Wednesday, January 26, 2022

Botswana’s average income will double in 2039

A report produced on behalf of a continental panel that the Bank of Botswana Governor, Linah Mohohlo is a member of, says that on current trends, it will take Botswana between 25 and 33 to double its average income.

From the analysis of the report, Botswana would not have done much in its fight against poverty.
The report says that Sub-Saharan growth has hovered around, and often exceeded, 5 per cent a year. During 2012ÔÇô2013, over one-third of countries in the region posted growth rates of over 6 per cent.

“Behind this record are marked improvements in macroeconomic policy, which insulated the region from the worst effects of the global financial crisis. At the start of the 21st century, most African countries were strapped with unsustainable debt. Now many have better debt indicators than countries in the European Union. Of the region’s major economies, only one of the largest, South Africa, has consistently underperformed,” it says.

Africa has become the world’s most rapidly urbanising region and Africans are now living seven years longer on average than they were a decade ago. By 2030, one half of Africans will live in cities the largest 18 of which will have a combined annual spending power of US$1.3 trillion.

This growth is pushing more and more countries towards middle-income status. In 2006, 13 countries in the region were categorised as middle-income ÔÇô that is, with per capita gross national income (GNI) between US$906 and US$11,115, as calculated by the World Bank Atlas method. Today, the figure has climbed to 21. By World Bank’s estimates, another 10 countries could attain middle-income status by 2025 if current growth trends continue.

“Translated into real money terms using purchasing power parity (PPP), these gains are modest: the average increase in income for people in low-income African countries is just US$567. But this is a striking turnaround from the sustained decline in average income over the two previous decades. If the average growth for 2000ÔÇô2012 continues, average incomes in Africa will double over the next 22 years. Between 1980 and 2000, they contracted by over 20 per cent,” the report says.

Some of its sections would be of particular to Botswana which, for the past five years, has been engaged in an ambitious effort to eradicate poverty.

“On average, 1 percentage point of growth in Africa reduces poverty by 0.69 per cent, or around one-third of the global average. Put differently, Africa has to grow three times as fast to achieve the same poverty reduction impact. Changing this ratio is critical if Africa is to have any prospect of eradicating poverty by 2030,” the report says.

In the year that the poverty eradication campaign started (2009), Botswana’s GDP growth rate was negative 7.8 percent – at least according to the African Development Bank figures. The following year, it rebounded to a healthy 8.6 percent but then dropped to 6.1 percent in 2011, 4.2 percent in 2012 and marginally rose to 5.4 percent last year.

Published every year in May, the Africa Progress Report is the flagship publication of the Africa Progress Panel and draws on the best research and analysis available on Africa. Among others, the Panel members include former United Secretary General, Kofi Annan; former Nigerian president, Olusegun Obasanjo; former South African first lady, Graca Machel; Co-Chairman of the Board, Council on Foreign Relations and former Secretary of the United States Treasury, Robert Rubin; and, former Managing Director of the International Monetary Fund, Michel Camdessus. Through the report, the Panel makes viable, policy recommendations for African policy makers as well as for international partners and civil society organizations.

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