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COUNTRY REPORT Botswana Lesotho 4th quarter 1997 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, USA 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: Moya Veitch Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 This publication is available on the following electronic and other media: Online databases CD-ROM Microfilm FT Profile (UK) Knight-Ridder Information World Microfilms Publications (UK) Tel: (44.171) 825 8000 Inc (USA) Tel: (44.171) 266 2202 DIALOG (USA) SilverPlatter (USA) Tel: (1.415) 254 7000 LEXIS-NEXIS (USA) Tel: (1.800) 227 4908 M.A.I.D/Profound (UK) Tel: (44.171) 930 6900 Copyright © 1997 The Economist Intelligence Unit Limited. 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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 12 Economic policy 13 The economy 14 Finance 17 Education, health and social matters 18 Agriculture 19 Industry and commerce 20 Power, transport and communications 21 Water 22 Mining 24 Aid 25 Foreign trade and payments Lesotho 27 Political structure 28 Economic structure 29 Outlook for 1998-99 32 Review 32 The political scene 34 The economy 36 Industry and commerce 37 Foreign trade and payments 38 Quarterly indicators and trade data List of tables 8 Botswana: forecast summary 14 Botswana: consumer price inflation 26 Botswana: international reserves 26 Botswana: exports by principal commodity, Jan-Jun 35 Lesotho: demand and supply of cereals 37 Lesotho: quarterly trade data 38 Botswana: quarterly indicators of economic activity 38 Lesotho: quarterly indicators of economic activity 39 Botswana and Lesotho: UK trade EIU Country Report 4th quarter 1997 © The Economist Intelligence Unit Limited 1997 2 List of figures 8 Botswana: gross domestic product 8 Botswana: pula real exchange rate 31 Lesotho: gross domestic product 31 Lesotho: loti real exchange rate EIU Country Report 4th quarter 1997 © The Economist Intelligence Unit Limited 1997 3 November 5, 1997 Summary 4th quarter 1997 Botswana Outlook for 1998-99: A new party may take votes from both major parties. The BDP will have a tough fight on its hands to win the next election, but has the advantage of being able to give handouts at the next two budgets. A bill passed by parliament assures the vice-president of succession, and the pres- ident announced his resignation for March 1998. GDP growth should be robust over the next few years, driven by diamond exports, government spending and construction. El Niño may cause a bad drought in 1997/98. Review: There were two resignations from the cabinet, but no reshuffle. The United Action Party was created. Both major parties held their congresses. The constitutional referendum approved several proposals but had a very low turn- out. The government’s media bill was roundly criticised and shelved. NDP 8 was presented to parliament. Botswana’s low tax regime has so far failed to attract many companies. The Vision 2016 team presented its report and the government published a report on poverty. Inflation was further reduced and the stock exchange rose fast. The BDC is to issue a bond, while BoBCs con- tinued to expand to mop up surplus liquidity. BIHL restructured to face grow- ing competition in the insurance market. The banks reported high profits. Hyundai’s CKD factory is ahead of schedule and the BDC continued to profit from its divestiture programme. BPC and BTC posted large profits, and Air Botswana posted its first ever profit. Progress was made on the north-south water carrier project. The Orapa 2000 project made progress. Various aid pro- jects are signed but the Peace Corps bids farewell. CITES approved ivory ex- ports, Botswana increased its exports to Zimbabwe and production of diamonds, but the performance of other exports was more mixed. Lesotho Outlook for 1998-99: Strife between the LCD and BCP will continue as the Senate refuses to debate any bills. The outcome of elections scheduled for 1998 is unclear. Dismissals of migrant workers in South Africa are expected to in- crease. The low world price of gold will have a negative impact on the economy. Review: Ntsu Mokhehle has left the BCP taking the majority of MPs with him. His newly formed LCD is now the governing party and he is still prime min- ister. Qhobela Molapo has been elected BCP leader after the High Court man- dated that national committee elections take place. The three man Independent Electoral Commission (IEC) has been appointed and elections are to take place before March 1998. New South African commercial financing is secured for Phase 1B of the Highlands Water Scheme. Environmental problems are being experienced with the diamond diggings. LNDC opens a major new Singaporean investment in the garment industry and appoints the first female chief executive. Lesotho Airways has been privatised. Expectations of food availability have been revised downwards. Editor: Stephanie Wolters All queries: Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 EIU Country Report 4th quarter 1997 © The Economist Intelligence Unit Limited 1997 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 nominated 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 The Botswana Democratic Party (BDP), the ruling party; the Botswana National Front (BNF); the Botswana People’s Party (BPP), the United Action Party (UAP) The government President Sir Quett Ketumile Joni Masire Vice-president, minister of finance & development planning Festus Mogae Key ministers Agriculture Ronald Sebago Commerce & industry George Kgoroba Education Gaositwe Chiepe External affairs Mompati Merafhe Health Chapson Butale Labour & home affairs Bahiti K Temane Local government, lands & housing Margaret Nasha Mineral resources & water affairs David Magang Presidential affairs & public administration Ponatshego Kedikilwe Works, transport & communications Daniel Kwelagobe Central bank governor Baledze Gaolathe EIU Country Report 4th quarter 1997 © The Economist Intelligence Unit Limited 1997 Botswana 5 Economic structure Latest available figures Economic indicators 1992 1993 1994 1995 1996a GDP at market pricesb P m 8,373 9,126 11,115 12,530 14,631c Real GDP growthb % 6.3 –0.2 4.0 3.5 6.8 Consumer price inflation % 16.1 14.3 10.6 10.5 10.1d Population m 1.39 1.44 1.49 1.54c 1.59 Exports fob $ m 1,744 1,722 1,878 2,160 2,304 Imports fob $ m 1,557 –1,455 –1,350 –1,579 –1,379 Current account $ m 244 503 243 338 671 Reserves excl gold $ m 3,845 4,153 4,462 4,764 5,098d Total external debt $ m 612 660 676 699 678 External debt-service ratio, paid % 4.0 3.7 4.0 3.2 3.5 Diamond production m carats 15.9 14.7 15.6 16.8 17.7d Cattle slaughteringse ’000 214 181 158 166 140 Exchange rate (av) P:$ 2.133 2.419 2.683 2.772 3.324d October 31, 1997 P3.72:$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