botswana, together with Senegal, has the longest tradition of liberal democracy in Africa. Botswana is located in southern Africa, bordering Zimbabwe - a country which has caught the attention of the entire world with its volatile political landscape.

Botswana remains the only country in the world to have sustained an uninterrupted and rapid annual economic growth rate of 9.2 % for three decades (between 1966 and 1996) averaging 8.2%. It is the largest producer of diamonds by value in the whole world. In fact, it has the richest diamond mine in the world.

Botswana attained independence from Britain in 1966, and was the second poorest country in the world, probably next to Bangladesh. Its Gross Domestic Product (GDP) per capita was a paltry US$80. Today, it is classified as a Middle-Income country---with a GDP Purchasing Power Parity (PPP) of about US$16, 000, with foreign reserves of over US$10 billion (2008). It remains the only country in the world to have sustained an uninterrupted and rapid annual economic growth rate of 9.2 % for three decades (between 1966 and 1996) averaging 8.2%. It is the largest producer of diamonds by value in the whole world, producing slightly over 34million carats per year. In fact, the richest diamond mine in the world, by value, is located in Botswana’s Jwaneng city. Botswana is also ranked among the top least corrupt countries and investor friendly by the World Bank and IMF. It is ranked the least corrupt country in Africa, and ranks 51st worldwide. The World Economic Forum’s 2007/2008 Global Competitiveness Report showed that Botswana was in position 76 out of the 131 countries surveyed. It also fared well in the World Bank’s 2007 Doing Business Report. Inflation averaged 7.1% in 2007, an excellent achievement compared to 250 million % of its neighbour, Zimbabwe. Thus, in an appreciable corpus of literature, Botswana is described in an abundant of positive phrases such as: ‘Africa’s best kept secret’, ‘an economic miracle’, ‘the Switzerland of Africa’, ‘the cheetah of Africa’, ‘a success story’, ‘a shining liberal democracy’, and ‘the gem of Africa’.

In 2007, Botswana was assigned “A” grade credit ratings by Moody’s and Standard and Poor’s for seven running years.

How Botswana has achieved this, remains a ‘puzzle’ and a subject of ‘academic controversy’. For example, Botswana received 68.6% rating in the Heritage Foundation 2008---Index of Economic Freedom---ranking number 36 in global rankings. The Index of Economic Freedom has been developed by the Heritage Foundation and Wall Street Journal and base rankings on ten factors: business freedom, trade freedom, fiscal freedom, government size, monetary freedom, investment freedom, property rights, freedom from corruption, and labour freedom. In 2007, Botswana was assigned “A” grade credit ratings by Moody’s and Standard and Poor’s for seven running years. These sovereign ratings indicate that Botswana remains one of the most “successful” and “stable” countries in Africa and beyond. According to one scholar, this excellent credit ranking place Botswana, ‘… on a par with some of the best performing emerging market economies’. Having said so, it is safe to say that Botswana stands out in the region, and globally, as a country that has experienced remarkable consistent growth.

The diamond sector contributes more than 32% to Botswana's GDP. Even in the present global economic meltdown, its reserves of over 10 billion US$ represent 28 months cover for imports of goods and services.

I am aware that Botswana’s economic boom, in particular, has its own limitations, controversies, and shortcomings. However, because of space and scope, I deliberately leave out these challenges. The crux of the present post is to explicate why Botswana succeeded whereas many other mineral-rich countries, for example, Sierra Leone, Angola (until recently), Democratic Republic of the Congo (DRC), and Guinea, to mention but a few have done poorly (economically and politically). Botswana’s economy solely, but worryingly, depends on diamonds. The mining sector (which also includes copper, nickel, soda ash, and coal) contributes about 40.7% to the GDP (2007), with diamonds contributing more than 32%. The Resource Curse theorists have emphatically argued that a country where minerals account for over 32% to its GDP risks being plagued by civil war and disorder. Ironically, in Botswana, diamonds have been, even during the early years of their discovery in 1967, contributing nearly 40% to its GDP. It seems Botswana has left scholars ‘puzzled’ and academically ‘eluded’. Which ever way measured, Botswana remains the most peaceful country in Africa. Of course, I am aware that the current global economic meltdown poses a serious threat to this country too, but its reserves of over 10 billion US$ represent 28 months cover for imports of goods and services (2007).

Different explanations have been given as to why Botswana succeeded, something which is a mirage and almost impossible, in Africa, south of the Sahara. One scholar rightly says that each theory has some explanatory power, yet each has its problems.

Different explanations have been given as to why Botswana succeeded, something which is a mirage and almost impossible, in Africa, south of the Sahara. I note the words of Professor Tony Hawkins, of the University of Zimbabwe, who once said that: “Whenever economics gets in the way of politics, politics wins every time”. Remember he is based in Zimbabwe, he was pretty sure of what he meant! Without going deeper into the contested theories which unravel Botswana’s remarkable achievement, I would like to give the reader a simple explanation regarding Botswana’s success. Many scholars, some Eurocentric in their perspective, have simplistically argued that Botswana became successful because it was a British Protectorate not a Colony. Thus, they use the term ‘ineffective colonialism’ to buttress their thesis. But, we have, in Africa, other former British Protectorates such as Uganda---where vicious cycle of civil wars and political instability became the order of the day, more especially, after independence. Some argue that Botswana’s diamonds were discovered in 1967, a year after the British granted it political independence. Therefore, ‘plundering’ and ‘looting’ of its resources was minimal during the colonial era---a case they use to explain the legacy of colonial plunder in modern day DRC. But, again, the theory of colonial legacy seems not to hold water when it comes to Sierra Leone - a country which was plagued in tumultuous conflicts emanating from diamonds (minerals), in the 1990s. I am aware that external players do play a critical role in such conflicts, but why has this not occurred in Botswana? I do agree with one scholar that ‘Each theory has some explanatory power, yet each has its problems’.

Botswana has maintained a habit of ‘fiscal discipline’ since its independence. At independence, the President vested all the mineral rights on the state, something which has failed in most mineral-rich countries.

The basic explanation of Botswana’s stable economic growth emanates from its far-sighted political leadership. Botswana’s political leaders have been, compared to their counterparts, impressively commended for implementing “good” and “sound” economic policies, which propelled the country to stardom. Botswana has maintained a habit of ‘fiscal discipline’ since its independence. The first President of Botswana, a trained lawyer from Balliol College, UK, maintained that he wanted to make Botswana ‘a financially viable entity’. At independence, the President vested all the mineral rights on the state, something which has failed in most mineral-rich countries. The tribal claim to natural resources (including land and minerals) was denounced. Most importantly, in 1975, the state successfully negotiated with De Beers Diamond Company for a 50-50 share ownership in all of the country’s diamond mines (compared to the previous 85-15 % share in favour of De Beers).

Botswana’s diligent and committed bureaucrats have been described as one of the best in Africa. The nation building motto has been a driving force; hence Botswana’s four national principles are: Democracy, Development, Self- reliance and Unity.

According to one scholar, ‘This more equitable share holding has provided the state with influence over the mines’ wage policies as well as the ability to authorise expansion when deemed necessary’. But abundance of mineral wealth on its own explains nothing when one takes time to look at countries like diamond-rich Sierra Leone and DRC. What is important is how the resources are managed, and this needs leaders who are level-headed, transparent, accountable, well-focused, and far-sighted. Botswana, as a state, pursues policies that co-ordinates investment plans---has a national development vision—implying that the state is an entrepreneurial agent; that engages in institution building to promote growth and development, as noted by one observer. For example, Botswana’s diligent and committed bureaucrats have been described as one of the best in Africa. Furthermore, the government is legitimate, democratic, and the political elites are committed to economic development. Botswana’s political leaders have thus, beginning with the first President, exuberantly invested their energy and resources in economic development. The nation building motto has been a driving force; hence Botswana’s four national principles are: Democracy, Development, Self- reliance and Unity. Nationalism and a national vision lie at the heart of ‘a developmental state’. In Botswana, the slogan: ditiro tsa ditlhabololo (It means work for development) has been the guiding slogan in its development endeavour. In 1966, the first President noted that ‘Having accepted the challenges of independence, we had no other alternative but to get down to work to make our independence a meaningful one’. Interestingly, the current President in office, since April 2008, has devised his own motto centred around ‘self-discipline’ as the basis for meaningful development. Thus, his guiding principle is dubbed the 4Ds: Democracy, Development, Dignity, and Discipline.

The people of Botswana firmly believe and accept social diversity. Access to education, health, and other social amenities is guaranteed by the Constitution to every citizen regardless of race, religion, tribe, gender etc.

Botswana has a developmental vision called “A Long Term Vision for Botswana: Towards Prosperity for All” (Vision 2016). Vision 2016 is supposed to be a national manifesto to guide future National Development Policies, as well as broad government policy, and is a statement of long term goals with proposals for a set of strategies. It ‘characterizes what Botswana should be by the year 2016 by identifying goals to be reached, the major challenges that must be met and opportunities that must be productively exploited to attain these national aspirations’. Another explanation is that Botswana has a small and nearly homogenous population of about 1.7 million. The dominant Tswana-speaking groups constitute about 79% of the entire population. However, this variable should be treated with caution because Somalia has a single ethnic group, the Somalis (they speak the same language and have the same culture) but since 1991, Somalia has been plagued in civil disorder and untold humanitarian crisis. The people of Botswana, however, are ‘tolerant’ to each other, and access to education, health, and other social amenities is guaranteed by the Constitution to every citizen regardless of race, religion, tribe, gender etc. Botswana has a literacy rate of over 80%, with women literacy rate at 83%, higher than that of men. In 2002, the gross Primary enrollment rate was 100%, while the net enrollment rate was 81%. In fact, Botswana has a high percentage of women holding highest positions in the civil society and corporate sector, compared to some industrialized countries such as Japan. Currently, we have a Motswana woman as one of the Governors at the World Bank; another Motswana woman (a lawyer by profession) has been recently appointed to the International Court of Justice, the Hague; the Bank of Botswana Governor is a woman; we have at least two women as High Court Judges; several of them as magistrates; one of the two Deputy Vice Chancellors of the only University in the country is also a woman; we have several women as Professors and lecturers, others occupying the positions of Deanship/Head of Departments at the University of Botswana; and recently, women have been given the opportunity to join the army. Notably, in Botswana, more girls graduate from the University than boys, and the enrollment rate of girls in Primary schools is 49% compared to 51% of boys. Since education is relatively free, what is needed is dedication and commitment. Currently, the government of Botswana is sponsoring nearly 40,000 students in tertiary schools both in the country and overseas in countries such as Australia, USA, Ireland, Malaysia, Cuba, Trinidad and Tobago, UK, with the first batch of students expected to arrive in Japan this year (2009). All these attest to the commitment on the part of the government on human resource development and capacity building.

Another reason which explains this remarkable growth is the favourable relations with the Breton Woods institutions (IMF and the World Bank); the rule of law; market-friendly institutions and policies. The continued advice of the IMF and World Bank has been taken seriously by Botswana’s leaders. In fact, Festus Mogae, the former President of Botswana, and a reputable economist (who studied at Oxford and Sussex universities respectively) once worked for the IMF. Mogae once stated that: “Botswana has been, is, and will always be open for business. We welcome investors, we welcome tourists, we welcome all people. It is part of our culture, but it is also in our economic interest”. The local/indigenous institutions, most importantly, the kgotla (public court/village court) also continue to play critical role in development issues. The current government disseminates development policies through the kgotla, among other forums. Botswana proceeded modestly and prudently blending the traditional and modern characteristics in a pragmatic way. I hope that I have introduced my country and the secret behind its success. Thanks for coming all the way down to this point and having a patient read to my write-up. Please feel free to drop a line or two if you have liked the post.


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9 Comments:

Mukesh Jha on January 25, 2009 at 12:11 AM said...

very nice article!

AP said...

Thanks for this post. frankly speaking, I had no idea of this African country, Botswana. And the success story, both social and economical, really has impressed me. The two of most important things that I noted is, the commitment of democratic governments for development and, a clean (non-corrupt) bureaucracy! In addition to this, acceptance of social diversity is a key to success of a nation. There are many things that we Nepalese should learn if we intend to make 'New Nepal'.

Dilip Acharya on January 25, 2009 at 8:52 AM said...

Thanks for sharing this inspiring article. The GDP growth from that of US$80 to today's
figures, really deserves high appreciation.

I think this achievement certainly must be the result of dedicated leaders,hard working Botswana people and the well implemented plans and actions. And of course the ‘fiscal discipline' may also have played a great role.

I think we Nepalese people have lot to learn from your achievement.

Thanks Deependra Ji, for casting Mr.Boga's article and wishing Bostwana and Mr. Boga more prosperous future ahead.

Anonymous said...

Many thanks for the informative article.
I beleive Botswana realised its success courtesy of the wise leadership and prudent administration of its founding president who set forth a good precedence. Further to this, the secret of its stability in the midst of turmoil in African Countries lies in its very small population.Mohamed

Alok said...

I liked the post. The author's effort to introduce his country impressed me. And also impressed is the success story of the same. I firmly believe that 'Financial discipline', 'farsighted policies' and 'committed bureaucracy' are the main components of any economy to success. As far as my knowledge to Africa is concerned, I had the idea of only few countries like Zimbabwe, Kenya, South Africa etc. mostly because of the fact that they are cricket playing nations and I am a cricket lover. Most of the times, Africa is in the news for all the wrong reasons like hyper-inflation & cholera breakdown in Zimbabwe; civil wars in Congo, Burundi & Somalia; food scarcity and unrest in Ethiopia and Somalia etc. But, It is nice to read a true success story of an African nation. For this, your effort should be commended. And thanks Deependra for presenting Mr. Manatsha on his blog. I am really impressed by the different subjects covered on this blog through the articles of the guest authors. Keep up the good work, mate. Cheers!

Sumiran on January 26, 2009 at 7:46 AM said...

Dear Boga Thura MANATSHA,
Thank you for your delighting success story. Actually had no idea about your country could have such contrast against the neighbour Zimbabe. It is lesson to the other developing countries.
Cheers!

Basanta Gautam on January 28, 2009 at 8:33 AM said...

Nice article! I want to thank Mr. Boga Thura Manatsha for giving us this chance to read about the impressive progress that Botswana. It is very inspirational and Nepal can learn a lot from Botswana's experience. I hope to read more of your articles.

Boga Thura Manatsha said...

I would like to thank Deependra for giving me this rare opportunity to introduce my country. Many thanks also go to all the readers and commentators, who patiently perused this post. In particular, I forward my appreciation to the commentators, who gave some positive and inspirational comments. Below, I summarize the gist of this post; so that our readers can, once again, comprehend why Botswana is such a unique country in Africa:

(i) Botswana’s political leaders and the bureaucrats are committed to economic and social development. Thus, National Development Policies have been designed, implemented, monitored, and evaluated transparently, with outcomes: achievements, and failures carefully studied and analyzed for future remedies.
(ii) The same leaders are: (a) accountable to the electorates, (b) non-corrupt, (c) nationalistic, (d) far-sighted, (e) fiscal disciplined, and (f) unfalteringly adhere to the principles of liberal democracy.
(iii) Botswana is the leading producer of gemstone diamonds in the whole world. It also has other minerals such as soda-ash, copper, and nickel. The most important thing is the prudent management of these resources, something which is lacking in many mineral-rich African countries.
(iv) Constitutionally, all the citizens, regardless of gender/sex, race, religion, tribe/ethnic origin, and political views, have the right to access education, health, and other social amenities free of charge.

My wish to other African countries and Asian countries like Nepal, for instance, is that acceptance of social diversity is one of the most critical ingredients towards inclusive and workable liberal/participatory democracy. “National identity/nationalism” must be implanted in the political, social, and economic institutions. It is crucial for developing countries, including Nepal, to institutionalize ‘developmental nationalism’-if they want to achieve economic development. Botswana and Mauritius, for instance, institutionalized it, and now they are economic “success stories”. ‘Developmental nationalism’ simply means “state active role in economic activity to serve national goals”. But this is only achievable if the bureaucrats, ruling elites, and politicians are non-corrupt, accountable, far-sighted, well-focused, fiscal disciplined, and believe in democracy. My point of view is that “developmental nationalism” is a major explanation of the “Wealth of Nations”. But, if bureaucrats, politicians, ruling elites, businessmen, agrarian bourgeoisies, tribal and religious leaders, have no interest in their country’s destiny, then, for sure, there will be a socio-economic and political quagmire. In the 21st century, systematic categorization of people according to tribe/ethnic, others as backward groups, within the same state, is divisive. It breeds intolerance, arrogance, mistrust, and social and ethno-political conflict which retard economic development. Peaceful-coexistence and respect of democracy is what our leaders should imbibe and preach so that we can live in peace and prosperity.

I promise all the readers that next time, I will pen down an article on other issues relating to Africa’s development and political challenges.

RATTIE AND VALENTIA said...

wow!this is just awesome...bring in more please it really helps.but its a shame though that more women in this country are more literate than men,yet we have so few of them in the business industry.pity,hey?

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