IMF Sings Praises Of Mauritius And Botswana

by Robert Lee, for LawAndTax-News.com, London

03 May 2004

In its latest semi-annual report, the International Monetary Fund (IMF) has sung the praises of Botswana and Mauritius within the context of wider economic growth in Africa, holding both countries up as comparable to developed countries in many regards.

In the section of its report entitled "What Works in Africa", the IMF revealed that economic performance in sub-Saharan Africa generally has not matched that of other regions during the period under examination.

Looking at the reasons behind the better economic performances of Botswana and Mauritius compared to their peers, the international organisation suggested that their success was less to do with better macroeconomic and trade policies, or better economic, social and geographic inheritance (although such factors were acknowledged as an influence), and was more to do with the quality of institutions in the two countries in question.

Observing that the superior institutional quality may go a long way to explaining the higher levels of income shown by Botswana and Mauritius, the IMF report explained that:

"In addition to the standard benefits that good economic institutions provide - namely, an enabling climate for private investment - institutions helped Botswana and Mauritius in three particular ways."

It went on to reveal that these were: helping Botswana to prevent the natural resource curse which has been shown to depress long-term growth in other countries; minimising the scope for conflict and providing space for the participation of all groups via strong political institutions in Mauritius; and the role of strong domestic institutions in both countries in helping them to adjust to commodity shocks.

Drawing on the examples of Mauritius and Botswana, the IMF concluded by suggesting that institution building is a prerequisite for strong long term economic performance in Africa generally.

"Over the past few years, the reduction in civil conflicts, the growing democratisation of the continent, and the adoption of more market-oriented policies have improved the prospects of countries in sub-Saharan Africa being able to meet this challenge," it observed.

Recommended