The year is 2022 and most Western economies have created a wide gap in social and business communities compared to their counterparts here in Africa.
While through most of Africa, we have suffered through years of poverty and famine, coupled with the after-effects of colonisation, many countries have managed to move past those stages as independent states with thriving economies. Botswana is one of these and has actually exceeded the expectations of most analysts as one of the fastest-growing economies with a GDP of approximately USD16 billion as at 2020 relative to a population of 2.2 million.
The development of Botswana over the years can be described as a miracle moulded by a democracy that has supported the livelihoods of the people over the years since independence. The diamond-rich country has used its mineral revenues to develop infrastructure and communities in education and health care and has so far evaded the resource curse, unlike many Third World countries.
That said, we are not out of the woods yet because even as we do not anticipate depletion of minerals in the near future, it will happen eventually, and this will be detrimental as we are still heavily reliant on a single industry, 89 percent of our exports being diamonds which form 25 percent of GDP and half of governments revenue. Several economists across our financial institutions have had conversations around Botswana’s economy being like a massive cargo ship that is able to turn and avoid obstacles but only if it took the turn well before crashing on the potential danger.
This points to measures that ought to be taken by both the government and the private sector to invest in more sustainable economic sectors like manufacturing and services. But this would result in an opportunity cost whereby the government and Batswana forego short-term prosperity for the benefit of future generations to come, which can be nearly impossible to do in any democracy. Further, while the ordinary Motswana lives far better relative to the average sub-Saharan African, distribution of wealth is extremely unequal and accumulates upon only a few while the majority of the population remains relatively poor. According to studies, Botswana’s inequality is the nation’s Achilles’ heel because it is one of the world’s most pronounced.
But how far are we really from being a “developed” country instead of a “developing” one? There are probably a few economic matrices that can be used to measure this, but I would like us to look at the question from an individual country perspective, ceteris paribus, that is to say all other factors remaining constant. Active effort and resources have been placed on the financial services sector, and when you look at the Northern and Western economies, they thrive on financial services and ensure that their laws, policies and social standards conform to the livelihoods and cost of living.
A simple example is the performance of the New York Stock Exchange, the London Stock Exchange, the Shanghai Stock Exchange and the Moscow Stock Exchange. There is an entire complementing ecosystem among these as well as the companies and commodities listed on them. The respective countries of these exchanges have created a harbour of self-reliance and stability to safely produce and service within themselves, their country competitors, and eventually Africa, which imports goods and services heavily from those countries, Botswana included.
Yes, our development of a steady economy has earned us 4th largest GDP in Africa status, and this is on par with countries like Mexico and Turkey. The new financial services sector where the country has been heavily investing in, with strong fiscal policies and free-market enterprises, is how we managed to accumulate USD7 billion worth of foreign exchange reserves 10 years ago and approximately USD5billion as today. Additionally, Botswana has Africa’s highest credit rating with a well-capitalised system that allows high interest rates. This is something worth celebrating because soon enough we will be compared with countries like Switzerland whose 75 percent of GDP is driven by the services sector.
On a side note, Botswana’s international relations have been astute because we have been balancing the seesaw by being friends with those who are not friends of each other, a typical example being Russia and the US. While the US has been instrumental in provision of facilities and resources for health and health-related issues (HIV/AIDS), Russia has provided means of trade policies and educational cooperation.
Other counties include Israel for agriculture and education (e.g. BIUST) and Pakistan through embassies in Beijing to facilitate business interests). From a political science perspective, the good governance of this country has been pivotal to the borderline strategies that have made it what it is today. As one economist put it, “it’s like going to a party and finding your ex-wife there”. But for a more immediate benefit, the relationship between Botswana, South Africa and Namibia and how trade is facilitated among the three is quite commendable and could prove pivotal in accelerating Botswana becoming a developed economy.
For commentary and further dialogue, please engage me via LinkedIn or email at ctketlhoafetse@gmail.com
