BOTSWANA ANNUAL AGOA ELIGIBILITY UPDATE

UNCLAS GABORONE 001454

SIPDIS


AF/S FOR MUNCY

E.O. 12958: N/A
TAGS: ETRD ECON BC AGOA
SUBJECT: BOTSWANA ANNUAL AGOA ELIGIBILITY UPDATE

REFERENCE: STATE 170577


1. Post recommends renewal of Botswana's AGOA eligibility status
based on its continued compliance with the stipulated criteria.
As described below, during the year, Botswana took steps to
strengthen its private sector, improve its capacity to combat the
financing of terrorism, and prevent child labor.


2. Country Background Summary: Botswana is Africa's longest
continuous multi-party democracy. It has a population of 1.7
million, and real 2003/4 GDP was $4.03 billion (Note: The real
GDP figure is calculated using the Ministry of Finance's figure
of 19.3 billion pula for fiscal year 2003/4 and converted using
the average annual exchange rate for the period of 4.7849).
Approximately half the population is employed in the informal
sector, largely subsistence farming and animal husbandry.
Botswana has effectively channeled revenue from mineral wealth
into human development, giving it one of the highest economic
growth rates in Africa. Its economy is highly dependent on
diamonds.


3. Comments on Eligibility Requirements


I. Market based Economy

Major Strengths Identified
No known investment disputes; nationalization of private
property prohibited by law.
Open, rules-based trading system complies with WTO
obligations.
Regulatory system is transparent.
Limited price controls and price subsidies.
Remaining parastatals required to operate on a commercial
basis; government is committed to privatizing most parastatals.
Market-oriented economy with strong encouragement for
private enterprise; has achieved and sustained rapid per capita
apita
economic growth since independence.
In March 2005, the Cabinet approved a Privatization Master
Plan.
In August 2005, the Cabinet approved a Competition Policy.
A Foreign Direct Investment Strategy is currently being
developed by the Botswana Export Development and Investment
Authority.
Moody's and Standard & Poor's again ranked Botswana an A-
rated economy based on its continued macroeconomic and political
stability.
The 2005 Economic Freedom of the World Report listed
Botswana as the freest economy in Africa and ranked it even with
Japan and Spain.
Government is targeting international marketing of exports,
tourism, and investment opportunities in order to lessen
dependence on mineral revenues, generate more jobs, and alleviate
poverty.
The Government of Botswana is committed to creating a
regulatory framework favorable to investors. Foreign investors
are given equal access to general incentive schemes in all
in all
economic sectors, save in those reserved for Botswana citizens.
New intellectual property rights legislation largely
conforms to the TRIPS agreement.
Core inflation is low and stable. In August of 2005, annual
inflation stood at 9.6%, well above the Bank of Botswana's 4-7%
target range for the year, fueled by a 12.5% currency devaluation
in May 2005 and rising fuel, utility, transportation and
communications prices.


B. Major Issues/Problems Identified
Heavily dependent on diamond sector (79.9% of exports in
2004),vulnerable to market sentiment; needs to diversify
economy.
Rising unemployment.
Recently, recurring budget deficits have undermined
development spending on new infrastructure projects and resulted
in a freeze of government hiring, which makes up roughly 40
percent of formal sector employment.
Lacks privatization legislation, which slows implementation
of privatization master plan.


II. Political Reforms/Rule of Law/Anti-Corruption

tion


A. Major Strengths Identified
A well established record of observing the rule of law and
right to due process, and equal protection under the law.
Transparency International again ranked Botswana the least
corrupt country in Africa in its 2004 Corruption Perceptions
Index (Botswana tied for 31st place with Estonia and Slovenia).
Political pluralism well established.

Independent press has a long tradition of candid, unimpeded
discourse.
Active and effective campaign to eliminate corruption and
improve efficiency of judicial system.
GOB making efforts to reduce overcrowding its prison system.
No reports of political prisoners.
Government has declared war on corruption and economic
crime.
Government bureaucracy is paid on time and is provided a
living wage.
Botswana hosts the International Law Enforcement Academy,
jointly managed by USG and Botswana officials, which provides
provides
training to law enforcement personnel from sub-Saharan Africa.
The curriculum focuses on long term institutional reforms of the
law enforcement sector, anti-corruption training, and combating
international criminal activities.


B. Major Issues/Problems Identified
The judicial system does not always provide timely, fair
trials due to a serious backlog of cases.
Prison conditions remained poor, due primarily to
overcrowding.
Some citizens still do not enjoy full access to social
services and remain politically and economically marginalized.
Some media professionals complain that the Government has
manipulated coverage of the state-owned television station and
unreasonably restricts access to information. .


III. Poverty Reduction


A. Major Strengths Identified
Legal structures for promoting small/medium enterprises,
export oriented industries, and the non-mining sector.
tor.
Poverty reduction inextricably linked to development of
private sector through foreign and domestic investment.
Investment incentives for job-creating industries
established in traditionally underdeveloped rural areas.
Universal access to health care and primary education, with
schools and clinics throughout the country.
GOB attempting to expand rural access to secondary
education.
Health care spending growing as GOB implements national
HIV/AIDS control strategy.


B. Major Issues/Problems Identified
Despite the dedication of substantial resources to combating
HIV/AIDS, the Government continues to face challenges in
providing medical care for the growing number of HIV positive
Batswana. HIV/AIDS exacerbates problems of low productivity and
poverty.
Limited data on poverty.
According to the most recent data available (2005),the
Government estimates that 30% of the population lives below the
poverty line.
y line.
The implementation of the National Strategy for Poverty
Reduction pilot program in collaboration with UNDP has been slow
to take off.


IV. Worker's Rights/Child Labor/Human Rights


A. Major Strengths Identified
Government generally respects human rights of its citizens;
no confirmed reports of political or other extrajudicial killing
nor politically motivated disappearances.
Has ratified all ILO core conventions, including No. 182
(worst forms of child labor) and No. 38 (minimum wage).
Constitution provides for the right of association and all
workers may join or organize unions of their choice.
Detention without bail is highly unusual.
Industrial relations system based on a tripartite
consultative process.
Working with the U.S. Department of Labor and the
International Labor Organization on two programs designed to
prevent child labor.



B. Major Issues/Problems Identified
tified
Government restricts the right to strike; burdensome
arbitration process required by law means few strikes have
actually been legal.
Domestic violence against women remains a serious problem,
but one that is difficult to quantify.
In January 2002, the Government terminated public services
to the ethnic San (also known as Basarwa) and other minorities
living in the Central Kalahari Game Reserve and relocated them to

settlements outside the Reserve. An NGO representing some of the
relocated persons has challenged the constitutionality of this
policy in court. Hearings in the case continued throughout 2005.
Reports emerged of government officials harassing and torturing
some residents of the relocation settlements who were suspected
of poaching.
During the year, the Government deported an academic and
three journalists. The Government exercised its right not to
specify reasons for the deportations other than to cite national
nal
security concerns. One of the individuals, longtime University
of Botswana Professor Ken Good, was an outspoken critic of the
Government.



V. International Terrorism/U.S. National Security


A. Major Strengths Identified
Fully supports U.S. war on terrorism; pledged compliance
with UNSCR 1373; party to all international counter-terrorism
conventions.
Working with U.S. Treasury's Office of Technical Assistance
to upgrade its anti-money laundering and counter terrorism
finance capabilities.
Does not engage in activities that undermine U.S. national
security or foreign policy interests; has supported internationa
efforts to combat terrorism.
Shares interest in combating transnational threats from
Africa, taking steps to stop HIV/AIDS spread, environmental
degradation, and trafficking of small arms and illegal drugs.
The International Law Enforcement Academy, located in
Botswana and jointly managed by U.S. and Botswana officials,
als,
conducts courses on counter-terrorism and related subjects, such
as arms smuggling, for law enforcement personnel from sub-Sahara
Africa.


B. Major Issues/Problems Identified
Botswana's rudimentary travel documents are easily forged.


Summary and Recommendation

Botswana has manifested its commitment to the principles
underlying the AGOA eligibility criteria by maintaining and
expanding its compliance with them in the past year. The GOB
continues its efforts to diversify and liberalize Botswana's
economy and to distribute the benefits of the resulting economic
growth to the least advantaged sectors of society. Botswana's
track record on human rights and rule of law arguably exceeds any
in Africa. Botswana's achievements in these areas should be
recognized through the renewal of its eligibility to participate
in AGOA.

CANAVAN


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