On a recent visit to the United States, the President of Botswana, Festus Mogae, thanked Washington for its continued economic support for his country. He was particularly grateful to the current US administration for making Botswana one of the beneficiaries of the African Growth and Opportunity Act (AGOA). In terms of this initiative, America gives certain African countries preferential access to its lucrative markets, allowing them to export goods to the US and earn valuable foreign exchange. But Mr. Mogae has made it clear that he’s seeking further American investments in Botswana, which Washington recognizes is one of Africa’s strongest democracies. In the third part of a series on Botswana, VOA’s Darren Taylor focuses on the southern African nation’s economic ties with the US.
President Mogae thanked the US administration for its continued humanitarian aid to his country, and to sub-Saharan Africa.
“Pro-African initiatives, such as AGOA, the Millennium Challenge Account (MCA) and PEPFAR (the US President’s Emergency Plan for AIDS Relief) – are innovative in nature, and unprecedented in scope. In sub-Saharan Africa - the main beneficiary of this good will – US administrations, especially the current one, have helped lift millions out of poverty, created employment, diversified economies and built hope,” Mr. Mogae told an audience in Washington.
Former US President, Bill Clinton, signed AGOA into law in May 2000. The Act offers incentives to certain African countries to maintain reform efforts aimed at opening their economies and building free markets. President George W. Bush has signed several amendments to AGOA, allowing beneficiary sub-Saharan African countries enhanced access to American markets.
“I would contend that, in economic terms, AGOA is the single most important Africa-focused initiative by your (the US) government in the last 50 years, that has had the greatest impact – economic impact. I wish to take this opportunity to express my government’s gratitude to the Bush administration for including Botswana in AGOA,” President Mogae continued.
But the southern African nation and the US haven’t always enjoyed good economic relations. When President Clinton established AGOA, the US excluded Botswana from the list of African countries that would benefit from the Act.
Mr. Mogae acknowledged to several audiences in the US that this had left him “frustrated.”
“When AGOA was being discussed, we as Botswana were among the African countries summoned to come and give evidence. But when it was finally approved, we were excluded on per capita income grounds,” he lamented.
US officials maintained at the time that others in sub-Saharan Africa deserved AGOA’s benefits more than Botswana, as they earned much less than Botswanans – even though the majority of the country’s two million citizens lived , and continue to live, in poverty.
“We were disappointed, and angry with my friend, Bill (Clinton), and some of the other Congressmen at the time. I felt betrayed – quite frankly,” President Mogae said.
But, following extensive lobbying, he continued, the Bush administration had “reconsidered and went to Congress and asked them to overlook the little per capita thing” and Botswana was included in AGOA.
However, Botswana’s days of lobbying on Capitol Hill for more economic assistance from America are far from over…. Washington has excluded the country from the benefits of the MCA – again on the grounds that Botswana’s per capita income is too high when compared to others in Africa. According to MCA requirements, candidates must be either low-income countries with per capita income below $1,675, or lower middle-income countries with per capita income between $1,676 and $3,465. But, in recent years, Botswana has hovered around the $5, 000 dollar mark.
In 2002, President Bush called for “a new compact for global development, defined by new accountability for both rich and poor nations alike. Greater contributions from developed nations must be linked to greater responsibility from developing nations.”
Mr. Bush pledged increased assistance to developing nations, with the funds going into what he termed a Millennium Challenge Account. The fund, he said, would be “devoted to projects in nations that govern justly, invest in their people and encourage economic freedom.”
President Mogae said Botswana conformed to most of the criteria permitting MCA qualification, and shouldn’t be penalized simply because it was deemed “too prosperous” when compared to others in Africa.
“So I have been lobbying on the Hill, and I lobby (US) administration officials wherever I meet them…. I told the Congressional committee that they should again overlook this (per capita income requirement).”
The US State Department says Botswana – with its central economic activity of diamond mining - remains one of the most attractive investment destinations in the developing world.
Gaborone has instituted a number of incentives aimed at encouraging foreign investment. In 1999, it abolished foreign exchange controls. The government maintains a low corporate tax rate of 15 per cent and there are no prohibitions on foreign ownership of companies. Botswana’s inflation rate has remained relatively stable, and its currency, the pula, is the strongest in Africa, with six pula buying one US dollar.
Transparency International has consistently ranked Botswana as Africa’s least corrupt country, ahead of many European and Asian countries.
Since independence from Britain in 1966, Botswana has maintained one of the world’s highest economic growth rates - though growth slowed to less than five per cent last in 2006.
Despite his disappointment at Botswana’s exclusion from the MCA, Mr. Mogae said his government would work “tirelessly” to ensure that America’s “positive disposition towards Africa, and the excellent relations that exist between the United States and Botswana, serve as an anchor for enhanced commercial and investment links. Our shared vision of economic freedom and the free market should also help in forging closer economic ties.”
He said Botswana would continue its efforts to attract foreign investment.
“Deliberate government policies were put in place to create a stable political and macroeconomic environment based on predictable policies – to protect property, and non-expropriation of investors’ assets, to respect the rule of law, to guarantee the sanctity of contracts, to ensure repatriation of profits, to promote open dialogue with the private sector,” President Mogae explained.
He called on corporate America to “continue to explore investment opportunities in Botswana. Invest in the stability that the country offers, and share in the prosperity and promise of Botswana,” Mr. Mogae implored.
And although he thanked US businesspeople for their support, he also wasn’t averse to challenging them. He criticized what he termed the US “preoccupation” with “labor standards” in sub-Saharan Africa.
President Mogae told an audience in Washington, which included representatives of US business: “You say that if our workers are working in non-air conditioned factories, it means that we are using slave labor. And you want to be represented in our trade unions; you want to be represented in our negotiations, between us and the trade unions – in spite of the fact that we have signed all the labor conventions that originated here and in Western Europe anyway. We think you are being unreasonable on this labor standards thing, which is your preoccupation – an irrational preoccupation in my view.”
American insistence that countries such as Botswana conform to certain “unrealistic” labor standards before investments would be made in those nations, Mr. Mogae said, was resulting in a deadlock between the Southern African Customs Union and the US.
He added that although interregional trade was taking place in southern Africa, the balance of power was firmly in favor of South Africa.
“The problem is the imbalances in development between South Africa and the rest. Many countries source their imports from South Africa…. One hundred and forty American companies that have invested in southern Africa have invested in South Africa,” President Mogae said.