In-class presentation. Public-Sector Economics.

1. Growth, Trends, Prospects

2. Compiled for an in-class presentation on
Public sector Economics.
By Mothusi Tshekiso and Masego Miaka

3. As compared to other middle income countries and
countries in sub-saharan Africa, the economy of
Botswana has been growing tremendously. At the
time of independence in 1966, Botswana was one of
the poorest countries in the world but has now
moved higher to become a middle income country. It
is all attributed to stable political environment,
economic policy making and a sound management
and salvage of natural resources. (African Economic
Outlook 2012). As a result of an abundance of natural
resources and their sound management, the per
capita income has risen from $70 to $6,500 in less
than 3 decades. (Siphambe 2007)

4. In the 1980s and the 1990s, real GDP per
capita grew at about 5% per annum. In
particular, during the 1980s annual growth in
GDP per capita reached more than 7%.
However, it declined to around 3% in the
1990s
The country has had periods of sustained
high unemployment of about 20% for most of
the 1990s and early parts of the new
millennium.

5. The real growth rate for GDP was, on average,
about 15 percent for the first 20 years after
independence.
Over a longer period (1966-2008) the
average GDP growth was about 9 percent per
annum.

6. Botswana, with a population of 2,024,904
(Population and Housing Census 2011) has a
public sector that contributes 40% of all
labour force, being the largest (Fontaine
2011)
The Public sector employs over 125,000
people (Fontaine 2011)

7. 0
5
10
15
20
25
30
35
40
45
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Revenue
Expenditure

8. 2001: Government decided to offer the ARV
therapy in 2001 through the public health
system. The estimated costs of the ARV
programme at the start of 2002, was US$28
million (WHO 2004)
Health was allocated P380 million, or 7% of the
total development budget in 2002
As at 2003,the ministry was allocated P406
million, or 9% of the total development budget
showing considerable growth of the sector (GoB
2003)
As at 2010, health sector was at P2.2 billion of
recurrent expenditure (GoB 2010)

9. 10% of all labour force is employed in the
education sector (MoE, 2009)
Education occupies the largest share of the
budget 2001- P3.19bil 2009-P8.3bil
As at 2013/2014 financial year, the ministry
of education had a budget of P7.7 billion, still
the highest in the public sector (Budget
Speech 2013)

10. GDP is largely composed of mining sector as
it has for a long time contributed on average
39%
Diamond exports averaged 75% of total
annual exports over the past 10yrs, they are
Botswana’s main source of foreign exchange,.

11. Botswana, known for its diamond mines, has
the Selebi-Phikwe copper nickel deposit
which has been exploited since the 1970s
Mining accounted for 75% of national export
earnings, 42% of GDP and 48% of Government
revenues (2006/07)
Resource rents of the sector increased over
time in nominal terms from P131 million in
1980 to over P10.3 billion in 2001
Diamonds accounted for 81% of total
minerals contribution to GDP (2012)

12. Livestock is the 2nd foreign exchange earner
in the country, though livestock exports
account for only a little less than 2% of the
total export earnings (Nair 2014)
The major contributors in the sector are beef
and its by-products such as leather and
leather products.

13. The agricultural sector is dominated by the
beef industry where 50% is exported to the
E.U
The value of the domestic retail market was
US$107million
In 2010, beef exports were worth around
US$110 million to EU and others
Government expenditures on agriculture,
forestry and fisheries jumped from BWP100
million in 2000/01 to almost BWP700 million
in 2008/9…….Malope et al 2013

14. Botswana experienced a mean growth rate in
merchandise exports of 13% between2003
and 2009 (Zizhou 2009)
But this sector has declined in importance to
GDP over the years as it contributed less
than10% in 2008
Textiles markets are SACU (duty‐free) as well
as the USA (duty‐free under the Africa Growth
and Opportunity Act (AGOA)

17. 0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
1966 1976 1986 1996 2006
GDPinMillionsofPula
Major Sectoral Growth Since Independence
Agriculture
Mining
Manufacturing
Banks and Insurance
Construction

18. Recurrent expenditures have remained very
high above 60% and this is considered high
by international standards (IMF)
The government had to either reduce its
expenditure or increase its revenues
In response it
1. Outsourced low skilled activities to the
private sector
2. hiring and vacant freeze

19. Education and health care service can be
concluded as the major cause of the upward
trend of the expenditure function
The revenue curve could not keep up with the
rate of increase of expenditure because of
among other reason the volatility of the
international primary commodity market for
diamonds, beef and beef related product

20. Thank You
!!!!!!!!!!!!!!!!!!!!!!!!!!!