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January 2010

Hard Choices in Botswana

Zeinab Partow's picture

Despite being pummeled by the global crisis--diamond production and exports contracted by 50 percent in 2009--Botswana was in the enviable position of being able to cushion its people and the economy, thanks to large savings accumulated over the years and access to inexpensive financing. 

But it may have overdone the cushioning.  The fiscal deficit for the 2009/10 budget year is projected at 14 percent of GDP.

Although diamond prices are expected to rebound, production and exports will remain below pre-crisis levels, and another double-digit deficit is expected in 2010/11.  Not even Botswana can maintain double-digit deficits for long without jeopardizing its fiscal sustainability, especially given the specter of a rapid fall in diamond production--and eventual depletion of known reserves--in a few decades. 

At the same time, cutting spending is particularly painful in a country like Botswana where government expenditures are pivotal to economic activity and to sustaining non-mining private sector.

 Some tough choices ahead for one of Africa's best-managed economies.

L’UEMOA à Quinze Ans

Shanta Devarajan's picture

Mon ami, l’économiste togolais Kako Nubukpo, avec qui j’ai eu l’occasion de débattre lors d’un de mes voyages à Lomé, a fait part de son analyse sur le bilan des quinze années d’existence de l’Union économique et monétaire ouest-africaine (UEMOA) lors d’un entretien pour le site Ouestaf.com.

D’après lui, même si l’Union est parvenue à gérer l’équilibre macroéconomique et budgétaire entre les États membres, la combinaison d’une monnaie forte (du fait de la parité fixe entre le franc CFA et l’euro) avec ce qu’il appelle « la gouvernance macroéconomique » restreint la compétitivité et donc la diversification et la croissance économique des pays membres.

Ces commentaires émanant d’un économiste qui est actuellement consultant auprès de l’UEMOA relanceront peut-être le débat sur les performances et les options économiques des pays d’Afrique francophone.

Teachers and politics

Shanta Devarajan's picture

One of the reasons why schoolchildren in low-income countries, despite being in school most of the time, seem to be learning very little is that the teacher is often not there. In Uganda, for instance, the teacher absence rate in public primary schools was estimated at 27 percent. 

Are African women having too many babies?

Shanta Devarajan's picture

Twenty-five of the 28 high-fertility (more than 5 children per woman) countries are in Africa. This and related facts have revived the concern that Africa will miss out on the “demographic dividend” –the rapid economic growth rates associated with declining fertility, as experienced by many countries in Asia. But Africa is also the continent with the slowest economic growth in the past. And, as The Economist (and others) pointed out, economic growth is probably the best contraceptive. 

The three most important challenges and opportunities for the decade ahead

Shanta Devarajan's picture

 1. Jobs

Throughout the developing world, productive-employment-intensive growth remains a challenge. In Africa, it is almost a crisis, with most of the labor force working in low-productivity, informal-sector jobs, and 7-10 million young people entering the labor force every year. That the unemployment rate in South Africa—the continent’s largest economy—has remained around 25 percent is particularly troubling.

My top three and Bono's top ten

Shanta Devarajan's picture

For the World Bank's internal website, I was asked to list the three most important developments of the past decade.  To elicit a broader discussion, I am sharing it on this blog.  In a subsequent post, I will list the three most important challenges and opportunities for the coming decade.  One or two of my items are also reflected in Bono's excellent piece in yesterday's New York Times, "Ten for the Next Ten."  Here are my top three: