Is the African Economic Miracle at the Verge of Economic Collapse? The case of Botswana’s an

Untapped Economic Potential

Prof. Brothers W. MalemaDepartment of Economics - UB

Introduction

• African Economic Miracle Phenomenal Growth(Conteth C. 2008,

Malema B. w. 2012, • Island of PeaceDemocracy and Elections(Febaek M. 2010,

Good K. 1999 & Taylor I. 2003)• Impetus to GrowthPrimarily – Minerals

Introduction Cont.Secondarily Economic Management Democracy Rule of Law

Transition

Transition

19601962

19641966

19681970

19721974

19761978

19801982

19841986

19881990

19921994

19961998

20002002

20042006

20082010

-20

-10

0

10

20

30

40

50

GDP Per Capita Growth Rate

Growth rate

YEARS

PERCENT

Diversification OR What?

Botswana’s Agricultural Sector

• Share to GDP(WB, 2013)• 43 % in 1960• 39.29 % in 1966• <9 % since 1983• < 3 % since 2001• > 3 % in 2009 and 2010

Second Diversification OR What?

• Share of mining was 2% at independence• Increased to about 46.7% in 2003• Has been decreasing • Has been below 20% since 2009• Was 13.5 % in 2012• Is this diversification?

Economic Challenges

• Poverty (Hope K. R & Edge W. A. 1996, Conteth C. 2008 and BIDPA & WB, 2013)

Below $1;23.4 (2003) 6.4 (2009/10)19.3 of Population poor16% of Popu below food comp of PDL• Unemployment17.8% in 2009/10• Income DistributionGNI 0.6(Bertelsmann Stiftung, BTI 2012)

Responding to the Challenges

• Social Protection (BIDPA & WB, 2013)Social NetDestitueOrphanLabour ProgrammesIpelegengInternship

Growth without Development

• Challenges above taints Botswana’s record• Attributed to the economic structure (Conteth

C. 2008 and Malema B. W. 2012)• CausesLack of DiversificationLewis two Sector model

LEWIS TWO SECTOR MODEL

• Gives to some degree a historical account• Rural Subsistence Agriculture• Emerging Urban Industrial Sector• Developed in parallel fashion• Rural provided inputs• Urban provided market• Agriculture became productiveTodaro & Smith (2009)

LEWIS TWO SECTOR MODEL Cont.

• The transition omitted in Botswana• Agriculture in particular arable was almost

neglected• Drought frustrated attempts to improve sector• Measures put in place failed to address the

economic challenges (ISPAAD)

Global Financial Crisis (GFC)

Botswana Mauritius South Africa Cape Verde Namibia Seychelles Swaziland

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

200820092010201120122013

Lessons From the GFC

• Economy highly Volatile• Diversification a must• Agriculture holds the keysMarket is a givenTechnological knowhow not much of a

challengeAn omitted step that requires visitation

Lessons From the GFC Cont.

• Lack of substantial FDI Inflows• Batswana investing more outside than

expatriates inside Expansion of BDC activities a must Requires total abhorrence for corruption Palapye Glass ProjectBotswana Meat CommissionMasitara Report

Conclusion

• We still have resources (and therefore potential)

• Should use them productively to diversifyMode of ownership should be less of a

concern• Their depletion will be our end.

NOTE• ONLY TENDENCIES

• NO UNIVERSAL TRUTHS

• NO SCIENTIFIC LAWS

I THANK YOU