Transcript Is the African Economic Miracle at the Verge of Economic

Is the African Economic Miracle at the Verge of
Economic Collapse? The case of Botswana’s an
Untapped Economic Potential
Prof. Brothers W. Malema
Department of Economics - UB
Introduction
• African Economic Miracle
 Phenomenal Growth(Conteth C. 2008,
Malema B. w. 2012,
• Island of Peace
Democracy and Elections(Febaek M. 2010,
Good K. 1999 & Taylor I. 2003)
• Impetus to Growth
Primarily – Minerals
Introduction Cont.
Secondarily
 Economic Management
 Democracy
 Rule of Law
Transition
Transition
GDP Per Capita Growth Rate
50.00
40.00
30.00
P
E
20.00
R
C
E
10.00
N
T
Growth rate
0.00
-10.00
-20.00
YEARS
Diversification OR What?
Botswana’s Agricultural Sector
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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?
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•
•
•
•
•
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 poor
 16% of Popu below food comp of PDL
• Unemployment
 17.8% in 2009/10
• Income Distribution
 GNI 0.6(Bertelsmann Stiftung, BTI 2012)
Responding to the Challenges
• Social Protection (BIDPA & WB, 2013)
Social Net
Destitue
Orphan
Labour Programmes
Ipelegeng
Internship
Growth without Development
• Challenges above taints Botswana’s record
• Attributed to the economic structure (Conteth
C. 2008 and Malema B. W. 2012)
• Causes
Lack of Diversification
Lewis 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 productive
Todaro & 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)
10.0
8.0
6.0
4.0
2008
2009
2.0
2010
2011
0.0
Botswana
Mauritius
South Africa
Cape Verde
Namibia
Seychelles
Swaziland
2012
2013
-2.0
-4.0
-6.0
-8.0
Lessons From the GFC
• Economy highly Volatile
• Diversification a must
• Agriculture holds the keys
Market is a given
Technological knowhow not much of a
challenge
An 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 Project
Botswana Meat Commission
Masitara Report
Conclusion
• We still have resources (and therefore
potential)
• Should use them productively to diversify
Mode 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