An African Success Story: Botswana

An African Success Story: Botswana

Sub-Saharan Africa: Economy Overview Despite some success stories in the 1960 s and early 1970 s, Africa is poor and getting poorer. This emerged at the start of the recent empirical work on the determinants of growth with Barro s (1991) discovery of a negative African Dummy and was summed up by Easterly and Levine s (1997) title, Africa s Growth Tragedy.

Comparative Development - Some Facts

Botswana s Success Against this background of poor performance, there is one African country that has performed not only well, but also better than any other country in the world in the last 35 years Botswana.

Botswana in Comparative Perspective

GDP Per Capita (current, % of world average) Source: World Bank

How was the initial conditions? Botswana did not start out with favorable initial conditions at independence. When the British left in 1966, there were 12 kilometers of paved road, 22 Batswana who had graduated from University and 100 from secondary school. Botswana is a predominantly tropical, landlocked country (which many economists see as a disadvantage, e.g., Bloom and Sachs, 1998).

Natural Resource Abundance: Is it a curse or blessing? Diamonds have been important for growth in Botswana. Currently account for around 40 percent of the country's output. Even though Democratic Republic of the Congo has more than 30% of the world's diamond reserves, their GDP per capita is much less than Botswana Natural resources may not be enough for success.

How has Botswana been so successful? Botswana achieved this spectacular growth performance because it managed to adopt good policies. The basic system of law and contract worked reasonably well. State and private predation have been quite limited. Despite the large revenues from diamonds, this has not induced domestic political instability or conflict for control of this resource.

The government sustained the minimal public service structure that it inherited from the British and developed it into a meritocratic, relatively non-corrupt and efficient bureaucracy. The government invested heavily in infrastructure, education and health. Fiscal policy has been prudent in the extreme and the exchange rate has remained closely tied to fundamentals.

Not everything in Botswana is going well 1) Botswana has one of the highest adult incidences of AIDS in the world with perhaps 25%- 30% of adults being HIV positive.

A Serious Public Policy Failure 2) Although growth has been rapid, Inequality is remarkably high and has been practically unchanged The unemployment rate, especially of migrant workers from rural areas, is very high.

Trends in total labor force and unemployment, 1991-2006

Unemployment and labor force participation rate by gender, areas and youth, 2001

3) While Botswana has had freely contested democratic elections since independence, one party has always won and there has never been a credible opposition. Presidents of Botswana (1966- Present)

A BRIEF POLITICAL HISTORY OF BOTSWANA

A General Overview of Botswana Botswana is a landlocked country, surrounded by the Republic of South Africa, Namibia and Zimbabwe It is about the size of France, Kenya or Texas The environment is mostly arid, 84% of the country is Kalahari Sand. 80% of the population lives in the east of the country, where most of the usable arable land is.

THE ANCESTORS The Ancestors of the modern Tswana tribes migrated into the area of modern day Botswana in the 18 th century. They conquered the San and other tribes/societies who were combined into the Tswana. The Chief was the central political figure in these societies. There was also a series of public forums, called kgotla.

Integrative nature of Tswana Institutions + = The current homogeneity of Botswana Relative Absence of Colonialism No more than 50% of Botswana are actually real Tswana. The Tswana tribes did attempt to integrate other groups into their institutional structure.

THE DIFAGANE PERIOD & RISE OF THE COLONIALISM Difagane Period : The period of conflicts and fights due to widespread migrations. Botswana had to fight to protect their lands. After this period, they began to interact with the spread of colonialism : 1- Tswana chiefs saw trade with Europeans as a way to acquire weapons to use in those fights. 2- At 1853, the chief of the Bakwena had traveled to Capetown to persuade the British for the protection from the Boers. In 1884, Germany annexed Southwest Africa and the British began to look inwards. In addition to the diamonds and the gold, Botswana occupied an important strategic position blocking Germany one side and the Boer states the other side Britain declared the creation of a crown colony in British Bechuanaland and the Bechuanaland Protectorate in 1885

During the colonial period, 75% of the expenditures of the administration went on administrative cost, little was spent for investment or development. The economic effects of the colonialism : Hut Tax Native tax These taxes forced Africans into labor force market.

THE AUTHORITY OF GREAT BRITAIN Once and for all establish it s authority over the chiefs in the tribal territories This approach united chiefs to work against the Britain. The opposition of the chiefs and the WW2 blocked the imposition of the new policies. After the war and the rise of the National Party in South Africa, the idea of amalgamation of the Protectorate into South Africa seemed less feasible, and got abandoned in 1961.

POLITICAL PARTIES In 1951, The British formed the Joint Advisory Council. In 1960, they announced the creation of the legislative council and the first political party : BOTSWANA PEOPLE S PARTY (BPP). As a response to BPP, opponents founded BOTSWANA DEMOCRATIC PARTY (BDP). BPP being the strongest opposition party, another was founded in the name of Botswana National Front (BNF) to take BPP s place.

BPP vs. BDP BPP adopted a radical anti-colonial stance. BPP appealed to urban groups and workers, BDP integrated within an emerging educated elites and traditional chiefs. The structure of traditional loyalty of BDP made them easily win the first election held in 1965. BDP won every election ever since.

THE RULE OF BDP BDP was responsive to the threat of losing power to BNF : Accelerated Rural Dvpt. Programme Investment in rural areas BDP introduced popular reforms to keep the power, such as reducing the voting age from 21 to 18 etc. The founder of BDP, Seretse Khama, a traditional chief, have been intent on constructing a strong central state. Seretse Khama s effort resulted in the emergence of The National Assembly and the House of Chiefs. Seretse Khama ensured that the House of Chiefs became a talking stop that gave chiefs no power over legislation.

ECONOMIC STANCE OF BOTSWANA At independence in 1966, Botswana was a very poor country : Only industry was that of beef Poor agricultural condition High level of food import 50% of govt expenditures were finance by Britain To solve this problem BDP adopted highly successful strategies: Renegotiation of The Custom Union with South Africa in 1969 for a greater share of revenues. Encouragement mining companies to explore the country and make of agreements to receive 50% share of diamond profits. From the independence, BDP followed a consistent series of investments in infrastructure, health & education.

By the mid-1970 s the government budget was in surplus. In 1976, they introduced their own currency, The Pula. To stimulate industry, Botswana Development Corporation was introduced in 1982.

The Political Economy of Botswana

Key Facts Botswana had been implementing a sound economic policy. Diamonds have been a key player in growth; not the only one though. Strong institutions and their constraints on the tribal leaders prevented tribes to get in the way of growth. Colonial effects were small if any.

Sharing similar geographic conditions with all and rich diamond resources with some sub-saharan countries, Botswana stands out with its institutions.

Corruption in Botswana Botswana s government and the tribes were most of the time in harmony. However, brief interludes of corruption took place This stability and harmony contrasted Botswana from similar states in Africa. The government had continuous investments in education, health services.

Why Botswana? Richness in natural resource wealth Pre-Colonial institutions that promoted commoner participation and political elite criticization. Weak British colonializm helped those instutions to survive. After the independence, the country exploited its comparative advantage thus increasing the profits for the elite. The elite were happy. BDP, especially Seretse Kahama, was strong and their institutions (policies) received little opposition.

Kgotla A kgotla is a public meeting, community council or traditional law court, especially in villages of Botswana, usually referred to as a customary court. Decisions are arrived at by consensus (Commoners have power by quantity!) Everyone has a right to bring up a topic of discussion and state their opinion.

The Players These favorable conditions were in effect because the institutions were endegeneous: the elite, the people and the government had long agreed upon the rules of the game. Economic Interests were common. A strong leader was welcome as he was investing the governmental income into public goods and services; the tribes weren t suppressed as this would make them rebellious. They were incentivised to profit from what they have. (Cattle owners)

The Players A stable political system where the elites are not threatened is less likely to encourage inefficient methods of redistribution as a way of maintaining power. The elites (highly influential group of people) didn t feel threatened by change. There were no Political Losers.

The Players Constraints limited tribe predation and prevented other parties to fight for power. These political limits facilitated the birth and the implementation of good policies.

Economic Interest After the independence, ranching was highly promoted and supported. The elite were the main cattle owners. They were incentivised to go on with their profitable businesses. With the introduction of the much more profitable diamond business, elites stayed in ranching(!)

Political Losers The elite didn t feel threatened by the change (growth in other sectors etc.) in Botswana. Pre-colonial institutions made Kahan a legitimate and a strong leader. He was supporte by the elite.

Constraints Thanks to kgotla there were no political instability in Botswana at the time. Unlike others, colonialism(a weak one in Botswana s case) didn t strengthen tribal leaders, instead it helped the rise of pre-colonial institutions.

The Diamonds

The Diamonds Because of the breadth of the BDP coalition, diamond rents were widely distributed and the extent of this wealth increased the opportunity cost of undermining thegood institutional path--- no group wanted to fight to expand its rents at the expense of"rocking the boat".

Comparing Botswana with Other African Countries Previous arguments explained Botswana s success. In the following, we are going to go deeper in case studies. Four countries: 1) Somali 2) Lesotho 3) Ghana 4) Côte d Ivoire

BOTSWANA vs SOMALIA (1966) (1960) Not just a state, a nation as well (common history, culture, religion, language) Never governed by common political institutions British colonial rule had minimal effect Strategic location

BOTSWANA vs SOMALIA Problems Dismal economic record Unable to sustain democracy Political instability * QUESTION: Despite the similarities with Botswana, what is different in Somalia?

BOTSWANA vs SOMALIA *ANSWER: Pre-colonial institutions are problematic! Nomadic society Fractions in the society (based on competition over scarce resources) Somal (common ancestor) vs Clan loyalty Tswana institutions created a political culture of inter-tribe cooperation, which is absent in Somalia.

BOTSWANA vs SOMALIA Moreover: No constraints on de jure (political elites) Elites fight each other to take over control Good pre-colonial institutions Limited Colonial Rule Effective Constraints on Political Elites

BOTSWANA vs SOMALIA Result ONGOING CIVIL WAR IN SOMALIA SINCE 1988

BOTSWANA vs LESOTHO (1966) (1966) Small country Culturally & Linguistically close to Tswana Endless conflicts in 1820s (as in Tswana) 1830 Moshoeshoe as the Chief Political institutions resemble kgotla.

BOTSWANA vs LESOTHO Kgotla Community council, traditional court, led by chief but decisions arrived by consensus. (highly democratic structure)

BOTSWANA vs LESOTHO What happened next? 1841: Moshoeshoe appeal to British for help against Boers 1843: Sign a treaty with British to claim territory 1849: British reneged on their treaty 1849-1865: Tensions with Boers 1865-1868: Series of wars with Boers 1868: British annexed Basotho(people): Basutoland 1871: Cape colony took over control 1871-1884: Inconsistent policies, wars with Boers Moshoeshoe

BOTSWANA vs LESOTHO What happened next? British empowered the paramount chiefs to give an end to tensions 1910: Basutoland Council (dominated by the chiefs) End of kgotla-like council The ability to take over control arises More power of the chiefs No constraints for elites Higher stakes in politics

BOTSWANA vs LESOTHO Good pre-colonial institutions Limited Colonial Rule Effective Constraints on Political Elites

BOTSWANA vs GHANA (1966) (1957) After colonialism (1951 in principle), domestic struggles for power Kwame Nkrumah: divide and rule Ensured power at independence in 1957 Suppress opposition: one party state Economics as a tool to stabilize politics Fear of losing position (unlike BDP of Botswana) Unstable parliament (unlike BDP of Botswana)

BOTSWANA vs IVORY COAST (1966) (1960) Improved agricultural performance benefits elites (de jure) They support pro-farmer policies NOT SUFFICIENT TO ENSURE DEVELOPMENT Why? Precarious poisitions of elites Fear of losing power by promoting development

Social Challenges

Inequality in terms of GINI 100 #5 out of 154 countries GINI Index 67 33 54,21 60,96 64,73 60,46 0 1985 1994 2003 2009 Source: World Bank

Income Distribution 1985 1994 2003 2009 0 10 20 30 40 50 60 70 highest 20% highest 10% lowest 10% lowest 20%

Human Development Report 2014 Botswana is #109 out of 189 countries in the range of Medium Human Development alongside Mongolia, Palestine, Paraguay, Bolivia, Iraq

CONCLUSION

Advantages of Botswana Sufficiency of pre-colonial institutions Constraints on elites Limited colonial intervention (peripheral nature of Botswana) Chiefs and cattle owners benefited from enforcing property rights. Revenues from diamonds Sensible decisions in post-independence era

Ongoing Problems of Botswana AIDS Persistence of inequality Unequal distribution of wealth High urban unemployment Urgent need to focus on human development

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