ECONOMIC DEVELOPMENT IN BOTSWANA

DEFINITION OF TERMS AND CONCEPTS

-Economy: A system by which a country’s resources are organized
-Development: It is a positive change in the society
-Gross National product (GNP): The total value of all goods and services
produced in a country in a year plus those coming from outside the country
-Gross Domestic Product (GDP): The total value of all goods and services
produced in a country in a year (home-produced wealth excluding income from
abroad)
-Corruption: Illegal behavior by officials or people in positions of power
-Dual society: A nation which is divided into rich and poor classes
-Domestic market: The market within the country
-Sustainable Development: It refers to the exploitation of resources wisely
which must be continued for future generations to come
-Foreign Aid: Are resources given from one country to another one in the form of
money, materials or human resources
-Tied Aid: Assistance that comes with certain conditions or strings attached
-Donor country: A country which gives aid
-Recipient country: A country which receives aid
-Humanitarian: Kindness to people eg. Food for famine relief
-Protectionism/Trade restrictions: Is done to protect local industries from stiff
competitions from MNC`s
-Quota: A limit on the quantity of something
-Foreign Exchange: Is foreign currency or money from other countries
-Devaluation of Currency: It means the making of the local currency weaker in
comparison to other currencies
-Privatization: The selling of government owned corporations to private buyers
-Debt: The money owed to a financial institution
-Structural Adjustment Programme (SAP): It is the reduction of government
spending and increasing government income by increasing exports
-Economic Development: It is more about improving the quality of life of
citizens by producing and distributing resources of the country
-Economic Growth: It deals with increasing the economic base or GDP of a
country
-Economic Sector: A business controlled by the government or private sector
-Economic Diversification: The development of a wide variety of industries such
as mining, tourism, manufacturing, agriculture, trade etc

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DIFFERENT EXAMPLES OF ECONOMIC SECTORS IN BOTSWANA
-Tourism, Manufacturing, Fishing, Mining, Trade, Agriculture, Communication,
Forestry and Quarrying

ECONOMIC SECTORS OR STAGES OF PRODUCTION IN BOTSWANA

a) Primary sector/industry
These are economic activities which extract raw materials from land or sea eg.
Mining, agriculture, forestry, quarrying and fishing

Challenges
-Raw products-Since raw materials do not have value added to them they
provide low financial returns or money
-Price fluctuations-Prices of raw materials are always changing (up and down)
-Perishables-Some raw materials from agriculture and forestry are seasonal and
get rotten easily e.g. Crops, fruits, phane etc

b) Secondary sector/industry
Is the processing and manufacturing of raw materials into finished products e.g.
Canning of beef, making of vehicles, making of shoes etc

Challenges
-Lack of markets-The market for finished products in Botswana is too small
while the outside markets has a lot of competition from Multi National
Corporations (MNC`s)
-Costly Utilities- Water, accommodation and power/electricity are too expensive
-Inferior quality goods-Some manufactured goods from Botswana are of low
quality

c) Tertiary sector/industry
It provides services to the consumers e.g. teaching, nursing, policing, tourism,
banking, insurance etc.

Challenges
-Lack of qualified professionals-There is shortage of skilled personnel in the
country to provide services in different fields
-Poor Service delivery-Sometimes service delivery is affected by industrial actions
and other factors like strikes, go-slow, sick leaves etc
-De-motivation-Low morale can affect productivity at work places e.g. promotions
-Corruption-It undermines economic development of the country e.g. bribery
-Lack of resources-Most government departments are faced with shortage of
resources especially e.g. transport, medication etc

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FACTORS THAT CONTRIBUTE TO ECONOMIC DEVELOPMENT
-Infrastructure: Good roads, telecommunications, power, factory shells makes
production to be easy and effective
-Capital/Financial assistance: Money and machinery are needed to for goods
and services and payment of workers
-Education: Skilled labour is needed in the production of quality goods and
services
-Utilities: Provision of cheap serviced land, water, electricity and accommodation
-Natural resources/Raw materials: There are needed in order to start any
economic activity e.g. water, minerals, plants, animals etc.
-Technology: Appropriate technology is needed to produce more goods and
services within a certain period of time e.g. Computers
-Markets: Availability of ready markets for goods and services can bring more
money
-Political stability: Democracy and good governance enhance effective
production of goods and services without fear or favour
-Reduction of import duties and taxes: to attract foreign investors to produce
more goods and services
-Entrepreneurship: Good management of businesses to produce more goods
and services to satisfy the country

THE IMPORTANCE OF THE ECONOMIC SECTORS

-Create employment: Job opportunities are found in the mines
- Trade: Brings foreign exchange through exportation of goods
-Promote country’ image: Helps in putting the country into the international
arena so as to attract foreign investors
-Generate Revenue: Income goes to the government for development e.g.
Taxation
-Social responsibility: That is helping the local communities with some
donations and developments to improve their lives
-Improve lifestyles: They improve the living standards of people eg. Health and
education
- Develop infrastructure: Good roads and sports facilities in the country improve
the welfare of Batswana
-Technology: They provide advanced technology that meet global standards in
the form communication and entertainment services e.g. Telecoms and recreation
-Education: They offer scholarships to locals in order to develop human
resources and improve productivity
-Sphere of influence: Promotes the development of other industries e.g.
Mmamabula Thermal electricity industry developed due to the mining of coal
from Morupule

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1. MINING: Involves the extraction of raw materials from underground
-Job creation-Creates employment for a lot of people
-Projects-Leads to development of infrastructure like roads and buildings
-Improves Trade-Brings foreign exchange from exportation e.g. dollars
-Creates Revenue-It’s a source of income through royalties and taxes
-Education & Training-Develops human resources by training more
people for various fields
-Out-reach projects-Promotes social responsibility through donations and
Building of some infrastructure
Challenges: -Shortage of skilled personnel-It results in the recruitment of
expensive foreigners
-Lack of capital- To buy expensive machinery for the industry
-Lack of Ownership-Many mining companies are owned by
foreigners who repatriate their profits to their home countries
-No control of world prices-Fluctuation of world market prices
results in low profits from sales
-Environmental degradation-Mines are prone to environmental
problems like pollution and floods
-Economic Meltdown-Global economic recession results in decline
in global demand for products

Solutions: -Education-Train more Batswana in specialized

-Economic Diversification-Invest profits from mining to develop other
industries
-Bargaining-Renegotiate terms of loans with foreign banks
-Protect ecosystem-Investment by companies in rehabilitating damaged
environment
-Environmental Policy-Legislation for protection of the environment
-Stockpiling-reserving minerals and selling them when world prices go
up

2. AGRICULTURE: The practice of growing of crops and rearing of livestock for

subsistence and commercial purposes
-Food Security-Provides people with food such as beef, milk,
cereals, beans etc.
-Create Revenue-A source of income as farmers can sell some of
their products
-Create Jobs-Creates employment for people such as farm managers,
herd boys etc.
-Provide Natural Resources-It provides raw materials for other
industries like skins use leather products such as bags and
jackets and cotton for clothes
-Source of Revenue-Source of income for government through
taxation of farmers foreign exchange
-Education-Trains more people for different economic sectors

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 Challenges: -Self Reliance-Batswana are not self-sufficient in food production
and therefore import more food from other countries
-Unfavourable climate conditions-Unreliable, seasonal and
unevenly distributed rainfall, extreme temperatures which kill
crops and livestock
-Unfair Trade-Competition for markets results in collapse of some
industries
-Shortage of Markets-Lack of markets or distance to markets and
low market prices affect the businesses
- Attitude towards agriculture-lack of youth involvement in
agriculture sector
-Infertile Soils-Poor soils which are mostly sandy and saline
-Lack of Scientific Methods of farming-Poor methods of farming
result in low production
-Natural Disasters-Pests and diseases result in losses or damage to
farm products
-Lack of capital-Lack of money to buy farm inputs such as fertilizers
and pesticides
-Scarce Resources-Conflict in land uses result in limited land for
agricultural purposes

Solutions: -Training-Provide extension services like teaching farmers modern

methods of farming by agricultural demonstrators
-Credit Schemes-Give loans to farmers to buy machinery, fertilizers
and pesticides
-Commercialization of Agriculture-Encourage more people to go into
Farming for business
-Marketing-Improve farmers’ access to markets such as BMC and
BAMB
-Poverty Eradication Policy-Establishment of schemes to assist
farmers e.g. ISPAAD (Integrated Support for Arable Agricultural
Development)

3. TOURISM: the business of providing holiday makers with services such as

accommodation and recreational activities
-Create Jobs-Creates employment for people such as tour guides, hotel
workers etc.
-Provides market- Local people who traditional crafts like
Baskets and sculptures to tourists
-Promote trade-Brings foreign exchange from tourists
-Projects implementation-Leads to the development of infrastructure
like roads and hotels
-Enhances Environmental Management-Encourages conservation of
natural and cultural resources

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 Challenges: -High maintenance costs-Needs expensive and well maintained
facilities such as hotels and transport e.g. vehicles
-Poaching illegal killing of endangered species which may lead to
their extinction
-Environmental damage-Too many tourists can cause soil erosion
,veld fires and littering
-Unreliability-It’s seasonal as most tourists come around Christmas
Time and in winter
-Very competitive-There is a lot of competition from neighbouring
countries with more developed tourist attractions

Solutions: -Develops projects-Improve infrastructure like accommodation and

roads
-Improve holiday destinations-Promote tourist attractions in urban
centers
-Empowerment-Encourage more Batswana to be involved in the
tourism industry
-Diversify tourism-Promote culture based tourism e.g. cultural village
and music
-Environmental protection-Employ more personnel to guard against
poaching e.g.Special game wardens
-Marketing-More advertisement of Botswana’ tourism abroad

4. MANUFACTURING: The process of turning raw materials into finished

Products
-Create jobs-Creates employment for people working in various
industries
-Improves Trade-Brings foreign exchange since some industries
are export-oriented
-Import Substitution-Reduces the costs of importing some
goods since they are manufactured goods
-Creates Revenue-Generates income which can be used to
improve infrastructure
-Education-Increases skills development through in-service
training

Challenges: -Poor infrastructure- Our roads are bad which makes it difficult to
transport goods and services to and from the markets
-Small Domestic market- Our small population cannot consume all
manufactured goods
-Costly utilities- Expensive water and electricity prices increases
production costs and then prices for finished goods
-Lack of skilled labour-Few Batswana have managerial skills as such
more companies are owned by foreigners
-Unfair competition- Well-established foreign companies brings
quality goods at low prices due their low production costs

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 -Lack of capital- Shortage of money to establish industries and buy
equipment and merchandise (stock)
-Global economic crisis-Recession has diminished the global appetite
for manufactured goods.

Solutions: Negotiations--Expanding the market by entering into some trade

agreements with other countries
-Good Infrastructure-Improvement of infrastructure by the
government e.g. roads
-Trade Restrictions—Our infant domestic companies should be
protected from giant multi-national corporations
-Credit schemes-Provision of loans and grants to encourage
establishment of local industries e.g. CEDA
-Subsidies-Reduction of utility costs by the state to reduce production
costs
5. TRADE & COMMUNICATIONS: This involves businesses that sell
Manufactured goods
-Create jobs-It creates employment for different people
-Improves transportation-It helps to ferry goods and services to and
from the markets
-Improves technology-Encourages quick exchange of information
-Education-Trains more people for different professions like technicians
-Develops Projects-Leads to development of infrastructure and gadgets

Challenges: -Small domestic market-Small population with a low buying power

for the goods produced locally
-Poor transport network -In remote areas there are bad roads
which affects the transportation of goods to and from the markets
-Poor business skills-Lack of managerial skills to run businesses
Effectively and efficiently
-Stiff competition-High from goods produced by rich foreign
companies
-Lack of capital-Lack of money to establish domestic companies

Solutions: -Training-Equip more Batswana with business skills

-Create Jobs-Create employment opportunities to increase the
purchasing power
-Create credit facilities-Provision of loans and grants by the
state for Batswana
-Develop projects-Improvement of infrastructure like roads and
telecommunications
-Trade restrictions-Protect infant local companies from trans-
nationals

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 THE CHALLENGES FACED BY EACH ECONOMIC SECTOR
-Economic Diversification: The sectors have a problem of diversifying the
economy because we rely much on the mining sector
- Output: Sectors are still producing goods and services in small quantities which
could not meet the demands
-World recession: In most cases industries and trade are not successful because
of price fluctuations/changes
-Brain Drain: Skilled personnel migrate to developed countries for greener
pastures ie. Better employment opportunities and higher salaries
-Globalization: There is unfair competition between Multi National
Corporations and small domestic industries for markets. Usually MNC`s produce
cheap and quality products and this forces small industries to close
-Technological changes: Sectors have to advance their technology every time in
order to produce more goods and services eg. Intermediate technology to complex
technology
-Political integration: accommodating political views that allows investment
growth
-Corruption: It enables nepotism, bribe and factionalism, these compromises
quality production of goods and services
-Diseases: Outbreak of livestock diseases affects the beef industry while
HIV/AIDS kills a lot of employees in different sectors
-Natural disasters: Frequent droughts leads to decreased water supply to all
sectors
-Privatization: They government is selling many industries to the private
companies or individuals hence employees are being retrenched

EVALUATE THE CONTRIBUTION OF EACH SECTOR TO THE ECONOMY

- Jobs: Even though economic sectors create employment there is a serous
shortage of jobs in developing countries
-Revenue: Sectors bring money for the government to develop the country but
some parts of the country are still underdeveloped
-Improve lifestyles: Sectors improve the standard of living of people but some
people are very poor or destitutes in the country
-Education: Sectors train people into different fields but a lot people are not yet
self-employed
-Diversification: Some sectors like mining and tourism contribute more money
while others like manufacturing and agriculture are not doing well
-Infrastructure: Sectors provide education, health and entertainment services but
at times the services are expensive and the poor cannot afford them e.g. private
hospitals, schools, gym rooms etc

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 POSSIBLE SOLUTIONS TO THE PROBLEMS FACED BY THE
ECONOMIC SECTORS
-Protectionism/Trade restrictions-The government to protect local infant
industries from stiff competition from Multi National Corporations (MNC`s)
-Competition: Industries should try their best to meet the Global standards so as
to produce quality goods and services
-Technology: Sectors should equip both employers and employees with the latest
technological developments eg. Information technology skills
-Trade agreements- Countries should negotiate in order to reduce brain-drain
and high exports and imports duties (tariffs).
-Provision of Serviced Land: The government should create a conducive
investment climate by providing electricity, water, accommodation, good roads,
security etc in order to attract foreign investors
-Consultation: Sectors must facilitate negotiations/dialogue between employers
and the employees in order to avoid civil strifes or industrial actions
-Political stability: For the sectors to perform well there must be a stable or
peaceful political environment in a country

HOW CORRUPTION UNDERMINES ECONOMIC DEVELOPMENT

-Diverts investments: Investors are scared away by corrupt practices and as a
result jobs would not be created
-Economic disparity: Corruption widens the gap between the rich and the poor
ie. The corrupt get richer
-Re-location and shut down: Corruption makes some industries to collapse/shut
down or relocate to corruption-free zones, because normally profits are used by
corrupt people for self enrichment or to buy out some authorities for favouritism
-De-motivates workforce: Corruption demoralizes the employees because in
some instances they are not given the benefits due for them
-Retards progress: It delays progress because corrupt officers inflate/increase
the actual time to spend on the project
-Un-procedural tendering system: Some foreign companies are given
preferential treatment in the awarding of tenders because they are always ready to
give backhanders to public officers. Some jobs are given to Ghost companies, i.e.
some foreign companies have engaged in the practice of “fronting” for jobs by
some citizens on behalf of foreign companies to win juicy tenders
-Poor workmanship: Some corrupt companies do flimsy jobs which later
require the government to renovate them within a short period of time after their
completion with supplementary funds
-Nepotism: Some incompetent people are given posts which they do not deserve
or are not trained for simply because they are friends or relatives of the employers
and thus inhibiting production and performance
-Political instability: Corrupt can breed some tribal, gender and other social
unrests and hostilities which are deterrents for economic development

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WAYS OF SUSTAINING ECONOMIC DIVERSIFICATION
-Protectionism: The government should protect our infant industries by imposing
quotas so that they do not get swallowed by giant ones like the Trans National
Corporations
-Privatization: The state should sell out some of the corporations to improve
work ethics so as to increase production
-Corrupt free practices: There should be zero tolerance for nepotism,
favouritism and bribe in order to perform better
-Technology: Employers and employees need to be equipped with the latest
technological developments or skills in order to run the business properly and
efficiently
-Agglomeration of economies: Businesses operating in the same geographical
area should network/syndicate with others so as to save more
-Sports and recreation: Development of more entertainment facilities to
promote self-employment and hence self-reliance
-Foreign Direct Investment: The government should attract foreign companies
in order to create more jobs and increase government revenue
-Infrastructural Development: improvement of roads and buildings so as to
enhance production and transportation of goods and services
-Tourism: Establishment of more tourist destinations or holiday resorts to attract
more visitors in order to earn more foreign exchange
-Commercialization of agriculture: Farmers should engage in the production of
goods for commercial purposes to improve food security
-Import Substitution: Development of manufacturing industries locally to reduce
buying from other countries
-Education and Training: people must be equipped with business management
skills so as produce effectively
-Provision of loans and grants: The government should provide credits scheme
in order to encourage more Batswana to go into businesses to promote self-
employment
*Red tape/bureaucracy-delays progress e.g. processing of work permits, trading
licensing, and tender processes
*Poor supervision-Lack of monitoring of projects funded through loans such as
Young Farmers Fund
*Fly-by-night companies-Allows for repatriation of profits by international
companies to their countries
*High crime rates-Although the government has set up DCEC corruption cases
are kept on being reported at a high rate
*Poor infrastructure-Failure to provide adequate infrastructural development
*Lack of trade restrictions-Failure to protect Batswana’s businesses e.g. selling
of fat cakes by foreign
Hawkers
*Poor business skills-Inadequate business education given to Batswana as their
businesses are more susceptible to collapse than those of foreigners
*Lack of markets-Market for local products still limited despite establishment of
BEDIA & BIIC

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THE ROLE OF STAKEHOLDERS IN PROMOTING ECONOMIC
DIVESIFICATION
a) Government
-Self-Employment: She introduced financial assistance in the form of loans and
grants for Batswana to start their own businesses eg. CEDA,
-Education: She provides education so as to train more Batswana inside and
outside Botswana in different academic fields i.e. human resource development
-Foreign Direct Investment: She is giving some incentives so as to attract
foreign companies to establish in the country eg. Tax rebates
-Mixed economy: Resources are channeled to improve other economic sectors
like tourism, manufacturing, agriculture and fishing
-Marketing: Advertises its country outside for foreign investors e.g. internet
-Privatization: She is engaged in selling some industries in order to increase her
revenue
-Provision of serviced land: Utilities should be provided at reduced costs for
infrastructural development
-Political stability: a peaceful environment because of good governance promote
economic production
-Intervention-Provision of technical assistance e.g. hiring of consultancy
-Provision of entrepreneurship: Management skills in businesses are needed in
order to run them properly
-Protectionism policy: The state should protect infant industries locally from rich
foreign companies
-Good customer care attitude: The state has introduced performance reform
programmes so as to improvement of our work ethics so as to maintain our clients

MULTI-NATIONAL CORPORATIONS (internationally owned companies)

Advantages
-Promote competitive trade: help local owned companies to meet global
standards
-Create Jobs-Create employment opportunities for the locals
-Speed up economic development- Improves citizens life styles
-Infrastructure development-Taxes gained from the MNC’s are used to
develop the country
-Provide financial assistance-Help local companies with finance to carry out
their projects e.g. commercial banks
-Provide sponsorships-They offer scholarships and in-service training to the
locals to improve them
-Enhances negotiations-Provide a platform to solve world economic crisis
like recession e.g. IMF

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 Disadvantages
-Retards citizen empowerment-Inhibit growth of citizen-owned companies
as small local businesses are swallowed by the unfair competition from
MNC’s
-Exploitation of citizens-Top posts are occupied by expatriates while locals
fill low paying jobs (exploitation of locals as MNC’s are profit-oriented)
-Control world prices-MNC’s tend to monopolize world and domestic
markets to their advantage
-Profit repatriations-Act as ‘fly by night’ companies who may skip or leave
the country after making huge profits to their mother countries
-Loss of jobs-They are associated with large scale retrenchments or loss of
employment by the locals
-Corrupt practices-They slow down the country’s citizen economic
empowerment programmes as they shield their commercial interests

b) The Youth
-Create jobs-They form their own companies and businesses with the help of the
Department of Culture and Youth
-Self reliance-They form clubs which encourages self-employment such as Boot
camps, Junior Achievement Botswana (JAB)
-Enhances cross pollination of ideas-They are involved in entertainment groups
which help them exchange ideas
-Form syndicates-Some form joint ventures to start businesses
-Training-Some educate their peers on business related matters e.g. JAB
-Voluntarism-some join some public works like special constables & ipelegeng

c) The Private sector

-High competition-Helps them to produce more and quality goods for exports
-Value for money-Desire for profit makes them to charge reasonable prices eg.
Shops
-Improves country’ image-Markets the country outside e.g. BEDIA with its
Global Expo Botswana
-Financial assistance-Provide money to the government for development through
taxes
-Provides business skills- Enhances entrepreneurial or management skills for
Batswana for human development
-Infrastructure development-Sets up industries to bring foreign exchange e.g.
manufacturing and tourism
-Promote good governance-Serves as government`s watch dog or pressure
groups on illegal activities e.g. newspapers
-Education-Provides scholarships and sponsorships for some people

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 d) Non-Governmental Organizations (NGO`s)/Parastatals
-Employment-Organizations hire people to carry out different activities
-Training-Women organizations equip women with political and entrepreneurial
skills for them to enter politics and business e.g. WAR, Emang Basadi
-Promote good governance-Serve as government watchdog to protect peoples
rights e.g. Ditshwanelo, Media
-Provide pool of skilled labour-Enhances manpower development through
sponsorships and scholarships
-Improves life styles-improve the standard of living for destitute and disabled
e.g. Red Cross
-Promote eco-tourism-Some organizations help the communities to develop
themselves through the programme of Community Based Natural Resource
Management (CBNRM) e.g. Sankoyo Development Trust

e) AID Agencies (e.g. USAID and CIDA)

-Financial assistance-Provide monetary aid in the form of grants and loans for
counties to improve their infrastructure
-Training-They provide technical aid in the form of expertise to deserving people
-Voluntarism-Assist to improve the lifestyles of the poor and disabled people e.g.
rehabilitation centers like Thuso
-Import substitution initiatives-Helps the developing countries to engage in
structural adjustment programmes so as to enhance a positive balance of trade

ASSESS THE IMPORTANCE OF GLOBAL ECONOMIC FORCES FOR

ECONOMIIC DEVELOPMENT IN BOTSWANA (GLOBALIZATION)

BENEFITS
-Foreign Direct Investment: Foreign companies would increase government
revenue through taxes but some companies repatriate their profits to their mother
countries
-Employment Creation: International companies invest in Botswana and create
jobs which help to improve the living standards of Batswana but some do pay
them little wages and make them work under bad conditions
-Infrastructure Development: Some taxes and dividends from multi national
companies are used to build schools, health centres, and roads but some
companies evade paying taxes through corruption
-Tourism and Trade: These sectors of the economy get enhanced by free trade
and movement of people but some visitors can be a national security threat
-Skilled Labour: Importing some people with the technical know how or experts
would help the country to train its people and increase production of goods and
services but some foreigner exploit Batswana
-International Markets: Locally produced goods and services can be sold at the
international markets but fluctuation of world prices results in low profits for our
exports

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 -World Trade Patterns: Botswana enjoys free trade with other countries
therefore she can gain foreign exchange and new technology from such dealings
but rich countries monopolize these trade agreements
-International Financial Institutions: Botswana gets financial assistance from
global institutions for her development but she pays back the loans at high interest
rates
-HIV/Aids: Botswana gets donations or aid from international organizations in
order to help her fight the HIV/Aids scourge but some donors have since stopped
their contributions which is now affecting the war against the disease
-Gender Equality-The empowerment of women has changed the roles of
Women as more females occupy professional jobs

CHALLENGES
-Tied Aid: In most cases developed countries give donations or aid with some
strings attached
-International Financial Institutions: When they lend money to a country, the
loan has to be repaid with high interests and the country will be pushed into debt
crisis due to negative balance of payment
-Trade imbalances: These are giant profit making companies which usually
make local industries to close down because of unfair competition and therefore a
lot of people would become unemployed
-Fly-by-night companies: Some companies come and invest in the country with
the help of the host country`s credit schemes and after accumulating a lot of
money they close down without notice leaving behind the workers stranded
-Labour Exploitation: Some companies employ Batswana and give them low
wages while the foreigners occupy top management posts with handsome
financial and fringe benefits
-Profits repatriation: These foreign direct investments take the profits back to
invest in their mother countries with strong currencies
-Global Financial Trends: They usually affect the Pula currency and the
government is therefore forced to devaluate its currency and make the goods and
services to be more expensive for Batswana this widens the gap between the rich
and the poor
-Fluctuation of Global Prices: Prices of minerals, agricultural products and fuel
keep on going up and down since Botswana does not have control over them
-Monopoly of World Markets: Goods from Botswana are out-competed by
goods which are produced by developed countries, because they are cheap and of
good quality while the market within the country is flooded with imported goods
-Botswana becomes a dumping site: The country experiences a proliferation of
cheap inferior quality goods from Asia e.g. “Difonkong” clothing and vehicles

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i) Fluctuation of market prices/world economic recessions

Effects are: -Price Fluctuations-Affects Botswana’ mineral prices and there by

leading to fewer profits
-Erodes our economic base- Reduces Botswana’ foreign reserves at
global financial institutions
-Subsidies-Leads to constant adjustments on prices of essential products
e.g.Petroleum products
-Prioritization-Leads to constant adjustments to the national
budget/budget deficit
-Loss of Jobs-Leads to retrenchments by the private sectors
ii) World financial institutions (IMF and World Bank)
Advantages/Benefits to Botswana
-Financial assistance-Provide funds (loans /grants) that speed the process of
development
-Projects implementation-Promote infrastructure development e.g. building
of roads
-Poverty eradication-Promote poverty alleviation programmes
-Education-Promote human resource training as the loans may be used to
establish schools
-Provide foreign aid-Promote temporary relief to Botswana’ economic
problems

Disadvantages/Negatives
-Debt crisis-Their loans are repaid at high interest rates which to leads to
huge debts
-Rigidity-The terms of repayments are in most cases not flexible especially
the time frame and interest rates
-Decreases wage bill-It may lead to budget deficit and probably loss of jobs
in the private sector

ii) World Trade Patterns: e.g. free trade or movement of goods

Advantages/Benefits to Botswana
-Promote trade-It enables easy access to foreign goods and services by
Batswana
-Technological advancement-It enables Batswana to get access to the latest
technology that promotes economic development
-Creates revenue-Creates more investment opportunities and employment as
a way of diversifying the economy by the MNCs

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Disadvantages/Weaknesses
-Unfair trade system-There would be high influx of substandard goods e.g.
‘Difonkong’ clothing and electronics
-Economic collapse-Shut down by locally owned companies because they are
out-competed by rich foreign businesses
-Labour exploitation-Creation of low wages for locals in the Multinational
corporations
-Enhances cross boarder crime-Creates room for cross boarder criminal
activities like terrorism, drug/human trafficking e.tc.
-Enhances money laundering-Provide room for cross boarder money
laundering and a lot of foreign currency in Botswana has been lost in the
process.

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