Linah K Mohohlo: Economic understanding and integration, plus
transparency and discipline in economic policy
Acceptance remarks by Ms Linah K Mohohlo, Governor of the Bank of Botswana, for the
OMFIF (Official Monetary and Financial Institutions Forum) "Lifetime Achievement Award",
Pretoria, 23 August 2011.
* * *
It is an honour and privilege to receive the Lifetime Achievement Award from the Official
Monetary and Financial Institutions Forum. You will agree that what we think of ourselves
may be important, but it is encouraging when observers' thoughts of ourselves are positive.
In the circumstances, I am humbled by the generous gesture of the Forum, an organisation
which has now attained international stature and influence in advancing the cause of
prudential management of international finance.
I accept the Award with humility. I accept it on my own behalf and on behalf of colleagues at
the Bank of Botswana and counterparts elsewhere; because without their support over the
years, this Award would not have been within reach.
I would like to take this opportunity to say a few words on the two broad areas contained in
the Award citation: first, the importance of supporting "economic understanding and
Integration"; second, the importance of "transparency and discipline in economic policy".
With respect to economic integration, its potential benefits are obvious. Integration enables a
pooling of resources to improve infrastructure, to facilitate the movement of people, goods
and services, to align regulations, and to create opportunities and incentives for investors, all
of which together, accelerate economic development. This has been demonstrated by the
single European market, the current problems of the euro zone notwithstanding, and there is
no reason why economic integration cannot also benefit Africa.
However, enthusiasm for integration, especially at the political level, has not always been
accompanied by the necessary understanding of demands and sacrifices. This includes
difficult political decisions and economic trade-offs in establishing mechanisms for effective
alignment of national economic ambitions with common objectives.
Indeed, the current European experience provides a salutary warning; the ongoing efforts to
save the viability of the euro is a reminder that enthusiasm for a political agenda can obscure
key economic issues.
We should be grateful, therefore, that in the face of pressure to accelerate Africa's integration
process, some enlightened minds have advised caution, taking the view that good intentions
are not enough. Agreements on an ambitious timetable for milestone events, such as the
formal establishment of some additional pan-African institutions, are no substitute for
adequately addressing the imperatives of economic integration.
Similarly, there can be no dispute as to the importance of transparency and discipline in
economic policy. It is noteworthy that lack of transparency in key areas contributed to the
recent global financial crisis. Thanks to discernible improvements in economic governance
and policy making in some parts of the continent, some African economies were generally
resilient during the economic recession. Be that as it may, the pursuit of sound policies
remains a challenge due, in part, to the difficult international environment and adverse
weather conditions.
As for my country Botswana, you will know that its rapid economic transformation from a
poor undeveloped country, dependent on cattle farming, subsistence agriculture and migrant
workers' remittances, to a middle-income economy, is itself the result of a consistent
commitment to transparency and discipline in economic policy. The discovery of diamond
deposits, immediately following independence from Great Britain, clearly played a pivotal role
in the transformation, but the role of minerals is only part of the story.
As history has repeatedly shown, no matter how rich the endowment, natural resources
cannot, on their own, develop a country in the absence of appropriate and effective
institutions. Nor should it be forgotten that Botswana's commitment to prudent
macroeconomic policies covered not only the years of diamond-generated budgetary and
balance of payments surpluses; it was maintained during difficult times, which include the
early years of independence and, more recently, the global financial crisis and economic
recession.
While the strength of Botswana's economic performance has been widely recognised, there
can be no room for complacency if this success is to be sustained. After all, the global
economic recovery is still weak, uncertainties abound, and Botswana remains exposed to the
vagaries of commodity markets. In such an environment, it is imperative not only to maintain
macroeconomic stability, but also to take further steps to improve the business environment
so that more non-mining businesses can be attracted and can ultimately flourish. Up to this
point, the country has emerged from the economic recession in not-so-bad a shape, and its
sovereign credit ratings are so far largely unchanged.
That said, there is nothing miraculous about Botswana's economic performance. In fact,
other African countries have increasingly been able to adopt similar, if not better,
macroeconomic policies, and the benefits are self-evident.
As far as my employer, the Bank of Botswana, is concerned, it has continued to contribute to
the country's economic development since its founding in 1975, by seeking to align fiscal,
monetary and exchange rate policies. This is facilitated by regular consultations between the
Government and the Bank, accompanied by operational and policy transparency through,
among other avenues, periodic economic briefings.
When I joined the Bank shortly after its establishment, I did not envisage that, 23 years later
in 1999, I would head it as Governor and Board Chairman. Nor did I know that during my
tenure, I would be involved in what I consider a professionally fulfilling wide range of activities
at regional and international levels.
Over time, I have learned the importance of the Bank continuously adapting to evolving
circumstances. Indeed, the Bank is much changed from when it was first established. While
still operating under broadly the same mandate of promoting monetary stability and
maintaining a sound financial system, the governing legislation has been subject to a number
of reviews; and there have been several reorganisations to accommodate the evolving
nature of responsibilities. Monetary policy implementation is now benchmarked against
international practice, and the policies and guidelines for managing the foreign exchange
reserves are regularly revisited. Banking regulation and supervision are increasingly risk
based and, accordingly, financial stability has also assumed centre stage.
In all these endeavours, I counted and continue to rely on the support of structures at home
and abroad; this includes colleagues, counterparts and bilateral establishments, such as the
Official Monetary and Financial Institutions Forum.
Director of Ceremonies, Chairman of the OMFIF Advisory Board, Co-Chairpersons of
OMFIF, the Forum's Award Jury, fellow Governors, Distinguished Ladies and Gentlemen, I
end by reiterating my eternal gratitude for the generous acknowledgement of my work, as
evidenced by the conferment on me of the Official Monetary and Financial Institutions
Forum's Lifetime Achievement Award.
I embrace it.
Thank you for your attention.