An analysis of the Development State Model in Botswana

Submitted to
Dr. Sheila Siar

In partial fulfillment
Of the requirements of the course
SPECTO5 (Section V24)

Submitted by:
Dan Abad
Tiffany Dee
Iseul Hwang
Aldo Manzano
Dan Mejes
Mark Lozano
Tim Ramos
Dana Uson

Submitted on
March 21, 2015

Table of Contents

I.

Overview

p. 3

II.

Pre-colonial Botswana

III.

Botswana under the British colonial rule

IV.

Post-colonial transformation

- The critical role of leadership

- Successfully implemented policy

- The diamond rush

10

- Discussion of some implications and criticisms

11

V.

Discussion

12

VI.

Conclusions

13

I.

Introduction
When Botswana became independent from British colonial rule in 1967, it was classified as one of

the poorest countries in the world. Since then, however, Botswana has come to be one of the strongest
economies in the African region, and one of the highest-growth countries in the world. Throughout 19801990, for instance, Gross Domestic Product (GDP) of Botswana grew at an annual average rate of 12% at
constant market prices, while per capita income registered an annual average rate of 5% (Tsie, 1996). The
country is presently classified as an upper-middle-income country with an estimated GNI per capita of US
$5,900 in 2006 (Hillbom, 2008).
Ushering in economic growth in the country was focus on the development of the cattle industry,
and also the development of the mining industry has generated a surplus of capital for the nation which has
contributed greatly to the development of Botswana as a whole. Despite these deficiencies, the
development of Botswana is largely considered a success story. More than the efficiency of these sectors,
however, it was the set of institutions that allowed Botswana to take off from its initial state of poverty.
Since independence, its bureaucratic and political elites have pursued a series of soundly-executed policies
calculated to promote economic growth and development, and in the process have acquired a
developmental orientation (Tsie, 1996).
It is interesting to note that the Botswana state is perhaps the only African country which has the
characteristics of a developmental state. Majority of the success of the country lies in the aforementioned
soundless of its institutions, but also in the way it has been shaped by history. Pre-colonial Botswana, for
instance, already was more progressive in terms of democratic and inclusive political practices. During the
colonial era, meanwhile, the minimal involvement and intervention of the British allowed the country to
preserve many of these practices and traditional industries, which were made to flourish come the postcolonial era.
This paper thus aims to delve into the pre-colonial and colonial structures and traditions of
Botswana in light of its influence on development of the country. It also seeks to examines the critical role
of institutions in the early years of Botswanas independence in allowing it to grow into the remarkable
African economy it is today.
II.

Pre-colonial Botswana
In order to fully assess the success of the development of Botswana following its independence in

1967 until the present day, it is vital to first examine the countrys geographical and political development
in the pre-colonial era, as well as the customs and traditions which have survived and aided in its growth
3

today. The people of Botswana, referred to as Batswana or the Tswana, previously occupied a large area in
Southern Africa which, according to Maundeni (2012), is estimated to be almost the size of France or
roughly 640,000 km2. This area was divided into multiple independent state kingdoms which were
constantly carrying the burden of internal conflict and the risk of invaders. The threat of invasion and
internal conflict ultimately led to the fall of majority of the pre-colonial kingdoms in the area. In addition,
historical accounts also show that some of the kingdoms that did not succumb to conflict simply separated
or broke apart, by way of tradition or migration.
A number of the fallen state kingdoms were able to reorganize and rebuild. The success of these
states lies mostly in the location in which they rebuilt their capitals and cities. These locations were
characterized by the accessibility of game and the moderate conditions for raising cattle and other
livestock, the ease of access to bodies of water, and also geography that would provide war-time advantage
such as the presence of surrounding hills (Maundeni, 2012). The fact that these newly-risen states were
located next to or in the proximity of bodies of water, particularly rivers, was especially important as it
allowed the people to survive droughts and other disasters. Over time, several of these independent states
merged and grew together as cities overlapped.
The pre-colonial local government allowed and even encouraged various people or aliens to move
into the capital and into other prefectures of the state (Beaulier, 2003). This was justified as a means to
promote political unity and to further promote economic growth. Unity was further forged through the
inter-marriage of chieftains families, or of the royals with women from ethnic populations. The various
social classes were also heavily invested in their own work and stature, and there was little internal conflict
despite the fact that forms of discrimination may have been present.
The Tswana were headed by a chief who was well-respected by the people who decided on
how to allocate land and also spearheaded negotiations with other states and tribes for both economic and
peace-keeping purposes. As early as then, there were democratic practices such as the kgotla which was
the equivalent of a town hall meeting, which gathered all the men of the village and served as an avenue
for them to complain about certain things they did not find appropriate in their state, and to give advice the
current chief. According to Schapera (1967), as cited in Beaulier (2003), it was because of the practice of
the kgotla which was unique to the Tswana that the chief was viewed almost as an equal to the people.
The strongest industry at this time was the cattle industry, which was one of the regions main
drivers of economic growth. One reason for the success of the cattle industry is that unlike elsewhere in
Africa where communal ownership is the norm, the chiefs of the Tswana tribes allowed private ownership
of cattle farms (Beaulier, 2003). In fact, the chiefs themselves controlled a large percentage of the cattle
4

industry, and it was for this reason of protecting their private interests in the business that trade and
economic policy was devised in such a way that it would benefit the industry ultimately for the
chieftains own benefit but consequently also to the benefit of other private cattle owners and the Tswana
economy.
Problems once again built when the threat of invasion became more frequent. The land borders of
modern-day Botswana were defined by constant conflict with the Zulu group, which constantly launched
invasions of the nation. Though they were mostly unsuccessful, their conflict created clear divides between
the Tswana and the neighboring ethnic tribes (Beaulier, 2003).
III.

Botswana under the British Colonial rule

It was during this time on heavy conflict that one of the Tswana chiefs approached the British

government for protection aid against the Zulu and the Boers (other invaders). The request was initially
denied by the British due to their want to maintain more diplomatic relations. Sometime later, the Germans
occupied what is now the country of Namibia, and the British finally agreed to a partnership with the
Tswana, for fear that the Germans would also occupy the land of the Tswana and thus block the Britishs
main passageway into Northern Africa.
The Tswana was then placed under British control in the year 1885.When the area was occupied
by the British, it was given the name Bechuanaland and was divided into two parts: the northern
Bechuanaland Protectorate and the southern British Bechuanaland, the latter now being part of present-day
South Africa. It is important to note that because the British were too focused on the governance and
development of other colonies such as India, it did not place too much attention on the Bechuanaland
protectorate, believing it would not have benefited them either way due to the lack of resources of the
region (Beaulier, 2003). The British governance of Bechuanaland thus was focused not on exploiting
resources nor on upgrading infrastructure, but rather on improving military efficiency of the locals to make
them less susceptible to attacks and invasions from neighboring tribes and also (hypothetically) the
Germans.
Because of this, much of the Tswanas pre-colonial culture and tradition was preserved. One the
manifestations of this is the continuing tradition of the kgotla, which came to be referred to as council
meetings. The local business of cattle also continued to thrive, still under the former chiefs (Tsie, 1996).
It should be noted, however, the growth of the Bechuanaland protectorate during the British colonial rule
thus allowed a sort of economic disparity to manifest, in favor of the class of the chiefs and other
traditional aristocrats who controlled most of the cattle. In addition to the class of chiefs, the class of

academics or teachers and other local government officials came to have control over the drilling and
allocation of boreholes across the protectorate favored regions of the protectorate were thus given the
benefit of more access to deep well water.
This does not discount that fact that the British still did in fact have some influence over the
Tswana. While it does not show in their culture, the British influence has particularly lasted in the legal
code, with the Bechuanaland protectorate and also modern-day Botswana adopting the British
parliamentary system and common law code (Beaulier, 2003).
British rule over the protectorate generally did not last very long. Dissent for the colonizers among
the Tswana grew when their favored chief, Seretse Khama, was exiled after he studied in England and
ended up marrying a white woman. The British and also the predominantly white population of South
Africa and the southern British Bechuanaland were appalled by the incident as they considered interracial
marriage taboo. Khamas exile created unrest in the Bechuanaland Protectorate, and ruined Britains
original plans of combining Bechuanaland with South Africa. Not wanting to complicated matters further,
independence of the Bechuanaland protectorate renamed to Botswana was declared in 1965.
IV.

Post-colonial transformation
Since its independence, Botswana has since risen from being one of the poorest nations to one of

the most high-growth countries in the world. The transformation is due in most part to the strong influence
of the early post-colonial leaders, the soundness of the policies implemented during this time, and also on
the shift in the major industry focus from cattle-rearing to mining.
The critical role of leadership
Before examining the post-independence policies implemented and their corresponding effects, it
is necessary to understand the nature of the leadership in Botswana during this critical stage of
development. Emphasis will be placed on the countrys first two elected presidents, Khama and his
successor Quett Masire, and particular aspects about their decision-making.
Khamas rise to leadership prior to independence was a result of his lineage, his forefathers being
part of the nobility or class of chiefs during the pre-colonial and colonial era. Upon his return to Botswana
from exile in England after the declaration of independence, he was voted as the first president of the
country, a post which he served until his death in 1980 (Encyclopdia Britannica, 2015). The decisions
made by Khama during his rule can be attributed to the fact that he was educated in England in Fort Hare
University where he picked up values which were anti-apartheid or anti-discrimination, and he

additionally pursued law school which, because of its emphasis on British common law, allowed him to
develop a market-centric development goal (Beaulier, 2003). Because of this, the development of
Botswana after independence was capitalist or market-centric, rather than socialist as it was in other
newly-freed African nations.
Khama strictly adhered to policies that vouched for non-discrimination, and believed that it was in
the countrys best interests to not be involved in foreign affairs (Parsons, Henderson & Tlao, 1995). The
non-discrimination policies of Botswana encouraged both racial tolerance and freedom of speech among
the people. The practice of the kgotlas, for example, while not formally retained, was preserved in that
people were encouraged to speak their minds about both the good and bad they saw in the government.
Such a practice allowed Khamas regime to determine what other improvements and reforms were needed
(Beaulier, 2003). In addition, because of the fair treatment of all people regardless of race and religion in
Botswana, many migrants and refugees from other African nations moved into the country, most of whom
were skilled in various crafts and further boosted the economic performance of the country. The countrys
non-involvement in foreign affairs, meanwhile, allowed it to gain the promise of aid and protection from
developed countries. An important aspect of Khamas leadership was that he was open to engaging in trade
and commerce with Westerners an idea which at the time of their independence was unique to Botswana,
given the stigma that the whites still had with other former colonies in Africa and that fiscal policies
such as taxes were generally conducive to economic growth.
After Khama passed away, his former deputy in the Botswana Democratic Party (BDP) Masire
was elected as the new president of the country. Masire was responsible for furthering the policies initiated
by Khama. His term was further characterized by heightened focus on strengthening ties with regional and
international organizations (Parsons, Henderson & Tlao, 1995).
Upon emerging from colonization, Botswana was still highly dependent on financial aid from
Britain. For this reason, these first two presidents of Botswana worked towards financial independence.
This was achieved in 1972 when ties of financial aid with Britain were formally and permanently cut
following the shift in economic activity to mining (after the discovery of diamonds in Botswana) (Beaulier,
2003). The two also encouraged Foreign Direct Investments (FDIs) to the country as opposed to simply
financial aid. Both were also wary of aid from both the World Bank and the International Monetary Fund
(IMF) thus, instead of appealing for development aid from these international institutions, the Batswana
leaders instead regarded them in advisory roles.
Their terms, particularly Masires, however, were not without problems. Some issues included
high unemployment rates, a widening gap between the rich and the poor, and other international concerns.
7

As will be explained in the forthcoming sessions, however, corresponding policies were implemented in
order to address these (Encyclopdia Britannica, 2015).
Both Khama and Masire were described as leaders with far-sighted vision (Robinson, Acemolgu
& Johnson, 2003). This kind of thinking enabled them and their governments to engage in adequate longterm policy and project planning (Parsons, Henderson & Tlao, 1995).
Successfully implemented policy
To better understand the effects of post-colonial policies, it is necessary to paint a picture of what
the Batswana society was like as it emerged from colonialism. Majority of the population remained to be
in poverty, with only a small percentage of the population controlling most of the wealth. This wealth drew
mainly from cattle production, which was a long-standing business adequate to the countrys geographical
qualities. According to Tsie (1996), the general consensus on Batswana rural households is that majority of
them do not own cattle, or if at all, have inadequate numbers to enable them to plough. To compound
matters, the mineral boom of the 1980s following the discovery of diamonds made agricultural labor less
attractive than formal sector employment. Consequently, shortage of agricultural labor has emerged as
another constraint on crop production. The first implication of this is the emergence of cattle-farming-elite,
which results actors of society being left out of the benefits of economic growth.
The major strategies implemented in Botswana were focused on fostering more inclusive
economic growth. The first emerged from the natural social interaction within the Batswana society in the
cattle production sector. Mafisa, or cattle loaning by cattle owners with a surplus of resources to
commoners with less resources, was in practice. Through this, poorer farmers were able to participate in
the industry, while the landowners were able to gain the support of the lower classes (Taylor, 2003)2.
Moreover, enforced property rights meant that there was flexibility and control over its use. This created a
stronger link between cattle owners and others who felt excluded from the growth experienced by the
cattle industry, a form of benevolent paternalism (Tsie, 1996).
The second strategy for inclusion stems from the creation of the National Development Bank
(NDB) in 1964 and the Botswana Development Enterprises. Access to credit was specifically catalyzed via
NDB, where cattle herders were able to obtain credit to drill more boreholes, acquire freehold farms, and
buy existing state-owned boreholes and more breeding stock of cattle (Tsie, 1996). These programs
favored cattle accumulators in large reserves such as the Bakwena Reserve (now Kweneng District),
Bangwato Reserve (now Central District), Batawana Reserve (now North-West District) and Bangwaketse
Reserve (now Southern District).

According to Tsie (1996), it was specifically the class of cattle accumulators, both black and
white, which took control of the state at independence under Khama. It was Khama who gradually and
informally drew these cattle accumulators together into a powerful coalition that emerged as the BDP in
1962 in response to the militant BPP, which had been formed in 1960 by opposition Kgalemang Motsese,
Motsamai Mpho, and Philip Matante (Taylor, 2003)1. This indicates that the crucial capitalists of
Bostswana banded together in the form of the BDP in order to implement policies that propagated more
economic opportunities in Botswana.
The dominance of the BDP in post-colonial politics is largely the result of its ability to build a
political alliance consisting of the most powerful members of the capitalist class of cattle accumulators
who, for the most of the post-colonial period, shared common values regarding domestic economic policy
and foreign policy. In addition, the BDP also managed to enlist the support of the lower classes (Tsie,
1996). The presence of a unifying party and the legislation of policies and propagation of access to credit
contribute largely to the growth of the cattle industry in Botswana.
According to Tsie (1996), the BDP Government removed discriminatory colonial legislation in
commerce and provided credit and extension services to local businessmen and farmers through the NDB
and the Botswana Development Enterprises (BEDU). It encouraged foreign capital to invest in Botswana,
mainly through the Botswana Development Corporation (BDC) and the Trade and Investment Promotion
Agency housed in the Ministry of Commerce and Industry. Since 1982, it has subsidized small-, medium-,
and large-scale manufacturing firms in the form of a Financial Assistance Policy (FAP), including largescale arable farming in the Pandamatenga area.
Third, the Financial Assistance Program (FAP) redistributed the revenues generated by the mining
industry to new ventures and expansions in the private sector (Curry Jr. 1986). Since 1982, FAP has
subsidized everything from small to large-scale manufacturing firms. Large scale arable farming in the
Pandamatenga area was also financed through FAP (Curry Jr. 1986).
Fourth, land reform policies were also drafted and implemented, the most prominent of which is
the Arable Land Development Program (ALDEP). According to Curry Jr. (1986), the goals of ALDEP are
to increase production to achieve self-sufficiency, raise rural incomes, and create employment, which is
achieved in multiple stages. Assistance is first extended to farmers in order for them to adopt improved
farming methods based on techniques such as row planting. The next would be that target-based subsidies
were provided, wherein those who need animals are extended credit in order to purchase them, and other
complementary agricultural subsidies such as increased access to water resources were also extended.
Lastly, the price of agricultural output was increased in order to encourage farmers to produce more. It
9

should be noted, however, this policy had little effect during drought, and as such, many farmers who
acquired their capital on credit, had a high frequency of delinquency.
To aid in the equitable distribution of land, Tribal Land Grazing Policies (TLGP) were also
implemented. These policies regulated the amount of farm animals allowed on certain portions of land in
order to prevent overgrazing and encouraged cooperation between farmers (Curry Jr. 1986). This increased
the sustainability of the cattle industry in Botswana. Generally, the combination of good social interaction
in the Batswana society, the creation of strong institutions, the presence of FAP and land development
policy were beneficial to the economy of Botswana. This not only strengthened the ability of capitalists to
accumulate wealth, but also extended opportunities to those living in rural areas.
The fifth major strategy is the implementation of sound policies in terms of public-private
partnerships which contributed greatly in allowing Botswana in extracting wealth from its resources,
despite initial deficiencies in capital (Taylor, 2003)2. From 1977 onwards the contribution of diamond
exports to foreign exchange earnings and government revenue surpassed that of beef exports. The
commissioning of the Jwaneng diamond mine in 1982 further reinforced this structural change in
Botswanas economy from one dominated by beef exports to a diamond-dependent one.
The diamond rush
The openness of the post-colonial regime to foreign investors ushered in a wave of investment
inflow. One particular sector which enjoyed growth from private and government investment alike was the
minerals or mining sector, which started to boom in the 1970s. It was during this time that inspectors from
the international mining giant De Beers discovered that Botswana housed stores of diamonds (Nocera,
2008). The discovery of the diamond mines allowed Botswana to shift from an agriculture-based
particularly cattle intensive economy into one of the worlds largest diamond and mineral exporters, with
the mining industry of Botswana presently accounting for roughly 40% of GDP and over 50% of
government revenues.
De Beers was allowed to operate in Botswana under the company Debswana, which is a jointventure between De Beers and the government of Botswana. Other foreign mining companies have since
entered the country in order to participate in operations. The robustness of the mining industry in
Botswana has further encouraged more private investment into the industry, and also into the development
of infrastructure in Botswana for mining and transportation purposes. In this sense, the industry can be
held responsible for the predominantly export-led economic growth of the country from the 1980s onwards
(Jordaan & Eita, 2009).

10

One of the primary reasons behind the success of the industry lies in the Khamas fiscal policy
approach. Miners in Botswana were taxed a standard 10%, a rate which was held constant for many years
(Beaulier, 2003). The stability in policy gave both foreign operators and investors confidence in the
stability of the economy, while the low rate encouraged them to further pursue operations (Auty, 2001).
Moderated taxes also proved to be a key deterrent to tax evasion as well as corruption in the sector and in
the government as a whole. Apart from diamonds, Botswana was found to have stores of gold, copper, and
nickel. As with the diamond industry, investors and mine operators were well-regulated and monitored.
Large coal deposits were also found in the country. These key mineral operations account for much of the
growth of the country even until today.
Discussion of some implications and criticisms
The success of the cattle and mining industries in Botswana lead to the emergence of preferential
financial treatment for these industries, which create some downsides for the economy (Makgetla, 1982).
While these industries generated a surplus in capital of about 67 million Pula, it is seen that majority of
these funds were not reinvested in other industries. Cattle and mining were perceived to be safe
investments, and as a result, banks and other financial institutions did not want to risk their resources on
financing other riskier industries. Therefore, it became harder to develop other industries due to the
shortage of capital extended to them. This can be seen through the distribution of credit in Botswana with
mining, cattle and agriculture, and manufacturing receiving 38%, 21% and 5% respectively (Makgetla,
1982).
Criticism is still extended on the basis that the development of the economy is not as inclusive as it
ought to be, but rather export-biased with mining and cattle being the leading industries (Hill, 1991). More
troubling is the fact that in a small country with an economy dominated by a valuable natural resource,
growth usually has few linkages to other aspects of the economy and society, unless there is active
government involvement to substitute stagnating sectors (Hillbom, 2008).
Evidence of this can be seen when taking a look at the mining industry. Even if its contribution to
the economy is large, it employs only 4% of labor and has not encouraged technological advance
(Hillbom, 2008). This indicates that while the economic development of Botswana has been pretty
successful, there is misguided potential for further economic growth due to the lack of interaction between
the mining and agricultural industry to the industrializing industry.
It was precisely because of this that not long after minerals began to be exploited, one of the goals
set by the government for the country was to diversify economic activity. Khama and Masire recognized

11

the need to source income and investment from sectors other than mining, knowing that resources were
finite and that mineral values had the tendency to fluctuate in the global market (Beaulier, 2003). At
present, foreign investment and institutional management continue to be highly encouraged in Botswana,
and this has led to the slight decline in the share of the mining industry in its GDP, while there has been a
slow but steady increase in the GDP share of non-mining sectors (Robinson, Acemoglu & Johnson, 2003).
Some of the policies implemented include the abolition of strict foreign exchange controls and foreign
ownership bans, and also on lowering corporate tax rates.
V.

Conclusion
The success of Botswana in ushering in economic growth lies not in the implementation of one or

two major policies, but rather on the collection of factors across history which have ultimately made the
atmosphere in the country conducive to economic growth. In the pre-colonial era, the Tswana were
politically organized and experience relatively inclusive growth with few instances of discrimination. At
this time, the cattle industry had already started to grow, and because cattle was largely controlled by the
upper class, there was a vested interest in protecting the industry, which inevitably also profited the rest of
the economy. During the colonial period under the British, life continued almost as usual, what with
minimal interference from the British, save for influence in legal matters and in the development of the
countrys military two things which also, in a way, turned out to be for the better of the country. It should
further be noted that it was very lucky that the British, during their occupation, did not think to look into
the natural resources of the country, else these would no doubt have been exploited by the colonizers.
After achieving independence, institutions that were set in place aimed to achieve inclusiveness in
the countrys economic growth. This included land reform, financial assistance, and other development
programs. The establishment of agencies such as the NDB, BEDU, and BDC, was also important in
facilitating, regulating, and monitoring the implementation of these programs. It was the agricultural
sector, through cattle herding, and the mining industry that continued to drive Botswanas economic
growth, with economic policies working to adequately entice foreign investors into the country for the
continued development of these sectors and other industries as well.
Even more important, still, is the countrys good governance, without which the above described
institutions would not have been set in place. The success of their leaders particularly Khama and Masire
and their governments lies in these institutions, as well as in the relatively corruption-free government
they have established, which continues to work to the advantage of Botswana by creating a suitable
business climate and by further encouraging the entry of foreign investors.

12

VI.

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