IMF Staff Country Reports

This Selected Issues paper discusses reforming the state-owned enterprises (SOE) sector in Botswana. The authorities are committed to diversifying the economy and growing the relative size of the private sector but, until now, progress has been limited. Compared to other emerging markets, SOEs operate in similar industries but government ownership is considerably higher in Botswana. The authorities are taking steps to liberalize some sectors, as part of efforts to enhance productivity and improve market functioning. Two entities are involved in the oversight and monitoring of SOEs, potentially creating risks of overlap and duplication. A review of past country experiences with SOE reforms highlights several key ingredients for success. A favorable political environment combined with strengthened state oversight and monitoring functions. Several countries now subject SOEs to competition law, compensating them for public service obligations, requiring them to separate the accounts of commercial and noncommercial activities, setting guidelines for financing decisions, or establishing financial performance targets.