Botswana Praised as Economic Model for Developing World

By Charles W. Corey, Washington File

Country just one example of expanding financial opportunities in Africa

There are functioning stock exchanges and countless investment and trade opportunities that now exist throughout sub-Saharan Africa that, if fully developed, could help bring a higher level of economic growth and development to the continent.

To help promote such growth, and expand the volume of U.S.-Africa trade as well, the U.S. Agency for International Development (USAID) recently opened a fourth trade hub office in Dakar, Senegal, to complement three already functioning hubs in Gaborone, Botswana; Nairobi, Kenya; and Accra, Ghana. (See related article.)

To help draw attention to the many investment and trade opportunities across sub-Saharan Africa, the chief executive officer of the prestigious New York Stock Exchange (NYSE), John Thaine, praised Botswana as a "model for the developing world."

The southern African country, Thaine told reporters, has clearly "demonstrated growth and fiscal transparency that even bigger countries would envy." The NYSE executive also praised Botswana as the only African country with an A+ credit rating from both Standard and Poor's and Moody's rating services.

Thaine made his comments September 13, the same day the NYSE honored the nation of Botswana and its president, Festus G. Mogae, who was invited to ring the closing bell, which ends floor trading that day on the exchange.

Such an event is very important, Thaine told reporters. "With President Mogae ringing the closing bell of the NYSE, people will ask questions and see that Botswana's track record is impressive."

Botswana has maintained one of the world's highest growth rates since its independence in 1966. Through fiscal discipline and sound management, the nation has transformed itself from one of the poorest countries in the world to a middle-income country with a per capita gross domestic product (GDP) of $8,800 in 2003. Two major investment services rank Botswana as the best credit risk in Africa.

Diamond mining has fueled much of Botswana's expansion and currently accounts for more than one-third of GDP and for 90 percent of export earnings. Tourism, subsistence farming and cattle raising are other key sectors. On the downside, the government must deal with high rates of unemployment and poverty. Unemployment officially is 21 percent, but unofficial estimates place it closer to 40 percent. HIV/AIDS infection rates are the highest in the world and threaten Botswana's impressive economic gains.

Mogae is only the third African president who has been honored with an invitation to ring the NYSE's closing bell. His action was seen by more than 120 million television viewers around the world who track the international financial markets, such as the NYSE, and watch the closing ceremony. Former Zambian President Frederick Chiluba and President Thabo Mbeki of South Africa also have rung the closing bell.

In further comments, Thaine stressed the important role stock markets play in the economies of prospering and successful nations. "As a mechanism for providing capital, a stock market is important," he said. "The African continent offers many opportunities for the future -- South Africa for obvious reasons, but Botswana also has potential and an impressive record to match."

Currently, the African Stock Exchanges Association, headquartered in Nairobi, Kenya, has member exchanges in a broad array of African countries, including Cote d'Ivoire, Botswana, Egypt, Morocco, Tanzania, Ghana, South Africa, Uganda, Zambia, Malawi, Mozambique, Kenya, Namibia, Nigeria, Mauritius and Swaziland.

The International Monetary Fund recently noted that African stock exchanges currently offer some of the highest rates of return to investors worldwide, with the return on investment at the Ghana Exchange being the highest at 144 percent.

President Mogae, who was in New York to attend the proceedings surrounding the 60th anniversary session of the United Nations General Assembly, said that in addition to Botswana's "substantial relations with the United States government, we can now count the New York Stock Exchange among our friends."

Mogae said he was encouraged by the afternoon's events. "Botswana is here for inspiration," he said. "I am well aware of the market size represented here at the NYSE, and it is wonderful to be part of the awe-inspiring atmosphere."

There are more than 2,700 companies listed on the NYSE, with a market capitalization of $20 trillion. American-owned companies represent about $7 trillion of the exchange's value.

Thaine said the NYSE is interested in expanding its trading capital and working with exchanges in other countries such as Botswana to develop and expand stock exchanges worldwide.

The Corporate Council on Africa's new senior adviser on financing and capital flows, Ambassador Joseph Huggins, helped coordinate the NYSE event with Botswana's permanent representative to the United Nations, Ambassador Alfred Dube.

Source: U.S. Department of State

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