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Botswana Lesotho COUNTRY REPORT Botswana Lesotho 2nd quarter 1998 The Economist Intelligence Unit 15 Regent Street, 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 Street 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: (44.171) 830 1000 Tel: (1.212) 554 0600 Tel: (852) 2802 7288 Fax: (44.171) 499 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 Publishing New York: Lou Celi or Lisa Hennessey Tel: (1.212) 554 0600 Fax: (1.212) 586 0248 London: Jeremy Eagle Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 This publication is available on the following electronic and other media: Online databases Microfilm FT Profile (UK) NewsEdge Corporation (US) World Microfilms Publications (UK) Tel: (44.171) 825 8000 Tel: (1.781) 229 3000 Tel: (44.171) 266 2202 DIALOG (US) Tel: (1.415) 254 7000 CD-ROM LEXIS-NEXIS (US) The Dialog Corporation (US) Tel: (1.800) 227 4908 SilverPlatter (US) M.A.I.D/Profound (UK) Tel: (44.171) 930 6900 Copyright © 1998 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 3 Summary Botswana 4 Political structure 5 Economic structure 6 Outlook for 1998-99 8 Review 8 The political scene 10 Economic policy 14 The economy 16 Industry and commerce 16 Foreign trade and payments 17 Finance 18 Health 18 Agriculture 19 Communications and law 21 Mining Lesotho 22 Political structure 23 Economic structure 24 Outlook for 1998-99 26 Review 26 The political scene 28 The economy 30 Foreign trade and payments 31 Quarterly indicators and trade data List of tables 8 Botswana: forecast summary 11 Botswana: recurrent expenditure 11 Botswana: development expenditure 12 Botswana: government budget 17 Botswana: exchange rates 31 Botswana: quarterly indicators of economic activity 31 Lesotho: quarterly indicators of economic activity 32 Botswana and Lesotho: UK trade EIU Country Report 2nd quarter 1998 © The Economist Intelligence Unit Limited 1998 2 List of figures 8 Botswana: gross domestic product 8 Botswana: pula real exchange rate 25 Lesotho: gross domestic product 25 Lesotho: loti real exchange rate EIU Country Report 2nd quarter 1998 © The Economist Intelligence Unit Limited 1998 3 April 14th 1998 Summary 2nd quarter 1998 Botswana Outlook for 1998-99: The inauguration of Festus Mogae as president and his choice of Ian Khama as vice-president will not bring any significant change to government policy. The unifying power of the Khama name could calm factional fighting within the BDP. Internal strife within the opposition BNF will damage its chances of electoral success in 1999. Global demand for diamonds is expected to remain depressed in 1998 and mineral receipts are forecast to drop. In addition, government spending will increase in the run-up to the general election in 1999, and the current-account deficit is forecast to narrow consider- ably, but it will remain in surplus throughout the forecast period. Government spending will also fuel inflation in 1998 and 1999. Review: President Masire resigned in late March and was succeeded by his former vice-president and finance minister, Festus Mogae. Ian Khama, who recently resigned as commander of the BDF, was selected as vice-president. The choice of Mr Khama reflects Mr Mogae’s careful calculations of how best to maintain his position as the leader of the party and thus as presidential candi- date in 1999. The 1998/99 budget includes sharp increases in government expenditure designed primarily to solidify BDP support in rural areas. The capital account has been liberalised. Lesotho Outlook for 1998-99: The general election in May should be conducted in a free and fair manner. It will largely be a contest between the LCD and the BCP, the LCD’s new leader hoping to succeed Mr Mokhehle as prime minister. The migrant mining sector will experience only modest growth. Nevertheless, good levels of GDP growth will be maintained, given Lesotho’s unique advantages over other SADC economies. Review: The prime minister, Ntsu Mokhehle, resigned as leader of the LCD, and Pakalitha Mosisili was elected in his stead, with Kelebone Maope as his deputy. The National Assembly was dissolved at the end of February and the election is set for May 23rd. Six political parties have so far declared that they will participate. Three ministers suffered a setback in a libel case against a newspaper. One person was killed, and six seriously injured, as police opened fire on strikers at a garment factory. The Highland Water Scheme was officially inaugurated. A food emergency has been declared. There was a 6% decline in the number of gold mine workers in 1997. Lesotho leads sub-Saharan Africa in garment exports. Editor: Stephanie Wolters All queries: Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 EIU Country Report 2nd quarter 1998 © The Economist Intelligence Unit Limited 1998 4 Botswana 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; 34 members elected by universal suffrage and four appointed by the assembly; in addition, the president is an ex-officio member and the attorney-general a non-voting member; all serve a five-year term. A 15-member House of Chiefs advises on tribal matters National elections October 1994 (legislative); next election due by October 1999 (legislative) Head of state President, chosen by the National Assembly for concurrent term of office National government The president, his appointed vice-president and cabinet Main political parties Botswana Democratic Party (BDP), the ruling party; Botswana National Front (BNF); Botswana People’s Party (BPP); United Action Party (UAP) The government President Festus Mogae Vice-president, minister of presidential affairs & public administration Ian Khama Key ministers Agriculture Ronald Sebago Commerce & industry George Kgoroba Education Gaositwe Chiepe Finance & development planning Ponatshego Kedikilwe Foreign affairs Mompati Merafhe Health Chapson Butale Labour & home affairs Bahiti Temane Local government, lands & housing Daniel Kwelagobe Mineral resources, energy & water affairs Margaret Nasha Works, transport & communications David Magang Central bank governor Baledzi Gaolathe EIU Country Report 2nd quarter 1998 © The Economist Intelligence Unit Limited 1998 Botswana 5 Economic structure Latest available figures Economic indicators 1993 1994 1995 1996a 1997a GDP at market pricesb (P m) 9,126 11,115 12,530 14,631c 16,686 Real GDP growthb (%) –0.2 4.0 3.5 7.0 6.9 Consumer price inflation (%) 14.3 10.6 10.5 10.1d 8.9 Population (m) 1.39 1.42 1.45c 1.48 1.52 Exports fob ($ m) 1,722 1,878 2,164 2,228 2,697 Imports fob ($ m) –1,455 –1,350 –1,579 –1,293 –1,900 Current-account balance ($ m) 503 243 342 701 578 Reserves excl gold ($ m) 4,153 4,462 4,764 5,028d 5,600 Total external debt ($ m) 660 676 699 678 670 External debt-service ratio (paid; %) 3.7 4.0 3.2 4.0 3.0 Diamond production (m carats) 14.7 15.6 16.8 17.7d 20.0d Cattle slaughteringse (’000) 181 158 166 140 130 Exchange rate (av; P:$) 2.419 2.683 2.772 3.320d 3.650 April 14th 1998 P3.9139:$1 % of % of Origins of gross domestic product 1996bc total Components of gross domestic product 1996bc total Agriculture 3.8 Private consumption 28.4 Mining & quarrying 33.2 Public consumption 28.9 Manufacturing 4.7 Gross fixed capital formation 24.1 Construction 5.9 Change in stocks 0.0 Trade, hotels etc 17.0 Exports of goods & services 51.2 General government 17.4 Imports of goods & services –32.6 GDP at current market prices incl others 100.0 GDP at market prices 100.0 Principal exports fob 1996a $ m Principal imports cif 1996a $ m Diamonds 1,582 Food, beverages & tobacco 260 Vehicles 242 Vehicles & transport equipment 247 Copper-nickel 124 Machinery & electrical goods 216 Beef 84 Chemical & rubber products 157 Total incl others 2,228 Total incl others 1,540 Main destinations of exports 1996f % of total Main origins of imports 1996f % of total EU15 74 SACU 78 SACU 21 EU15 8 Zimbabwe 3 Zimbabwe 6 a EIU estimates.
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