THE FOURTH ANNUAL CONFERENCE OF
THE CENTRE FOR THE STUDY
OF AFRICAN ECONOMIES, KEBLE
COLLEGE, UNIVERSITY OF OXFORD
ECONOMIC DEVELOPMENT IN BOTSWANA
ADDRESS BY HIS EXCELLENCY,
MR. FESTUS G. MOGAE,
PRESIDENT OF THE REPUBLIC
OF BOTSWANA
30TH MARCH, 2001
Time: 19.30 Hours
Venue: Keble College
Chairperson,
Director of the Centre of the Study
of African Economies, Professor John Toye,
Faculty, Staff and Students of the University of Oxford
Members of the Diplomatic Corps
Distinguished Guests
Ladies and Gentlemen
1. I salute you all.
2. Let me also convey my gratitude to the Centre for
the Study of African Economies, particularly the Director,
Professor John Toye, for inviting me to be the guest speaker at this Fourth
Annual Conference. The subject of the Conference, namely “Development Policy in
Africa: Public and Private Perspectives” is particularly appropriate at this
time when Africa is seized with revitalizing economic development and building
polities that will sustain social and political order.
3. As an alumnus of the University College of this University in the class of
1968, my presence here today gives me the opportunity to see how the alma mater
has progressed in response to contemporary global development challenges and to
reminisce over my student days.
4. May I also applaud the decision by the Centre to utilise the funds raised
from organising this Conference to replenish the Museveni Scholarship Fund,
which brings African scholars to the University of Oxford.
The interaction between African development practitioners, public officials,
professionals, scholars, and business people and their counterparts from
elsewhere, will enrich the formulation of policies and strategies for African
development. Such opportunities also recharge our energies in the search for
potent and durable solutions that are required to propel and sustain African
economic renaissance.
5. In addition to the efforts of Africans themselves, concrete and coordinated
international action is necessary for Africans to be delivered from the quagmire
of poverty, hunger, illiteracy, ill-health, inadequate shelter, lack of economic
opportunities and other manifestations of under development.
6. To put my discourse on Botswana’s development experience in perspective, a
few basic facts are in order.
Botswana is landlocked with an area of 582 000 square kilometres, roughly the
size of France or the State of Texas in the USA. At political independence in
1966, the population was just over half a million and per capita income was
about 80 US dollars.
7. Many Batswana were employed in South African
mines as migrant workers. The main economic activity was pastoral farming whose
performance was adversely affected by frequent droughts. Agriculture accounted
for 39 per cent of gross domestic product. Life expectancy at birth was 48
years, only half the children of primary school age were at school and the
country had about 100 secondary school and 40 university graduates. Health and
nutrition indicators were low and physical infrastructure was poorly developed.
Tarred roads in the entire country amounted to no more than 6 kilometres.
8. The railway line that traverses the eastern part
of the country, which was then operated by Rhodesia Railways, owed its existence
to Cecil John Rhodes’ dream of the Cape to Cairo link, rather than serving
economic and business activity within the country. Government was totally
dependent on external aid for capital expenditure, and the British Government
provided grants-in-aid to partially finance recurrent expenditure until 1972.
Thus, Botswana was poor by whatever yardstick and, not surprisingly, the country
was one of the 25 least developed countries in the world.
9. Chairperson, Distinguished Guests, Ladies and Gentlemen, Botswana’s economic
prospects at the time were gloomy and the geo-political situation was equally
discomforting. The country was surrounded by hostile minority ruled regimes –
the Republic of South Africa to the south, South West Africa to the west and
Rhodesia to the north. Botswana was an island of human sanity in a sea of
turbulence. While Botswana found the racist policies of these regimes unjust,
abhorrent and morally reprehensible, the geo-political imperative required that
we cooperate economically with those countries.
The Republic of South Africa then provided the only access to the sea and the
Botswana economy was closely linked with that of South Africa through the
Southern African Customs Union established in 1910. Botswana used the South
African Rand until 1976 when our own currency, the Pula was launched.
10. One of the most fundamental choices made in 1966 was the adoption of a
Constitution that embraced national unity, non-racialism, multi-party democracy,
an independent judiciary, respect for human rights, freedom of speech and
freedom of association, among others. This set the stage for popular
participation in the choice of Government, separation of powers amongst the
judiciary, legislature and the executive as well as respect for the rule of law
and the supremacy of the Constitution. The right to private ownership of
property is an inviolable feature of Botswana’s Constitution. These attributes,
together with social cohesiveness, peaceful, free and fair elections, have been
responsible for Botswana’s political stability.
11. Economic policy has mainly been enunciated through successive National
Development Plans, which are approved by Parliament. These 6 year Plans, which
are reviewed after 3 years, contain forecasts of available resources as well as
expenditure programmes and development priorities in-keeping with anticipated
resources. National Development Plans provide a framework for coherent and
consistent national policies that, among others, ensures that Government does
not pre-empt resources in short supply, such as skilled human resources, to the
detriment of other stakeholders, for example, the private sector.
12. National Development Plans are prepared with inputs from the broad spectrum
of our society, such as Local Authorities, NGOs and the private sector. Regular
consultations on major policies are conducted through the “Kgotla” or
traditional meeting place where everyone is free to air their views. This
cultural heritage has become a cardinal element of our democracy.
13. Botswana has pursued market-based policies. Direct Government intervention
in the economy has decreased in tandem with the growth and capacity of the
private sector. Government has focussed its attention on formulating policies
and overseeing the development of social and economic infrastructure, human
capital and provision of public services in order to create an enabling
environment for private sector development.
14. Chairperson, Distinguished Guests, Ladies and Gentlemen, maintaining a
stable, balanced and predictable economic environment has been a critical tenet
of Botswana’s economic management. This is achieved through building
institutional capacity to service the public and the private sector in a
facilitative, open, transparent and accountable manner. The economy has been
open to foreign investment and trade although trade policy largely complies with
the provisions of the Southern African Customs Union. Botswana has duty- free
access to the entire Southern African Custom Union market. Whereas many
developing countries exercised pervasive State control of the economy in the
early years of independence, Botswana chose private–sector led development, ab
initio.
15. The political and economic policies pursued by
Botswana attracted significant levels of development aid, technical assistance
as well as private foreign investment. Some of the major development projects,
such as copper-nickel, diamonds, and coal mines were undertaken by Government in
partnership with private foreign investors. Debswana, the diamond mining company
is a 50:50 partnership between Government and De Beers. And it is mainly the
development of diamonds that provided impetus to the growth of the economy. Real
GDP growth has averaged 7% over the past 3 decades making the Botswana economy
one of the fastest growing in the world, albeit from a small base. The approach
to development has been fairly simple – to utilise the economic rents accruing
from diamonds to develop social, economic and physical infrastructure; develop
human capital, and create productive capacity in the economy.
16. As a result, by the end of 2000, the GDP per capita
had risen to 3 000 US dollars, access to clean water, sanitation, education,
health and development of infrastructure have expanded considerably.
Botswana graduated from the group of 25 Least Developed Countries in 1991 and is
now a lower middle-income country. This has in turn reduced concessional aid to
the country. It is ironic that Botswana’s success may be responsible for little
being known about the country internationally for it is countries that are
involved in gross human rights violations, political turmoil and civil strife
that seem to attract the most media attention.
17. Notwithstanding the significant contribution diamonds continue to make to
our development, we are concerned about our dependence on diamonds, a depletable
natural resource. Mining accounts for 33% of GDP of which diamonds constitute
the major part and, hence, the emphasis on “Sustainable Economic
Diversification”. For this to be achieved, we need to develop highly skilled
human resources to meet the challenges of globalisation, diversify and improve
international competitiveness of our exports, create employment opportunities,
manage the environment in a sustainable way, continue to improve the network of
roads, power, telecommunications, health facilities and water supplies. This is
how we will continue to improve the quality of life of our people.
18. But none of the challenges that we face could be more daunting than the one
posed by the HIV/AIDS pandemic. About 17% of the population is estimated to be
infected with the HIV virus. The loss of breadwinners, parents and close
relatives will disrupt normal family life and the social fabric of our society.
Health facilities are over-stretched on account of AIDS related illnesses.
Government has introduced measures to counter these, such as prevention of
Mother to Child Transmission, Home Based Care, Orphanage programmes, as well as
extensive public education about safe sex, caring for infected people at home
and in the work place and avoiding their ostracization from society. Government
is negotiating with major pharmaceutical companies with a view to making
anti-retroviral drugs available in health facilities at affordable prices. The
cost of dealing with AIDS is quite high and this is an area where we shall
require international assistance.
19. Without doubt, Botswana’s achievements are also attributable to a viable
partnership between the public and the private sectors.
Government recognizes the important role that the private sector, both local and
foreign, will continue to play in meeting development challenges facing the
country. Given the small domestic market, sustainable economic growth will have
to come from increased capacity to export. The role of the private sector and
regional integration will be crucial in this.
20. There are various channels of tripartite consultation
among Government, business and labour, an indication of the determination to
have economic planning processes that are as inclusive as possible. In 1995, we
introduced the High Level Consultative Council, which I chair. It meets at least
twice a year and brings together all Cabinet Ministers, business captains and
labour to discuss solutions to bottlenecks encountered in business as well as
make suggestions on policies and programmes that are necessary to promote
development.
21. Other avenues of regular consultation with the private sector, NGOs, civil
society and other stakeholders include the Rural Development Council which
coordinates and reviews plans for rural development and monitors implementation.
The National Employment, Manpower and Incomes Council deals with policies on
human resources development, employment and incomes. More importantly,
Government is always open to suggestions by the private sector even outside
these established channels of communication. Representation of the private
sector in the Boards of Directors of public enterprises has also been increased
to reflect the growing partnership.
22. The private sector also convenes bi-annual
Business Conferences to which it invites Members of Cabinet, including myself,
and other stakeholders to discuss issues of concern and map out strategies for
the future. Public and private sector consultation is a two-way process that has
developed into a solid partnership founded on mutual goodwill, trust and the
sharing of a common National Vision.
23. Chairperson, Distinguished Guests, Ladies and Gentlemen, diversification of
the economy into export based industries, tourism and other services is critical
to the creation of employment opportunities, raising incomes and reduction of
poverty.
In order to promote increased private sector investment, Government is
deregulating and liberalising the economy. There are no foreign exchange
controls, thus making it convenient and less costly to undertake foreign
exchange transactions, repatriate dividends and invest abroad.
24. Establishment of Joint Ventures between local and
foreign investors is welcome, but not mandatory. The Botswana Export Development
and Investment Authority is charged with the responsibility of attracting
foreign investment into the country as well as facilitating their establishment
once in the country. The international value of the Pula is aimed at improving
the international competitiveness of Botswana products. Membership in Southern
African Customs Union, Southern African Development Community, African Caribbean
and Pacific Group of countries and, more recently benefits available under the
African Growth and Opportunity Act of the USA, provide access to larger markets.
25. Fiscal policy has been prudent and part of the economic rents accruing from
diamonds used to build up Government savings and foreign exchange reserves.
At present, Government has no domestic debt and external debt service ratio is
around 5% of exports. Minerals account for 59% of Government revenue and over
75% of export earnings; foreign exchange reserves are equivalent to 6.3 billion
United States Dollars, sufficient to finance 36 months of imports of goods and
services. Corporate tax is 25% and 15% for manufacturing enterprises. In
addition Botswana has double taxation agreements with a number of countries.
Inflation stands at 7.6% supported by appropriate monetary and interest rate
policies.
26. Prospects for the Botswana economy are good with annual average GDP growth
for the next 2 years estimated at 4.7%. The privatisation of our national
airline is at an advanced stage and once the Privatisation Agency is
established, an implementation programme will be worked out to privatise other
state owned enterprises. This should create many viable business opportunities.
27. Botswana has a well established financial and banking system. Cooperation
with other jurisdictions and vigilance ensures the detection of practices that
erode the integrity of financial and banking systems, such as money laundering.
The Botswana Stock Exchange although thinly traded, has potential for future
development. Botswana’s recent sovereign credit rating by Moody’s Investors
Service is A2. Prime 1, an investment grade rating. This should enhance the
capacity of investors wishing to raise capital from international markets. Also,
legislation has been passed to enable Botswana to become an International
Financial Services Centre.
28. Investment Protection Agreements with many other countries, multilateral
agreements, the Constitution protect Intellectual Property rights and other
investments. An Investment Code is under preparation that will serve as a guide
to investors as well as outline what investors can expect of Government.
29. Efficient telecommunications infrastructure is critical to the needs of
Information Technology and internet connectivity that are so crucial to today’s
business strategies and operations. Updating the technology, in-keeping with the
latest developments, is well underway.
30. In general, the educational and skills levels of Batswana can support viable
modern businesses. Industrial relations in Botswana are quite good. The 1999
Report on Africa competitiveness, produced by the World Economic Forum and
Harvard University’s Centre for International Development, ranks Botswana third,
after Tunisia and Mauritius, out of a total of 24 African economies rated.
31. As a democratic Nation committed to the values of integrity, fair play,
accountability and transparency, we take the fight against corruption very
seriously. Corruption is a social evil that pollutes morality and introduces
unnecessary costs and uncertainties to business.
The Directorate on Economic Crime and Corruption, Ombudsman and other state
organs guard against corruption. In 1999 Transparency International rated
Botswana as the least corrupt African country and the twenty–sixth least corrupt
country in the world. We, of course, endeavour to be first but such
acknowledgement should be clear testimony to all about
Botswana’s commitment to fight the scourge of corruption. Last month, I launched
Transparency International Botswana Chapter as my Government welcomes civil
society “watchdog” organisations.
32. For the fight against corruption to succeed, both developing and developed
countries should play their full part so that both the briber and the bribed get
penalised. It is unconscionable that certain tax jurisdictions allow expenses
for bribery as legitimate business costs.
33. Given Botswana’s location in the heart of Southern Africa, Botswana is a
suitable location for manufacturing enterprises and provision of international
services that serve the rest of the sub-region.
Available minerals, for example soda ash, offer a wide range of opportunities
for down stream processing industries. With over 2.5 million cattle, the
processing of leather and other products also provide viable business
opportunities. Tourism and financial services also offer interesting prospects.
34. Botswana has attractive tourist destinations such as the Okavango Delta, the
largest inland delta in the world.
The pristine and unspoilt environment is sanctuary to exotic species of
wildlife, birds and flowers. If you need a holiday that brings you close to
“Mother Nature”, come to Botswana.
35. My Government has, on its own volition, put in place
institutions, policies and legal framework to facilitate private sector
development. Our democracy is well founded and promotes social tranquility and
peace. None of the measures we have taken came as a quid pro quo for
international financial assistance. We are firmly committed to the development
path we have chosen and Batswana are ready to welcome foreign investors as
partners in development.
36. I note that many of you are friends of Africa who want to conscientise the
international community about Africa’s concerns for market access, speedy
resolution of external debt, managing adverse effects of globalisation, bridging
the digital divide, ensuring an equitable international economic order,
assistance in fighting the AIDS scourge, peaceful resolution of conflicts and,
more importantly, disseminating factual information about our continent we need
to dispel Afro – pessimism. With a conducive international environment,
accountable governments and peace, Africa can improve living standards and
reduce poverty.
37. The relationship between the public and private
sectors need not be adversarial nor sharply dichotomous. For the one to prosper,
it needs the symbiotic support of the other. The separation of roles is simply a
form of division of labour. Policy makers should strengthen "Smart Partnerships”
between the two and meaningfully engage other stakeholders such as NGOs, civil
society and labour to ensure that economies perform to their optimal capacities
in an environment of peace and social harmony.
38. Chairperson and Distinguished Guests, I wish conference participants
fruitful deliberations and look forward to receiving the conclusions of the
conference. Thank you for your kind attention.
BON APPETITI!