Institutions. Botswana case study

1. Institutions. Botswana case study African Economic Development Renata Serra – Feb 13th 2007

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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)

8. 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

9. 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

10. 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