Botswana: A land of economic diversification and progress.
Botswana is a country best known for its rich source of diamonds. However, look beyond the glitter and you will see a diverse economy offering much more than just the sparkling gems.
Botswana’s impressive economic record has been built on a foundation of not only diamond mining, but more importantly prudent fiscal policies, international financial and technical assistance, and a cautious foreign policy. With only 2 million inhabitants, the country can present an impressive annual growth rate of 5 percent. With this figure, Botswana is placed amongst the world’s fastest growing economies.
The overall guiding document for national development in Botswana is Vision 2016, a broad based national approach adopted in 1996 focusing on the aspiration of Botswana towards the 50th anniversary of their Independence. Vision 2016 comprises seven pillars that resonate strongly with the United Nations Millennium Development Goals.
Botswana is a landlocked country, bordering South Africa, Zimbabwe, Namibia and Zambia.
It is dominated by the Kalahari Desert, a basin situated more than 1000 meter above sea level. The desert covers some two-thirds of the country. 80% of the population lives in the eastern part of Botswana, where the three largest urban centers are located. Most important is the capital Gaborone, a vibrant and colorful city.
Botswana became independent from Britain in 1966. It is still part of the Commonwealth.
Since independence,Botswana underwent rapid reforms, both economically and politically.
It held free and democratic elections ever since, in the framework of a multi-party system.
The standard of living for the biggest part of the population has been rising steadily.
The economy thrives essentially on the exploitation of numerous minerals. Amongst them, of course, diamonds are the most important. They account for nearly 40% of the country’s GDP. But the government equally wants to diversify. It has been promoting investments in IT, manufacturing, tourism, infrastructure, finance, only to mention a few. Developing a good transport infrastructure and a modern telecommunication system is another major goal.
Botswana is home to several ethnic groups and tribes. The Tswana form the majority of the inhabitants, counting for roughly 80% of the total population. The people of Botswana also include whites and Indians. The latter are descendants of immigrant groups having arrived in Botswana several decades ago. The main language spoken is Tswana.
Being a country with wonderful sceneries and one of the best wildlife viewing possibilities in Africa, Botswana is investing a lot in its tourism sector. This is done in a responsible way, taking into account all the requirements for a sustainable tourism development. Visitors can
enjoy the thrill of unspoilt environments and surprisingly beautiful spots in all parts of the
country. All this makes Botswana an unforgettable place to discover, either for tourism or for business purposes.
Most of us are familiar with the expression “diamonds are forever”. Indeed since large-scale diamond production began in Botswana 25 years ago, the precious commodity has been crucial in stimulating her economy. Currently the sector accounts for more than 70 percent of the country’s total exports.
When the global financial crisis hit in 2008 and with it a decrease in income available to purchase luxury goods such as diamonds, Botswana’s diamond industry felt the blow strongly.
Mining expeditions were put on hold and many mines were shut down.
Now as the world gradually recovers from the financial crisis, Botswana is also moving forward. Mines have been reopened and exploration projects are underway, especially in areas such as copper, nickel, and coal. Botswana has an abundance of these natural resources, and it is just beginning to tap into them. Botswana is known to have vast coal deposits making it possibly one of the most coal rich countries in the world.
Large reserves of coal bed methane gas, an alternative source of energy, have been discovered in Botswana but have not yet been hugely explored.
Botswana is at once blessed with an abundance of sunlight but also plagued with the lack of rainfall. The water here is excellent in quality. In fact; Botswana is one of the few African countries in the SADC region where you can drink the water straight from the source. However, the lack of rainfall during the summer months and absolutely no rainfall during the winter, means that supply is scarce. This affects not only sectors such as agriculture but also the general well being of the Botswana community.
To counter this problem, the Water Utilities Corporation works in partnerships within the SADC region to build pipelines in order to bring water into Botswana and to recycle the water. To this end, water conservation is extremely important. There is also a pilot project to turn wastewater into drinkable water.
Botswana has created the basics of infrastructure in all the sectors and with water more specifically they have now reached all the villages and areas of habitation. With the demand for water growing in the economy, there is a need to develop schemes and projects to meet the need.
Similar to water there is a need for power. Power generation means the lives of the people are improved enormously: children can have light to read at night and food can be preserved. At present, power comes from three main sources: Morupule, Eskom and imports from two power stations in Mozambique. The infrastructure in place, but due to Botswana’s rapid growth, it has been impossible to keep up with demand. This explains the push in coal exploration and renewable energy sources.
Power is supplied now to all areas of the country, but quantity as well as supply is limited and power has to be cut off regularly in order to continue meeting the needs of the people. The sector has also been building dams and working with the water department to use natural resources such as rivers to generate power. However, it still comes back to the need for technology. Botswana recognizes the rippling effects of providing power at an affordable level to its people. Power generation means the betterment of people’s lives. Opportunities are plenty for investors in regional energy distribution, an area that Petro Botswana has experienced solid success.
For the past forty years, Botswana has ranked among the world’s fastest growing economies. Diamond-led growth combined with sound macroeconomic policies and good governance has moved Botswana from being one of the poorest countries in the world to the upper-middle-income range, with the highest sovereign debt ratings in Africa. Real GDP growth averaged 5 percent over the last ten years but decreased to 3 percent last year due to repercussions of the financial crisis. Balance of payment and fiscal surpluses have built up extensive reserves and reduced Botswana’s already low external debt burden.
Botswana has a small but thriving financial sector that has experienced significant growth in the past decade – primarily a reflection of the substantial accumulation of national resources and the associated high degree of liquidity. An array of financial institutions populates the country’s financial system, with pension funds and commercial banks being the two most important segments by asset size. Banks remain profitable, well-capitalized, and liquid, as a result of growing national resources and high interest rates.
Botswana was named a top investment destination by the World Bank. It is politically stable, has the highest credit ranking and is the freest country in Africa. All this makes Botswana a very attractive hub for all financial services in Southern Africa.
The National Development Bank is a leading bank that provides loans to projects that promote the economic development of Botswana. NDB finances agricultural, commercial property development, industrial and tourism projects. Furthermore, NDB enhances projects that create employment and the transfer of technology just to name a few.
The Botswana Stock Exchange, a member of the African Stock Exchanges Association, has been growing in recent years, with 21 domestic and 11 foreign companies listed. Private investors are estimated to account for under 10% of the total market capitalization. The insurance sector is relatively well developed and supervised. 14 insurance companies operate in Botswana, with total assets equivalent to 16 percent of GDP and insurance premiums amounting to 3.4 percent of GDP.
About 54 percent of Botswana’s population has access to formal or informal financial services, and 43 percent is banked. The overall access ratio is lower in rural areas, where there are 3.8 branches and 73 ATMs per 100,000 people. Mobile banking services have just started to be offered.
Health in Botswana has made some serious strides in recent years. In the area of HIV/AIDS treatment, services are provided free of charge. Currently it is estimated that about 17% of the population is afflicted with HIV/AIDS. However, due to the treatments they receive, life expectancy has increased and overall productivity of the population has increased as well. The introduction of antiviral medicines has allowed the health sector to prevent mother to child transfer of the disease . Today, new generations of people are born free of the disease. Furthermore, education on preventing and contracting HIV/AIDS is carried out vigilantly. All of the efforts mean that for the future, HIV/AIDS will be dramatically reduced.
Malaria is another disease of concern in the country. A number of malaria control interventions have been implemented over the years however challenges still remain in achieving the coverage targets for pregnant women and children under five. Botswana’s aim is to move from malaria control to elimination by 2015.
In terms of quality of care and facilities, Botswana is right up there with the major leaders of the world. Clinics can be found in every village and in the rural areas. The capital city of Gaborone boasts two major private hospitals that cater to the small population. The development of the private sector will help to decongest the public facilities, which operate over capacity.
Bokamoso is the country’s new private hospital that will not only service the local community, but aims to attract international carriers to Botswana. It’s a state of the art facility, which has drawn the skilled force of doctors and nurses back into the country.