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
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