Download Botswana

Botswana: A Small Developmental
State in Africa
“DEVELOPMENTAL STATES”
Thinking on the role of the state in development has
differed over past 50 years:
• State-led development was encouraged/supported in the
1950s and 1960s;
• State-led development was then criticised in 1970s/early
1980s as inefficient and distorting in the light of growing
debt and economic problems in Africa and S.America;
• Structural adjustment and market-oriented reforms
(“Washington Consensus”);
• Role of the state in development was re-evaluated based on
the successful experiences of state-led development in “Asian
Tigers” since the mid-1990s;
• Each of these stages has reflected the lessons learned from
the previous one(s)
 While too much faith seems to have been placed in state-led
development in the 1950s and 1960s, efforts to curtail the state
in the 1980s and 1990s were perhaps too strong and dogmatic
• Since the end of the 1990s, accelerated development has spread further in
Asia, and is increasingly including the Indian sub-continent
• 1997 World Development Report was dedicated to ‘rethinking the state’,
and reaffirmed the position that ‘the state is central to economic and
social development’
• Growing awareness that the orientation and effectiveness of the state is
the critical variable explaining why some countries succeed whereas
others fail in meeting development goals
• State capacity and effectiveness is the key bottleneck in Africa’s ability to
meet the Millennium Development Goals
• Recognition of the developmental success of East Asia has led to new
thinking on what states should accomplish
• A developmental state project must possess at
least two essential attributes:
1. The state must have the capacity to control a
vast majority of its territory and possess a set of
core capacities that will enable it to design and
deliver policies
2. The project must involve some degree of reach
and inclusion, and have an institutional, long-term
perspective that transcends any specific political
figure
Adrian Leftwich emphasises commitment
 in his view, an ideal-type developmental state is one that
demonstrates a ‘determination and ability to stimulate, direct,
shape and cooperate with the domestic private sector and
arrange or supervise mutually acceptable deals with foreign
interests’
• Thus, a developmental state is broadly understood as one that
evinces a clear commitment to a national development
agenda, that has solid capacity and reach, and that seeks to
provide growth as well as poverty reduction and the provision
of public services
Developmental state
“Good governance”
Core
aspect
Emphasis on state capacity and
‘embedded autonomy’
Emphasis on transparency
and accountability
Political
regime
No normative commitment to any
particular type of political regime, though
many examples of ‘successful’
developmental states are authoritarian
Normative commitment to
democracy. Strengthening
democratic rule is a key concern
State
legitimacy
Derived from state achievements and
performance
Derived from democratic
representation of interests of the
majority and the protection of the
rights of the minority based on
rules and procedures
Political
will
Concern for national goals; commitment
of core leadership is essential
Concern for effective constraints,
normative orientation (legitimacy,
human rights, democracy,
macroeconomic balance)
Role of the State should (actively) foster economic
state
development but avoid capture by
particular groups
No clear agreement among various
proponents; state should set a
framework (rule of law) for
markets/private actors
The attributes of “developmental” states embody the following capacities:
• Regulatory capacity – ability to establish and enforce rules throughout the
society, including the traditional and religious realms
• Administrative capacity - ability to manage the personnel and resources of
the state and to ensure accountability and efficiency in service delivery
• Technical capacity- expertise and knowledge required to make and
implement technical decisions as well as the policy tools and instruments
necessary to implement those decisions effectively
• Extractive capacity - to raise the revenues needed by the state to pay for
the expenses of implementing state policies and goals – includes the
revenue for hiring, paying, and providing public servants with the
resources to work with
• Developmental states and public services (by the above definition) are rare
in Africa - outside of South Africa, Namibia Botswana and Mauritius; the
quest for the developmental state elsewhere in Africa has proved highly
elusive
• Top ten best governed SSA states on the Ibrahim index:
1. Mauritius
2. Seychelles
3. Botswana
4. Cape Verde
5. South Africa
6. Gabon
7. Namibia
8. Ghana
9. Senegal
10. Sao Tome and Principe
 The challenges of development are firstly, political
BOTSWANA
• Was extremely poor at independence – is now a middle-income country
• It was landlocked, surrounded by hostile neighbours but also resource rich (i.e.
potential disaster in terms of the “resource curse”)
• It did not simply pursue the “right policies” - we have to ask what were the
dynamics of Botswana’s ability to avoid the sort of problems its neighbours
encountered i.e. what were the politics that made it possible?
• At independence in 1966, Botswana was rated among the poorest states
in the world with a per capita GDP of only US$283
• By 2010, Botswana’s had attained the status of an upper middle income
country.
 between 1966 and 1999, Botswana had the highest rate of economic
growth in the world and way ahead of rest of Africa
• Life expectancy at birth was estimated at 50 years in 1965, rose to 68 in
1995, then dropped to 59 by 2010 (HIV/AIDS)
• Infant mortality was 108 per 1000 live births, had dropped to 42 by 2009
• Adult literacy rate was 34% in 1970, had risen to 81% by 2010
 Has enjoyed peace, stability and democracy since independence
• Botswana was a livestock economy until 1967 when diamond mining
commenced
• Before 1967 agriculture accounted for 40% of the total GDP
• Contribution of mining (particularly diamond mining) to GDP rose from
1.6% in 1967 to 34% of the country's GDP and 50% of its tax revenues
• Mining’s share of total government revenue was virtually zero in 1967,
rose to between 45 and 65% by 2000s
• NOTE: mineral wealth not a sufficient condition for economic growth, let
alone economic development – Angola, Sierra Leone, Liberia, Nigeria etc
• Botswana has so far been successful in utilizing the financial capital from
mining to drive and sustain economic growth and development
• One of the most popular explanations is the country’s adoption of, and
strict adherence to, sound macro-economic objectives and corresponding
policies to achieve the objectives i.e. pursuing a developmental state path
• Two objectives adopted very early:
– Avoidance of external debt and stabilization of
government expenditure
– Management of the exchange rate in order to
promote economic diversification
• These objectives were to be achieved using
the following policies:
1. Policy towards avoidance of external debt and
stabilization of public expenditure
• Avoided excessive public expenditure during
mineral export boom periods
 instead built up budget surpluses and
accumulated international reserves
• The surpluses and reserves were used to finance
spending during periods of mineral export
‘drought’ without having to borrow or to cut
public spending drastically
• Consequently, Botswana was successful in
avoiding “boom and bust” cycles and built up
mounting financial surpluses since the 1980s
Botswana: current public revenue and expenditure,
1971-1995 (Pula millions)
• Part of the surpluses was invested in national
development projects
• All new domestic investments:
a) had to be based on expected/projected revenue flows in
the medium and long-term
b) Had to always taken into account necessary recurrent
expenditure to ensure their sustainability with or without
export booms (i.e. upsurge in state income)
c) Had to always be budgeted for in 6-year national
development plans and approved by parliament
 Only projects provided for in the published national plans
were funded during the plan periods
• Domestic investments were always well below recurrent
revenue
• Surpluses not invested in national development projects were
used to build up foreign exchange reserves
 estimated to represent approximately 19 months' cover of
imports of goods and services
Explanation 2: Good governance and
institutions
• Botswana has had a good, earned and sustained record of
good governance
• A functioning constitutional multi-party democracy has
existed since 1966
• All elections held have been conflict free and declared free
and fair.
• Low levels of corruption: consistently lowest in Africa, and
amongst lowest in the world according to Transparency
International.
• Enduring social and political stability
• According to Transparency International,
Botswana has a strong National Integrity
System (NIS):
• The NIS = “the sum total of laws, institutions
and practices in a country that maintain
accountability and integrity of public, private
and civil society organizations”
• Some scholars have traced the evolution of
effective governance structures to traditional
heritage and to the fact that some of them
were established before mineral wealth
became a factor
• Traditional kgotla system – consultative assembly as well as a
court through which decisions were made, justice was
administered and traditional authorities were held accountable
• Close similarity with post-independence parliament
• In 1967, before mining commenced, parliament enacted the
Mines and Minerals Act which vested all sub-soil resources in the
state
 pre-empted future conflict
over mineral wealth.
• The first president, Seretse Khama, enjoyed a legitimacy,
drawn from his position as (former) chief of the dominant
Tswana tribe (the Bangwato) that was unrivalled
• Khama’s charismatic style of leadership and his integrity,
combined with his natural authority helped secure the
BDP’s position and shaped system of governance
• There was also no real organised opposition to Khama’s
agenda
• The electorate was steeped in a traditionalist culture of
respect for authority
• This granted space to Khama and his BDP
• The emergent elite were also conscious that its
interests would be better served by private capitalist
accumulation rather than state capitalism
• At independence, the state was in dire financial
problems and could not be the means of
accumulation  consequently, the elites did not see
the state as a source of self-enrichment
• Instead, constructing an interventionist state to
facilitate development and the accumulation of
capital was the main vehicle advancing the elites’
interests
• The BDP and political elite that emerged after 1966
had important interests in the cattle industry, the
main productive sector of the economy
• It was in their interests to build infrastructure and
generally develop institutions
• This promoted national development, but also their
economic interests
1. THE FIRST PHASE: 1960 - 1975 – Initial base creating, a
transitional phase
• Significance of the historical, socio-economic, and political
context, especially survival of traditional Tswana political
culture in colonial context and integration into modern
institutions;
• New ruling elite ultimately merged local interest into broader
commitment to build a non-racial and unitary state
• Start of Development Planning & its integration with the
budgetary system
• Policy stance sought to maximize flow of foreign capital – aid
and private investment;
• Introduction of multi-party system of government under
inherited market-based economy;
• Development strategy entailed state-led development
strategy similar with many other African states at
independence;
• Membership in SACU and Rand Monetary Area providing
external agency of restrain in fiscal and monetary policies.
Second Phase 1975 to 1989: Consolidation of both market based
& multi-party system
• Built a relatively strong and competent state that provided visionary leadership
& management;
• Mining sector clearly emerged and consolidated itself as the engine of growth;
• Fastest economic growth
•
 per capita GDP (in US$) between Botswana and Nigeria:
By the end of the second phase, viable traditional and modern institutions
of economic, political and legal restraint had been in place and relatively
well consolidated
Development Planning and its integration with budgeting system ensured
that development projects were initiated locally, and any donor-funded
projects addressed identified government priorities
• Extreme shortage of skilled/educated manpower
did not seriously affect economic growth partly
due to increased inflow of aid in the form of
technical assistance
• Botswana avoided rushing into Africanization.
• Export-led growth driven mainly by FDI – setting
in in motion a process of sustained growth,
transmitted to the whole economy
• Government acted as a conduit primarily on
infrastructure and human capital
• Avoided corruption and leaders are not prone to
rent seeking
CONCLUSION
1. The democratic system of governance appears to
have enhanced good policies with national policies
contested through regular elections and legislative
roles,
 both of these enforced a discipline of
accountability for results that benefited the
electorate more broadly.
2. Democracy has been in the interest of Botswana
leaders
seen as a way to deliver better public goods by
using it to attract foreign resources and also
manage internal politics in which the opposition
has been largely marginalized due to popular
policies in place
3. Botswana illustrates the positive role the
leadership can play in sustaining economic
growth and development
 the essence of state-led development
hinged on a secure political elite
 This elite developed or modified and
maintained viable inherited traditional and
modern institutions of political, economic,
and legal restraint
4. Botswana’s success story is not due to good fortune or good
luck factors
 a result of effective management, pursued by a relatively
strong and competent state that provided visionary role operating
under viable traditional and developed modern institutions of
economic, political and legal restraint
Conducive policy environment included restraint, broad-based
development planning, pragmatism, etc.
Compare and contrast……
5. Botswana’s prudent macro-economic policy of
treating diamond price increases as temporary and
declines as permanent – led to reserve accumulation
during boom periods and rapid responses in
downturn periods
• Credit for this goes to the founding leaders of
independent Botswana.
•To appreciate this observation, compare the
following statements from two renowned statesmen:
• “….we intend to conserve our resources wisely and not destroy
them. Those of us who happen to live in Botswana in the 20th
century are no more important than our descendants in centuries
to come” – Ketumile Masire, Second President of Botswana
• “We are in part to blame, but this is the curse of being born with a
copper spoon in our mouths” –Kenneth Kaunda, First President of
Zambia
Questions?