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Republic of Botswana - European Community Republic of Botswana - European Community JOINT ANNUAL REPORT 2008 Table of Contents Executive Summary ............................................................................................................................................... 3 1. Country Performance ..................................................................................................................................... 4 1.1 Update on the political situation and political governance ................................................................. 4 1.2 Update on the economic situation and economic governance............................................................. 6 1.3 Update on the poverty and social situation......................................................................................... 10 1.4 Update on the environmental situation............................................................................................... 12 2. Overview of past and ongoing co-operation................................................................................................. 13 2.1 Reporting on the financial performance of EDF resources............................................................... 13 2.2 Reporting on General and Sector Budget Support............................................................................ 14 2.3 Project and programmes in the focal and non-focal areas................................................................ 15 2.3.1 Focal Sector: Human Resource Development.......................................................................... 15 2.3.2 Non-focal Sectors ..................................................................................................................... 16 2.3.3 The development results achieved by support to Non-State Actors ......................................... 17 2.4 Other cooperation................................................................................................................................. 17 2.4.1 SYSMIN................................................................................................................................... 17 2.4.2 FLEX........................................................................................................................................ 18 2.4.3 Regional Indicative Programme ............................................................................................... 18 2.4.4 Community budget lines........................................................................................................... 18 2.4.5 European Investment Bank (EIB)............................................................................................. 19 2.4.6 Centre for Development of Enterprises (CDE)......................................................................... 20 2.4.7 Facilities (water, energy, business climate, tradecom) ............................................................. 20 2.4.8 Global Fund for HIV/AIDS...................................................................................................... 20 2.4.9 Research ................................................................................................................................... 20 2.4.10 ECHO....................................................................................................................................... 20 2.5 Policy Coherence for Development ..................................................................................................... 20 2.6 Dialogue in country with the national Parliaments, local authorities and NSAs ............................ 21 2.7 Aid Effectiveness................................................................................................................................... 22 ANNEXES............................................................................................................................................................ 23 A. Key macro-economic performance indicators.............................................................................................. 24 B. Monitoring country performance, including Key MDG indicators............................................................. 25 C. Governance ................................................................................................................................................... 26 D. Use of budget support ................................................................................................................................... 56 E. Donor Financial Support and Roles ............................................................................................................ 59 F. EAMR Aid Effectiveness Questionnaire ...................................................................................................... 65 G. Financial Situation of EDF projects............................................................................................................ 69 H. List of Regional and Intra-ACP projects benefiting Botswana................................................................... 71 I. Status of Budget Lines .................................................................................................................................. 75 J. Status of Other EU-Funded projects............................................................................................................ 75 K. Status of EIB projects ................................................................................................................................... 77 L. Updated EDF10 CSP chronogramme .......................................................................................................... 78 M. Abbreviations................................................................................................................................................. 79 2 EXECUTIVE SUMMARY Botswana’s political stability, good use of mineral resources and prudent financial management continued throughout 2008, but came under pressure in late 2008 as the financial crisis unfolded. The year 2008 was marked by the peaceful transition from President Festus Mogae to Botswana’s fourth President, Lt. General Seretse Khama Ian Khama, on the 1st of April. The new President’s road map is based on 4 pillars: Democracy, Discipline, Dignity and Development. In his first year the President made few foreign visits, preferring to travel locally and to meet the people. Growth in 2007/08 was lower than expected (3.3%) attributed to poor performance in the mining sector (-3.5%), while there are encouraging signs of economic diversification with growth in the non-mining sector (+8%). Botswana started to be adversely affected by the international crisis at the end of 2008 with no sales of diamonds in November 2008 and hundreds of job losses, principally in the mining industry. GoB forecasts a 50% decrease in mining revenues (the mining sector traditionally accounts for roughly 40% of GoB revenues, 75% of exports and 1/3 of GDP) which will challenge its expanding expenditures and the achievement of vision 2016 goals. In the face of rising food prices, GoB has intensified its campaign to support the agriculture sector. The first public expenditure and financial accountability (PEFA) assessment took place in Botswana in 2008, and concluded with broadly positive results while also revealing weaknesses, especially in public procurement. GoB and other stakeholders have reacted very positively to the PEFA findings. With regards to trade developments, the SADC Free Trade Area was launched in August 2008 and GoB continued its strong support for the Economic Partnership Agreement (EPA) with the EU. Botswana shows good governance, although some concerns in relation to human rights continue, notably the use of the death penalty. Out of the 22 commitments of the governance areas monitored in the framework of the 10th EDF, progress by GoB was noted in 16 commitments (refer to annexe C). The European Commission continued enjoying a good cooperation relationship with Botswana. The annual assessment of the main cooperation programme (education and training sector budget support) concluded in a relatively low achievement (55% or €6.4m) but noted progress in important reforms such as the national human resource development strategy, the decentralisation process and the improvement of statistics. There are concerns that the quality of education is not higher given the investment made and that enrolment at primary level, transition to senior secondary and participation in state run vocational education are all falling .The skills mismatch remains a key challenge for the sector and the economy as a whole, and is proving difficult to address. The Francistown College of Vocational Education and Training co-funded by the EU was officially opened by the President in October 2008. The Commission’s support to the nickel and copper sector and to the economic diversification of Selebi Phikwe mining town intensified in 2008. Short-term technical assistance provided under the Technical Cooperation Facility to GoB departments in the area of public financial management, good governance and education, continued to prove very effective and to be very appreciated by beneficiaries. The programmes supporting non-state actors and the Ministry of Local Government however experienced difficulties, the former due to weaknesses in the programme management unit and the latter due to insufficient commitment from the Ministry. EU co-operation
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