Botswana has had the highest rate of per-capita growth of any country in the world in the last 35 years. This occurred despite adverse initial conditions, including minimal investment during the colonial period and high levels of inequality. Botswana achieved this rapid development by following orthodox economic policies. How Botswana sustained these policies is a puzzle because typically in Africa, "good economics" has been politically difficult.

I. Introduction

Despite some success stories in the 1960’s and early 1970’s, Africa is poor and getting poorer. There is also an almost universally pessimistic consensus about its economic prospects. The average sub-Saharan African country is poorer than the average low-income country and getting poorer. The average growth rate has been negative since 1965 and there is approximately a 35-fold difference between the per-capita income level of such a country and the U.S.

Against this background of poor performance, there is one African country that has performed not only well, but also better than any other country in the world in the last 35 years - Botswana. Botswana had a PPP-adjusted income per capita of $5,796 in 1998, almost four times the African average, and between 1965 and 1998, it grew at an annual rate of 7.7 percent.

This case study attempts to answer the question: "Why has Botswana been so successful?"

II. A Brief History
Botswana is a landlocked country surrounded to the south by the Republic of South Africa, to the west and north by Namibia, and to the east by Zimbabwe. It borders Zambia at a single point (Kazungula on the Zambezi river) in the northeast. It comprises 220,000 square miles (570,000 square kilometers) about the size of France, Kenya or Texas. The environment is mostly arid and 84 percent of the country is Kalahari sand, supporting savanna vegetation. 80 percent of the population lives in a long strip in the east of the country along the line of rail which links South Africa with Zimbabwe. This is where most of the usable arable land is. About 4 percent of all the land can be easily cultivated; the bulk of land, including the desert areas, is rangeland only suitable for seasonal grazing.

The ancestors of the modern Tswana tribes migrated into the area of modern day Botswana in the eighteenth century from the south-east (modern South Africa) and are closely related to the Basotho of modern day Lesotho. They conquered the indigenous San and other tribes who were incorporated into the Tswana. By 1800 several related Tswana societies were established and over time new ones were created as groups broke away from the existing ones. For instance, the Bangwato resulted from a split in the Bakwena and the Batawana was created as a result of a split in the Bangwato.

Several features of Tswana political and economic organization stand out. The chief was the central political figure in these societies with power to allocate land for grazing crops and residences. His authority was exercised through a hierarchy of relatives and officials. Alongside this hierarchy was a series of public forums. The kgotla was an assembly of adult males in which issues of public interest were discussed. Even though they were supposed to be advisory they seem to have been an effective way for commoners to criticize the king. They also were the venue where the king heard court cases and law was dispensed. Although one might imagine that these features were characteristic of all pre-colonial African societies, this is not the case.

While land was collectively owned, cattle were privately owned and the chief and aristocracy were large owners. Herds were divided up among a large number of clients who had the use of the cattle (as well as some of the meat and milk). In return for the use of the cattle, non-cattle owners were expected to provide political support for the officials. The relatively integrative nature of Tswana institutions and the lack of colonialism seems to account for the current relative homogeneity of Botswana. The Tswana, despite an economy based on cattle, tended to live in large concentrated settlements where as other Bantu tribes, such as the Zulu, lived in more dispersed hamlets. This made it easier to hold regular political meetings.

Despite appearances, probably no more than 50 percent of Batswana are actually real Tswana. Although 85 percent of the population speak Setswana (the only language taught in public schools along with English), there is rather a large amount of underlying ethnic if not linguistic diversity. The Tswana tribes traditionally attempted to integrate other groups into their institutional structure and even after independence, this promotion of homogeneity continued. Unlike the Ga or Ewe in Ghana, the San or Kalanga in Botswana do not have a separate historiography and experience of "stateness" but were rather integrated into Tswana society.

The early nineteenth century was tumultuous for the Tswana tribes. Starting in 1818 and lasting into the 1830’s, widespread migrations and conflicts occurred as a result of the expansion of the Zulu kingdom under Shaka. The Batswana had to fight to protect their lands, and consolidate their hold on Botswana. As this period of fighting subsided than they began to interact with the spread of colonialism. Clashes with Afrikaaners began from the 1830’s onwards. Even before that the effects of the European occupation of South Africa began to be felt. The movement of the Boers into their territory was halted however by the success of the Tswana at the battle of Dimawe in 1852. An interesting feature of these wars is the extent of cooperation between the tribes in the face of a common enemy. This was to lay the foundations for a future Republic of Botswana.

Diamonds were discovered in Kimberly in 1867 and gold on the Witwatersrand in 1884-1885. In 1884 Germany annexed South West Africa (now Nambia), the Berlin Conference that formalized the scramble for Africa took place in 1885 and the British began to look inwards from the Cape Colony towards central Africa. Suddenly Botswana occupied an important strategic position blocking Germany Southwest Africa on one side and the Boer states on the other. Britain declared the creation of a crown colony in British Bechuanaland in 1885 and creation of the Bechuanaland Protectorate in 1885. The Tswana tribes were amalgamated into the British Empire mostly because of the strategic location of their territory, not because the territory was thought to be particularly valuable or attractive. The protectorate served both to contain German and Boer expansionism and guarantee Britain a route into the interior.

As a result of the way in which Botswana entered the Empire, and because of the putative amalgamation with South Africa, colonialism was very light. In 1885 the high commissioner defined the role of the British government as follows: "We have no interest in the country to the north of the Molope [the Bechuanaland Protectorate], except as a road to the interior; we might therefore confine ourselves for the present to preventing that part of the Protectorate being occupied by either filibusters or foreign powers doing as little in the way of administration or settlement as possible."

During the colonial period 75 percent of the expenditures of the administration went on "administrative costs." Little was spent for investment or development of any kind. Nevertheless, colonialism had important effects on the structure of the economy. In 1899 a hut tax of one pound payable in money was introduced and this was increased by the addition of a three shillings "native tax" in 1919. The effect of this, as in many places in colonial Africa, was to force Africans into the labor market to earn money to pay taxes.

After neglecting the Protectorate for nearly 50 years, the British policy changed from 1934 onwards as there was a sustained attempt by the British administration to once and for all establish its authority over the chiefs in the tribal territories. Some chiefs challenged these measures in the courts and although they were unsuccessful, the united opposition of the chiefs and the Second World War essentially blocked the imposition of new policies.

In 1948 Seretse Khama, who had been studying in Britain and married a white Englishwoman Ruth Williams, was banned by the British from returning to the Protectorate to take up his chieftanship. The ban was to placate enraged South African reaction to the inter-racial marriage. He remained in exile until 1956 when both he and his uncle, Tshekedi, renounced their claims to the chieftanship. Seretse returned to the Protectorate and began to take an active part in the Joint Advisory Council that the British had formed in 1951 by amalgamating formerly separate European and African councils. In 1960 the British announced the creation of a Legislative Council and at the same time the first political party, the Bechuanaland People’s Party (later the Botswana People’s Party - BPP) was founded.

The BPP adopted a radical anti-colonial stance and took inspiration from the antiapartheid struggle in South Africa. In response, Seretse Khama and others founded the Bechuanaland Democratic Party (later the Botswana Democratic Party - BDP). While the BPP initially appealed to urban groups and workers, this was a very narrow political base in the early 1960’s. In contrast the BDP integrated within it not only an emerging educated elite gap, being both the hereditary leader of the largest Tswana state, but also European educated. The particular political strength of the BDP coalition was that they could integrate within the party the traditional rural structures of loyalty between commoners and chiefs. This structure of traditional loyalty was cemented by the continuation of clientelistic practices such as the lending of cattle noted above.

As a result, the BDP easily won the first elections held in 1965 and has won every election ever since with a commanding majority in the National Assembly. Seretse Khama maintained the Presidency until his death in 1980 after which it fell to Quett Masire, who had been his deputy from 1966 on. Masire retired in 1998 and was succeeded by Festus Mogae. During this period there is no evidence of electoral fraud. While the only daily newspaper is government run, there are several weekly papers that freely criticize the government and any instances of mismanagement. Though the BPP was initially the strongest opposition party, by the 1969 election the Botswana National Front (BNF), founded by Kenneth Koma had become the strongest opposition. Their electoral success in 1969, in which they won 3 seats in the National Assembly, was primarily due to an unlikely coalition between Koma, a radical, and Batheon, former chief of the Bangwaketse who resigned his chieftancy and ran for the Assembly. By siding with the BNF Batheon switched the voters in his tribal area to the BNF. His main motivation was to try to build a coalition to restore power to the chiefs (a completely different agenda than Koma’s). This outcome clearly indicates the strength of tribal affiliations.

Even though the BDP has ruled continuously, there is evidence that they have been responsive to the threat of losing power. For instance, before the 1974 election and after the shock of 1969, the Accelerated Rural Development Program--which involved extensive investment in infrastructure in the rural areas, was launched. The primary aim of this program was to show to its supporters that the BDP was doing its job.

Another example of political responsiveness is that after losing ground in the 1994 election the BDP responded by introducing popular reforms such as reducing the voting age from 21 to 18 and allowing Batswana outside the country to vote (particularly important given the large number still employed in South Africa). Although the composition of the BDP goes a long way to explain its electoral success, there is a crucial tension between the nature of the party and the political strategy of Seretse Khama in the period leading up to independence. Despite being himself a traditional chief, Khama seems to have been intent on constructing a strong central state that would not be impeded by the powers of traditional rulers. To achieve this, he successfully controlled the constitutional negotiations with the British. The National Assembly that emerged from the constitutional negotiations initially consisted of the speaker, the attorney general, thirty-one elected members, and four specially appointed members chosen by the President.

Executive power resides with the President who is chosen by the vote in the National Assembly. Assembly constituencies are British style "first-past-the-post" constituencies and candidates must declare which presidential candidate they support during the elections. In addition to the Assembly, the constitutions created a House of Chiefs that consists of the eight chiefs of the eight Tswana tribes, four representatives of other sub-chiefs (from minor ethnic groups), and three members selected by the House of Chiefs. Members of the House of Chiefs cannot sit in the Assembly. Seretse Khama ensured that the House of Chiefs became a talking shop that gave the chiefs no real power over legislation. Once in power the BDP passed legislation that progressively stripped the chiefs of their residual powers, for example over the allocation of lands. Particularly important were the Chieftancy Act of 1965 and the Chieftancy Amendment Act of 1970. These essentially gave the President the ability to remove a chief. These steps were crucial in the construction of the state. One of the most crucial decisions was the passing in 1967 of the Mines and Minerals Act that vested sub-soil mineral rights in the national government. Before this the rights had belonged to the tribes. This decision is particularly interesting given that the main diamond mines were under the lands of the Bangwato, of whom Seretse Khama was the chief.

At independence in 1966, Botswana was a very poor country with few assets and little infrastructure. When the British left, there were 12 kilometers of paved road, 22 Botswanans who had graduated from University and 100 from secondary school. In 1966 there were only two secondary schools in the country that offered full five-year courses and only 80 Batswana in the final year. In contrast, Zambia had 10 times as many secondary school graduates, and Uganda 70 times! The quality of education was uniformly poor with large class sizes and a high failure rate. The lack of education was reflected in the make-up of the civil service with only a quarter of 1,023 civil servants in 1965 being Batswana.

Though in 1954 an abattoir had been opened in Lobatse, enabling beef to be sold beyond the region for the first time, this was about the only industry in the country. Given the poor agricultural conditions in the country imports of food were also large (about 10 percent of GDP in 1965) and most analysts wrote Botswana off as a dependent underdeveloped labor reserve for South Africa. In addition, 50 percent of government expenditures upon independence had to be financed by transfers from Britain. According to one observer: "it was about as bad a start as could be imagined."

To solve this problem the BDP adopted several highly successful strategies. First, they renegotiated the Customs Union with South Africa in 1969. They also encouraged mining companies to explore the country. As a result, copper and nickel deposits were quickly found at Selebi-Phikwe and coal at Marupule. Most crucially kimberlite diamond pipes containing diamonds of industrial and gem quality were discovered at Orapa and Letlhakane and later at Jwaneng. Moreover, in 1975, once it became clear how productive these mines were the government invoked a clause in the original mining agreement with DeBeers and renegotiated the diamond mining agreement. As a result the government received a 50 percent share of diamond profits.

From independence the BDP adopted and implemented a consistent series of development plans emphasizing investment in infrastructure, health and education. These plans have been run from the Ministry of Finance and Development Planning. In stark contrast to most other African countries after independence, the BDP resisted all calls to ‘indigenize’ the bureaucracy until suitably qualified Batswana were available. Thus they kept in place expatriate workers and freely used international advisers and consultants. The initial development plan of 1966 conservatively imagined phasing out all expatriate staff by 1991, a target that has not been achieved. This was clearly a conscious choice by the BDP. In his first speech as President Seretse Khama announced: "My Government is deeply conscious of the dangers inherent in localizing the public service too quickly. Precipitate or reckless action in this field could have disastrous effects on the whole programme of services and development of the Government,"

In the absence of any other sector to develop the early development plans focused on the rural sector - basically cattle ranching. Building infrastructure and developing this sector was entirely in the interests of the BDP political elites. This rising rural capitalist class made a successful transition from political power in pre-colonial societies to the new nation state. This type of direct engagement in agricultural production is similar to that of the settler political elites in Rhodesia. However, this is quite unlike the common situation in contemporary Africa. Immediately upon independence the abattoir at Lobatse was nationalized and the Botswana Meat Commission (BMC) was founded. The BMC is a traditional type of marketing board that is a monopsony purchaser of cattle from ranchers. It sets the prices and sells the beef on regional and world markets. The BMC has been largely controlled by cattle interests and aided the development of the industry. Indeed, the government has heavily subsidized veterinary services, the distribution of vaccines and extension services and built over 5,000 km of cattle fences to maintain the health of the stock. Under the auspices of the Lome convention, the BMC (with the direct intervention of Seretse Khama) also negotiated access to the lucrative EEC market gaining prices far above world levels.

By the mid-1970’s the government budget was in surplus and the diamond income began to accrue. From the beginning the income was managed in an efficient manner with the rents being allocated to investment in the government budget. The best evidence of this is in the early 1980’s, when in an attempt to maintain the market price for diamonds Botswana was unable to sell any diamonds for six months. This led to no cuts in expenditure, as the government was able to optimally smooth expenditures relative to income. Botswana diamonds now represent about 1/3 of the diamonds sold by the De Beers cartel and Botswana has benefited enormously from this successful attempt to maintain high diamond prices. While the government stayed within the South African Customs Union, in 1976 they introduced their own currency, the Pula (they had previously used the South African Rand) which has been essentially pegged against the Rand.

To stimulate industry, the government introduced in 1970 the Botswana Development Corporation and in 1982 created the Financial Assistance Policy to subsidize industrial ventures. Though these have not led to large-scale industrialization it is significant that manufacturing has stayed at around 5 percent of GDP, which is quite an achievement given the dominance of resources in the economy. In general nearly every aspect of Botswana economic performance is spectacular. Inflation has rarely been above 10 percent, investment has been between 20 and 30 percent of GDP, and there has been significant investment in human capital. The balance of payments has typically been in surplus, there are large accumulated reserves and government has not needed any structural adjustment loans. Although diamonds have clearly fueled Botswana’s growth, the income has been invested rather than squandered.

While diamonds have been important for growth in Botswana and currently account for around 40 percent of the country’s output, in many other countries, abundant natural resource appears to be a curse rather than a blessing. So how did Botswana do it? There is almost complete agreement that Botswana achieved this spectacular growth performance because it managed to adopt good policies.

The basic system of law and contract worked reasonably well. State and private predation have been quite limited. Despite the large revenues from diamonds, this has not induced domestic political instability or conflict for control of this resource. The government sustained the minimal public service structure that it inherited from the British and developed it into a meritcratic, relatively uncorrupt and efficient bureaucracy. The state sector has never been large and to the extent it has existed, it has faced budget constraints. Although there was a government marketing board, usually an institution employed by the urban interests to exploit farmers, in Botswana the board was not used to extract resources from the rural sector. Moreover, the government invested heavily in infrastructure, education and health. Fiscal policy has been prudent in the extreme and the exchange rate has remained closely tied to fundamentals.

Not everything in Botswana is rosy. Though the statistics are not fully reliable, Botswana has one of the highest adult incidences of AIDS in the world with perhaps 25 - 30 percent of adults being HIV positive. This probably represents, above else, a serious public policy failure. Although growth has been rapid, inequality is remarkably high and has been practically unchanged, and the unemployment rate, especially of migrant workers from rural areas, is very high. Moreover, while Botswana has had freely contested democratic elections since independence, one party has always won and there has never been a credible opposition.

It therefore remains to be seen whether Botswana’s institutions will continue to be effective in fostering future economic growth, as well as deal with the unemployment and persistent inequality problems, and most importantly, with the demographic crisis created by the AIDS epidemic. Nevertheless, despite these important caveats, the evidence suggests that there is something distinctly successful about Botswana’s economic policy.

From this brief history, a number of structural features can be identified:

1. Botswana is very rich in natural resource wealth.

2. It had unusual pre-colonial political institutions allowing commoners to make suggestions and criticize chiefs. The institutions therefore enabled an unusual degree of participation in the political process, and placed restrictions on the political power of the elites.

3. British colonial rule in Botswana was limited. This allowed the pre-colonial institutions to survive to the independence era.

4. Upon independence, the most important rural interests, chiefs and cattle owners, were politically powerful, and it was in their economic interest to enforce property rights.

5. Exploiting the comparative advantage of the country after 1966 directly increased the incomes of the members of the elite. This increased the opportunity cost of, and discouraged, meddling in the economy.

6. The political leadership of the BDP, in particular Seretse Khama and Quett Masire, took a number of sensible decisions. This gave them a broad political base.

 

III. A Comparative Perspective
These factors provide a possible explanation for the success of Botswana. They explain why it managed to sustain a political equilibrium of a nature that no other African country could. To check the plausibility of these different arguments it is important to evaluate them in comparison with the experience of other countries. Thus Botswana is compared to four other countries: Somalia, Lesotho, Ghana, and the Côte d’Ivoire.

It has been suggested that Botswana benefited from a pre-colonial institutional inheritance that was not perverted by colonialism. Somalia suggests the importance of state institutions. Despite being a relatively homogeneous nation, Somalia suffers from its inheritance of highly dysfunctional pre-colonial political institutions. Lesotho, on the other hand, is culturally identical to Botswana, and had the same colonial institutions. Yet these institutions were affected differently by warfare in the 19th century and colonialism. In particular, the powers of chiefs were strengthened and a single paramount chief emerged with far fewer constraints than in Botswana. This resulted in a greater vested interest in the status quo, higher political stakes and greater political instability.

The evidence from Ghana and the Côte d’Ivoire supports the view on the crucial nature of the political coalition integrated into the BDP and institutional constraints on post-independence political power. The fact that the BDP represented the majority of the traditional political elites in Botswana gave them a broad and stable coalition with little to fear from abandoning the status quo and promoting development. Moreover, the relatively limited nature of political power meant that the BDP was not too threatening to potential opponents. This reduced political instability.

In Ghana, Nkrumah and this Convention People’s Party (CPP) lacked such a coalition and in the absence of institutional limits, posed a threat to other groups. The CPP therefore quickly became locked into an antagonistic relationship with other tribes, particularly the Ashanti and the resulting political instability led to the collapse of democracy and highly inefficient income redistribution. This suggests that Nkrumah and the CPP’s lack of economic interest by in promoting development was less crucial than this political instability which was exacerbated by the long divisive impact of the Atlantic slave trade and colonialism on indigenous political institutions.

Similarly, in the Côte d’Ivoire, post-independence political elites did have strong interests in coffee and cocoa production but, as with the CPP, had a narrow political agenda so as to increase their political power. This narrow base of support is likely to have made political elites feel threatened by economic and social change (i.e., they feared becoming "political losers"). In addition, the absence of effective constraints on political elites enabled them to pursue distortionary economic policies to maintain power. As a result, despite the alignment of the economic interests of the governing elite with development in the Côte d’Ivoire, many distortionary policies were adopted and economic performance has been poor.

IV. Conclusion
Despite being a small, agriculturally marginal, predominantly tropical, landlocked nation in a very precarious geo-political situation, Botswana is an example of successful economic development. Many, if not most, African countries are well endowed with natural resources and mineral wealth. However, Botswana was able to grow rapidly because it had a set of institutions that encouraged investment and economic development. These institutions protected the property rights of actual and potential investors, provided political stability, ensured the political elites were constrained by the political system, fostered socially efficient exploitation of resources, and encouraged the participation of a broad cross-section of the society.

Although these institutions emerged in part as a result of a unique juxtaposition of a historical conditions and political factors that obviously cannot be duplicated elsewhere, to the extent that individual actions have been important, similar institution-building may be helpful in other African nations.

Source: http://ksghome.harvard.edu/~.drodrik.academic.ksg/RobJohnAcem-Botswana.pdf