Coal Exports and the Diversification of Botswana's Economy (original) (raw)
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Botswana has vast proven deposits of steam coal, which, for a long time, the government has wanted to develop but without much success. The main objectives of this study are • to forecast possible coal exports from Botswana and the land routes for these exports • to determine the competitiveness of Botswana's coal in world steam coal trade • to make recommendations on the appropriate policy for the exploitation of this coal. To accomplish these objectives, we construct a model of the global steam coal trade and apply this model to forecast the likely optimal size of mine, timing of capacity, and choice of export port for the years 2005 and 2010 from a 2000 base forecast year. The results of our regional analysis suggest that Botswana's coal exports are competitive in Asia and Western Europe. These results are shown to be least sensitive to changes in rail transportation costs and marginal supply costs but more sensitive to changes in capital costs for mine development.
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This paper seeks to analyse the structure of Botswana's economy and the degree of success in economic diversification. We note that the economy of Botswana has not made any significant success in diversifying the economy away from minerals, particularly diamonds. The failure of the economy to diversify away from minerals has meant that the capitalintensive diamond sector, with its low employment capacity, did not help in reducing the high levels of unemployment. It is unsurprising that the country, despite its widely acclaimed economic success, continues to have high levels of poverty. The paper further analyses the recent economic initiatives geared towards employment creation and poverty reduction such as the Ipelegeng public works programme and Integrated Support for Arable Agricultural Production (ISPAAD). The paper proposes policies which have the potential to diversify the economy, create employment and, ultimately, reduce poverty.
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Botswana is typically perceived as a development anomaly on the continent. With a stable democracy and strong economic growth since 1966, the country’s success is in danger of being taken for granted. Diamond revenues are likely to decline in the near future. The government has historically depended on these, through its partnership with De Beers, to fund its development plans. Future economic growth, and by implication political stability, therefore depend on a reliable replacement for diamond revenues. Economic diversification is crucial, yet it has proved difficult to realise in Botswana. This policy briefing examines Botswana’s options. It concludes that investment in human and physical capital, and a policy focus on making tourism more successful, is the most efficient way forward for the country. Abundant coal resources, combined with potential iron ore reserves, could provide intermediate revenue streams, but the long-term development orientation should ultimately focus on re...
Botswana: Institutions Trump Everything (Almost
While the developed world has enjoyed relatively steady economic growth and prosperity in the years since World War II, the same cannot be said for the rest. Developing nations are a problem both in terms of causes and solutions. Political instability, poverty, and economic inconsistency have been common characteristics among these nations and most especially among the nations of sub-Saharan Africa. Following Robert J. Barro's seminal "Economic Growth in a Cross Section of Counties" (1991), an entire body of regression analysis literature has appeared, searching for the causes of the "African dummy variable" (Jerven 2011), and perhaps even prompting The Economist to ask whether Africa has "some inherent character flaw that keeps it backward and incapable of development" (The Economist 2000). Yet among the Sub-Saharan nations, Botswana is anomalous in that it has not followed the paths taken by its neighbors. Where other countries have endured frequent and frequently violent changes of regimes, Botswana has held regular and open elections in the 50 years since its independence. Where other countries have succumbed to the Resource Curse, Botswana's diamond wealth has fed strong and sustained economic growth, although admittedly weaker since the 2008 economic crisis. Where other mineral-rich countries have battled Dutch Disease, Botswana has managed its macroeconomic policies with the aims of reducing external debt, stabilizing growth, and promoting economic diversification (Hill 1991). In short, Botswana has managed to do what few of its neighbors have and has managed to do it better than almost any other developing country.
Botswana: A Note on Economic Diversification
Despite a series of supportive policies over the years, economic diversification remains an obscurity for Botswana. The economy remains heavily dependent on diamond mining, while the private sector, considered pivotal in the strategy for diversification, continues to be shallow and narrow, with weak inter sectoral diversity and production links. In addition to proliferation of fragmented, uncoordinated policies and/or strategies, which have seriously undermined implementation and monitoring (and accountability in the case of institutions), the paper identifies passive political commitment, especially with regard to supporting innovation, research and development as some of the major contributing factors to sluggish progress on economic diversification. Government"s slow rate of response towards addressing factors that inhibit private sector growth and competitiveness (including utility costs, cost of capital, access to land etc) in yester years has also compounded the problem. With renewed vigor and excitement in government in recent times, especially with regard to the "Excellence Strategy" and the "Economic Diversification Drive", it is imperative that these factors be taken on board, otherwise these latest initiatives will only perpetuate what has been the case over the years.