Country Profile: BOTSWANA

This country profile was published in November 2010 in our annual 'Africa in 2011' issue. The next edition, 'Africa in 2012' will be on sale in November 2011.

In the months ahead, the ruling Botswana Democratic Party (BDP) will struggle to overcome the effects of a ?serious political split in its ranks. In April, eight of the BDP’s 45 MPs from the Barataphathi (those who love the party) faction left to form the Botswana Movement for Democracy (BMD). The breakaway reflected personal antagonisms and resentment over President Ian Khama’s appointment of relatives and former army colleagues to important positions.?

The president marginalised a number of his internal party opponents after he won his first popular mandate in October 2009, having come to power by automatic succession in April 2008 as the incumbent vice-president. Although the 2009 polls appeared to give public endorsement to his populist style of governing and his emphasis on discipline in public affairs, defections to the BMD meant that the BDP almost ceased to exist in several constituencies. For a while, the BMD was the largest opposition party in the National Assembly – the Botswana National Front and the Botswana Congress Party have six and five MPs respectively – but two of its MPs rejoined the BDP in August. ?

Further defections to the BMD are possible, although this largely depends on whether President Khama’s now more conciliatory approach to internal dissidents works. BDP chairman Daniel Kwelagobe, while remaining loyal to the BDP, has openly expressed support for the defectors. Khama also suffered a setback when his cousin and close ally, Ramadeluka Seretse, resigned as defence and justice minister a day before being formally charged with corruption.

The fact that he had been investigated by the directorate of corruption and economic crime, headed by another of Khama’s relatives, may help the BDP to counter allegations that presidential allies are above the law.?The global recession has exposed Botswana’s overdependence on diamond mining for export earnings and public revenue. Since the onset of the downturn, the government has redoubled its efforts at economic diversification.

The recovery in commodity prices in 2010 has also boosted foreign investment in the development of copper, coal and uranium mines.? Debswana, the 50/50 government-De Beers joint venture, reduced diamond production by 46% to 18m carats in 2009 in response to the slump in demand for rough stones. This resulted in an estimated 8% contraction of real GDP and forced the government to expand spending and allow a substantial budget deficit in 2009-10.

At the same time, the current account moved from surplus to a $0.8m deficit. Diamond output more than doubled to 10m carats in the first half of 2010 and Debswana resumed projects to extend the life of the two biggest mines, Jwaneng and Orapa. Junior companies have invested in two new mines, both to begin production in 2011.

?The IMF estimates that GDP will have increased by 8.4% in 2010 and will expand by 4.8% in 2011. The budget deficit should fall in 2010-11 due to higher mineral-tax receipts, planned expenditure cuts and efficiency savings. The prompt easing of fiscal and monetary policies in 2009-10 prevented a more serious deterioration in the economy.

The rebound in export earnings has gone some way to overcoming the sharp fall in revenue from the Southern African Customs Union. ?The less favourable macroeconomic environment led to Botswana dropping 10 places, to 76th, in the World Economic Forum’s Global Competitiveness Report 2010-2011. However, it was the second-ranked African country, at 7th place, in the annual Survey of Mining Companies 2009-2010, which measures countries by mineral potential under current policies.