Leaner means fitter.

Botswana's planners appear to have learnt harsh but invaluable lessons from the slump of 1992. Although the country has now recovered from the downturn, there is no room for complacency. Anver Versi reviews the efforts being made to begin a new era of development, one based on efficiency and productivity rather than dependence on mineral wealth.

Mr Quill Hermans, the Governor of the Bank of Botswana is not given to mincing his words. During the annual general meeting of the Botswana Confederation of Commerce, Industry and Manpower (BOCCIM) in June, he told a rapt audience: "We are running out of time. Feelings of deep disillusionment, frustration, disempowerment and anger have spread throughout Botswana, especially in the urban areas. We cannot afford more riots and urban unrest. As South Africa gets its act together, Botswana is in danger of becoming marginalised."

In most African countries, the scale of the riots he was referring to would be deemed too insignificant to merit special attention; in Botswana, any manifestation of public displeasure constitutes a major social disaster. This gives some indication of the social and political harmony this model African nation has enjoyed over almost three decades of independence.

But Mr Hermans was giving robust articulation to a deep seated concern among many Batswana that the hour of radical change is at hand. Indeed, Mr Festus Mogae, the Vice-President and Minister of Finance and Development, stated as strongly if in more measured terms when he presented his budget in February, that Botswana had already embarked on a period of change. (Please see interview with Mr Mogae).

The Batswana are a conservative, prudent and cautious people. Their single minded dedication to building a thriving, modern economy based on the judicious use of mineral revenues has lifted them, in less than two decades, from the ranks of the poorest countries in Africa to become one of the top three performers (South Africa included) in the continent.

The formula for success was classically simple: Exploit minerals under the ground to create a modern infrastructure above it and fully develop human capacity. They wrote in an incomes policy to ensure that all their citizens would share in the spoils of development. The state undertook to provide services such as transport, water and telecommunications directly to the public and set up a series of parastatals to expand productive capacity.

Quality of leadership

What set Botswana apart from other African countries which had followed the same model was the quality of its leadership. The country was a genuine democracy from the word go; it was singularly free of corruption and strict public accountability was maintained.

The results were spectacular, even on a global level. Throughout the 1980s, Botswana averaged an annual growth of 12%, the government produced budget surpluses year after year and foreign reserves grew apace.

Today, even after the severe downturn from 1991 to 1993, Botswana is still a shining example of developing country success. Consider the following: Botswana enjoys a per capita GNP of $2,800 (the second highest in Africa after oil-rich Gabon); the lowest teacher/pupil ratio in Africa; the highest percentage of children who complete primary schooling (87%) in Africa; the highest secondary school enrolment (47%) in Africa; one of the highest percentages of graduates in Africa; the highest level of adult literacy in Africa; one of the lowest ratios of people per doctor (6,960) on the continent; the second lowest maternal mortality in Africa and the third lowest incidence of infant mortality on the continent.

Botswana is also Africa's biggest producer of diamonds and the third biggest (after Australia and Russia) in the world. It has foreign reserves of around $4.5bn and interest payments on these reserves form the country's second largest earner after diamonds. Botswana's cattle-to-human ratio, at roughly two to one is one of the highest in the world. It possesses more kilometres of tarred roads per capita than anywhere else and, ironically, receives more international aid per capita than any other African country.

However, Botswana's unique run of success came to a sudden halt at the beginning of the 1990s. With its economy intimately intertwined with that of the world, Botswana suffered heavily from the effects of the global recession. To add to its woes, in 1992 came the worst drought in living memory. This decimated cattle herds and laid to waste traditional food crops.

Export of diamonds, which is the foundation on which the economy is built, was scaled down by as much as 25% at one time by the Central Selling Organisation as Russian and Angolan gems began to flood the market.

The world market for Botswana's soda ash, copper and nickel collapsed.

Closer to home, a series of devaluations in Zimbabwe virtually put paid to what had been a thriving textiles export industry. Better, cheaper products from South Africa began to crowd out locally made items from shop shelves and in the panicky climate, private and public construction projects were either shelved or drastically scaled down.

Growth stuttered, stumbled and in 1992/93, fell to -0.3% reaching the nadir of Botswana's fortunes in modern times. The human cost manifested itself in a sharp drop in living standards and a sharp rise in unemployment. Between 1986 and 1991, employment opportunities increased by an average of 11.9% per annum. Between 1991 and 1993, employment grew by only 0.8%, well below the population growth rate of 3.5%.

Current estimates indicate that 21% of the workforce is unemployed. The severe drought of 1992, compounded by a less severe one last year means that larger numbers than usual have been making the familiar trek from the countryside to seek employment in the cities, adding to the numbers of the jobless.

The political fallout of the downturn was immediate. During the general elections in October 1994, the ruling Botswana Democratic Party of President Sir Quett Ketumile Masire found itself being strongly challenged by the opposition Botswana National Front (BNF) particularly in those urban areas where unemployment has hit the hardest. These included Gaborone, Selebi-Phikwe (where the mines have been laying off workers for quite some time), Lobatse (the base of the Botswana Meat Commission) and the town of Kanye. In the event, the BNF won an unprecedented 13 of the 34 parliamentay seats, gaining ten seats from the Government.

For the first time since independence, the Government became the target of ferocious attacks in the press and on the floor of the Assembly. A messy demonstration by students demanding swifter action from the Government to apprehend the murderer of a fellow student, soon gathered many others, disaffected with life.

Writing on the wall

The writing on the wall was clear enough: Unless there was a radical change in policy, a change that led to the swift creation of thousands of new jobs, the dreaded spectre of social and political unrest might yet haunt the normally peaceful streets of Botswana.

To its credit, the Government neither tried to hide the incidents nor did it attempt to downplay them. Instead, it has given new urgency to its liberalisation measures and has embarked on a process of increased productivity in all sectors, not least in Government.

Mr Quill Hermans, Governor of the Bank of Botswana has been demanding nothing short of a back to the drawing board approach: "It is difficult to escape the conclusion that the old model which served Botswana so well in so many ways, must tee discarded, or at least radically re-tooled. It has served its purpose. Now something new must be put in its place," he says.

Mr Festus Mogae, the Minister of Finance, agrees that a new approach is required, but wants a more measured response. (Please see Mr Mogae's interview). His first task was to halt the decline in growth and see positive growth re-established.

Indeed, GDP grew by 4.1% in 1994, slightly above the population growth rate and per capita income increased from $2,300 in 1992/93 to $2,700 in 1993/ 94. Most sectors recorded positive growth rates, with business, utility, trade and hotel services achieving the highest rates, although manufacturing continued to decline.

Yet it is in manufacturing that Botswana holds the most hope of creating employment opportunities. But, as Mr Hermans points out: "Manufacturing remains a very small, fragile and largely foreign owned sector of the economy, heavily dependent on government grants under the Financial Assistance Programme". He wants more Batswana to be involved in the sector and he wants the private sector to play the leading role in development.

Manufacturing received a massive boost early this year when its tax rate was cut from 35 to 15%, part of an overall cut in company taxes making Botswana's current tax rate one of the lowest in the region. The Government has also hinted that it is examining the possibility of privatising key utilities, such as power, water and telecommunications in order to make them more competitive price wise.

Mr Mogae has already warned public enterprises to shape up or face being sold off. Over the years, the Government has sunk some 3bn Pula into public enterprises and it is now demanding greater productivity and efficiency. "Public enterprises should not expect to be subsidised. Above all, good management will be asked to prove itself and one important measure of that proof will be the rate of return which each enterprise is able to earn on the assets entrusted to its management". A Public Enterprises Monitoring Unit has already been set up to act as Ombudsman.

A sustained campaign to attract foreign investors has been largely successful. The US multinational, Owens Corning is investing $6m to add a second production line for its manufacturing activities and providing a pipeline from Gaborone to Lobatse. Among other American companies seriously looking at investment possibilities in Botswana are Amoco, Betchel Power Corporation, General Motors, M&W Pump, World-Space and American Breeders Service.

The Government has been streamlining its investment regulations including the issuing of licences, granting of work and residence permits and allocation of industrial real estate.

Jobs prospects improve

A number of major construction projects, including the giant North-South Water Carrier project which will involve the building of a dam on the Motloutse River and a 360km pipeline to Gaborone; the construction of the Trans-Kgalagadi Road, the resumption of several private and public housing projects and the general upturn of the economy, will provide sufficient new jobs over the next few years to soak up a good part of the unemployed labour force.

However, in his budget speech, Mr Mogae warned of the dangers of short term policies. He stated that given the outlook of the global diamond market, it was unlikely that the heady growth of the 1980s could be replicated.

Instead, it was now time to squeeze that extra ounce of productivity from the country's resources. "Increase in productivity must be demonstrated by a rising level of goods and services produced per pula of expenditure," he says.

The downturn, distressing as it might have been for individuals, has nevertheless been something of a blessing. It has spelt out the new global realities that face Botswana. The country's political and business leadership appear to have already taken stock of the new situation and a new, leaner, more competitive environment is already being put into place.

The question is, can the general population, used to decades of plenty, now transform themselves into the hungry, fierce entrepreneurs the country needs?

RELATED ARTICLE: BOTSWANA TOWNS

Maun

(Population 32,000)

Maun styles itself the `Safari Capital fo Botswana', and it most certainly is that. The tourist sector does dominate, and the offices of virtually all the tour operators serving the Okavango Delta and surrounding areas are located here in Maun.

Most tourists don't actually spend much time in the town however; they arrive, usually by air, and are transferred within an hour or two either to land transport (four-wheel-drive vehicles predominate) or to a connectinting flight to take them on up to an airstrip in the Delta.

Hertz and Holiday Car Rentals have facilities in Maun, but Maun is the first city to achieve any size that is not near the railway line. International Air Botswana flights now link Maun directly to Windhoek and to Johannesburg without the necessity of landing in Gaborone. Direct domestic flights link Maun to gaborone and to the new airport at Kasane, close to the point where the borders of Botswana, Namibia, Zambia and Zimbabwe meet, and a gateway to nearby Victoria Falls. Tour operators certainly offer a variety of safari options. There are air charter services, helicopter hire services, aerial surveys and photographic safaris. Visitors can also rent a houseboat, or they can buy or hire a full range of camping equipment.

It may be that tourism accounts for Maun's rapid growth in recent years, but it would be wrong to imply that tourism is the only economic activity in the town. The Botswana Meat Commission operates an abattoir here which serves the whole of the northern Botswana livestock region. Other companies do quarrying, silk screening and clothing manufacture.