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