TOPIC: ECONOMIC DEVELOPMENT IN BOTSWANA

Use of the country’s resources (human and natural) in improving people’s lives
Or
The process of improving production and distribution of the country’s resources /wealth for the

betterment of people’s lives

ECONOMIC SECTORS
Any significant /activity /service/ production institution that generate revenue,

employment and aimed at improving people’ living standards.

Examples of economic sectors:

- Agricultural sector
- Mining
- Manufacturing
- Tourism
- Education

Factors that contribute to economic development

- Availability of capital /finance to buy machinery or pay human resource may

speed up the pace of development
- Availability of natural resources such as minerals can develop a country if fully
utilized/ distributed by existing stakeholders e.g. industries
- Technology: advanced technology e.g. computer age increase efficiency in
production as more work is done with less available human resource
- Availability of both skilled and unskilled human resource/ labour: an efficient
labour force allows a country to fully exploit its natural resources and improve
output (performance) of each economic sector
- Availability of land: land is the power base on which an economic activity should
take place e.g. lack of land brings developments to a standstill
- Improved transport and communication networks: promote quick access to the
market / facilitate efficiency in economic sector production
- Govt policies: good policies attract foreign investors and also do not sideline
local investors e.g. tax rebates, PMS to promote a productive work environment,
import substitution policies to promote the local production base.
- Political stability: a peaceful environment promote economic production as there
are no physical destruction to property of investors
 Contribution of economic sectors to the economy of Botswana

- Generate Govt revenue / foreign exchange through profit gains and tax e.g. agric
sell beef to E.U market
- Create employment e.g. BCL alone has more than 5000 employees
- Improves human resource / work force through specials training like (educational
sponsorship ,mining engineers or equip individuals with life sustenance skills)
- Pride: good performance by economic sectors brings pride to the country e.g.
Botswana is famous because of the good performance by the Diamond mining
sector
- Attract more investors and tourists e.g. the tourism sector
- Improves the country’s infrastructure or service delivery as money generated
build roads, sports facilities, improve welfare of Batswana
- Lead to acquisition of advanced technology that meet global standards

Conduct a case study of any of the economic sectors that you know (tourism, mining e.t.c)

-Address the following questions

- Challenges faced by the selected sector

- Contribution of the chosen sector to the economy of Botswana
- Examine possible solutions to problems faced by each economic sector

CHALLENGES FACED BY EACH ECONOMIC SECTOR

- Ever-changing technology: time and again we have to cope / keep pace with
global technological standards hence this affect the output per each sector
- Brain drain: Botswana’ economic sectors are losing a lot of their skilled labour
force to the more developed world as they pay better salaries
- Globalization: serious competition for world markets from multi-national
corporations in trade e.t.c threatens the existence of Botswana’ sectors. For them
to survive they have to be in line with global technological standards
- Frequent fluctuation of world market prices especially in the mining sector
- Frequent outbreaks of livestock diseases that are affect the Beef industry e.g. Foot
and mouth
- Demand and supply: level of out put or production at minimal production cost to
the satisfaction of all Batswana is a challenge as the products/ service will not
satisfy every Motswana’s needs
- Frequent droughts leading to decreased water supply to all sectors
- Economic empowerment policies by the Govt: issues of privatization and
localization of specialized skills / posts vs. private sector interests
- Political integration: accommodating political views that allows investment
growth
- HIV/AIDS which kills a lot of the employees of the country’s economic sectors
 Solutions to problems faced by each economic sector

- Global Competitiveness in order to meet /keep pace with global standards

(challenges) in service delivery / production goods
- Create a favourable investment climate: i.e. avail financial institutions (banks),
have low tax charges, tariffs etc
- Improve infrastructure: Establishment of better transport and communication
networks e.g. Trans Kgalagadi road
- Consultation: there should be sufficient dialogue between employer and employee
so as to improve work relations /customer ethics
- Quality standards: set quality standards on work ethics such as having vision
/mission, avoiding nepotism
- Bilateral/multilateral agreements between countries /organizations in areas of
trade, information exchange, socio-cultural e.t.c

HOW CORRUPTIONS UNDERMINES ECONOMIC DEVELOPMENT

- Demoralizes workforce/ human resource: no motivation/ reward to the
hardworking employees as reward would be given to the not so hard working
ones
- Scare away potential investors and limits employment opportunities
- Collapse of economic sectors : as funds to run sectors are misused
- Production of substandard goods/ projects as right procedures to test quality
standards are not followed
- Tarnishes the emerge of the nation /country
- Govt or other stakeholder projects are halted as nepotism give post to the
incompetent workers who don’t have the technical know how
- During the tendering process corrupt practices may award tenders to the not so
deserving
- Corruption practices delays completion of projects/ increase the time spent in
carrying out projects as there is embezzlement of funds
- Widens the gap between the rich and poor / spark political unrest as the corrupt
enriches themselves to the disadvantage the appropriate beneficiaries

WAYS OF SUSTAINING ECONOMIC DIVERSIFICATION

Diversification: having alternative sources of production / money rather relying on one.
Botswana relies more on Diamond sales
- must instill a corrupt free culture to prevent economic collapse
- Networking / liaising with other people to get ideas about different
businesses/investments either than one is engaged in.
- Encourage foreign investors to invest in other sectors like agric and
manufacturing. Batswana could be encouraged to invest into the tourism industry
by building more hotels
- Upgrade training on entrepreneurship skills and even acquire latest updates on
technological changes
- Good customer care attitude: improve our work ethics so as to maintain our
clients
 - Promote the local entrepreneurs through the buy Botswana campaign
- Broaden the market for survival of existing sectors

MULTI –NATIONAL CORPORATIONS (advantages and disadvantages of globalization)

INTERNATIONALLY owned companies
i) Advantages
- Promote competitive trade: help local owned company to meet global
competitiveness standards
- Create a lot of employment to the locals
- Speed up the economic development of a country there by improving peoples
living standards
- Tax gained from MTC is used to develop the country
- Strengthen local companies through financial assistance e.g. Barclays
- Provide a platform to solve world economic problems as MTC operate in different
countries

ii) Disadvantages
- Inhibit growth of local /citizen owned industries as small local companies are
swallowed by the unfair competition posed by the much advanced MTC ‘s
- Top posts are occupied by expatriates while the locals fill the low paying posts
(exploit the locals as the MTC are profit oriented)
- MTC tend to monopolize world markets (local markets inclusive)
- Act as ‘fly by night’ industries who may leave the country after making huge
profits
- Associated with large scale retrenchments or loss of jobs
- Slow down the country’s citizen economic empowerment programmes as they
protect their interests

ROLES OF STAKE HOLDERS IN PROMOTING ECONOMIC DIVERSIFICATION

a) Govt

- Introduction of financial institutions /easy access to credit through CEDA, NDB

to fund business in the non miming sector etc
- Amendment of the legislature to protect local companies from foreign dominance(
import substitution policy, Avail incentives such as tax subsidies for companies
- Entrepreneurship skills: educate the locals in various business skills e.g.
agriculture ,tourism
- Broaden and Promote sustainable use of the environment in areas of extraction of
veld products, mining, agriculture or different natural resources
- Take a lead in advertising economic diversification e.g. buy Botswana brand
/campaign, tourism board adverts to attract different economic sectors
 - Creation of various specialists departments like IFS, Piggery, to
mobilize ,supervise and direct different business initiatives such as
piggery ,clothing

b) Private sector

- Investing in different economic sectors by establishing companies in areas of

agric , tourism ,manufacturing
- Train the locals on different business skills so as to broaden their economic
empowerment base
- Networking or liaising to exchange or share information about economic
diversification with other stakeholders through forums, seminars
- Acquire the latest technology that would promote growth of different individual
group /investments

c) Youth
- create their own business /companies in areas of agric, tourism, transport etc
(Exposure on hands on experiences)
- : Actively participate in youth empowerment programmes like Young Farmers
fund, JAB
- Liaise or network with other potential investors within and outside the country for
Self employment (Create their own jobs)

d) NGO
- Entrepreneurship skills e.g. Environmental education: disseminate relevant
information to all stakeholders to promote sustainable resource utilization
- Harmonize all stakeholder efforts in protecting the environment e.g. KCS protect
both soil, fauna to broaden the resource material base for potential industries
- Encourage women empowerment and participation in various business /economic
sectors e.g. BYWCA, Emang Basadi engage women in manufacturing ,tourism

GLOBAL ECONOMIC FORCES FOR ECONOMIC DEVELOPMENT IN BOTSWANA

i) Fluctuation of market prices/ world unprecedented economic recessions: affects mainly

Botswana ‘mineral prices and there by leading to less profits.
Effects are:
 decline in Botswana’ foreign reserves
 Increased global inflation / prices on market products e.g. food, clothing as
attributed to increased supply of money
Or Constant adjustments on prices of essential products e.g. petroleum products
 Constant adjustments to the national budget /budget deficit
 Retrenchments by the private sector
  Devaluation of currencies leading to increased costs in imports and decreased
costs in exports

ii) World financial institutions (IMF, World Bank)

Advantages to Botswana
 Provides funds (loans/grants) that speed the process of development
 Promote infrastructure development e.g. building of roads
 Promote poverty alleviation programmes
 Promote human resource training as the loans may be used to establish schools
 Provided temporary relief to Botswana’ economic hardship/ problems

Disadvantages /negatives
 Provide loans that charge high interests which make it difficult to repay the loans
(perpetual debts as Botswana is up to this day still paying some of the loans obtained 25
years back)
 Terms of repayments are in most cases not flexible especially the time frame and interest
rates
 Has in the past led to budget deficit and probably loss of jobs in the private sector

iii) World trade patterns: e.g. free trade /movement of goods etc
Benefits to Botswana:
 Remove trade barriers which then enables easy access to foreign goods and services
by Batswana
 Enables Batswana to get access to the latest technology that promote economic
development
 Gives access to foreign exchange through international trade e.g. SACU, WTO
 Create more investment opportunities and employment for both Batswana and
foreigners by attracting multi –national corporations like BM Garments that may
speed up Economic diversification

Disadvantages:
 High influx of substandard goods e.g. Chinese community clothing and electronics
businesses
 Development of few locally owned companies as they are out competed by the multi-
national corporations
 Creation of low wages posts for locals in the MTC
 Create room for cross boarder crime / terrorism e.g. recent scam for Asian community
trafficking into Botswana
 Provide room for cross boarder money laundering and a lot of foreign currency in
Botswana has been lost in the process

Study questions
- explain any challenges faced by the mining sector
- using examples , evaluate the significance of global economic forces on the
 economy of Botswana
- assess the role of the government in economic diversification
- explain five that contribute to economic development