| Keith Jefferis | ||||||
The senior Botswanan banker who told Euromoney last year that he didn’t care what rating Botswana got, as long as it was better than South Africa’s, has finally got his wish.
Botswana has received a single A from Moody’s Investors Service – the country’s first credit rating. This puts it four notches above South Africa’s Baa3. In fact, Botswana now has the highest credit rating on the African continent.
But it’s not just the African states such as South Africa, Tunisia (Baa1) and Egypt (Ba1) that are lagging behind the diamond-flush state. Korea (Baa2), Poland (Baa1) and a whole host of other higher-profile destinations for foreign investors’ funds are eating Botswanan dust. “Obviously in a global context Botswana is a small country. And we are in a part of the world that is better known for its problems than for its successes,” says Keith Jefferis, deputy governor of Bank of Botswana, the central bank. “We felt that getting a credit rating would enable us to show that our economy is very strong and raise our profile and status in the eyes of the international investor.”
In the short term it is little more than a public relations exercise since, as Jefferis points out, the rating is certainly not tied to any specific plans for a sovereign bond issue. But, in the long term, it does pave the way for Botswana to access the international markets at some point.
Botswana has experienced rapid growth since independence in 1966, posting average growth rates of 9%. The government holds no domestic debt, holds greater foreign assets than its small external debt, and has run a budget surplus in 15 of the past 16 years.
For a country surrounded by basket cases where Kalashnikovs and bread are top of the most wanted list, Botswanans are more concerned with where their next pair of Calvin Kleins are coming from. However, it remains to be seen whether a strong credit rating and a taste for fashionable underwear will be enough to overcome the suspicion that so many international investors still hold when the phrase sub-Saharan is mentioned.
