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Edouard Castaignet Mirela Koleva

Studying AfricanDevelopment History

How Botswana has become an African success story ?

·

What are the reasons of Botswana's economic prosperity?

· Part 1: Economic development in a global perspective

Botswana: A success story of economic development Policies in Africa? 10/04/2007

­ The Bretton Woods Economic Order ­ Theoretical frameworks of international development ­ From theory to practice: Structural Adjustment.

· Part 2: The peculiar case of Botswana

­ ­ ­ ­ A country marked by social stability An effective management of the diamond ressource Democracy as a factor of economic prosperity Still some tricky issues

I.The Bretton Woods Project

· · · · 1930s- the Great Depression 1944 ­ Bretton Woods Conference, New Hampshire ­ 44 countries present John Maynard Keynes A new international monetary order ­ Fixed exchange rates to the US dollar ­ Dollar pegged to gold ­ Government regulation to ensure employment ­ Free trade

· Elimination of tariffs · Maintaining a balance of trade

I. The Bretton Woods Project

The World Bank

· Former International Bank for Reconstruction and Development · Originally intended to finance the reconstruction of war-torn Europe · Developing countries' largest creditor · Lends about $ 25 billion per year. · Financing large-scale development projects · 1980s debt crisis ­ lending enormous amounts of money, in order to urge developing countries to adopt structural economic reforms · Recently, the WB has been redirected its efforts to PBA program based approaches, and GBS - general budgetary support

=> PROBLEMS:

- the Wiggins dilemma - the system favored capitalist western economies

I. The Bretton Woods Project

II. Theoretical Framework for Development

The IMF

· Initially created to regulate exchange rate stability, international trade and monetary cooperation · 1970s, facing a crisis of purpose, shifted to managing balance of payment difficulties · How? - By providing conditional assistance to member countries experiencing balance of payments problems while urging for reforms in domestic economic policies · assistance or exacerbation of the debt crisis?

­ Postponed the crisis, did not resolve it

· · · · ·

Neo-liberalism

Friedrich Hayek, Milton Friedman, Arnold Herberger The problem of development is an economic one Free competition among business firms within markets, notably liberalization and monetarism Laissez-faire economics - markets and the private sector operate well on their own, without state intervention A move away from Keynesian economics, neo-liberalism promotes:

­ ­ ­ ­ A stable currency Free trade Free flow of capitals and investment Complete lack of government regulation

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Dominant theoretical perspective followed by the Bretton Woods Institutions in the past 20 years.

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II. Theoretical Framework for Development

II. Theoretical Framework for Development

Modernization Theory

· ·

Dependency Theory

Raul Preibisch, Andre Gunder Frank Dependency theorists assert that so-called 'third-world' countries were not always 'poor', but became impoverished through colonial domination and forced incorporation into the world economy by expansionist 'first-world' powers. `Third-world' economies became geared more toward the needs of their 'firstworld' colonial masters than the domestic needs of their own societies. Relationships of dependency have continued long after formal colonization ended Thus, the primary obstacles to autonomous development are seen as external rather than internal Developing countries face a global economy dominated by rich industrial countries Developed countries never had to contend with colonialism or a world full of richer, more powerful competitors.

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· ·

Western World countries are the most developed, while the rest of the world (mostly former colonies) are at the earlier stages of development, and will eventually reach the same level as the Western world Development stages go from the traditional societies to developed ones Developing countries have fallen behind with their social progress and need to be directed on their way to becoming more advanced The developing states as well as states in transition are seen to benefit (with aid and guidance from the West) economically, politically, culturally, and demographically through the adjustment to the modern policies and values of the Western world.

· · · · ·

· Keynesian economics ­ government intervention is necessary to boost up demand, fight unemployment and deflation

·

=> Dependency theorists argue that

it is imprecise and inadequate to compare contemporary 'third-world' societies with those of the 'firstworld' in the early stages of development.

III. Neo-liberalism in Practice

Structural Adjustment Programs (SAP)

· "free market" economic policy reforms imposed by the IMF upon granting financial assistance to developing countries · Developed in the early 1980s · The Chicago School economists · Most donor countries condition their assistance upon the implementation of SAPs · SAPs are necessary for economic growth ­ develop the private sector foreign investment

III. Neo-liberalism in Practice Structural Adjustment Programs (SAP) · Measures include

­ a shift from growing diverse food crops for domestic consumption to specializing in the production of cash crops or other commodities (like rubber, cotton, coffee, copper, tin etc.) for export; ­ abolishing food and agricultural subsidies to reduce government expenditures; ­ deep cuts to social programmes usually in the areas of health, education and housing and massive layoffs in the civil service; ­ currency devaluation measures which increase import costs while reducing the value of domestically produced goods; ­ liberalization of trade and investment and high interest rates to attract foreign investment; ­ privatization of government-held enterprises.

III. Neo-liberalism in Practice Structural Adjustment Programs (SAP)

· Criticism to SAPs ­ Harsh economic measures that deepen poverty ­ Hinder food security ­ Increased corruption ­ Environmental degradation ­ Unsustainable resource exploitation ­ Population dislocation and displacement

III. Neo-liberalism in Practice Enhanced Structural Adjustment Facility (ESAF) · IMF's concessional lending facility for the least developed countries · ESAF offers low interest rates (0.5%) and repayment terms of five and a half to ten years · Established in 1987, although its predecessor, the Structural Adjustment (SAP), began its operations in 1986. · As a condition of receiving these loans, countries must agree to adopt IMF structural adjustment programs.

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III. Neo-liberalism in practice

SAPs Global Failure?

· Developing countries worldwide implementing ESAF programs have experienced lower economic growth than those who have been outside of these programs · IMF structural adjustment programs have forced developing countries to reduce social spending

­ Lack of social security ­ Political instability

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Neither IMF-mandated macroeconomic policies nor debt relief under the IMF-sponsored HIPC (Heavily Indebted Poor Countries) Initiative have sufficiently reduced these countries' debt burdens (Uganda and Mozambique)

· Poor countries continue to divert resources from health care and education to the benefit of external debt.

Botswana and the IMF ­ a special relationship

· · · · · Limited research investigating Botswana's success compared to the rest of Africa Between 1970 and 1995 Botswana had an average 7.3% economic growth rate 1981 ­ Botswana had already achieved a high level of development when SAPs were starting to get implemented Botswana's financial institutions collaborated with the IMF However, its economic programs were planned by outside advisers, independent from the international financial institutions As a middle-income country, Botswana does not qualify for financial assistance by the IMF, and has not been required to implement SAPs

·

Part 2 : Botswana's case main facts

· · · · · · · · · · Area : 600,370 sq km Coastline : 0 km landlocked Population : 1,639,833 GDP per capita : 11,600 $ Life expectancy : 33.74 years HIV/AIDS : 37.3 % Literacy : 79.8 % Unemployment : 23.8 % Capital : Gaborone GDP growth : 7%

the independence one of the poorest country in the world

· Botswana President Masire " When we asked for independence, people thought we were either very brave or very foolish" IN 1966 22 Batswana had graduated from university 100 from secondary school 12 km of paved road 75 % of Kalahari desert 50% of government expenditures upon independence had to be financed by transfers from Britain.

Botswana 1965

· · · · · ·

· Highest rate of per-capita growth of any country in the world in the last 35 years.

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The Independence

· but some advantages

· · · 1 . limited effect of British colonization on the pre-colonial institutions. 2 . A homogeonous society. 3 . Some qualified and honest leaders. · · · ·

·sir Serestse Khama reading the new constitution 1st october 1966.

I. History : a society defined by stability 1. preserved from the colonial indirect rule.

XVIII century Tswana tribes conquered the indigenous San who were amalgamated. 1830´s clashes with Zulu and the Boers : uniting of the Batswana tribes. 1885 creation of the Bechuanaland protectorate under British domination. 1895 Rhodes tries to take control of the region but three Tswana chiefs went to Britain to see Queen Victoria to keep the protectorate under the crown and succeeded. 1934 two chiefs challenge British decision to enforce colonial institutions 1966 the independence

Khama III (1837-1923) one of the chief who visited the Queen Elisabeth and grandfather of the first president of Botswana.

· ·

I. Botswana : a society defined by stability . 1 . precolonial institutions preserved

· The Kogtla is an assembly in which issues of public interest are discussed.( also effective way to criticize the King : model of political constraints )

A Kogtla at Mochudi in 1907 ...and today in Botswana.

I. Botswana : a society defined by stability 2 . stability based on ethnic & social origin.

· · · ·

· · ·

tswana 71 % Kalanga 9 % bochiman 1,7 % Lozi 0,8 %

first inhabitants Bochiman XVIII invasion of Bantou Tswana Traditionnal attempt of Tswana tribes to integrate other groups into their institutional structure. Both Bantou and Khoisan large repartition in the country : no regional revendication.

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Chieftancy Act of 1965 : creation of a House of Chiefs that consists on the eight Tswana tribes + 4 other chiefs from minor ethnic groups (no real power of legislation). the first president Seretse Khama was the chief of the most important Tswana tribe.

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I. Botswana : a society defined by stability. 3 . responsible political leaders

· ranked for many years as the lowest corrupt country in Africa. In stark to most African countries after independence, the ruling party resisted all calls to "indigenize" the bureaucracy until suitably qualified Batswana were available. Botswana was able to adopt good policies and institutions because they were in the interests of the political elites, which included the cattle owners and powerful tribal actors. they would keep there political power by pursuing good policies. Diamond fields were on Serestse khama tribe´s area and he gave the property right to the country avoiding any conflict between tribes .

II. The Diamond era :

a model of gestion of a natural ressource.

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1955

The search of diamonds in Botswana began. Beginning of the exploitation. De Beers made $ 60 m the first year. Creation of Debswana. renogociation of the diamond mining agreement to 50/50.

· · · ·

1967 1972 1975

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2001 Debswana became the first company in the world to provide free Anti Retroviral treatment to its employees. The 100% subsidy covers employees living with HIV/AIDS and their familly

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Debswana is a joint-venture between the government of Botswana and De Beers; each party owns 50 percent of the company.

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II.The Diamond era

a model of gestion of a natural ressource

II. The ressources : from curse to blessing in many African countries !

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· · the aptitude of the government towards the IFI´s. Diamond mining activities have fueled much of the growth in Botswana's economy. Largely because of this, Botswana is considered by two major investment services to be the safest credit risk in Africa. Diamonds account for 35 % of the nation's GDP, 90 % of earnings from exports, 50 % of government revenues...

UN peacekeepers patrol against diamond and gold smugglers on Lake Kivu, in the eastern Democratic Republic of the Congo.

Guard at an illegal diamond mine in Angola during the country's civil war. How can such resources be turned towards peace and development?

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A 13-year-old boy carries a sack of earth and rock at a diamond mine in Mbuji-Mayi, the Congolese "diamond capital."

III. Democracy as a factor of economic prosperity · 1 institutions of private property

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III. Democracy as a factor of economic development · a merging civil society

What is the possible impact of a nascent civil society on democratic practice ? a real collaboration with the UN 1993 : 1045 organized groups have had registered with the government. Civil servants are buiding a democratic corporatist state. In many cases, the government has been forced to reverse its position and adopt policies advocated by the organized groups involved.

· · · · ·

such institutions protect the property rights of actual and potential investors, provide political stability to ensure continuity in these rights ensure that the political elites are constrained by the political system participation of a broad cross-section of the society no state expropiation neither predation by private agents. higher investments.

· · ·

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massive government expenditure 40% of GDP : Welfare state.

Botswana´s problematic issues : the aftermath of HIV and AIDS

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Botswana´s problematic issues : the forced integration of minorities

The Bushmen have been forced out from their land by the government because of the material interests accompanying the exploration and exploitation of diamond fields in their reserve. Moreover, forced assimilation is enforced and destroy the Bushmen traditional way of life and culture. "soft authoritarian tendencies"

Survival : an association backing the Bushmen !

December 2006 Historic victory for the Bushmen : Judges ruled that the eviction of the government was " unlawful and unconstitutional " Moreover the Bushmen have appealed to the actor Leonardo DiCaprio, star of the new film `Blood Diamond', for help, through a full-page advert in Variety magazine.

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Sign on the Namibia / Botswana border

The test diamond mine at Gope Bushmen at gope before being evicted.

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CONCLUSION

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Sources

· · · · · Globalisation, Poverty and Conflict: A Critical Development Reader, Max Spoor, ed. Dordrecht (Netherlands) and Boston: Kluwer Academic Publishers, 2004 Vreeland, James Raymond The IMF and Economic Development New York: Cambridge University Press J.E. Stiglitz, Globalization and its discontents, W.W. Norton and Company,2002 An African success story : Botswana , Aceglomu, Johnson, Robinson, july 11 2001 The development of Civil society in a Democratic State : the Botswana Model. Holm, Molutsi, Somolekae. African studies Review sept 1996. Policy choice and development performance in Botswana , Harvey charles and Stephen Lewis 1990.

· An explanation of this success can be based on... · · · · · · · · women´s best friend : Diamonds. A special relationship with IFIs Economic input from independent advisers the role of political leaders at the independence efficient & democratic use of the natural ressource wealth tribal institutions limited effects of British colonization the most important rural interests, chiefs and cattle owners were politically powerful

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