VZCZCXRO1554
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHOR #0958/01 3081029
ZNR UUUUU ZZH
R 031029Z NOV 08
FM AMEMBASSY GABORONE
TO RUEHC/SECSTATE WASHDC 5350
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RHMFISS/HQ USAFRICOM STUTTGART GE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC

UNCLAS SECTION 01 OF 02 GABORONE 000958 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EAID ENRG PREL KHIV BC
SUBJECT: BOTSWANA: AMBASSADOR'S MEETING WITH FINANCE 
MINISTER 
 
SENSITIVE BUT UNCLASSIFIED.  NOT FOR INTERNET POSTING. 
PLEASE PROTECT ACCORDINGLY. 
 
¶1. (U) SUMMARY.  Ambassador Nolan paid a courtesy call on 
Botswana's Minister of Finance and Development Planning 
Baledzi Gaolathe on October 28.  The Finance Minister thanked 
the Ambassador for U.S. development assistance programs and 
noted that although Botswana has reached middle income 
status, the country still needs foreign aid, especially to 
manage the AIDS pandemic.  The Minister briefed the 
Ambassador on some of the goals of the Government's 10th 
National Development Plan.  Ambassador Nolan pledged that 
U.S. partnership with Botswana will continue and expressed 
his interest in Botswana's initiatives to increase trade and 
diversify its economy.  They also discussed the impact of the 
Zimbabwe crisis and world economic turmoil on Botswana's 
economy.  END SUMMARY 
 
-------------------------------------------- 
Request for Continued Development Assistance 
-------------------------------------------- 
¶2. (U) Ambassador Nolan paid a courtesy call on Botswana's 
Minister of Finance and Development Planning Baledzi Gaolathe 
on October 28 in the Minister's office.  He was accompanied 
by DCM and Pol/Econ Chief.  Finance Minister Gaolathe thanked 
the USG for its partnership in Botswana's economic 
development over the past 40 years.  Although Botswana has 
reached middle income status, the Minister noted that the 
country still needs friends like the United States, 
especially to manage the AIDS pandemic.  He thanked the 
Ambassador for our PEPFAR program and was especially grateful 
that the Peace Corps has returned to Botswana with a focus on 
HIV/AIDS.  He explained that the AIDS crisis was making it 
more difficult for Botswana to meet the Millenium Development 
Goals and its own "Vision 2016" pledges.  The Minister and 
the Ambassador both praised the work of private American 
groups working in Botswana, including churches, the Gates 
Foundation, and universities like Pennsylvania and Harvard. 
 
------------------------------ 
10th National Development Plan 
------------------------------ 
¶3. (SBU) The Finance and Development Planning Ministry is 
finalizing Botswana's 10th National Development Plan (NDP). 
Though past NDP's only covered a six-year period, this one 
will last seven years, to coincide with Botswana's "Vision 
2016" goals.  One fundamental premise of the draft NDP 10 is 
that government must encourage economic diversification and 
facilitate private sector growth in order to create wealth 
and combat poverty.  He noted that the Vision 2016 Plan calls 
for Botswana to raise its per capita income to approximately 
$9000 (from current level of nearly $6000), and that doing so 
will require new ways to generate wealth.  Gaolathe also 
explained that in "Vision 2016," the GOB had hoped to 
eliminate poverty and stop new HIV infections, but 
achievement of these 2016 goals currently seems unlikely. 
However, he estimated that only 25% of Botswana's citizens 
are now living below the poverty line, and that this number 
is declining.  The Minister noted that Botswana is close to 
reaching its 2016 pledge to have all citizens living within 
five kilometers of a health care facility, but the current 
problem is staffing those facilities.  Manpower problems are 
replacing infrastructure problems.  To improve the situation, 
Gaolathe said that the GOB is spending about 25% of its 
current budget on education, including the creation of a new 
faculty of medicine and teaching hospital.  Botswana is on 
track to meet the Millenium Development Goal of universal 
primary education, but according to the Minister the GOB has 
set a goal in NDP 10 for all children to receive education 
through Form 5 (i.e. 12 years). 
 
-------------------------------- 
Economic Diversification Efforts 
-------------------------------- 
¶4. (SBU) According to Minister Gaolathe, Botswana is open to 
world trade and working to grow its private sector and 
diversify its economy beyond diamonds.  He noted Botswana's 
membership in the Southern African Customs Union (SACU), 
cooperation with the European Union, and ability to export 
duty-free to the United States under the Africa Growth and 
Opportunity Act (AGOA).  He lamented that many Botswana firms 
lack the capacity to take advantage of AGOA preferences. 
Ambassador noted Botswana's efforts to develop a knowledge 
economy, such as the "Botswana Innovation Hub" project to 
 
GABORONE 00000958  002 OF 002 
 
 
attract technolgy firms.  The Minister explained that the GOB 
is hoping to develop a "knowledge sector" (i.e. technology 
firms or service firms that have a high-tech component) and 
to become an energy exporter.  He mentioned that the 
government is building a new University of Science and 
Technology to build capacity for "knowledge sector" 
employment.  He noted that Botswana wants to contribute to 
the SADC power grid, both through projects at Mmamabula and 
Morupule and the encouragement of indpendent power projects. 
Finally, the Minister explained that the government is 
encouraging the mining sector to expand beyond diamonds and 
the diamond industry to diversify from mining to include 
aggregation, cutting, and polishing. 
 
--------------------------------- 
Impact of Zimbabwe, World Turmoil 
--------------------------------- 
¶5. (SBU) The Ambassador asked Minister Gaolathe about the 
impact of the crisis in Zimbabwe on Botswana.  While the GOB 
does not have formal statistics on Zimbabwe's economic 
impact, the Minister noted that an estimated 300,000 
Zimbabweans live in Botswana, and most of them are economic 
migrants working throughout the country, many illegally.  He 
explained that due to Botswana's relative prosperity, many of 
its citizens choose not to work as domestics or field hands, 
and that Zimbabwean laborers have filled some of that demand. 
 Zimbabwean migrants use Botswana's clinics and hospitals, 
straining the government's budget for medical and social 
services.  The GOB also had to increase funding for the 
police, prisons, customs, and immigration to improve the 
capacity to round up so-called "border jumpers" and return 
them to Zimbabwe.  The Minister acknowledged that the economy 
around Francistown has certainly boomed due to the influx of 
Zimbabwean shoppers, but he argued that any benefit to 
Francistown has been far outweighed by the way that 
Zimbabwe's problems have deterred investors from the entire 
SADC region.  In addition, he explained that Zimbabwe used to 
be the second largest economy within SADC and it was a good 
trading partner to Botswana.  The lost opportunity of trade 
within the region has also taken an economic toll. 
 
¶6. (SBU) The world economic downturn has had some negative 
impact on Botswana.  Minister Gaolathe said that the GOB is 
very worried that the global crisis will soften demand for 
luxury items like diamonds in the United States and Europe, 
thus hurting Botswana.  He noted that some buyers have chosen 
not to purchase diamond sights after viewing them, which is a 
sign of market anxiety.  He was hopeful that the growth of 
the market for diamonds in India and China will help off-set 
slumping demand in the West, but worried that Asian demand 
for iamonds will also diminish due to the global problms. 
The Minister was pleased to note that world il prices have 
dropped, and explained that this ill likely reduce inflation 
in Botswana, making griculture and domestic manufacturing 
more profitable in the short term. 
 
----------------- 
Biographical Note 
----------------- 
¶7. (SBU) Baledzi Gaolathe, a respected technocrat and former 
civil servant, has been Minister of Finance and Development 
Planning since October 1999.  He first joined Parliament in 
1999 as a "specially elected member," but in 2004 stood for 
and won the Tonota North constituency.  Before joining 
Parliament, he was the Governor of the Bank of Botswana from 
July 1997 to October 1999.  Gaolathe began his career as a 
civil servant.  He was the Permanent Secretary in the 
Ministry of Finance and Development Planning for fifteen 
years (1977-1992) and Permanent Secretary in the Ministry of 
MinerQs, Energy, and Water Affairs from 1970 to 1973.  He 
was also the first Managing Director of Debswana (the joint 
venture between the GOB and DeBeers) from 1992 to 1997. 
Minister Gaolathe is 66 years old and is married with two 
surviving children. 
NOLAN