BSC Part 1: Japan, Germany and America granted Botswana extensive foreign aid packages, but why?

The late 1990s and early 2000s saw a gradual decrease in Foreign Aid in its top five countries, with one exception. In 2002 the United States increased their aid package by US$22.66million from US$0.55million in 2001 to US$23.21million in 2002. The United States maintained this high level of aid with an average of US$20million per year between 2003 – 2006 compared to an average of US$4.38million a year from 1998-2001. Japan also increased their aid prior to the United States providing foreign aid in 1998 valued at US$35.61million, which was their highest ever aid grant to Botswana, outdoing their previous highest aid grant in 1988 by US$15million ((OECD) O. F.-O., 2016).

Economists believe that one reason for some countries granting large aid packages to Botswana was due to their economic success up until this point. The early 2000s saw Botswana unfold as one of the world’s most successful developing countries of all time, while upholding one of world’s highest economic growth rates since the 1960s. Botswana was also redefined from a lower income country to a upper middle income country in 1989 due to their substantial increases in GDP per capita and standard of livings. Furthermore, evaluation reports, country studies and various academic articles have commended Botswana on their management, utilization of resources, implementation of development strategies, rating it overall as very positive (Rakner, 1996). Some economists believe that the characteristics of Botswana’s civil service, ability to identify priority areas and implement aid into comprehensive development projects while maintaining low levels of corruption are major reasons why donors were attracted to Botswana (Hopkin, 1994). Festus Mogae who was Botswana’s third president taking office in 1998, explained it well when he said how, “many donors have favoured the country because we were able to spend resources both effectively and speedily. That meant that we normally got something extra” (Horner, 1995).

                If we analyze the amount of foreign aid given to Botswana bilaterally for the years 2006 to 2014 it is evident there were two periods of increased foreign aid inflows. One of the first increases in aid is portray in figure 6 by the Japanese who saw a US$17.7million increase in foreign aid to Botswana from 2007 to 2008.  

However, the most significant increase in foreign aid during this time period , as seen in Figure 7, is specifically by Germany and the United States in 2008. Germany’s US$438.98million worth of foreign aid given to Botswana in 2008 accounts for 48% of Germany’s total aid money granted to Botswana since independence in 1966. The United States also provided Botswana with its highest aid package since 1966, valued at US$232.87million and accounting for approximately 18%, nearly one fifth, of the total amount of money ever given to Botswana in foreign aid. Japan also showed their support by providing their 2^nd highest aid grant to Botswana in 2008 valued at US$22.47million while also giving another one in 2010 worth US$15.85million.

Despite Germany’s termination of bilateral financial cooperation in 1992 and bilateral technical cooperation in 2004 in Botswana, it has continued to provide Botswana with large amounts of aid (German Federal Foreign Office, 2015). Germany has a history of focusing its aid on middle income countries, as in 2006 it gave 59.8% of its total ODA to middle income countries, mostly in the form of debt relief. In 2008 US$436.77million of the US$438.98million, which is approximately 99.5% of total aid in 2008, was granted in the form of debt forgiveness. Furthermore, as part of the G7 summit in Gleneagles in 2005 Germany committed to doubling its aid to Sub-Saharan Africa by 2010. One of the biggest risks involved in granting and increasing aid to Sub-Saharan African countries are the extremely low credibility of highly corrupt governments. Due to Botswana’s history of economic success and political stability, Germany has always and still considers Botswana a country teeming with high potential for investment (OECD, 2011). In 2015 German Ambassador to Botswana, Mr. Rold Ulrich, Said Germany is, “very proud to have contributed, though moderately to the impressive development of Botswana has achieved since independence” (Gaofise, 2015). Additionally, Ambassador of Botswana to Germany, Tswelelo Moremi, said that Botswana’s aim is to, “identify trade and investment opportunities for the German private sector in Botswana and also to provide a platform for the country companies to present their capabilities and cultivate possible partnerships with their Botswana counterparts” (Seitshiro, 2016). In line with this strong relationship between Botswana and Germany in August of 2007, after termination of both bilateral aid treaties, both countries signed a German-Botswanan investment protection and promotion agreement (German Federal Foreign Office, 2015). I believe that Germany’s large aid package in 2008, after the tragedy of the Global Financial Crisis, was the first act of fulfillment of this agreement between these two countries. Thus, as portray by the data, Japan, Germany and the United States played a pivotal role for Botswana, as a source of foreign aid throughout the 1990s and 2000s. 

Sources

(OECD), O. F.-O. (2016). Aid (ODA) disburesements to countries and regions. Retrieved from OECD.Stat: http://stats.oecd.org/Index.aspx?ThemeTreeId=3#

Gaofise, L. (2015, 10 5). Botswana Appreciated German Assistance. Daily Mail .

German Federal Foreign Office. (2015, March). Botswana Development Cooperation. Retrieved from Federal Foriegn Office: http://www.auswaertiges-amt.de/EN/Aussenpolitik/Laender/Laenderinfos/01-Nodes/Botswana_node.html

Hopkin, A. (1994). Aid, Education and Development in Botswana: A Qualitative Analysis. International Journal of Educational Development, 393-407.

Horner, S. (1995). Botswana: Prudence and Dynamsm - Getting the Mixture Right, Country. The Courier.

OECD. (2011). In OECD Development Assistance Committee Peer Reviews: Germany 2010. OECD Publishing.

Rakner, L. (1996). Botswana - 30 years of economic growth, democracy, and aid: Is there a connection? Bergen The Institute 1997.

Seitshiro, K. (2016). German Investors Set Eyeyes on Botswana. Sunday Standard.