Botswana has avoided the curse of most resource-abundant economies and maintained growth consistent with its resources, the International Monetary Fund (IMF) said on Tuesday.
“Botswana ranks well above the countries of its sub-Saharan region and the middle-income countries in all aspects of governance and compares favourably with some high-income developed countries,” the IMF said in a research paper.
It suggested that Botswana had maintained growth because of its good regulation and powerful anti-corruption policies.
On a scale of one to zero, with one indicating the best possible governance and zero the worst, Botswana scored an average 0.70. This against an average sub-Saharan score of 0.36. Middle-income countries had an average score of 0.56 and high-income developed countries an average of 0.68.
The IMF said in Botswana there was an implicit rule that all mineral revenue be used to finance “investment expenditure”. This was defined as development expenditure and recurrent spending on education and health care. Other recurrent spending was funded from non-mineral revenues.
Botswana is the world’s largest producer of diamonds. Diamond revenues make up 70 percent of its export revenues, 50 percent of government revenues and 40 percent of gross domestic product.
It is also aggressively promoting investment in copper-nickel operations and more diamond mines. A gold mine came on stream recently.
Diamond mining company, De Beers, will over the next two years move elements of its sorting and aggregation operations to the Botswana capital of Gaborone where six sorting factories are already open.
The IMF warned that the country must accelerate its diversification away from a reliance on resource revenues.
“However, good governance alone may not be the answer. Many resource-dependent counties – including Botswana – are often not economically diversified,” said the IMF.
Capital intensive mining had made Botswana lag behind in terms of employment and social development. Less than one-and-a-half percent of Botswana’s workforce was employed by the mining industry and unemployment was rising.
“It is clear that, in addition to good governance, supporting policies,
including structural reforms, are necessary to ensure that natural resource benefits are effectively channelled into sustainable growth and social development,” the IMF said. – Sapa