Chairman of the Summit
Distinguished Delegates
Ladies and Gentlemen

1. It is a great honour for me to have been invited to this 10th
Nigerian Economic Summit, especially to deliver a keynote address on
"Managing Transition from Underdevelopment to Fast-Paced Economic
Development". I am particularly delighted to be part of this gathering,
which is intended to contribute towards reshaping the economic landscape
in Nigeria. The Summit theme, "Nigeria Partnering for Growth and
Transformation", is therefore apt and appropriate. I cannot
over-emphasise the need for leaders and other key players in the Nigerian
economy and society to come together in order to dialogues and agree on
major policy thrusts that will support transformation and growth through
effective partnerships. I would therefore encourage all Nigerians,
irrespective of political party affiliation, ethnic group or religious
background to work together for the good of their country. In my own
country we have established a body known as the High Level Consultative
Council in which our public and private sectors meet twice a year in the
spirit of partnership. Every other year we also hold a symposium, which
provides an opportunity for us to find common ground (while pointing
fingers at one another)

2. Permit me Mr. Chairman, to personally thank President Obasanjo and
the Government of Nigeria for allowing me the opportunity to share with
you the Botswana development experience. We also have an institute, which
is only one of the players - Botswana Institute for Development Policy
Analysis (BIDPA). I take pride in the recognition that a small country
such as my own could be considered to have valuable lessons for Nigeria, I
fully recognise that this is in keeping with President Obasanjo's humility
and the Nigerian people's friendship with Batswana. I salute the
President, the Nigerian people and Government for this. In Shakespeare's
Merchant of Venice, Graciano says some men are reputed wise just because
they keep the company of wise men. I suppose nowadays we have to say
women too. I thank you for letting me keep your company so that I may be
seen to be wise.

3. Botswana has received much international acclaim for its rapid
economic growth, especially in the early 1980, when average economic
growth was close to 10% per annum. Notwithstanding this relative success,
Botswana still faces many economic challenges.

4. For the benefit of those of us who may not be familiar with my
country, Botswana is a landlocked, semi-arid country of some 582,000
square kilometres in size, which is about the size of Kenya or France, or
Texas and hosts a population of only 1.7 million people. It shares
borders with Zimbabwe, South Africa, Namibia and Zambia. The country
attained self-governance in 1965 and Independence in September 1966 after
80 years as a British Protectorate. It has since been a non-racial
multi-party democracy operating within the framework of a democratic
Constitution, which enshrines freedom of speech, of association, and of
worship, and affords all citizens equal rights. This is a Constitution we
have upheld to this day.

5. Mr. Chairman, at the time of Independence in September 1966,
Botswana was one of the least developed and poorest nations in the world,
with a per capita income of approximately US$94. About 99% of the
population was dependent on subsistence agriculture for a livelihood, with
beef production as the mainstay of the economy, amidst a series of
recurring prolonged droughts. The literacy rate was low and access to
health, sanitation, water and other basic services was negligible. There
was virtually no infrastructure, apart from Cecil Rhodes railway line
completed in 1897 and minimal communication lines.

6. Prospects for rapid development were bleak given the fact that for
all its development capital and even a major portion of the recurrent
budget, Botswana depended on British foreign aid. This posed as major
developmental challenge for the newly independent Botswana. Indeed, at
this time there was a lot of skepticism on the wisdom of this territory
seeking self-governance and independence.

7. As of today, Botswana's social indicators are much improved. For
example, life expectancy had risen to 65.3 by 1991, though it has since
fallen to 55.6 years in 2001 due to HIV/AIDS, the literacy rate is now
well above 89% and the percentage of people in extreme poverty has reduced
from 47% in 1994 to an estimated 36% in 2003. Access to basic services
such as potable water and sanitation; health facilities and
telecommunications services have improved significantly.


Factors Accounting for the Transition
8. Although some development experts attribute Botswana's relative
success to the exploitation of diamond deposits in the late 1970s and the
early 1980s, this is only part of the story. Natural resources, no matter
how lucrative, cannot develop a country without sound macro-economic and
prudent financial management.

9. In my view, many factors were responsible for Botswana's success.
These include the political leadership at the time of independence. The
leadership was genuinely committed to development and was responsive to
the needs of the people. In a way, the priorities representing these needs
were pre-determined as skilled human resources, physical infrastructure,
such as roads and telecommunications; social infrastructure, such as
water, health and education; and appropriate institutional infrastructure
were almost non-existent.

10. As a multi-party democracy, it is perhaps not too difficult to see
why Botswana leadership was more inclined to respond to the wishes of its
people than many other governments in the developing world, and indeed in
Africa. During the period from the 1960s to 1980s, developing countries
were characterized by single party democracies and dictatorships, and
military dictatorships. Often the 1980s are referred to as the lost
decade for Africa during which time the economic condition of many African
states became worse than at the time of their political independence. In
contrast, Botswana progressed during this period.

11. In Botswana there is a saying that "kgosi ke kgosi ka batho",
meaning that a chief is a chief through his/her people. Another saying is
that "mafoko a kgotla a mantle otlhe", which means that in the
traditional meeting place, the "kgotla" in this case, everyone is free to
air their opinions, no matter how different. Rather than destroy the rich
cultural democratic heritage, Botswana post-independence leaders built on
it. Botswana prides herself in that to this day, the country has never
had a political prisoner! The opposition conducts its business freely and
without encumbrance. Typically of African opposition parties, it is kept
out of power increasingly by its own fragmentations


Development Planning
12. Botswana developed an elaborate system of planning in the early
years of independence before diamond revenues became available. In those
years, there were 5-year National Development Plans (3 year rolling plans)
but from the mid-1980s, these became 6-year plans with a mid-term review
after 3 years of implementation. The National Development Plans are the
main articulation of Government's socio-economic policies as they lay out
the main development priorities, programmes and projects for the Plan
period, in keeping with sustainable public expenditure profile and
Government revenues. These Plans are enshrined in the law and approved by
Parliament. As a result, a development project cannot be implemented if
it is not in the Plan, and any periodic modifications, which have to be
fully justified, also have to be approved by Parliament.

13. The established system of development planning and Botswana's
adherence to democratic principles and free market economic policies
endeared the country to foreign investors and donor assistance. In this
regard, diamonds were developed and marketed through Government's
partnership with De Beers Mining Company. Other mineral investments were
also developed in the same way, although unfortunately, these turned out
not to be as rewarding as diamonds.

14. In the early 1980s, among the developing countries, Botswana was one
of the largest aid recipients on a per capita basis. The National
Development Plans clearly lay the framework of our policies and
priorities. As such, co-operating partners were happy with the levels of
accountability, that their resources would be used for the intended
purposes and not diverted for personal use by leaders. I am thankful that
some of our projects were financed through the Nigerian Trust Fund, which
is administered by the African Development Bank on behalf of the Nigerian
authorities.


Macro-economic Management
15. Apart from a host of macro-economic policies, which are part of the
economic management that has contributed to Botswana successes, particular
attention has been given to budgetary sustainability, as measured by the
ratio of its non-investment expenditures to its recurring non-mineral
domestic revenues. This ratio is referred to as the 'Budget Sustainability
Ratio'. It measures the extent to which Government's non-investment
recurrent expenditures are being financed by recurring sustainable
revenues. The thrust of this planning tool is to guide budgetary prudence
in the planning process, particularly in view of the unsustainability of
mineral revenues, which dominate revenues from other domestic sources.

16. However, as diamond revenues increased in the mid-1980s and
early 1990s, expenditure began to rise rapidly causing the economy to
over-heat. Costs in the construction sector rose rapidly and the quality
of projects deteriorated. The public sector pre-empted available capacity
and constrained private sector growth.


Diversification
17. In view of the over dependence on diamond revenues,
diversification of the economy became a policy imperative. To this end, a
deliberate policy has been adopted to invest in particular productive
activities, such as, infrastructural development and human resource
development. The corollary to this is that mineral revenues and other
non-recurring, non-sustainable revenues should not be used to finance
recurring expenditures of a consumption nature. This is more likely to
create a broader spectrum of income generating opportunities, which, in
turn, will lead to a more equitable distribution of income through
increased employment.

18. As part of the diversification drive, Government continues to
modernise and diversify the agricultural sector, through extension of
credit and targeted subsidies. This is where the majority of the
population resides. Agricultural development as one of the key avenues for
rural development has been recognised since the early development plans.
Unfortunately many of our initiatives in this area have failed being
excessively dependant on subsidies.

19. Creating and sustaining a conductive and enabling environment for
private sector development is a priority for Government as it has been
from the earliest development plans. Deliberate policies have therefore
consistently aimed at this. In particular, Government is now implementing
a privatisation policy, as a framework for co-coordinated privatisation of
activities hitherto performed by the public sector. In a true partnership
sense, Government is now to be a facilitator, rather than a provider of
goods and services. In this regard, Government's role is progressively
being curtailed. On the other hand, the private sector is now seen as an
alternative engine of economic growth and development.

20. From the outset, Botswana has always based its development
strategies on the belief that the nation's major resource is its people,
and that investment in their education and training is a necessary
condition for national development.

21. Hence, Botswana considers basic education as a human right and
thus provides universal free education up to secondary level and a highly
subsidised tertiary education.


Mr. Chairman;
22. Whilst Government still has the social responsibility to have a
major stake in education and the policy for free education has produced
positive returns, this in no longer sustainable. In response to this
situation, Government is currently examining alternative strategies for
funding, including cost-recovery measures.

23. Economic diversification has been a major challenge. An
extensive subsidy programme to establish manufacturing enterprises, known
as the Financial Assistance Policy attracted foot-loose companies, the
majority of which ceased operations after a 5-year support period. This is
another example of where we have not succeeded.


Economic Empowerment
24. Botswana also has macroeconomic and fiscal policies that have
been directed at promoting business start-ups and development as
strategies for diversification and poverty eradication. This is being done
through development of economic empowerment schemes, which support
initiatives that are labour intensive, import substituting and
export-oriented, as well as promoting economic diversification and
participation by nationals in economic activity.

25. It is well documented how the menace of corruption has inhibited
economic development in many developing countries, particularly in Africa.
Because of relative openness in economic policy making, National
Development Planning formulation and priority setting and the
constitutionally entrenched role of the Auditor General, the Attorney
General and the independent Judiciary, Botswana was less inclined towards
corrupt practices. At the time of independence our people were mostly
rural, poor and innocent of corrupt practices. Furthermore, our political
leadership then lived modest private and public life styles. Ostentatious
consumption and greed were discouraged. It is therefore no surprise that,
in the early years, Botswana did not have large prestige projects like
giant stadia and prestigious international hotels. In fact, some
development commentators have criticised Botswana for her perceived
excessive modesty and economic conservatism. Where cases of corruption
were detected, the culprits, including high-ranking Government officials,
were tried in open courts and sentenced, as appropriate.

26. I would also like to believe that a truly democratic political
dispensation, with a free press and vibrant civil society is also a good
check against corruption. However, as society has become prosperous,
urbanised, educated and more sophisticated, it has become necessary to
establish institutions to guard against and fight corruption. For the
public service, in addition to "General Orders", we have the
anti-corruption provisions of the Public Service Act, a couple of years
ago we created the Ombudsman to report annually to Parliament, (helicopter
issue). This office works independently - for example, it issued a report
saying that Vice was using Defence Force aircraft even though he had left
the armed services. In response, I stated that this had been authorised
by myself, using my executive authority, though this did not end the
controversy. (Some even wondered if I could also exercise executive
authority to take away their homes!) Above all, we have created and
constitutionally entrenched the Directorate on Corruption and Economic
Crime. He reports to Parliament through me.


Regional Co-operation
27. Botswana, due to its small population and economy, has always
recognised that regional cooperation is indispensable to its economic
success. For this reason, Botswana has played a key role in regional
initiatives such as the Southern African Customs Union (SACU), the
Southern African Development Community (SADC) and the African, Caribbean
and Pacific Group of Countries under the Lome Convention (now the Cotonou
Agreement). Once again, the Southern African region is indebted to
Nigeria for the crucial role it played as an honorary member of the
Frontline States. Without the Nigerian moral and material support, the
emancipation of the Southern African region from racist minority regimes
would have taken much longer. (The President gave as an example the help
Botswana received from individual Nigerians as well as the Government in
gaining favourable access to the European market through the ACP.

28. Botswana's open economy and low manufacturing base make trade
policy a vital instrument of economic policy. In 1969 therefore, Botswana
re-negotiated together with other partners, the Republic of South Africa,
Lesotho and Swaziland, the 1910 Southern African Customs Union Agreement
in order to improve its terms and conditions. The renegotiation resulted
in, among others, compensation in revenue for the polarisation effect of
entering into agreement with a more developed country, namely the Republic
of South Africa. Customs Union revenues thus became one of the main
revenue sources for Government.

29. The Southern African Development Community also offered
opportunities for development co-operation. Projects that could not be
undertaken on individual country basis because of economies of scale could
only be viable on regional basis. A regional approach is also valuable in
harnessing energy, water and other natural resources. Botswana made the
best use of opportunities regional integration presented.

30. Regional co-operation is not only useful for the material
benefits it brings to members, but also for regional solidarity, including
speaking with one voice on the many topical developmental issues, as well
as developing common values and ideals. In 1980, when the Southern
African Development Co-ordination Conference, the predecessor of the
Development Community SADC, was founded, only Botswana was a multi-party
democracy. Today, as I speak, all 14 member-countries are democracies
although some are in the formative stages of establishment.

31. Botswana, which hosts the SADC Headquarters, was chair of the
organisation for most of the first decade of its existence. One could
argue that given that Botswana was a relatively small country, this was a
major sign of confidence in her leadership to steer the organisation to
maturity.


Foreign Exchange Reserves
32. As they say experience is the best teacher. Given Botswana's
vulnerability to drought and international price fluctuations of diamonds
and beef, Botswana adopted a cautious Foreign Exchange Reserve Cover. At
the moment there are 29 months of import cover of good and services. Many
protagonists of high unproductive spending have criticised this as too
high.

33. While we agree that they may indeed be high by any international
standards, the logic for it is a simple one. Botswana is a country of
recurring prolonged droughts and frequent outbreaks of foot and mouth
disease ultimately adversely affecting the export industry.


This is also a country largely dependent on food imports and with weak
manufacturing capacity and at the same time currently hard hit by
HIV/AIDS. The simple logic therefore is that given these circumstances,
we have to "save for the day when it does not rain". And believe me it
does not always rain in Botswana.

34. To this end, the majority of the foreign exchange reserves, which
represent accumulated savings of Government, are being invested in
longer-term financial instruments, the returns of which have become a
major source of recurring revenues for financing the public budget.


Debt Management
35. Another important aspect of Botswana's development strategy has
been to avoid the accumulation of excessive debt, both internal and
external. Throughout the post-independence period, our debt service ratio
has been kept below 5% of exports of goods and services. External
borrowing was undertaken after careful assessment of projects to be
financed as well as realistic capacity and ability to pay back. Botswana
took advantage of concessionary international fiancé and resisted
borrowing at high costs from private capital markets and multilateral
finance institutions.

36. Despite recorded successes, Botswana continues to be faced with
major developmental challenges, such as HIV/AIDS, which threaten to
reverse the development gains of the last 36 years. Other challenges
include poverty eradication, economic diversification, plateauing of
mineral revenues, creation of new engines of growth, sustained private
sector development, continued economic management, recurring droughts,
globalisation and HIV/AIDS.

37. I wish to conclude by observing that economic management in a
given country has to respond to the particular circumstances on the
ground. Good policies, strategies and management cannot simply be
transplanted from one economic regime to another. This notwithstanding,
some common threads can guide economic policy-making and management. In
my view key prerequisites for success include the following:


a) the need for national priorities and well defined and agreed
co-coordinated development processes right form the grassroots levels;

b) every one must have a stake in the development and no one should
feel excluded;

c) Government must recognise the important role of other development
stakeholders and establish fora for regular consultations; and

d) there is need to develop trust among key stakeholders, by
acknowledging mistakes and taking corrective action on key matters.
Disagreements must be well managed so that they do not degenerate into
irreconcilable differences over protracted periods of time.

38. I derive comfort from the knowledge that Nigeria is a great
country, a country blessed with abundant natural resources, highly skilled
and professional cadres in a wide variety of specialisations, as well as
enterprising and resourceful people. Nigeria will be even a far greater
country if you could marshal your collective efforts for development.


Mr. Chairman; I thank you.