The effects of the global financial crisis of 2007-2008 on public sector projects in Botswana during 2008-2010
Abstract
This dissertation focuses on the effects of the global financial crisis of 2007-2008 on public
sector development projects in Botswana during the period 2008-2010. A documentary
research strategy was used to execute this study. Data was collected and analysed in relation
to the sectors of importance, which were agriculture, extractive industries, transport and
communications, hotels and restaurants amongst others. Expectation was that as the
financial crisis was felt globally, the economy of Botswana would not be exceptional.
However, in assessing the effects of the financial crisis under the different public and private
sectors, it showed that not all effects were felt at the same time. For example, the main
economic sector in Botswana, mining, which falls under the ambit of extractive industries,
was more affected than other, non-mining, sectors. The government, however, employed
effective strategies to counter this situation. It eased monetary policy so as to ensure price
stability and to keep inflation rates within the desired range of between 3-6%. Another
strategy was that government stimulated domestic demand through an expansionary fiscal
policy. In executing such strategies, the government wanted to ensure a stable fiscal and
monetary environment which was sustainable and in line with comparators in the region.
With the effects of the crisis on public and private sectors, felt at different levels and at
different times, the country however weathered to the crisis and was able to move forward in
the post-crisis period.
Though, challenges of high inflation rate amongst others still remain, this had existed prior the
years of crisis. Post crisis, as from 2001 until 2013, Botswana inflation rate averaged 8.3%
reaching an all-time high of 15.1% in August of 2009. Keeping this rate within the desirable
ranges is still a challenge.
With the non-mining sector performing well despite the recession, government has
recommended diversification of this sector together with the private sector to become the
alternative engines of growth for the economy.
Results suggest that the economy was significantly affected by the crisis and it is my
recommendation that the diversification strategies be employed.