Mauritius and Botswana - proven strategies for economic success in Africa

The conflict raging in the Democratic Republic of Congo where it is thought that between 3 and 4 million people have been killed in the last 5 years has more recently become a news focus in the international media. Unfortunately the situation there is not unusual or unique in Africa. It is not hard to remember the tragedies in Rwanda in the early 1990s and the more recent Liberian battles. Many African nations are struggling to economically develop and have serious issues of poverty, AIDS and corruption, a fusion of factors which help war or tribal conflicts to easily ignite. However there are models of development success where stability and peace have flourished under economic growth. The UN Economic Commission for Africa recently published its 2003 report on Africa highlighting such successes. This article focuses on Mauritius and Botswana in an attempt to identify some of the key strategies undertaken which may be applicable to nations such as the Democratic Republic of Congo (DRC) who have recently taken steps towards peace and are once again re-determining their future.

Before investigating this, it is important to remember the widescale influence of colonialism that has deeply affected the continent since the 16th Century. From building institutions and infrastructure to creating slavery and raping the land of treasures, the European legacy is still marking todays African landscape.

Perhaps the single most dramatic continent-wide influence happened at the Berlin Conference in 1885 which settled various land claims made by European countries, and later became known as the scramble for Africa. Lines were drawn in appropriate places on the map of the continent, taking into account the land claims and natural physical features. The countries of Africa were created and imperialistic European nations were appointed rule or power in various countries. Needless to say this division of Africa did not take into consideration the desires of the native population. Countries were created in a land which was and still is heavily tribal. People of different ethnicity and origin were plumped together in a 'nation', a consequence which continually rumbles the continent today.

Putting history aside and focusing on how and what is being done today, the latest economic report on Africa by the UN Economic Commission for Africa provides an interesting insight into the overall economic progression of nations. It ranks countries according to macroeconomic performance, poverty reduction and institution building policies. The top countries have lower interest rates, budget deficits and foreign debt.

It is inline with the Millenium Development Goals for Africa. According to the report published in July 2003, the top 5 countries are Botswana South Africa Mauritius Namibia Tunisia Source: UNECA

Millennium Development Goals Eradicate extreme poverty and hunger Achieve universal primary education Promote gender equality and empower women Reduce child mortality Improve maternal health Combat HIV/AIDS, malaria and other diseases Ensure environmental stability Develop a global partnership for development

The Democratic Republic of Congo was the least successful country in the report. How can the DRC progress and develop its economic potential?

Before examining our first case study Mauritius, the third most successful country in Africa according to the study, it is useful to review some basic information about the DRC.

The Democratic Republic of Congo has a number of issues which are unique to its country. Firstly it is a vast nation, the third largest in Africa. It constitutes 905,328 square miles and is divided into nine regions. It has a population of approximately 46 million, 40% of this population live in urban areas. There are 200 different ethnic groups in the DRC. Life expectancy is approximately 46 years. Such a wide range of diversity over such a large expanse of area represents a huge challenge for governing the DRC. However this is not an insurmountable problem there are many positives within the country including vast amounts of mineral wealth in particular copper, oil and diamonds, literacy is over 70% and primary education is compulsory, although schools have been vastly disrupted during the five year civil war. A ceasefire is now in place in the Congo and a power-sharing government has been created.

Mauritius is very different from the DRC but it can still provide general guidances for economic development. Mauritius is an island off the west coast of Africa making up approximately 718 square miles, with a population of 1 million, 42% of which live in urban areas with only 4 different major ethnic groups.

According to the UNECA report, although the overall GDP of Mauritius has declined since 2001, Mauritius is still achieving economic success through its sound economic policies and commitment. Part of the reason for the recent decline in GDP to a 4% growth rate has been due to difficult external circumstances such as the decline of the world economy and the aftermath of September 11th which affected tourism one of the top industries in Mauritius. On top of this cyclone Dina hit Mauritius in January 2002 causing widescale damage and disruption to another cornerstone industry, sugar exportation.

As mentioned in the UNECA report, in the last twenty years, Mauritius has earned a deserved reputation for economic success. The philosophy behind their development has traditionally been to concentrate on three main areas of their economy, sugar, tourism and export processing zones (EPZ). They designed a strict trade regime whereby exports were encouraged but importation was largely restricted. The local people in Mauritius had principle control over the EPZs rather than foreign investors, and EPZs worked under special conditions compared to the rest of the economy which included tax benefits and wage and employment differentials. Mauritius allowed the export industry to survive where so many others have failed through maintaining stable inflation and exchange rates and keeping monetary deficits low. The economy also flourished through its beneficial trade agreements with the US and European markets and through its ethnic diversity which attracted investment from the Far East.

In response to changing economic conditions, Mauritius is now creating a new milestone by undertaking a government led project to help diversify its economy into the service sector focusing primarily on financial services, information and communications technology. The government is heavily investing in the project to ensure people have appropriate skills, the country has appropriate infrastructure and that there are suitable investment opportunities. Despite concerns that heavy government investment would upset the financial stability of Mauritius or further its deficit, the government has maintained an effective balance and stayed within the international fiscal standards of 25% expenditure of GDP. For further information on the strategies and success of Mauritius, visit chapter eight of the 2003 UNECA report.

Although Mauritius is vastly different from the Democratic Republic of Congo in both its size, location, ethnic diversity and many other factors, there are general lessons that can be learnt from Mauritius. These include.

• Political stability - Mauritius initially had the potential to splinter with its ethnic diversity but managed to avoid this. The DRC has a massive task on its hands but proportional representation of its ethnic groups maybe the only way forward. No voice, no peace.
• Local ownership - Mauritius did not allow foreign ownership to dictate trade and development. They kept local people and companies in the decision-making forum which has allowed appropriate choices to be made to suit Mauritius
• Selecting key economies for development - Originally Mauritius chose sugar, EPZs and tourism to concentrate on and has since made efforts to diversify into other chosen industries. The DRC has a wealth of resources which could help bring much needed economic gain to the DRC. However effective strategies need to be in place under strong leadership which prevent the natural turn towards greed and corruption or equally as damaging, the filtering of profits into the international community rather that remaining in the DRC.
• Economic strategies suitable to the present economic and financial climate
• Financial discipline.

The second country to be examined is Botswana. It heads the results of the Economic Commission. Three out of the top five countries are in southern Africa. What is being done successfully there but has not been replicated in the rest of Africa?

In the past 35 years Botswana has had the highest rate of per-capita growth not only in Africa but in the world. It is rich in diamonds and these have undoubtedly helped develop the economy but other factors have also had to become cornerstones in what has been dubbed by some as Africa's economic miracle.

Since independence from Britain in 1966, Botswana has managed to maintain consistent political stability. Robin Sherbourne a former economic adviser to the Namibian and British governments suggests that the success can be much attributed to the sound economic policies that were put in place, in a consistent direction and due to the understanding and commitment to economics of Botswana's leaders.
Source: The Namibian

In March 2003, President Mogae of Botswana gave a speech at the United Nations University entitled, "Botswana's success story- Overcoming the Challenges of Development". In his speech, he began by explaining Botswana's situation in 1966 when they gained independence, stating that the country was in a "bleak" state with, only six kilometers of tarred roads, three secondary schools, no university, and limited economic activities. According to Mogae the fundamentals that built Botswana's success were,

• Strong leaders with vision and commitment to multi-party democracy, free enterprise, human rights and law
• The above helped develop peace and stability and encouraged private foreign investment
• It also fostered partnerships with other countries such as Canada and the UK who provided technical assistance to help Botswana make good use of resources
• 5 year national development plans were created to build key infrastructure such as roads, hospitals, schools etc.
• Manufacturing industries and modern agricultural practices were encouraged
• Botswana maintained economic and trade relations with its minority-ruled neighbours whilst pressurising negotiations for liberalisation of the countries
• Wealth from diamonds were used to provide vital services such as education, medical facilities, clean water, roads and housing.
  Source: Botswana's Success Story - Overcoming the Challenges of Development

Mogae also mentioned, that Botswana is no utopia and still faces severe problems particularly with AIDS where it is has the highest infection rate in the world at a staggering 38.8%, but also with economic diversification, animal diseases, water scarcity, environmental degradation and low food production. However it has developed from having nothing to leading the continent with its economy. The basic steps to success outlined by Mogae are all readily transferable to the Democratic Republic of Congo.

In the paper, An African Success Story by Daron Acemoglu, Simon Johnson, James A. Robinson, their extensive research into Botswana's development proposed that fundamental to Botswanas success were good institutions, called "institutions of private property. They note that like the DRC, Botswana was blessed with diamonds but this did not lead to fights for wealth and civil wars because of the existence of good institutions. They argue that these institutes provide stability, protect the property rights of investors and ensure that the political elites were both bound and accountable, and that the cross-section of society was represented and able to participate.

In the paper, Acemoglu, Johnson and Robinson (2001) argue that the reasons why Botswana had good institutions were because historically Botswana's institutions represented the entire population and that British colonialism had little affect on such structures. They assert that after independence the institutions remained because it was economically suited the elite in Botswana. Diamonds created enough rents that groups did not wish to challenge the pattern of growth and development.

The paper also highlights the significant decision-making and leadership of Presidents Khama and Masire. After negotiating power from the British, they designed a strong central state which helped eliminate fights for power between differing tribal groups. For example the Chieftancy Act of 1965 meant the eight tribal chiefs no real power over legislation and the President had the power to remove a chief if necessary.

Also of great importance was the 1967 Mines and Minerals Act which changed sub-soil mineral rights to that of the national government rather than to the tribes. They negotiated trade agreements with South Africa like the Customs Union with South Africa in 1969 which gave the government a greater share of the revenues from the diamonds trade.

On independence President Khama did not immediately replace all public service personnel with indigenous people unlike most other African nations, but instead used ex-pats, international consultants and advisors until suitable qualified Batswana's were available. The Ministry of Finance and Development Planning created and implemented development plans from independence which focused on infrastructure, health and education. These plans first concentrated on rural development in particular cattle ranching which constituted the most important economic group. They tapped into the EU market and developed infrastructure which increased wealth. The government had strong ties with the cattleranchers and so too benefitted from the developments. The government introduced their own currency and pegged it to the South African Rand. The reinvestment into society ensured that the benefits of the economic success trickled down into society and helped stability. When there was tension and concern, the government were quick to amend and meet the requirements of the people.
Source: An African Success Story

So from the extensive study of Botwanas development by Acemoglu, Johnson and Robinson (2001), some important milestones that could be an aid to nations such as the DRC include,

• The importance of good institution building
• Representation of all parties at some level
• Strong central state
• Reinvestment of wealth into the nation's infrastructure
• Make minerals the property of the national government
• Choose strong leaders with an understanding of economics
• Make and use appropriate development plans to create economic growth
• Utilize experts advice and seek consultation from various sections of the international community
• Develop favorable trade agreements where possible

In conclusion, countries like the Democratic Republic of Congo have a long road ahead of them but their tasks are not insurmountable. Thirty years ago Mauritius and Botswana were poor and there was little expectation or hope for economic success. Much can be learnt from history.

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Sources/Further information

Development Goals
UN Economic Report on Africa 2003
An African Success Story
The Nambian
Botswana's success story - overcoming the challenges of development

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