Agribusiness in Botswana – the way forward after elections
Botswana, a country that is often celebrated as one of Africa’s most stable democracies, has been characterised by consistent economic growth driven by diamond mining, sound fiscal management, and political stability; yet it has struggled to diversify its economy to achieve greater equality. Major policy changes in the agribusiness sector are aimed at improving living conditions and fostering food security.
Botswana’s lay of the land and its agricultural characteristics
As articulated in the Who Owns Whom report on Agribusiness in Botswana, the country’s agriculture sector is dominated by traditional farming systems typified by traditional farming methods, limited use of fertiliser and certified seeds, low mechanisation, limited irrigation, and low productivity. Adding to the challenges of traditional farming, Botswana’s crop production is low due to its semi-arid climate and low soil fertility.
Botswana is a relatively small country with a heavy reliance on mining. Its diamond industry in particular is key for GDP growth. In recent years, the diamond market has not fared too well with a decline in volumes traded and pricing. This contributed to a 3.6% drop in the country’s GDP in 2023.
While the agriculture sector only contributes about 1.6% to GDP compared to 14.2% from mining and quarrying, it provides a livelihood for most citizens who operate subsistence farms.
Policy changes introduced in the agricultural sector
David Ricardo’s theory of comparative advantage explains an economy’s ability to produce a particular good or service at a lower opportunity cost than its trading partners. It does not account for artificial advantages created by financial, industrial and technological means overpowering marginal natural advantages.
In January 2022, Botswana’s government introduced a ban on the importation of fruit and vegetables to balance trade, enhance local production and improve food security. This measure is more drastic than raising import tariffs but has resulted in the desired outcome of higher local production.
The dramatic growth in Botswana’s agricultural trade deficit and trade restrictions due to Covid-19, as illustrated in the graph above, and the poor diamond export performance made it sensible to decide on an import ban in a sector that provides a livelihood to many. The crop production graph illustrates how this has benefited horticulture which, as a subsector is less prone to price competition from large-scale production, improved substantially.
Implications of the import ban on vegetable growing
According to Who Owns Whom’s report, the ban has reduced the import bill for vegetables by 74.7% to P168m (pula) in 2023 from P634m in 2018, and Botswana is now producing 70% of national demand (of 20,000t per annum) up from 49% before the ban.
Fortunately, Botswana is not a major player on the international scene and will not attract the wrath of international aid agencies who prefer liberal trade, made conditional to aid agency interventions.
A more progressive approach might be a better option, especially for developing countries with limited means to invest in new technologies that produce productivity advantages. This should, however, be with the proviso that the country needs to keep fighting and investing its way up in the competitive landscape so that over time, niche markets can trade competitively internationally.
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