Although Botswana has had one of the most liberal exchange control regimes in Africa, the economy badly needs to diversify. It is argued that the investment constraints imposed by the remaining exchange controls should be removed, but it is feared that this would cause a serious outflow of funds. Alternatively, there are expectations of large foreign investment inflows.
Present monetary instruments and management skills are inadequate to deal with these circumstances, so capital controls should only be abolished gradually. Exposing the economy to international influence should prevent any weakening of macroeconomic policy in the long-term.
