Dilemmas for prosperous Botswana.

Botswana is often represented as a model economy in Africa-particularly by the international financial press.

There are good reasons for the praise. Botswana ranks number three in Africa in terms of per capita GDP, just after Saudi Arabia at number one and South Africa at number two. The United States Department of State points out that Botswana is "by far the best credit risk in Africa" because of its "A" ratings by both Moodys Investors Service and Standard & Poor's.

Over the past decade the average annual increase in Botswana's GDP is 5.4 percent, using International Monetary Fund (IMF) statistics as a basis and including the IMF's 2005 prediction of 4.5 percent growth. Inflation has historically been rather high-an average annual rate of 6.9 percent-but in recent years has come under the government's control. The IMF says 2005 inflation will be 4.5 percent.

On October 23, 2005, however, Mmegi (Gaborone) carried a story titled: "Credit Ratings Do Not Reflect Economic State."

What was troubling to the local economists interviewed for the story was not that the government devalued the country's currency not once but twice in two years. The first devaluation occurred in February 2004 at 7.4 percent. The second devaluation occurred in May 2005 and registered 12 percent.

The economists complained rather that in a country where the middle class consumer segment depends heavily on imports, devaluation means that prices for these imported items are significantly higher. Add to this increasing costs for fuel and energy based on rising oil prices, and middle income consumers find...

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