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Botswana Lesotho COUNTRY REPORT Botswana Lesotho The full publishing schedule for Country Reports is now available on our website at http://www.eiu.com/schedule. 1st quarter 2000 The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The EIU delivers its information in four ways: through subscription products ranging from newsletters to annual reference works; through specific research reports, whether for general release or for particular clients; through electronic publishing; and by organising conferences and roundtables. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent St The Economist Building 25/F, Dah Sing Financial Centre London 111 West 57th Street 108 Gloucester Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1000 Tel: (1.212) 554 0600 Tel: (852) 2802 7288 Fax: (44.20) 7499 9767 Fax: (1.212) 586 1181/2 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: http://www.eiu.com Electronic delivery EIU Electronic New York: Lou Celi or Lisa Hennessey Tel: (1.212) 554 0600 Fax: (1.212) 586 0248 London: Jeremy Eagle Tel: (44.20) 7830 1183 Fax: (44.20) 7830 1023 This publication is available on the following electronic and other media: Online databases NewsEdge Corporation (US) Microfilm FT Profile (UK) Tel: (1.718) 229 3000 World Microfilms Publications Tel: (44.20) 7825 8000 (UK) DIALOG (US) CD-ROM Tel: (44.20) 7266 2202 Tel: (1.415) 254 7000 The Dialog Corporation (US) LEXIS-NEXIS (US) SilverPlatter (US) Tel: (1.800) 227 4908 M.A.I.D/Profound (UK) Tel: (44.20) 7930 6900 Copyright © 2000 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author's and the publisher's ability. However, the EIU does not accept responsibility for any loss arising from reliance on it. ISSN 1356-4021 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Redhouse Press Ltd, Unit 151, Dartford Trade Park, Dartford, Kent DA1 1QB, UK 1 Contents 2 Summary Botswana 5 Political structure 6 Economic structure 7 Outlook for 2000–01 11 The political scene 15 Economic policy 17 The domestic economy 18 Mining 19 Agriculture 19 Infrastructure 20 Financial services 21 Foreign trade and payments Lesotho 22 Political structure 23 Economic structure 24 Outlook for 2000-01 26 The political scene 29 Economic policy 30 The domestic economy 33 Quarterly indicators and trade data List of tables 7 Botswana: forecast summary 11 Botswana: distribution of seats in parliament 13 Botswana: summary of the October 1999 cabinet reshuffle 15 Botswana: Transparency International corruption rankings,1999 16 Botswana: money supply 17 Botswana: diamond results 30 Lesotho: consumer prices 31 Lesotho: the incidence of AIDS in Southern Africa 31 Lesotho: gross domestic product by type of activity 33 Botswana: quarterly indicators of economic activity 33 Lesotho: quarterly indicators of economic activity 34 Botswana: structure of trade EIU Country Report 1st quarter 2000 © The Economist Intelligence Unit Limited 1999 2 34 Botswana: direction of trade 35 Lesotho: structure of exports, fob 35 Lesotho: direction of trade 35 Botswana and Lesotho: UK trade List of figures 10 Botswana: gross domestic product 10 Botswana: regional real exchange rates 11 Botswana: distribution of seats in parliament 17 Botswana: world diamond sales 18 Botswana: inflation 20 Botswana: share index 29 Lesotho: Basotho migrant mine workers in South Africa 31 Lesotho: gross domestic product and gross national product EIU Country Report 1st quarter 2000 © The Economist Intelligence Unit Limited 1999 3 December 20th 1999 Summary 1st quarter 2000 Botswana Outlook for 2000-01 Following the BDP’s election victory in October 1999, political stability will be maintained, with factional tensions in the ruling party subsiding and President Mogae’s position in the BDP continuing to strengthen. Guided by political expediency, the government will move slowly with the privatisation programme. Fiscal policy will remain prudent, with higher diamond sales enabling a return to budget surpluses. Real GDP growth is expected to ease off to 6.2% in 2000 and to 5.4% in 2001, following reduced growth in the minerals sector and a slowdown in construction activity. Inflation will gradually decline, with the pula remaining stable. Export earnings will rise in line with growing world demand for diamonds, and the current-account surplus will widen to $680m in 2000 and to $700m in 2001. The political scene In the October 1999 national election a split opposition and widespread voter apathy assisted Mr Mogae to retain his presidency and for the BDP to increase its parliamentary majority. In a cabinet reshuffle following the election Mr Mogae’s strengthened his core support within the party and shifted the power base away from factional politics. Disputes over water rights will continue with Namibia. Economic policy Botswana has been ranked as the least corrupt country in Sub-Saharan Africa by Transparency International and has recently concluded its Article IV consultation with the IMF. The government appears to have agreed to an increase in the minimum wage. The domestic economy • Year-on-year inflation rose to 7.6% in September, in reaction to rising private-sector wages and increased domestic fuel prices and water rates. • Drought in much of the country has hurt the agricultural sector and most districts have reported cereals deficits. • Diamond exports are rising in line with a recovery in demand. The Orapa diamond mine expansion is now complete. This will boost Botswana’s diamond production by an estimated 30%. Foreign trade and There have been new initiatives towards export diversification, primarily in the payments textiles and garments sector. At the same time, the government is making moves to arrest capital flight and encourage the development of Botswana’s capital markets, with the possibility of introducing new regulations in the pensions and insurance industries. EIU Country Report 1st quarter 2000 © The Economist Intelligence Unit Limited 1999 4 Lesotho Outlook for 2000-01 The delayed signing of the election agreement has finally taken place in December 1999, calling for an election to be held by June 2000. The growth in the number of parliamentary seats will slow down the legislative process. Major investment initiatives will await a peaceful outcome to the election. The election is likely to go ahead relatively smoothly, with a victory for the ruling LCD almost certain, albeit with a reduced majority. Decisive economic policy initiatives will be required to boost the economy, particularly as govern- ment revenue is under threat from the free-trade agreement concluded between the EU and South Africa and alterations to the Southern African Customs Union agreement. The political scene The reformed electoral model to be used in 2000 has been agreed, with 80 seats awarded on a first-past-the-post basis and 50 seats awarded according to pro- portional representation. However, official agreement on the exact timetable for the electoral process has been delayed. The Interim Political Authority is hoping to conduct a country-wide voter education campaign. A new parliamentary speaker has been appointed and the country’s Director of Public Prosecution has resigned. Economic policy Major shifts in economic policy are unlikely until after the election. Although there has been some recovery in the economy since the political unrest of 1998, few investment projects have been initiated, and the tapering off of the LHWDP project and the fall in migrant employment in South African mines has held back growth. Free standard one primary education is to be introduced from January 2000. Economic trends Domestic inflation is falling in tandem with South African rates. New data show that real GDP fell by 8.6% between 1997 and 1998. The Letsend diamond mine will resume production in 2000. The sale of Lesotho Bank has been completed. Editor: Tim Ruffer All queries: Tel: (44.20) 7830 1007 Fax: (44.20) 7830 1023 Next report: Our next Country Report will be published in April EIU Country Report 1st quarter 2000 © The Economist Intelligence Unit Limited 1999 Botswana 5 Botswana Political structure Official name Republic of Botswana Form of state Unitary republic Legal system Roman-Dutch law; cases in rural areas are heard by customary courts National legislature National Assembly consisting of 40 members elected by universal suffrage, the president, the attorney-general and four members appointed by the president. A 15-member House of Chiefs advises on tribal matters National elections October 1999 (legislative); next election due by October 2004 (legislative) Head of state President, chosen by the National Assembly National
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