24 Feb 2003  Research & Ideas

In Troubled Africa, Botswana Flowers

Quick, name the country with the highest sustained growth in real output over the last forty years. The surprising answer: Botswana. Harvard Business School professor Debora L. Spar discusses the dynamics behind this little-reported story.

 

Editor's Note— Debora L. Spar's research in Africa has looked at the diamond industry, the AIDS crisis, and the democratization of South Africa since apartheid. Now she has turned her attention to Botswana, where an era of sustained growth has been under-researched. Working with assistant professor Laura Alfaro, Spar wants to find out why Botswana is emerging as a "land of potential" on a continent largely left behind in the economic boom of the 1990s.

Churchwell: How much is Botswana growing, and how does it compare to other fast-growing countries?

Spar: Botswana has been growing at an average rate of 10 percent a year for four decades—this is the highest sustained growth in real output of any country in the world.

Q: Although your research is still ongoing, what appear to be some factors contributing to the country's success?

A: Here are some bullet points to consider:

  • The country has been blessed with a very good government—committed leaders, well-trained civil servants, and a notable lack of corruption. The country's first president, Sir Seretse Khama, was exemplary in this regard.
  • The country's people are patient and tolerant. They haven't demanded too much too quickly. This has given the government time to get solid growth underway.
  • The country has invested seriously in its infrastructure, both physical and human. They have poured money into education, healthcare, water, roads, and the like.
  • Botswana has been careful to avoid the debt trap that has ensnared many other developing countries. After receiving generous amounts of aid in the early years of its development, the country weaned itself off these external flows as quickly as possible. They now maintain a comfortable cushion of foreign reserves to protect against any unforeseen shocks.
  • They had a valuable resource (diamonds) and have managed this resource extremely well. Working with De Beers, the government has consistently and strategically limited its sales of diamonds, striving to keep prices steady over the long run rather than maximizing short-term rewards.

Q: What are the opportunities for companies or countries that might want to invest in Botswana? Is it a land of opportunity?

Much of the continent still faces massive problems of disease, conflict, and resource depletion—but the world is turning its attention back to Africa.
—Debora L. Spar

A: I'd say a land, at least, of potential. Botswana is small and still relatively poor—it can't compare to the Chinese market, say, or to Brazil. But it has a very stable government, a solid financial and physical infrastructure, and a welcoming investment climate. It has vast potential as a tourist destination and could also serve as a platform for companies hoping to do business across the southern tier of Africa. With the emergence of New Partnership for Africa's Development and the African Growth and Opportunity Act, the overall climate for trade and investment in Africa is definitely improving. Botswana is well placed to be a regional commercial hub.

Q: On the larger topic of Africa, which appears to have been left behind in the globalization movement, where do you see Africa heading over the next twenty years, in terms of economic development?

A: Hopefully, the next few decades will allow Africa to make up for some of the time and prosperity it lost over the recent past. The difficulties will not disappear—much of the continent still faces massive problems of disease, conflict and resource depletion—but the world is turning its attention back to Africa, and there is renewed interest, both within the continent and outside, to begin to create new models of development. Certainly, political stability, of the type that is appearing in Uganda, Rwanda, Namibia, and elsewhere, will be a major boon for development. So will realistic development policies and a more welcome international trading environment.

Q: At HBS, will there be more Africa-focused content in the future either through fellowships or other offerings? Will HBS play an active role in the country's development?

A: We're certainly hoping to move in that direction. We have several recently completed cases on Africa and several more are in the works. We are hoping to recruit African students more aggressively and to expand our executive education offerings on the continent. Our new initiative, Making Markets Work, has already received great interest from African universities and we are looking forward to rolling out pilot projects this year in South African and Rwanda.

About the author

Cynthia Churchwell is a business information librarian at Baker Library, Harvard Business School, with a specialty in the international economy.