in funding public infrastructure was clearly appropriate. but now, with relatively low returns on such investments, the holding of financial reserves as a sustainable source of income for both current and future generations is increasingly important. the financial sector, too, has expanded rapidly, both in size and the range of services. in 2016, the financial and business services sector accounted for 13. 6 percent of gdp, dwarfing most other non - mining private sector activity ; for example, manufacturing accounted for only 5. 2 percent. over the past ten years, cumulative growth of the financial sector, in real terms, has been almost exactly 100 percent, compared to 52 percent for the economy as a whole. a major driving force in this development has been the rapid growth of the domestic pension fund industry. in the early 2000s, the government took a decision to effectively privatise a large portion of the foreign exchange reserves through the establishment of a defined contribution pension fund scheme for the public service. despite its openness, the impact of the global financial crisis on the botswana economy was relatively mild. the main negative shock was to the mining sector, but the transmission to the rest of the economy was muted, helped by government drawing on its financial savings to maintain public spending. for the financial sector, the predominantly " plain vanilla " characteristics and limited international linkages provided a shield against the worst effects, buttressed further by effective regulation and prudential supervision. there is no room for complacency, however, as the interconnectedness of africa with global financial markets continues to develop, encouraged by the search for yield and ample market liquidity resulting from an extended period of ultra - loose monetary policy. more generally, for the " africa rising " narrative to regain the much - needed momentum requires sustained recovery in global commodities markets. at the same time, increasingly stringent global regulatory requirements, especially on market conduct and financial crimes, notably the anti - money laundering and combatting of the financing of terrorism regimes, have created challenges. in this regard, a number of countries in the region have been subjected to enhanced due diligence by correspondent banks and, in general, negative perceptions among counterparties towards doing business with african banks. in response to the latter, it is clearly necessary for countries to do everything in their power to ensure that the know your customer, and the anti - money laundering and combatting of the financing of terrorism regulations in their jurisdictions are of the highest possible standards. adoption and effective implementation of such standards is also supportive

the domestic financial sector and the impact of the global financial crisis on the economy. second, from the global perspective, i will consider recent developments in financial markets and the associated policy challenges ; in particular, the extended period of low yields together with heightened risks, including geopolitical risks. again, this has major implications for effective asset / liability management. before concluding, i will give some consideration to the emerging challenges, where the increasingly optimistic outlook for the global economy has encouraged talk of policy " normalisation ". the botswana economy in the five decades since independence, in 1966, botswana ’ s economy has grown rapidly, from one of the poorest in the world to an upper - middle - income country with a per capita income of approximately seven thousand us dollars. central to this growth has been relatively strong institutions and governance, healthy fiscal position and external balance sheet, low public debt burden and the prudent management of mineral revenues. from the mid - eighties, persistent twin fiscal and balance of payments surpluses led to rapid growth of foreign exchange reserves that, at their peak, were equivalent to almost three years of import cover. in turn, this allowed the authorities to move relatively quickly to open the economy, includ5 ing the abolition of foreign exchange controls by 1999. since 2001, both s & p global ratings and moody ’ s investors service have consistently assigned botswana the highest, investment grade, sovereign ratings in africa. on october 27, 2017, s & p global ratings affirmed the country ’ s ratings of a - / a - 2 for short - and long - term foreign and domestic - currency denominated debt, while revising the outlook from negative to stable. the revision of the outlook is significant as it reflects expected stable economic growth at a time when many sub - saharan african countries face relatively weak growth and shrinking fiscal space. this has been a remarkably resilient development model, in combination with the government ’ s consistently prudent approach to fiscal management and sustainable budgeting. however, beginning in the 2000s and, in particular, since the global financial crisis, the twin surpluses have not been so reliable, with recurring fiscal and external deficits. this has implications for the management of the government ’ s net asset position, including balancing options for taking on more public debt vis - avis drawing on the accumulated national savings. the structural transformation of the economy is also an important consideration. in the past, the model whereby foreign exchange reserves were held pending opportunities for their productive deployment