institutions. botswana case study african economic development renata serra – feb 13 th 2007
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Institutions. Botswana case study
African Economic Development
Renata Serra – Feb 13th 2007
Class Objectives
Provide some background and supplementary info for putting into context your reading for today: A I Samatar, “Translating class unity and autonomy into an
effective institution: The Botswana Meat Commission” Ch. 3 in: An African Miracle, Heinemann, Portsmouth, 1999
What are parastatals?
Public (state) enterprises Various roles in the economy, but mainly:
Purchase from producers at a previously agreed price Process, market and export the produce
Among the largest employers and investors in African economies Between ¼ and 1/3 of urban wage labor force (often
equal to numbers of government employees) Mostly dismantled with SAPs Some survive as semi-public entities
Effects in practice
Pros: Guarantee producers a price Shield producers from the volatility of international
markets Provide allied services (marketing, access to inputs,
extension) Cons:
They have tended to absorb most surplus: price paid to producers < international price
Inefficiencies and corruption Lack of integration with either informal sectors or foreign
capital Performance across SSA is very mixed
CMDT in Mali
Another success story, though in more limited ways CMDT (cotton parastatal): 60% state and 40% private
(French capital) It provides extension, access to credit/inputs, equipment
to cotton farmers It works with formal “Associations Villageoises” in local
level development initiatives SYCOV (the farmers union) is a vocal and active stake-
holder Cotton is essential component of Malian economic
growth, and poverty reduction in the cotton region The problem is not inequality within farmers but low
cotton prices and, recently, mismanagement
Resource commoditization in Botswana
What does commoditization of land, cattle and water mean?
How do traditional pastoral systems work? Access to land and water is for, and regulated by, all
community members (this is not open access!!) Access to water is key in the dry season
What are the effects of borehole development and legislation? Private property Hierarchy of users Inequality when the system becomes less inclusive
Politics in Botswana
Political and economic elites are one and the same
Cohesion and unity of the elite (aided by ethnic and linguistic homogeneity)
Political stability and formal democracy BDP always re-elected in power
Large national support for the BDP government Since political support basis is in the rural areas
(moreover also civil servants now invest in cattle)
Trade with the EU
Botswana has benefited from preferential access granted by the EU to ACP countries under the Lomé Conventions
2000-08: The Cotonou agreement is meant to phase out preferential access
Botswana is not LDC and thus cannot benefit from the EBA (“everything but arms”) initiative
What will be the impact of preferences erosion on Botswana? Possibly the impact on economic growth will be limited
but that on the rural poor quite negative greater inequality
The basis for BMC success
Chance element Timely opening of the British market for colonial beef in
the mid 1950s Skillful negotiation of EU market access Self-restraint of the political class Good management and not-for-profit style
Producers’ price reflect international prices Ability to secure the support of small farmers
Abolition of the rigid quota system and other changes State support to the sector
Subsidies, incentives, tax breaks
Questions
What are the main parastatals in your choice country and how did they perform? What are the main institutional factors relevant
to these experiences?
Do you know the “main facts” about Botswana? Remember! Always look up the main features
for any country case study
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