Is the African Economic Miracle at the Verge of Economic

download report

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

I THANK YOU