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
50,00 40,00 30,00
P E R C E N T
20,00 10,00 0,00 -10,00 -20,00
Transition
GDP Per Capita Growth Rate YEARS
Growth rate
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 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 2,0 0,0 -2,0 -4,0 -6,0 -8,0 Botswana Mauritius South Africa Cape Verde Namibia Seychelles Swaziland 2008 2009 2010 2011 2012 2013
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