Human Development Report 2010 - The Real Wealth of Nations...

This Twentieth Anniversary Edition Human Development Report underscores the fact that he human development approach has profoundly affected an entire generation of policy-makers and development specialists around the world. This 20th anniversary milestone presents an opportunity to review human development achievements and challenges systematically at both the global and national levels, a task not attempted since the first Report, and to analyse their implications for policy and future research.

On one crucial point the evidence is compelling and clear: there is much that countries can do to improve the quality of people’s lives even under adverse circumstances. Many countries have made great gains in health and education despite only modest growth in income, while some countries with strong economic performance over the decades have failed to make similarly impressive progress in life expectancy, schooling and overall living standards. Improvements are never automatic—they require political will, courageous leadership and the continuing commitment of the international community. Click here to read the full report...

Regional integration in Southern Africa focusing on the the future of SADC and SACU

This paper shows that the international trade environment has witnessed growth in the number of preferential trade agreements (PTA) between developed and developing countries. Southern Africa is not spared from engaging in such types of preferential trade agreements with good examples being the Southern African Development Community (SADC) which comprises 14 countries, the Common Market for Eastern and Southern Africa (COMESA) with 19 countries while the Southern Africa Customs Union (SACU) which is the oldest customs union has five member states.

As SADC moves into customs union while SACU is already a customs union, however membership of more than one customs union is technically impossible. Hence as SADC moves to a CU, member states of both groupings with multiple memberships at present will have to strike the balance of the costs and benefits of belonging to one or another CU grouping. This is not the only major problem with regional integration in southern Africa, the economic partnership agreement (EPA) has also added another confusion where members of the oldest customs union. Click here to read more...

Taxing Alcohol in Africa: Reflections and Updates

A Working Paper by the Andrew Young School of Policy Studies (Georgia State University) posits that governments arguably exist in part to cope with such weaknesses of their citizens as those arising from infirmity, ignorance, and irrationality. At the same time, however, governments themselves partly subsist on the strength of such other popular "weaknesses‟ as smoking, drinking, gambling, and polluting. In many countries, alcoholic beverages have long played a critical role on both sides of this equation. Over-indulgence in drink is a factor in crime, injury, and illness. In recent decades, although the level of alcohol consumption worldwide has been relatively stable, in some developing countries, including a number in Africa, such consumption has increased. At the same time in many of the same countries alcohol has also proved to be a lucrative source of public financing.

Thus from a public policy perspective, alcohol thus has two faces. In particular, we attempt to draw from international experience some implications for African governments that are wrestling with the conundrums and trade-offs that confound alcohol tax policy everywhere. Click here to read more...

Diamonds Are Not Forever: Botswana Medium-term Fiscal Sustainability

This World Bank  Policy Research Working Paper (by Naoko C. Kojo) analyzes Botswana’s medium-term fiscal sustainability in view of the expected depletion of diamonds in the future. The paper shows that in the absence of policy adjustments, Botswana’s current fiscal policy strategy is unsustainable over the longer term, which could endanger macroeconomic stability and Botswana’s reputation as Africa’s success story. The paper further contends that ensuring medium-term sustainability of Botswana’s public finances requires stronger revenue collection, through improved revenue administration, greater tax enforcement, and the rationalization of tax exemptions in order to realize the full revenue potential. 

At the same time, the government needs to maximize the effectiveness of public expenditure and bring down public spending to levels that are more in line with long-term revenue prospects. The paper emphasises that a greater control over the public sector wage bill is critically important. It is further argued that growth of a dynamic non-mining sector is crucial for Botswana not only from the fiscal sustainability point of view, but from the point of view of achieving balanced development that will create jobs and deliver durable reduction in poverty and inequality. Fiscal policy will have to play a central role in this process. Click here to access the full paper.

Growth and Productivity in Agriculture and Agribusiness: Evaluative Lessons...

The Independent Evaluation Group (IEG) has released a new study titled “Growth and Productivity in Agriculture and Agribusiness: Evaluative Lessons from World Bank Group Experience.”The study is expected to help Africa and countries like Botswana raise productivity in the sector and promote its growth. Drawing on the World Bank Group’s (WBG) experience in supporting agricultural growth in the past decade, the report points to areas where increased funding can translate into higher impact.

According to the report  agricultural growth remains central to poverty reduction, particularly in the poorest countries, where a large share of the population relies on agriculture for their livelihood. At the same time, global demand for some of the major agricultural product groups is growing due to the growth in population and incomes, dietary shifts, and demand for biofuels. Click here to access the report.

BIDPA advocates Citizens' Budget

The Mmegi Newspaper indicates that Botswana Institute for Development Policy Analysis (BIDPA) has advised Government to start producing and publishing a Citizens' Budget so that Batswana may be better informed about how public funds in the national coffers are raised and spent.

Unlike other countries in the region, among them South Africa, Namibia and Malawi, Botswana does not produce a Citizens' Budget, which is a non-technical presentation of the national budget published for the public to better understand government plans and make it accountable for its policies. Click here to read the full newspaper article.

Govt opens up on 2011/ 12 budgeting

In a rare moment coming at a time when public finances and debt are getting out of control, the Ministry of Finance and Development Planning has gathered its critics for 2011/ 12 budget consultation next week.The gathering, named Budget Pitso, is a culmination of concerns from the industry and NGOs that Botswana public budget is done in ‘secrecy’. This is coming at a time when public finances and debt are getting out of control

A number of policy think tanks like BIDPA and trade unions have queried the way budget formulation is being conducted. Botswana budget only gets to be scrutinised when it reaches parliament where legislators debate it. For the public, it is even worse as they only see the minister reading it on national television stations and newspapers. Click here to read more...

BIFM Economic review: Q3 2010

BFM Economic Review report shows that the third quarter of 2010 marked a continuation of the recovery from the global economic crisis of 2008-09. Recovery in Botswana’s most important industry – diamond mining – has been stronger than earlier expectations, with the global diamond market increasingly robust. This has had a positive impact on the trade balance and the government budget, and has helped to stabilise some of the adverse macroeconomic developments that were in full swing a year ago.

But in many respects, economic conditions remain challenging and far from the “pre-crisis normal”. The priority is now changing to adjustment, and dealing with the structural challenges that need to be addressed to ensure sustainable growth. Click here to read the full report.

Economic Development in Pre-Independence Botswana, 1820-1966: Historical Trends...

This paper examines the trajectory of economic development in Botswana between the years 1820 and 1966, when it achieved independence. The paper reviews the historical trends in the country's economic and social development indicators. It analyzes what factors have encouraged or hindered economic development in Botswana: In particular, the paper focuses on the roles of physical geography, climate, disease ecology, economic and political institutions, geopolitical relations, demographic trends, as well as on ethnic divisions and cultural belief systems. In conclusion the paper discusses Botswana's preparedness for modern economic growth when it gained independence in 1966. Click here to read the full paper.

EU, SADC inch closer to final EPA

The Mmegi Newspaper reports that a series of meetings involving senior officials and experts from the European Commission and SADC are scheduled before year-end as the two groups attempt to wrap up a full Economic Partnership Agreement (EPA) before the New Year.

Senior officials of the two parties recently met in South Africa, marking the first meeting between the groups since the EU accepted the region's request that it places its solidarity ahead of any final agreement. Four of the seven SADC-EPA states, including Botswana, signed an interim EPA last June, but this year agreed to walk in step with the remaining states in the resolution of outstanding issues. Click here to read more...

Mixed feelings greet prospects of Pula slide against Rand

According to the Mmegi Newspaper article, indications are that for the first time ever, the Pula could bite the dust against the South African Rand. This analysis is attributed to the spokesperson of the Bank of Botswana, Andrew Sesinyi.
The Botswana currency fetches only R1.04 for P1.00. From August 1976 when Botswana formally withdrew from the Rand Monetary Area (RMA) and introduced its own currency and pegged it to the US dollar at P1 = US$1.15, the Pula has never fallen below the Rand. The Pula was on a par with the Rand, which was also pegged to the US dollar at R1= US$1.15. Click here to read more...

IMF World Economic Outlook (WEO) - Recovery, Risk, and Rebalancing; October 2010

Acoording to this IMF report, thus far, economic recovery is proceeding broadly as expected, but downside risks remain elevated. Most advanced economies and a few emerging economies

still face large adjustments. Their recoveries are proceeding at a sluggish pace, and high unemployment poses major social challenges. By contrast, many emerging and developing economies are again seeing strong growth, because they did not experience major financial excesses just prior to the Great Recession. Sustained, healthy recovery rests on two rebalancing acts: internal rebalancing, with a strengthening of private demand in advanced economies, allowing for fiscal consolidation; and external rebalancing, with an increase in net exports in deficit countries, such as the United States, and a decrease in net exports in surplus countries, notably emerging Asia. The two interact in strong ways.

Increased net exports inadvanced economies imply higher demand and higher growth, allowing more room for fiscal consolidation. Strengthened domestic demand helps emerging market economies maintain growth in the face of lower exports. A number of policies are required to

support these rebalancing acts. Click here to read the WEO.

Global Financial Stability Report - Oct 2010

                                                            Global Financial Stability Report (October 2010) shows that the inability of multiple financial institutions to roll over or obtain new short-term funding was one of the defining characteristics of the crisis. Systemic liquidity risks were underrecognized by both the private and public sectors and required unprecedented intervention by governments and central banks during the crisis. This report discusses the vulnerabilities that led to the systemic liquidity crunch and, in doing so,  provides a holistic framework for dealing with them, with central banks expected to step in only in dire emergencies.

A key aspect of the crisis was the increased use by banks of short-term wholesale funding and the risks that it posed when these short-term markets dried up. Perhaps insufficiently recognized was that the wholesale providers of funds had also changed instead of interbank markets acting to move unsecured funds where needed, other intermediaries, such as money market mutual funds, were growing suppliers of funds while traditional, more stable depositors were not. Secured lending through repurchase operations

also grew immensely, greasing the funding markets.

The report shows that going forward a comprehensive approach is needed to better mitigate systemic liquidity risks. Higher liquidity buffers and lower asset/liability maturity mismatches in banks will help to reduce the chance that an individual institution will run into liquidity difficulties. Click here to access chapers 2 & 3 of the report.

BOB defends its monetary policy

Bank of Botswana (BoB) leapt to the defence of its Monetary Policy while at the same time conceding that local commercial banks are making “abnormal profits” that raise concern through lending interest rates.

The move by the central bank follows an article carried by Sunday Standard a fortnight ago that stated that local commercial banks were making a killing out of Bank of Botswana Certificates (Bobcs) and the lending interest rates.

The Sunday Standard article was based on Professor Roman Grynberg’s research, "The Cost of Botswana’s Monetary Policy" that showed that, under the current tools used by Bank of Botswana, commercial banks are making huge profits from unbelievable interest rates while at the same time getting huge returns from Bobcs at no risk. Click here for more.



GDP (Botswana) contracts by 8.4 percent in the second quarter

The Central Statistics Office (CSO) has published estimates indicating that the gross domestic product (GDP) contracted by 8.4 percent in the second quarter of 2010 compared to the previous three months. However, on an annual basis, growth remained positive at 6.5 percent. The contraction was mainly concentrated in the mining sector, where output is estimated to have fallen by 23.5 percent. In contrast, non-mining GDP grew by 1 percent. In the first six months of 2010, overall GDP was 7 percent higher than during the same period in 2009.

Click here to access report from the CSO website.

Reaching the MDGs: An Action Plan for Trade

The paper projects lack of integration into the global economy as a major factor in the continued underdevelopment of the poorest countries. The reasons for this include obstacles faced by exporters both abroad and at home: access to foreign markets is frequently limited by import barriers, while inadequate infrastructure and weak policies at home—including their own trade policies—often frustrate producers seeking to compete abroad.

With many low-income countries (LICs) lagging in the global effort to reach the Millennium Development Goals (MDGs), there are calls for intensified action to spur growth and development. Trade is one key area where action can be taken. This paper suggests possible actions to foster trade integration for the LICs, substantially increasing their export potential and thereby helping them to progress toward the Millennium Development Goals.

As the foundation for these ambitions, the paper emphasises the role of a secure, open global trading environment—strengthened further by concluding the WTO Doha Round. The Fifteen Point Plan of possible actions outlined in this paper could increase annual exports of the least developed countries (LDCs) by US$10 billion or more, with additional benefits for other LICs. Click here to access the full paper.

World Development Report 2010: Development and Climate Change

The report indicates that climate change is a  threat to all countries, but particularly developing ones. Therefore, understanding what climate change means for development policy is the central aim of the World Development Report 2010. It explores how public policy can change to better help people cope with new or worsened risks, how land and water management must adapt to better protect a threatened natural environment while feeding an expanding and more prosperous population, and how energy systems will need to be transformed.

The report is an urgent call for action, both for developing countries who are striving to ensure policies are adapted to the realities and dangers of a hotter planet, and for high-income countries who need to undertake ambitious mitigation while supporting developing countries efforts. In the crowded field of climate change reports, WDR 2010 uniquely: Emphasizes development; takes an integrated look at adaptation and mitigation; highlights opportunities in the changing competitive landscape and how to seize them; proposes policy solutions grounded in analytic work and in the context of the political economy of reform.

The report is accessible at the following URL: http://publications.worldbank.org/index.php?main_page=product_info&cPath=0&products_id=23631

A hard copy of the report is available in the BIDPA Library.

The effects of tourism development on rural livelihoods in the Okavango Delta, Botswana

The article assesses the impact of the Community-Based Natural Resource Management (CBNRM) program on communities around the Okavango Delta  in Botswana. CBNRM assumes that if rural communities derive benefits from natural resources, they will be obliged to use such resources sustainably. Using the sustainable livelihoods framework, this study analyzes the effects of tourism development through CBNRM on rural livelihoods at Khwai, Sankoyo and Mababe in the Okavango Delta, Botswana, using primary and secondary data sources. Results of long-term surveys and in-depth interviews indicate that the three communities have forgone traditional livelihood activities such as hunting and gathering, livestock and crop farming to participate in tourism through CBNRM. Livelihoods in these villages have been improved as a result. Basic needs such as shelter, employment and income and social services like water supply systems, transportation, scholarships and payment of funeral expenses are now provided to community members and funded with income from CBNRM. Social capital has been built up in order to agree, manage and develop the CBNRM process. These results show that tourism development in these villages is achieving its goal of improved livelihoods, contradicting claims that community development projects are failing to achieve rural development. The article appears in Journal of Sustainable Tourism, vol 18, No.5, 2010.

The Global Competitiveness Report 2010-2011 [Botswana slips to 76th spot)

The Global Competitiveness Report 2010-2011 released by the World Economic Forum recently . The United States falls two places to fourth position, overtaken by Sweden (2nd) and Singapore (3rd). The Nordic countries continue to be well positioned in the ranking, with Sweden, Finland (7th) and Denmark (9th) among the top 10, and with Norway at 14th. Sweden overtakes the US and Singapore this year to be placed 2nd overall. The United Kingdom, after falling in the rankings over recent years, moves back up by one place to 12th position.

Botswana is ranked 76 compared to last year's 66. Problematic factors which contribute to this level of competitiveness include poor work ethic, inadequately educated workforce, inefficient government bureaucracy, access to financing, inadequate infrastructure, restrictive labor regulations, inflation, corruption, crime, poor public health; policy instability, etc. Click here for the full report.

Botswana pays heavily for its monetary policy

The Sunday Standard Newspaper (12.09.10 edition) carries news that the Central Bank’s monetary policy has been sharply criticised for enabling the local commercial banks to rip-off customers through huge interest rates while at the same time milking the country of billions of pula through Bobcs. This has emerged from a recent research report by Professor Roman Grynberg, a Senior Research Fellow at the Botswana Institute for Development Policy Analysis (BIDPA)

In his paper, entitled “Cost of Botswana Monetary Policy”, which is currently circulating within a close net of people, Professor Roman Grynberg charged that the tolls that are employed by Bank of Botswana have enabled commercial banks to profit from unbelievable interest rates while at the same time getting huge returns from Bobcs at no risk. Click here to read more...

Bank of Botswana Research Bulletin

The Research Bulletin is the forum through which the Bank of Botswana publishes a selection of economic research which is judged suitable for wider dissemination.  Most articles are prepared by Bank staff, mainly from the Research Department, but also more widely. The current, August 2010 edition contains the following articles:

• 
  
  2010 Monetary Policy Statement
• 
  
  The Southern African Customs Union (SACU): Agreement: Past, Present and Future Prospects
• 
  
  The Efficiency of the Botswana Equity Market
• 
  
  Interpreting National Accounts Estimates for the General Government Sector: The Case of Botswana

Click here to access the bulletin.

IMF Country Report No. 10/280 (Botswana), Sept 2010

According to this report, Botswana’s economy is rebounding after a significant setback following the global financial crisis. The economy entered the crisis from a position of considerable strength because of past prudent macroeconomic management. This facilitated a timely easing of fiscal and monetary policies, which helped cushion the impact on growth of the crisis and the subsequent collapse in demand for diamonds. The economy is likely to see some rebalancing beginning this year, as lower government spending dampens growth in the nonmining sector while recovery of the diamond sector accelerates. Click here to access the full report.

Mid-Term Review of the 2010 Monetary Policy Statement: Bank of Botswana

The Bank of Botswana has published the Mid-Term Review of the 2010 Monetary Policy Statement. The review notes that the prevailing monetary policy stance remains consistent with achieving the current medium-term objective for CPI inflation of 3 – 6 percent. The review further indicates that the policy remains appropriate for supporting economic recovery, including sustained growth in the non-mining sectors.

As anticipated at the beginning of this year, the economy began to recover during the first quarter although the overall level of domestic economic activity was below trend, a factor that exerted low demand pressures on inflation. Price developments were also in line with the projections, with inflation rising in the first half of 2010, from 5.8 percent in December 2009 to 7.7 percent in June 2010, due to the increase in value added tax (VAT), as well as electricity tariffs and fuel prices. Click here to read more.

Growth, Inequality and Poverty in Emerging and Transition Economies

Published in Transition Studies Review (Vol 16 No. 4), this paper explores the quality of economic growth in a sample of 50 emerging and transition economies (ETEs), which are countries experiencing a process of fast growth and institutional change. Economic growth during 1995–2006 is regressed against poverty, inequality and human development variables using OLS cross-country regression models.

The main findings are that growth did not reduce poverty and income inequality worsened too. On the one hand, economic growth occurred despite the worsening of income inequality. However, this result does not identify a ‘‘U-shaped’’ Kuznets curve because even after a consistent period of growth, inequality did not decrease and it remained at higher levels.

The paper observes that only countries with higher education levels and public expenditure in strategic dimensions seem to escape from this trap. On the other hand, growth occurred at the expense of an important human development variable i.e., life expectancy, and of an important indicator of democracy, i.e., voice and accountability. Click here to read more.

World Bank scolds Botswana over NDPs

An article in the Sunday Standard newspaper (Botswana) indicates that although Botswana’s traditional planning and budgeting systems have served the country well since independence, they are no longer in tune with modern times, so much that there is real risk of not being able to deliver on the projected targets, especially in view of the need to cope with demands presented by the current global financial crisis and dwindling revenues. This emerged during a presentation by World Bank officials during Public Expenditure Review Workshop in Gaborone.
The World Bank also notes that there is more money going out of state coffers than is practicable to make up for the costs resulting from remunerating a big public service that takes the bulk of the country’s financial resources.
It was observed by the World Bank Group delegation that on formulating the NDPs, no provision was ever made for existing projects, with the result that every NDP since independence has been leaving in its trail a legacy of either dilapidated or incomplete projects. Click here to read more...

Implementing competition law in Botswana: A formative analysis

This article, authored by Dr Gape Kaboyakgosi (Research Fellow at BIDPA), was published in a local newspaper and discusses aspects of the new Competition Law in Botswana. It posits that the recent legislating of the Botswana Competition Bill into law, as well as the appointment  of commissioners and subsequent gazetting of the Commission points towards the end of a long process of the reformation of aspects of Botswana’s microeconomic environment. It is tempting to imagine that the Law might address all the challenges facing the economy. Yet Competition Law is an important aspect of the transformation which was also the object of the Privatisation Policy (2000), the implementation which however has met numerous challenges to date. This article is a snap preview of matters that might face the Commission and the Authority. The article concludes that due to the many challenges that face the new Competition Law, bargaining between actors will be the most important regulatory tact to adopt especially in the nascent years of the implementation of the law. Click here, OR here to request for the full article.

Botswana at little risk of debt distress - IMF

According to the Mmegi Newspaper (Friday, 20 August 2010) the International Monetary Fund (IMF)has reported that despite the rapid build-up of external debt in 2009, Botswana is at little risk of debt distress.

In a report following consultations between government officials and the Fund's staff, the IMF says external debt for Botswana is expected to reach nearly 50 percent of the GDP by 2012, to finance construction of two power stations, but should stay below 60 percent of GDP in stress test scenarios.

"Public debt would rise to 25 percent of GDP in 2010, before falling to 15 percent by 2014," the report says. "If growth and the primary balance were to return to recent levels, however, Botswana would be able to repay its public debt by 2012." According to IMF statistics, Botswana's gross external debt stood at $1.2 billion (11.2 percent of GDP) at the end of 2008, with short-term debt accounting for one-fifth of total external debt. The initial increase in 2009 is also explained by the projected 10.3 percent contraction in real GDP due to significantly lower diamond production. Click here to read more. IMF Report URL: http://www.imf.org/external/pubs/ft/scr/2010/cr10172.pdf

 

What Does the Future Hold for SACU? From Own Goal to Laduma! Scenarios for the Future....

This paper discusses the outcomes of a recent scenario-planning exercise on the future of Southern African Customs Union (SACU), an exercise that involved a group of  SACU experts and other interested parties. The paper gives an account of the scenarios developed, which range from SACU collapsing to a scenario where it deepens into a common market.The exercise first mapped out the key certainties and uncertainties that SACU is facing. These range from the certainty that SACU will be impacted by the global economic slowdown to the uncertainty over whether an Economic Partnership Agreement (EPA) will be concluded and what the final content and configuration of this agreement will be. The impact of these circumstances (and others) will shape the future of SACU.

The key certainties and uncertainties identified were then used to map the likelihood of these elements transpiring and what their potential impact will be on SACU. They constitute the gameboard of the scenarios. On the gameboard four quadrants are envisaged, each representing a different future for SACU. SACU’s current position is noted on the board, as well as its ideal future. Driving forces are identified that would either move SACU towards or away from this ideal future. The group envisaged four possible futures for SACU and named them ‘Laduma! ’, ‘Wild Card’,‘Own Goal’ and ‘Red Card’, with ‘Laduma! ’ representing the quadrant in which SACU’s ideal future lies. Click here to read more...

Global Financial Stability Report: Financial Stability Set Back as Sovereign Risks Materialize

The IMF has released the Global Financial Stability Report - (GFSR Market Update -July 2010) which indicates that  despite generally improved economic conditions and a long period of healing after the failure of Lehman Brothers, progress toward global financial stability has recently experienced a setback. Sovereign risks in parts of the euro area have materialized and spread to the financial sector there, threatening to spill over to other regions and re-establish an adverse feedback loop with the economy. Further decisive follow-up is needed to the significant national and supranational policy responses that have been taken in order to strengthen confidence in the financial system and ensure continuation of the economic recovery. Click here to read more...

Development Progress in sub-Saharan Africa

The UNU-WIDER Working Paper 2010/07 lists Botswana, Ghana, Mauritius and South Africa as sub-Saharan African countries that stand out for their development progress. Apparently each of these countries has succeeded against the odds, and against expectations. This paper synthesizes the common ingredients of these countries’ success, and derives lessons.

From the dry, sparsely populated desert expanses of Botswana, through the densely populated tropics of Ghana, to the small sub-tropical island of Mauritius with its Asian heritage, and to the multicultural melting pot of densely urbanized, industrial South Africa, these four countries provide proof that the peoples of Africa have succeeded, and can succeed, in all environments and contexts. The paper  concludes that smallness, landlockedness, tropical location, distance from world markets, racism, colonialism and other challenges can be overcome through appropriate institutions, governance and good economic policies. Click here to read more.

 

ISPAAD to have horticulture component

Botswana government has approved the second phase of the Livestock Management and Infrastructure Development (LIMID) project, which include a horticultural component under the popular Integrated Support Programme for Arable Agriculture Development (ISPAAD), officials said.

Sarah George, Acting Permanent Secretary at MOA said ISPAAD will now have a horticulture component comprising production inputs support and farm equipment. Under the Production Inputs Support (IPS), assistance will be given to farmers to purchase fertilizers, pesticides, seeds and seedlings, whereas farmers will be assisted to acquire drip irrigation and shade nets under the Farm Equipment (FE) sub-component. Click here to read more.

Tourism Development in Africa: Focus on Poverty Alleviation

This journal article examines the contribution of tourism in African Development with an emphasis on poverty reduction. The analysis focuses on the performance indicators in the economic factors, employment and government revenue. The paper projects tourism as one of the fastest growing sectors of the global economy and underscores the fact that developing countries are attempting to cash in on this expanding industry in an attempt to boost foreign investment and financial reserves. Although the value of tourism has long been recognized, international attention to the role of tourism development especially in Africa is still lacking. The argument for tourism as a development strategy is primarily economic although ideals such as bringing increased understanding among peoples and cultures are invoked. Faced with civil wars, poverty, sanitation and other myriad of problems, Africa continuously faces the challenge of tourism marketing for various destinations against other competing regions such as Europe. Click here to access the full paper.

Africa’s renewed confidence

According to this article (Botswana Gurdian) fears that the global crisis would result in a structural setback for sub-Saharan Africa have largely dissipated. Real GDP growth has recovered from the weak but mostly positive levels recorded in 2009, with rising expectations that 2011 may see a return to trend growth across most sub-Saharan African economies. This stands in contrast to earlier economic slowdowns in Africa, when weakness in the global economy had a marked lagged effect on African economies. African economies entered this downturn with strong growth momentum. Perhaps as a result of this, the recovery from the crisis also appears to have been more rapid.

Nonetheless, headwinds associated with continuing global uncertainty persist. Africa is not immune to the slowdown. With intra-regional trade estimated to account for as little as 11% of total trade, Africa’s export growth remains highly correlated with world growth. Rising South-South trade has cushioned African economies from the brunt of the global slowdown. However, more subdued growth in Asia and other emerging regions would pose risks to the African outlook. Click here to read more.

Quality of Government is Needed to Reduce Poverty and Economic Inequality

It is a fact that lots of people in some developing countries have been lifted out of poverty during the recent decade, but severe poverty remains a huge problem, not least in Sub-Sahara Africa. Recognizing the importance of institutions for alleviating poverty and economic inequalities, this paper starts by asking the question “which institutions”. The paper posits that representative democracy seems to work poorly as a cure against poverty or large-scale economic inequalities. According to the paper, empirical analysis shows that this holds true for poor (non-OECD) countries. The main empirical analysis tests the relation between measures of QoG - Quality of Government – (such as levels of corruption and the rule of law) and poverty/inequality. The empirical analysis covers both a large n-analysis and a comparison of two cases (Singapore and Jamaica), The main conclusion from the large-n empirical test is that the quality of government matters for reducing absolute poverty among poor countries and for reducing relative economic inequalities among rich as well as among poor countries also after controlling for democracy. This conclusion if strengthened by the comparative analysis of democratic but low QoG Jamaica and authoritarian but high QoG Singapore. Click here to read more.

SACU Revenue Sharing Formula: The History of An Equation

This paper examines the evolution of the SACU revenue sharing formula (RSF) and what implications it has had on the revenue of Botswana as well as the other small state members of the customs union that include Lesotho, Namibia and Swaziland (BLNS). The paper does not attempt to review the three SACU treaties per se and they are discussed only to the extent that their other provisions bear on the distribution of revenues from the customs union. There has been adequate and extensive commentary by many authors. The first section carries a historical review of the SACU revenue sharing formula from a Botswana perspective. The formula is considered through its various iterations over the last century. It is argued that the SACU revenue sharing formula has been a bell-weather in the history of southern Africa. The initial formula and the two reforms have been preceded by seismic historical changes in the geo-politics of the region- the creation of the Union of South Africa in 1910, the independence of Botswana, Lesotho and Swaziland in the mid-1960‟s and the end of apartheid which signaled the commencement of the 1994-2002 renegotiations.

In the second section of the paper the historical experience from other customs unions, the theory of the distribution of customs union revenue and the more significant studies on this in the SACU region are considered. In the third section the distribution of the revenues between SACU members is considered under various scenarios with an emphasis on the case of Botswana. The impact of a shift to a "development funding‟ as opposed to general revenue transfers as broadly envisaged by South Africa would impact Botswana and the other BLNS is also considered. Click here to access the full paper.

Pula hinges on Rand depreciation

The Mmegi Newspaper reports that there is increasing possibility of a Rand depreciation, which will ease pressure on the Pula reducing the country's import bill and ease domestic inflation. According to the newspaper article the Rand has gained against the Pula and other hard currencies since last year, strengthening from levels of R10.27 to the greenback in February 2009, to its current R7.31. From February 2009 to February 2010, the Rand rose by 37 percent against the US Dollar, during which period the Pula declined by approximately 12 percent against the Rand.

Over the same period, the Pula has generally firmed against the US Dollar, as a result of the operation of the currency basket against which it is managed. Botswana's currency basket includes the Rand, US Dollar, British Pound, Euro and Japanese Yen. Read more...

World Economic Outlook Update - Restoring confidence without harming recovery

This IMF report (released in July 2010) projects world growth at about 4½ percent in 2010 and 4¼ percent in 2011. Relative to the April 2010 World Economic Outlook (WEO), this represents an upward revision of about ½ percentage point in 2010, reflecting stronger activity during the first half of the year. The forecast for 2011 is unchanged. At the same time, downside risks have risen sharply amid renewed financial turbulence. In this context, the new forecasts hinge on implementation of policies to rebuild confidence and stability, particularly in the euro area.

More generally, the report suggests that policy efforts in advanced economies should focus on credible fiscal consolidation, notably measures that enhance medium-run growth prospects, such as reforms to entitlement and tax systems. Supported by accommodative monetary conditions, fiscal actions should be complemented by financial sector reform and structural reforms to enhance growth and competitiveness.

Policies in emerging economies should also help rebalance global demand, including through structural reforms and, in some cases, greater exchange rate flexibility. Click here for the detailed report.

The impact of EU - South Africa trade development and cooperation development on Botswana, Lesotho....

This paper apperas in Review of Economic and Business Studies, and examines the impact of the European Union-South Africa Trade Development and Cooperation Agreement (EU-SA TDCA) on trade between the RSA and Botswana, Lesotho, Namibia and Swaziland (BLNS). The results indicate that demand for imports are income elastic and price inelastic. This implies that imported goods are necessary and consumers and producers of the BLNS countries depend on them.
The results also indicate that the agreement between the RSA and the EU brought about increased imports to the BLNS countries. Demand for exports is also income elastic and price inelastic. The volume of exports to the RSA, from the BLNS, seems to increase following the agreement. The empirical findings imply first, that imports could have led to a crowding out of domestic production, which would negatively impact on domestic industry. Second, the EU-SA TDCA has benefited the BLNS countries by boosting their exports. The paper is available here.

The MDGS and beyond: Pro-poor policy in a changing world

This European Association Development Research and Training Institutes (EADI) Policy Paper indicates that the MDGs have had a significant impact so far at a global level, but national level impacts are less clear and need more exploration. The paper suggests that there is strong evidence of MDG impacts at a global level and in many countries (in the recent UNDP study of 30 countries, no fewer than 25 countries had added, expanded or modified indicators and 10 had added local goals), and there is good evidence of MDG impacts on social sector budget allocations.

The 2010 MDG review should assess the MDG experience and lessons learnt, build an MDG global action plan, and lay the political groundwork for a global commission on 2015 and beyond. Key issues for the 2010-2015 MDG ‘big push’ are cross-cutting ones: There is need for more focus on a stronger linking of the Rights agenda in the Millennium Declaration and the MDGs; more focus on gender (and the new UN agency), more focus on poor people’s adaptation to climate change, and more focus on equity and social justice issues (and the poorest). Click here to access the full paper.

BIFM Economic Review - 2nd Quarter 2010

The Botswana Insurance Finance Management (BIFM) Economic Review indicates economic conditions have continued to improve alongside the global economic recovery. GDP data for the first quarter of 2010 show healthy growth as the mining sector has recovered. There has been an improvement in exports as diamond sales have improved, with diamond prices recovering to pre-crisis levels. Domestically, bank credit growth has returned to healthy levels with a welcome focus on business rather than household lending. And despite the global crisis and recession, employment has continued to grow.

However the report warns that these developments should not be interpreted as suggesting that Botswana has survived the global financial and economic crisis unscathed, or that economic difficulties have passed. The country has a large budget deficit, government borrowing has jumped, and the government’s net financial position has deteriorated sharply. On the exchange rate front the weakening of the pula against the South African Rand continues to be a concern. Click here to read the full report.

Human resource management and decentralization in Botswana and South Africa

A thesis submitted to the University of Birmingham by Dr Molefe Phirinyane, who is a Research Fellow at the Botswana Institute for Development Policy Analysis (BIDPA).The study explores the relationship between decentralisation and human resource management in Botswana and South Africa. It is situated within the context of the New Public Management (NPM) that has influenced the Human Resource Management reforms that the two countries aspire to adopt. The study’s main finding is that although strategic human resource management (SHRM) and decentralisation are frequently assumed to go together and are both advocated by the BrettonWoods institutions. In the cases researched SHRM reforms have been accompanied by a tendency towards centralisation. This implies a trade-off between SHRM and decentralisation in Botswana and South Africa.

In both countries the implementation of HRM reforms in local government has been slow due to other considerations – political factors in the case of South Africa and professional bureaucratic issues in Botswana, reflecting the different path dependencies of the two countries. This study argues that from the cases studied even though developing countries may implement similar reforms based on similar policy  advice or prescription, a combination of factors such as social and organisational culture that are not transferable between countries account for the difference in outcomes. Click here to acccess the thesis. A copy of the thesis is also available in the BIDPA Library.

Proceedings of the 2009 FOPRISA Annual Conference

A publication entitled Proceedings of the 2009 FOPRISA Annual Conference was recently released. The book is an assemblage of papers presented at the Formative Process Research on Integration in Southern Africa (FOPRISA) conference held in Cape Town, Republic of South Africa from 14 to 15 July 2009. The papers published in this book were commissioned by the Botswana Institute for Develeopment Policy Analysis, and as with the previous proceedings the papers discuss the political and economic dimensions of regional cooperation and integration, the monitoring of SADC, as well as relations with the international cooperating partners.

The papers in this volume represent all the FOPRISA themes, which are: Democratic development; Politics, defense and security cooperation; Regional trade and its relations to the international trade system; and  Economic harmonization, finance and investment. Copies of the proceedings are available at the BIDPA Library. 

Piggery can diversify Botswana agric sector - Study

A study on pig products in Botswana by the Local Enterprise Authority (LEA) has revealed that with the local and global demand for pork increasing, Botswana can have a stake in its production. Currently, the country is one of the big exporters of quality beef although trends show that the pig meat has been the world’s choice since 1976. The study shows that the annual national demand for pork products was 2, 417. 945 metric tones, while the annual supply was estimated at 1, 758.919 metric tones. Click here  to read more. The packaged report on the study is available here.

African poverty is falling...Much faster than you think!

This National Bureau of Economic Research (NBER) paper uses the Pinkovskiy and Sala‐i‐Martin methodology to estimate income distributions, poverty rates, and inequality and welfare indices for African countries for the period 1970‐2006. The paper shows that

- Since 1995, African poverty has been falling steadily
- If present trends continue, the poverty Millennium Development Goal of halving the proportion of people with incomes less than one dollar a day will be achieved on time.
- African poverty reduction is remarkably general: it cannot be explained by a large country, or even by a single set of countries possessing some beneficial geographical or historical characteristic.

Interestingly, poverty levels are going down in all classes of countries regardless of including those with disadvantageous geography and history, both landlocked as well as coastal countries, mineral‐rich as well as mineral poor countries, countries with favorable or with unfavorable agriculture, etc. Click here to access the full document.

Tourism development in Africa: Focus on poverty alleviation

This paper appears in The Journal of Tourism and Peace Research and contends that tourism is one of the fastest growing sectors of the global economy.  In this respect developing countries are making efforts to cash in on this expanding industry in an attempt to boost foreign investment and financial reserves. Although the value of tourism has long been recognized, international attention to the role of tourism development especially in Africa is still lacking. Faced with civil wars, poverty, sanitation and other myriad of problems, Africa continuously faces the challenge of tourism marketing for various destinations against other competing regions such as Europe. This paper examines the contribution of tourism in African Development with an emphasis on poverty reduction. The analysis focuses on the performance indicators in the economic factors, employment and government revenue. Click here to access the full article.

Botswana's GDP grows by 4.1 percent

This article indicates that the country's gross domestic product (GDP) increased by 4.1 percent in the first quarter of 2010. The increase is attributed to mining as the major contributor, followed by agriculture and trade, hotels and restaurants. The article further predicts that Botswana's economy will expand 4.5 percent this year and 5 percent in 2011, compared with a 6 percent contraction in 2009. Read more...

Bidpa responds to national budget

BIDAPA has issued a Budget Briefing which discusses the 2010/11 budget outcomes, and also highlights the implications of the propsed budget from an analytical and policy perspective. The Briefing highlights the challenges that the economy faces and underscores issues where the focus of policy should remain in view of those challenges. Botswana’s fiscal position, the economy’s credit ratings and investment opportunities in the wake of budgetary limitations are also discussed.. The Briefing also discusses the effects of a high public debt and deficit on future growth, and why it is important for Botswana’s economic policy to continue to emphasize a low debt and low deficit stance and maintain fiscal prudence in its budgeting process. Other issues that are given attention in the budget discussion in this issue are the possible effect of the proposed VAT changes on the consumers, the broader economy as well as the proposed policy strategies.This issue further highlights other areas for policy focus in the transformation of the economy in line with the proposed budget theme, and the prevailing socio-economic challenges. Click here to read more.

Staple food prices in Botswana

This BIDPA Policy Brief consider what has happened to food price in Botswana over the past two years. In mid and late 2008 food prices throughout the world peaked after a period of almost one year of continual price rises.

Yet the collapse of those prices on world markets which in some cases preceded but in most cases coincided with the onset of the global recession has not been translated into commensurate decreases of consumer prices in the shops in Botswana. This brief attempts to explain why consumer prices rose so dramatically in 2008, why they collapsed on the world market and why the consumers in Botswana have not seen significant benefits from that price decrease on world markets. This paper uses publicly available data from the statistics offices of Botswana and her neighbors, the Republic of South Africa (RSA) and Namibia as a basis of comparison. Several important basic commodities will be considered including maize, wheat flour, sugar and rice. The results are intended to assist policy makers as well as the general public understand the forces of global markets, national policy and the Botswana and regional market structures and how they affect day-to-day food prices. Click here to access the full paper.

Signing of interim Economic Partnership Agrements (EPAs)

In recent public discussions regarding the negotiation of the Interim Economic Partnership Agreement (IEPA) with the European Union there has been considerable recrimination about who has been  responsible for the signing and the subsequent division of the Southern African Development Community (SADC) negotiating group (Angola, Botswana, Lesotho, Namibia, Mozambique, South Africa and Swaziland). However, there have been few attempts to understand what are the interests of the respective parties. This BIDPA Brief will consider primarily the commercial considerations in the signing of the IEPA on the 4th June 2009 in Brussels, but these inevitably overlap with Botswana’s sovereign political interests. While the Brief considers the positions of other parties it aims to analyze the negotiations from the perspective of Botswana’s interests. Click here to access the Brief.