Economy of Botswana
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| Economy of Botswana | ||
|---|---|---|
| Currency | Pula (BWP) | |
| Fiscal year | 1 April - 31 March | |
| Trade organisations | AU, WTO | |
| Statistics [3] | ||
| GDP ranking | 122nd (2004) [4] | |
| GDP | $18.72 billion (2006 est.) | |
| GDP growth | 4.7% (2006 est.) | |
| GDP per capita | $11,400 (2006 est.) | |
| GDP by sector | agriculture (2.4%), industry (46.9%) (including 36% mining, services {50.7%) (2003 est.) | |
| Inflation | 11.4% (2006 est.) | |
| Pop below poverty line | 30.3% (2003) | |
| Labour force | 288,400 formal sector employees (2004) | |
| Labour force by occupation | N/A | |
| Unemployment | 23.8% (2004) | |
| Main industries | diamonds, copper, nickel, salt, soda ash, potash, livestock processing. textiles | |
| Trading Partners [5] | ||
| Exports | $4.836 billion f.o.b. (2006 est.) | |
| Export - Commodities | diamonds, copper, nickel, soda ash, meat, textiles | |
| Main partners | European Free Trade Association (EFTA) 87%, Southern African Customs Union (SACU) 7%, Zimbabwe 4% {2000) | |
| Imports | $3.034 billion f.o.b. (2006 est.) | |
| Imports - Commodities | foodstuffs, machinery, electrical goods, transport equipment, textiles, fuel and petroleum products, wood and paper products, metal and metal product | |
| Main Partners | European Free Trade Association (EFTA) 87%, Southern African Customs Union (SACU) 7%, Zimbabwe 4% (2004) | |
| Public finances [6] | ||
| Public debt | 7.1% of GDP (2006 est.) | |
| Revenues | $4.256 billion (2006 est.) | |
| Expenses | $3.968 billion (2006 est.) | |
| Economic aid | $73 million (1995) | |
Since independence, Botswana has had the highest average economic growth rate in the world, averaging about 9% per year from 1966 to 1999. The relatively high quality of Botswana's statistics means that this figure is likely to be quite accurate. Growth in private sector employment has averaged about 10% per annum over Botswana's first 30 years of independence. The government has consistently maintained budget surpluses and has substantial foreign exchange reserves totalling about $6.2 billion (6.2 G$) in 1999.
Botswana's impressive economic record has been built on a foundation of diamond mining, prudent fiscal policies, international financial and technical assistance, and a cautious foreign policy. It is rated the least corrupt country in Africa, according to an international corruption watchdog, Transparency International.
Trade unions represent a minority of workers in the Botswana economy. In general they are loosely organized "in-house" unions, although the Botswana Federation of Trade Unions (BFTU) is consolidating its role as the sole national trade union centre in the country.[1][2]
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[edit] Overview
Agriculture still provides a livelihood for more than 80% of the population but supplies only about 50% of food needs and accounts for only 3% of GDP. Subsistence farming and cattle raising predominate. The sector is plagued by erratic rainfall and poor soils. Tourism is also important to the economy. Substantial mineral deposits were found in the 1970s and the mining sector grew from 25% of GDP in 1980 to 38% in 1998. Unemployment officially is 21% but unofficial estimates place it closer to 40%. The Orapa 2000 project doubled the capacity of the country's main diamond mine from early 2000. This will be the main force behind continued economic expansion.
[edit] Mining
Two large mining companies, Debswana (formed by the government and South Africa's De Beers in equal partnership) and Bamangwato Concessions, Ltd. (BCL, also with substantial government equity participation) operate in the country.
Since the early 1980s, the country has been the world's largest producer of gem diamonds. Four large diamond mines have opened since independence. De Beers prospectors discovered diamonds in northern Botswana in the early 1970s. The first mine began production at Orapa in 1972, followed by the smaller mine at Letlhakane. What has become the single-richest diamond mine in the world opened in Jwaneng in 1982. In 2002, a fourth diamond mine, Damtshaa, began operations. Botswana produced a total over 30 million carats (6,000 kg) of diamonds (about 25% of worldwide production) from the three Debswana mines in 1999, and is the highest producer of diamonds by value in the world. The Orapa 2000 Expansion of the existing Orapa mine was opened in 2000. A fifth diamond mine and the first not operated by Debswana is scheduled to begin operations in 2008 in Lerala.[3]
Most (70%) of Botswana's electricity is imported from South Africa's Eskom. 80% of domestic production is concentrated in one plant, Morupule Power Station near Palapye. Debswana operates the nearby Morupule Colliery to supply coal to it.[4]
BCL, which operates a copper-nickel mine at Selebi-Phikwe, has had a troubled financial history but remains an important employer. The soda ash operation at Sua Pan, opened in 1991 and supported by substantial government investment, has begun making a profit following significant restructuring.
[edit] Tourism
Tourism is an increasingly important industry in Botswana, accounting for almost 12% of GDP. One of the world's unique ecosystems, the Okavango Delta, is located in Botswana. The country offers excellent game viewing and birding both in the Delta and in the Chobe Game Reserve -- home to one of the largest herds of free-ranging elephants in the world. Botswana's Central Kalahari Game Reserve also offers good game viewing and some of the most remote and unspoiled wilderness in southern Africa.
[edit] Agriculture
More than half of Batswana (preferred address of the Botswana people) live in rural areas and are dependent on subsistence crop and livestock farming, together with money sent home by relatives in urban areas. Agriculture meets only a small portion of food needs and contributes just 2.8% to GDP -- primarily through beef exports -- but it remains a social and cultural touchstone. Cattle raising dominated Botswana's social and economic life before independence. The Botswana Meat Commission has a monopoly on beef production. The national herd was about 2.5 million in the mid-1990s, though the government-ordered slaughter of the entire herd in Botswana's north-west Kgamiland District in 1995 has reduced the number by at least 200,000. The slaughter was ordered to prevent the spread of "cattle lung disease" to other parts of the country.
[edit] Private sector development and foreign investment
Botswana seeks to diversify its economy away from minerals, the earnings from which have levelled off. In 1998-99, non-mineral sectors of the economy grew at 8.9%, partially offsetting a slight 4.4% decline in the minerals sector. Foreign investment and management have been welcomed in Botswana.
External investment in Botswana has grown fitfully. In the early 1990s, two American companies, Owens Corning and H.J. Heinz, made major investments in production facilities in Botswana. In 1997, the St. Paul Group purchased Botswana Insurance, one of the country's leading short-term insurance providers. An American Business Council (ABC), with over 30 member companies, was inaugurated in 1995.
Hyundai operated a car assembly plant in Botswana from 1994 to 2000.[5]
Because of history and geography, Botswana has long had deep ties to the economy of South Africa. The Southern Africa Customs Union (SACU), comprising Botswana, Lesotho, Swaziland, and South Africa, dates from 1910. Namibia joined in 1990. Under this arrangement, South Africa has collected levies from customs, sales, and excise duties for all five members, sharing out proceeds based on each country's portion of imports. The exact formula for sharing revenues and the decision-making authority over duties--held, until at least 1996, exclusively by the Government of South Africa--have been increasingly controversial, and the members began renegotiating the arrangement in 1995. Following South Africa's accession to the World Trade Organization (WTO--Botswana also is a member), many of the SACU duties are declining, making American products more competitive.
[edit] Financial Sector
Botswana has a growing financial sector, and the country's national stock market, the Botswana Stock Exchange, based out of Gaborone is given the responsibility to operate and regulate the equities and fixed interest securities market. Formally established in 1989, the BSE continues to be pivotal to Botswana’s financial system, and in particular the capital market, as an avenue on which government, quasi- government and the private sector can raise debt and equity capital. Although the BSE has just under 40 companies listed, it plays host to the most pre-eminent companies doing business in Botswana. These companies represent a spectrum of industries and commerce, from Banking and financial services to Wholesaling and Retailing, Tourism and Information Technology.
To date, the BSE is one of Africa’s best performing stock exchanges, averaging 24% aggregate return in the past decade. This has allowed the BSE to be the third largest stock exchange in terms of market capitalization, in Southern Africa.
Given Botswana's lack of exchange controls, stable currency and exceptionally performing stock market, the financial sector has attracted a host of global investors seeking better returns.
Botswana's currency -- the pula -- is fully convertible and is valued against a basket of currencies heavily weighted toward the South African rand. Profits and direct investment can be repatriated without restriction from Botswana. The Botswana Government has eliminated all exchange controls. Despite a 12% devaluation in May 2005, the pula remains one of the strongest currencies in Africa.
Gaborone is host to the headquarters of the 14-nation Southern African Development Community (SADC). A successor to the Southern African Development Coordination Conference (SADCC), which focused its efforts on freeing regional economic development from dependence on apartheid in South Africa, SADC embraced the newly democratic South Africa as a member in 1994 and has a broad mandate to encourage growth, development, and economic integration in Southern Africa. SADC's Trade Protocol, which was launched on September 1, 2000, calls for the elimination of all tariff and non-tariff barriers to trade by 2012 among the 11 signatory countries. If successful, it will give Botswana companies free access to the far larger regional market. The Regional Center for Southern Africa (RCSA), which implements the U.S. Agency for International Development's (USAID) Initiative for Southern Africa (ISA), is headquartered in Gaborone as well.
[edit] See also
- Botswana
- Economy of Africa
- Economy of South Africa
- List of Botswana companies
- List of South African companies
- South Africa
[edit] References
- ^ (2005) in ICTUR et al,: Trade Unions of the World, 6th, London, UK: John Harper Publishing. ISBN 0-9543811-5-7.
- ^ “Policy position paper on globalization – 2007”, Botswana Federation of Trade Unions: p. 25, <http://www.fes.org.bw/Downloads/BFTU%20Globalization%202007.pdf>
- ^ Diamonex Limited Acquires Kimberlite Pipes In USA. ABN Newswire. Retrieved on 2008-01-20.
- ^ [1]
- ^ [2]
[edit] External links
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