Lewis reveals the keys to economic success in sub-Saharan Africa in lecture

If you have ever pondered which country has had the world’s fastest growing economy for the last thirty-five years, Botswana would certainly not have been your first guess.

Last Thursday at the Center for Developmental Economics (CDE), Stephen R. Lewis, professor and president emeritus at Carleton College and former professor at Williams, revealed the formula for the sub-Saharan nation’s economic success.

Botswana’s development is nothing short of extraordinary. Before it gained independence from the British Commonwealth in 1966, this completely land-locked country of half a million people was surrounded by white-ruler regimes.

According to Lewis, Botswana had a “record of total neglect in economic development.” Part of this reality can be explained by the severe droughts that the region experiences once every several years. As a result, in 1966, Botswana had fewer than three miles of paved roads and ranked amongst the world’s twenty poorest countries.

All that changed after independence from the British Commonwealth. In 1995, the country’s population had grown to 1.6 million. GDP per capita, which was at $345 in 1965 and which then constituted about 60 percent of the GDP of Sub-Saharan Africa (SSA), grew to $3,100 – six times as much as that of other counties in the region.

Botswana’s GDP per capita growth rate was at the staggering 7.1 percent during these three decades – certainly the highest in the world. What is more, these growth rates do not reflect on the fact that Botswana is a diamond-rich country as 6.7 percent of these annual growth rates are due to non-mining activities.

For the last thirty years, Botswana has developed the best health system in SSA, which has led to a low infant mortality rate. The country invested heavily in education, and universal secondary education is on its way. Botswana possesses a remarkable employment record with a 7.4 percent job growth rate since 1965. Roads per capita now are more than in the entire SSA. Democratic government has brought freedom of the press and civil liberties, and the perceived corruption index of the country is considered to be one of the lowest not only in SSA but in part of the industrialized world as well.

Yet there is no secret prescription that Botswana followed. It was a mix of luck and excellent management on the part of the government. In 1966, Botswana received half of its budget from Britain and was the only country in the world whose capital was located outside its state borders, in neighboring South Africa.

An independent source of capital was perhaps the single most important goal immediately after ousting the British. A customs union was also created, which brought revenues to the country.

In 1972, the country finally achieved financial independence from Britain. Shortly thereafter, Botswana succeeded in attracting a large number of international donors from Europe, Japan, the U.S. and even the African Development Bank and the Arab Development Bank. “Basically, all major donor programs in the world ended up taking part in Botswana,” Lewis said.

Part of the capital was invested in copper-nickel and diamond mines. Imports were almost exclusively dedicated to building an extensive socio-physical infrastructure in the country.

As a result, in the early 1980s, when the country was hit by one of the most severe droughts ever, there was no recorded loss of life in Botswana. The Botswana government had already adopted a highly elaborate contingency planning scheme. A key variable in it was the fact that Botswana dealt with all its donors bilaterally, meaning with no intermediaries. At the same time, the government had to make sure it had several projects on hand all the time because this was the only way it could secure stable and substantial financial backing.

Many grants were given to small businesses, further stimulating an economy in which urbanization was emerging as a major new development. The Batswana (which is the term used to describe the people of Botswana) success story would certainly not have been conceivable had it not been for the people. Historically, the country’s culture has always been one of consultation, one in which anybody could speak up. This reality proved to be highly conducive for reaching consensus when making decisions and later eased the transition of Botswana to a parliamentary democracy. “The government was a bunch of farmers,” Lewis said, soon adding that all were able and dedicated men and women, who were firmly committed to democracy.

The ideology of the Batswana has been a compelling belief in non-racialism, economic development, and democracy. There was no tribalism present and the former practice of placing mineral rights in the hands of the tribes was modified by transferring them to the government. Yet, neither capitalism nor socialism, nor any other ideology thrived in Botswana. “Either it works or it doesn’t. That’s it!” Lewis said.

“We’re not gonna pick something simply because it has a label,” he said, in reference to the Botswana people. The country has a well-educated electorate – the essence of democracy.

Another “hallmark of Botswana success” has been the practice of politicians, civil servants, and economists working tightly together. There has been an enormous concerted effort at educating the politicians. When in 1976 Botswana adopted its own currency, it could conduct its own monetary and fiscal policies. Politicians gradually became “great at negotiating.” This is how they arranged for the customs union settlement, all the donor contracts, and of the diamond mine’s exploitation. Lewis spoke about how politicians would move from seminar to seminar, always managing to “get the job done.” This central piece of Batswana government has proved to be integral to navigating times of crisis.

There certainly are challenges to this success story, one being a three-decade long legacy of sustained elevated growth of GDP and employment. “Expectations are very high,” Lewis said. Dealing with the grand success has become very difficult, since the political landscape has changed almost completely. In addition, the diamond drive is slowing down and there are also major regional changes.

After the lecture, Lewis was asked about the future of Botswana in light of the HIV/AIDS crisis that has blighted the country in the past five years. Lewis said that the latest numbers indicate a drop in infection rates, although this news should hardly be viewed as a source of relief. “Nobody in the government had an idea of how bad and how quickly this could develop,” he said.

Unfortunately, there is widespread reluctance to address the problem of the disease. Optimistically, the government will be able to employ its skills at solving crises, as it has done in the past. AIDS, however, could prove to be the first challenge with which the government is unequipped to deal.