In economic terms, Botswana is very much one of Africa’s success stories, reflecting both the country’s natural mineral wealth and a political and social stability which far outweighs that of its neighbours. In the 30-year period following independence in 1966, the economic growth rate averaged just over 9% a year, marking the economy out as the fastest growing in the world, according to the World Bank. By the turn of the century, the growth rate had stabilised at around 7% a year, and the country had foreign reserves of some US$6.3 billion. The annual rate of inflation is between 7% and 8%.
Fundamental to this growth has been the exploitation of Botswana’s diamond mines, although other growth sectors have been in telecommunications and financial services. Attempts to stimulate the manufacturing sector, however, have proved less successful, with the closure in 2000 of the Hyundai assembly plant, which exported vehicles to South Africa. Although manufacturing represents only 5% of the country’s GDP, the closure represented a loss to the economy of US$144 million per year, or nearly half of the total manufacturing output.
The Botswanan government is all too conscious of the country’s narrow revenue base and continues to seek means to diversify this. A recent initiative is the introduction in 2001 of value added tax (VAT), while privatisation of state-owned companies such as the Botswana Telecommunications Corporation (BTC) and Air Botswana could also bring significant income into the treasury coffers.
In recent years, this rosy picture has been heavily overshadowed by the threat of disease. Botswana has one of the highest HIV/AIDs levels in the world, currently affecting over a third of the population, and resulting in an average life expectancy of just 40 years.