Tuesday, August 11, 2020

Botswana made significant investment in infrastructure

There is concern about Botswana shelving construction projects due to budget constraints but it turns out that in 2011, the country was the only other in Africa which invested significantly more in infrastructure than might be expected.

This investment is measured by gross fixed capital formation (GFCF) which is defined as net increase in physical assets (investment minus disposals) within the measurement period. A component of expenditure approach to calculating GDP, GFCF does not account for the consumption (depreciation) of fixed capital and does not include land purchases.

“The developed countries have accumulated large stocks of machinery and equipment and infrastructure assets like ports, roads, communications systems, dwellings, and commercial buildings and these assets account for their high levels of productivity and high incomes.

African countries are still at an early stage of building up their capital stocks,” says a report from the Statistics Department of the African Development Bank.

The report does not say this but the level of underdevelopment in Sub-Saharan Africa is such that with the exception of South Africa, the region generates 28 gigawatts of power for more than 900 million people, which is about the same as Argentina generates for 42 million people and has fewer roads than Italy.

An analysis that the bank did suggests that about 87 percent of the variation in real GFCF per capita is explained by real GDP per capita and that there are few outliers.

“Only Botswana and Cabo Verde invested significantly more in 2011 than might be expected, given their levels of real GDP per capita whereas Egypt, Ethiopia, and Sudan invested significantly less,” AfDB says.

The development budget for the 2011/12 financial year was P10.77 billion and a large portion of it went towards the construction of Morupule “B” Power Station; three large dams at Thune, Lotsane and Dikgatlhong; North-South Carrier connections to the major villages of Kanye, Serowe and Molepolole; Gaborone-Tlokweng Border Post; Western Bypass Circle- Metsimotlhabe, Nata-Kazungula and Ngoma-Kachikau roads; and Sir Seretse Khama, Maun and Francistown airports.

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