A principal architect of economic growth
Mbongeni Mguni | Monday June 26, 2017 15:44
The audience packed inside Maitisong Hall was particularly surprised to hear the late former President recall how the economy was born from a budget of a mere P12 million!
It continues to amaze new generations that the modern Botswana of today was once a poor, agrarian and windswept nation of approximately 550,000 people in 1966 with per capita Gross Domestic Product (GDP) of about $70!
Masire, who helped found the Botswana Democratic Party (BDP) in 1961, was the primary architect of the now established policies that anchored the transformation of the country’s economy to its present modernity.
The late President, a farmer by profession, who had also distinguished himself for his remarkable academic acumen early in life, served as the late Sir Seretse Khama’s Vice President from Independence until 1980 when he ascended to the Presidency.
However, Masire also managed the portfolios of Finance (from 1966) and Development Planning (from 1967) before merging these formally in 1971 and it is in these roles that his policies laid the groundwork for the oft-cited explosion in economic growth in the post-Independence era.
For many, the discovery and subsequent mining of diamonds is solely behind Botswana’s economic miracle.
However, a look beyond the surface indicates that while diamonds did indeed trigger the wealth cycle that has produced today’s multifaceted Botswana, policies pioneered by Masire in his portfolios, with the support of others, ensured that Botswana escaped the resource curse and empowered more of its citizens.
It was the bedrock of social and economic policies adopted by the country’s leaders – namely to ensure that all citizens benefited from diamond revenues – that began the real economic miracle.
Countrywide, primary infrastructure such as roads, railways, water systems and to an extent, power generation, was established in the years after Independence, building economic greenbelts for communities and investors alike.
Masire also kick-started the now characteristic heavy budget spend on secondary infrastructure such as health facilities, schools, post offices and law enforcement structures.
The former President also championed diversification efforts with support programmes towards agriculture, as well as interventions such as the Financial Assistance Programme.
The miracle around the higher diamond revenues was not only limited to the roll-out of primary infrastructure, but also the attendant development of secondary services such as banking and insurance, which spiralled after having been originally established as outposts for the convenience of the South African trader.
The financial sector grew deeper from these initial services and would later offer asset management, stockbroking, accountancy and audit functions that would prove essential as the capital market took shape.
Many associate Masire’s tenure as president with a period of unprecedented economic growth and prosperity and three major achievements stand out during the former president’s terms in office.
One is the 1975 withdrawal by Botswana from the Rand Monetary Area and subsequent establishment of the Pula and another is the 1993 establishment of the Pula Fund, a sovereign wealth fund established with the aim of preserving part of the income from diamond exports for future generations. By April, the Fund was worth P56.7 billion.
It can be argued however that economically, Masire’s most significant achievement took place in 1967 when as finance minister, he took over the development planning portfolio as well.
In that year, Botswana developed and passed the Mines and Minerals Act that vested all subsoil mineral rights in the national government, a timely move in the year in which diamonds were first discovered in Orapa.
The Act, to this day, has ensured optimal benefit to Botswana and Batswana of the diamonds and other minerals beneath the soils, and the transmission of these benefits across the economy and society.
From that agrarian, windswept wilderness with a budget of P12 million and a per capita GDP of US$70 at Independence, Botswana now boasts a modern and mixed economy, a multicultural society, world-class institutions, a budget of P59 billion and per capita GDP of $693. “Of course the development of a country is about much more than monetary figures.
Any nation’s development must ultimately be measured in the livelihood of its people.
“We have certainly come a long way since 1966. But this is relevant to the extent that it may guide us towards further progress,” Masire told another enthralled audience at the Botswana International University of Science and Technology lecture last July.
His words were never truer.