MODULE 2: PRODUCTION, CONSUMPTION AND
entrepreneur in the process of
INVESTMENT
TOPIC GENERAL SPECIFIC OBJECTIVES
OBJECTIVES
Learners should be able Learners should be able to:
to:
Production Explain the concept and - Explain the concept of production;
the process of - Discuss the need for production
production including basic needs, needs, wants
(material and non-material), choice,
scarcity and opportunity costs;
- Discuss production in hunting and
gathering societies;
- Identify and define the factors of
production;
- Discuss land ownership and
problems related to utilisation and
ownership;
- Explain the various forms of capital
such as finance, machinery and
technology;
- Discuss ways of raising capital;
- Discuss labour and capital intensive
modes of production
- Discuss the determinant factors for
appropriate technology;
- Evaluate progress in the
development of relevant technology
in Botswana including efforts by
Rural Industries Innovation Centre
and Botswana Technology Centre;
- Discuss specialisation and division
of labour;
- Describe different types of labour
including specialised, skilled, semi-
skilled and unskilled;
- Discuss conditions which either or
promote labour efficiency;
- Assess how far local conditions
facilitate or militate against labour
efficiency;
- Explain entrepreneurship;
- Describe the role played by an
production;
- Discuss economic production
systems;
- Suggest and justify an alternative
production system for Botswana’s
economy.
Enterprise Demonstrate an - Explain enterprise;
understanding of the - Discuss the characteristics of sole
role of enterprise in the proprietors, private companies,
process of production. parastatals, joint venture,
partnerships and co-operatives;
- Discuss privatisation of parastatals,
citizen empowerment, localisation,
women and property ownership
strategies for development;
- Evaluate the role and development
of the primary, secondary, tertiary
and quaternary sectors of
production in developing countries
with specific reference to
Botswana.
Consumption Develop an - Explain consumption;
and investment understanding and - Describe the relationship between
appreciate consumption consumption and production,
and investment in supply and demand, consumption,
Botswana savings and investment;
- Discuss the benefits and risks of
investment;
- Discuss foreign reserves as a form
of investment;
- Evaluate the promotion of a culture
of investment in Botswana’s
economy.
Page 1 of 32
 PRODUCTION
- Production is a process whereby natural resources are transformed or
changed into more useful goods/commodities to satisfy human needs
and wants.
- Production is any economic activity that satisfies human needs and
wants
- Production is any process whereby natural resources and human effort
are used to provide goods and services to satisfy human needs and
wants.
- Production is the making of goods and provision of services in order
to satisfy human needs and wants.
Goods are physical products that can be seen or touched, for example,
bread, sugar, books and furniture.
Services are non-tangible activities that meet people’s needs and wants
(intangible or invisible). For example:
 Trading which is buying and selling of goods.
 Teaching which is imparting of knowledge to children by
teachers.
 Nursing which is medical care given to ill people at hospitals by
health workers.
 Insurance is the industry that protects society and businesses from
unforeseen risks.
 Transportation is the carrying of people, goods and services.
THE NEED FOR PRODUCTION
- In order to develop we have to satisfy our basic needs and wants to
start the process of economic growth.
- To satisfy our needs and wants, we produce and exchange goods.
- Development emphasizes satisfaction of people’s needs and the
production process ensures that goods and services are made to
satisfy basic needs first and wants later.
- Development requires money for it to take place and this money is
generated by production activities such as mining, industry and
agriculture.
- Production creates wealth to fuel the development process.
- The higher the level of production the higher the level of
development
MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES
NEEDS
Needs are items that are essential for human beings to survive.
Needs are items without which human beings will be unable to survive.
They can be divided into material and non-material needs.
MATERIAL NEEDS
Material needs are tangible, for example, they can be seen or touched.
They are usually referred to as basic needs.
They are four basic or material needs:
(a) Food which is essential for providing energy.
(b) Clothes which are important for providing warmth.
(c) Shelter provides protection from harsh weather conditions, for
example, cold, sun and winds.
(d) Clean and safe water which is important for excretion of waste
from the body or prevention of diseases.
NON-MATERIAL NEEDS
Non-material needs are services that we require for survival, they are
intangible and invisible. For example, love, security, education, health care
and human rights.
WANTS
Wants are items that make human lives easier and more comfortable.
Wants are inessential for human survival that man can do without them.
Human societies only produce wants after meeting their basic needs.
Societies have to produce surplus for it to be able to have wants, for
example, if excess food is produced it can be exchanged for jewellery.
Examples of wants
(i) Non-material wants, entertainment, banking and electricity.
(ii) Material wants, jewellery, expensive/flashy clothes,
mansion/big house, cars and furniture.
SCARCITY, CHOICE AND OPPORTUNITY COST
SCARCITY
In order for production to occur resources have to be used.
Resources can be in any of the following forms.
 Human resources which is knowledge, expertise and skills
provided by people.
 Economic resources which is capital in the form of machines and
finance (money).
 Natural resources which are items provided by nature that people
can utilize for their own good, for example, soil, water, vegetation
and minerals.
Page 2 of 32
MODULE 2

- People’s needs and wants are unlimited (infinite). Therefore if
resources were in abundance people would produce more goods
and services to satisfy their needs and wants.
- Resources are, however, limited (finite) and insufficient to satisfy
all people’s needs and wants.
- The inadequacy of resources is what is called scarcity. This
means that some people in a society will be able to meet their basic
needs and wants and enjoy high standards of living while others
will remain poor.
- Scarcity of resources differs from society to society since this is
dependent on the level of development, for example:
(a) Simple traditional societies: People mostly concerned with
acquiring basic needs hence low levels of scarcity, for example
Basarwa become satisfied once they have killed an animal for their
food.
(b) Modern societies: they have higher level of scarcity since they
have many and diverse needs and wants which are difficult to fully
satisfy. For example, after a person meets the basic needs there are
so many luxuries that one desires which are usually difficult to
satisfy, for example, car, furniture and holiday.
CHOICE
- Given the scarcity or insufficiency of resources, people are unable
to have all things they desire. People are, therefore, forced to
choose what to spend the available resources on. For example,
people have to decide on whether to spend on needs or wants if
their income is limited.
- A country or the government also has to make similar choices on
how to best use the limited resources. For example, whether to
spend money on industrial development or social development, for
example, education and health; use land for agriculture or wildlife
conservation; education or military expenditure.
MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES
- All these choices, made by people and government, will affect the
way in which a country uses its resources and therefore they will
determine what is produced.
OPPORTUNITY COSTS
 Whenever resources are committed to the production of one item,
then the society must forego the outputs of other items that could
have been produced but have been forfeited or sacrificed because
of the choice made.
 This means opportunity cost is the act of choosing one item over
the other as a result of scarcity of resources. For example:
(i) If a student chooses to use his/her own free time to study for
an examination, he/she sacrifices watching television and
other forms of entertainment. The entertainment is sacrificed
in order to study and obtain a good grade.
(ii) If a country chooses to use more money on buying weapons
then other services are neglected.
The importance of opportunity cost
 It helps people to make the right choices or decisions as it helps
them to focus on the real or true cost using resources.
 For example, production may mean loss of a clean environment if
it causes pollution like at Selibe-Phikwe. So the loss of a clean
environment is part of the cost of production that may be ignored if
the opportunity cost of production is neglected.
Page 3 of 32
MODULE 2
THE PRODUCTION IN HUNTING AND GATHERING SOCIETIES
 Hunting and gathering societies are the earliest forms of human
societies.
 They depended on products of the local environment that is the
wild animals, vegetation and water.
 They hunted wild animals, collected insects and gathered wild
plants and fruits. For example, the Basarwa of the Kgalagadi
desert.
 Hunter –gatherers are nomadic or wanderers, that is, they move
from place to place without any permanent homes.
Production Activities:
 The gathering was done mostly by women and children. Gather
water bearing plants like the tsama melon and makatane, nuts
fruits, edible roots and tubers and morama beans.
 The hunting was done mostly by men. Hunting big and small
game, for example, eland, kudu, hares, duiker and so on. They
used simple weapons like bows and poisoned arrows, clubs. They
also used traps, for example, pit traps and snares. Mostly hunted as
individuals or in groups or communal hunting.
 Animal products: meat for food; skins for clothing; bones to make
tools, for example, knives; bladders used to make containers.
Labour:
 Labour is provided by clan members in the group.
 Division of labour was done according to gender, for example,
men hunted while women gathered.
 The work was mostly devoted to production to basic needs. No
luxuries or surplus.
Land:
 The land is communally owned by the group.
 They had specific hunting territories.
 All resources belonged to the group.
MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES
Capital:
 They owned little capital because they were unable to produce
surplus.
 Possessions consisted of weapons, clothes and containers.
 Shelter was temporary because of a nomadic lifestyle.
Entrepreneurship:
 They used knowledge handed down from generation to generation,
for example, hunting skills; poison from plants and animals;
animal behaviour and tracking.
 Low level of production because of simple technology and
dependence on basic needs.
THE CHANGES IN THE LIFESTYLE OF HUNTING AND
GATHERING SOCIETIES IN BOTSWANA –i.e The Basarwa
The Basarwa are now abandoning the nomadic and hunting and gathering
way of life for a more settled life because of a number of factors;
 The provision of water by government, for example, boreholes.
 The encroachment of pastoral farming into wildlife areas.
 The overgrazing that has depleted edible plants.
 The construction of cordon fences that has disrupted migratory
routes of wild animals.
 The increased population that has reduced the land available for a
nomadic life.
 The government resettlement programmes like Remote Areas
Dwellers (R.A.D)
 The increasing levels of education amongst the Basarwa.
 The introduction of anti-poaching laws that prevent Basarwa from
hunting.
Page 4 of 32
MODULE 2
 FACTORS OF PRODUCTION THE WAYS BY WHICH ONE OF THE FACTORS OF
PRODUCTION CAN AFFECT THE PRODUCTION PROCESS
- There are four factors of production namely, Land, Labour, Capital
and Entrepreneurship. Land:
- If land is unfertile crop production will be low or poor pasture for
livestock

- If there is shortage of water there will be poor harvest or poor pasture

for livestock

- There has to be land to start a production process

Capital:
- Capital / money is needed to pay workers

- Capital is needed to buy machinery & tools

- We need capital goods to start a production process

- Each of the factors has to be present if production is to take place.
Labour:
FACTORS OF PRODUCTION (DEFINED) - There is need for workers to provide labour in the production process

- Land: refers to the whole of the earth’s surface together with all - The labour has to be trained & motivated to be efficient / productive
natural resources found on it

- Labour: refers to the human effort, both physical and mental, that is - The labour needs to be managed and/or coordinated for optimum
directed towards the production of goods and provision of services or production
work done by people to produce goods and services LAND OWNERSHIP

 Land or natural resources are owned or controlled in some way.

- Capital: refers to the things people use to produce goods and provide
services , for example, tools, machinery, factories and money saved  Ownership and control of land resources is paramount in
up and used to buy such things production because it determines who produces and become
wealthy.

- Enterprise: The organization or management of land, labour and  Land owners are usually rich while the landless are poor.
capital in the production process with the intention of making profit.

Page 5 of 32
MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 2
 TYPES OF LAND OWNERSHIP Advantages Disadvantages
- Everyone in society has access - Land degradation may occur
to land as no one takes
responsibility for looking
- The land is free after it, for example,
deforestation, soil erosion.
- Land is allocated fairly - Having title deeds is
because no one is allowed to prohibited.
grab land. - The user is unable to use it
as collateral to obtain loans.
- Women are denied
ownership of land in some
traditional societies.
Fig.2
(c) Collective Ownership
(a)Public/State ownership
 This is when land is owned and worked by the community as a
 The land belongs to the government.
unit.
 Private ownership and selling or buying of land is prohibited.
 They combine their capital and labour and share the profits
 It can be leased out to individuals or companies for specific period
equally.
of time.
 Found mostly in Socialist or Communist countries, for example,
 In communist countries like China, the land used to be all owned
Russia and Ujamaa villages in Tanzania in the 1970’s.
by the state, and individuals had the right to use it.
(d)Private Ownership (Freehold)
 In other countries, parts of the land are owned by the government
in countries like Botswana and South Africa, for example, National
 This is when land is owned and controlled by individuals or
Parks and Game Reserves, mining concessions.
companies.
 There land has title deeds or certificate of ownership.
(b)Communal ownership
 Land is a commodity that can be bought or sold, for example, land
 Land belongs to the whole community, usually the tribe or ethnic
has value attached to it.
group.
 Everyone in society has access to land.  Land is productively used, for example, commercial farming,
 The chief has the power to share out the land to individuals. In mining.
Botswana it is the responsibility of the Land Board.
 Grazing lands are communally used.  Common in Capitalist economies.

Page 6 of 32
MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 2
 Advantages
- Land can be used as a
security to obtain loans.
- Can be sold to raise
capital.
- Land carefully looked
after by the owner.
- Anybody can buy land
as long as he or she has
the money.
(e) Leasehold
Disadvantages
- Only the rich can own
land.
- Landlessness and poverty
among the poor.
- May lead to land
speculation, for example,
people buying up large
tracts of land in order to
sell it for a profit in future.
THE LANDLESSNESS
 People are said to be landless when they are unable to have access
to the land at all.
 Landless people are unable to produce or fend for themselves
leading to poverty.
 Landless is caused by
(i) People being too poor to buy their own land.
(ii) Inadequate or limited land for existing population.
(iii) Unfair distribution of land.

- This is when land owners rent out their land out to tenants for a (iv) Rapid population growth.
fee.
- Tenants use the land for commercial production.
- The landowners are referred to as absentee landlords.
Advantages
- Land used productively because the tenant has to pay rentals.

Disadvantages
- Rent has to be paid whether there has been production or not.
- The tenant is unable to use it to raise capital.
- The tenant can misuse land.

The people who rent land are often poor and do not have enough cash to
pay rent. So instead of paying with money they pay the landowner with a
share of their crops. We call this sharecropping.

Page 7 of 32
MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 2
 CAPITAL The Ways of Raising Capital (Government revenue)
Capital is a man-made resource.
Capital for investment can be raised in the following ways:
Capital is the money, machinery technology and buildings that is used to 1. Saving is abstaining from consumption and putting the money in
produce goods. the bank to earn interest.
2. Borrowing from the banks and financial institutions.
Capital is in two forms 3. International loans from other countries, the World Bank and
(i) Money capital International Monetary Fund.

(ii) Capital goods, for example, machinery or technology 4. Investment is putting money into a business with the hope of
earning profit.

Money Capital
 Money capital is also known as finance.
 This is the money that is used to increase production, that is, it is
used in ways that will help to earn more money.
 Money capital can be used in the following ways:
(a) Buying capital goods that will increase production hence earn
more money.
(b) Investment: saving it in a bank so that one can earn interest.
Capital Goods
Capital goods are tools, equipment or machinery that are used to make other
goods, for example, factory machines, roads, building and vehicles.
It is also known as fixed capital because they remain unchanged during
production.
5. Shares are putting money in the business to get a certain
percentage of profit made.
6. Taxation is done by the government. It taxes workers and
companies to raise money for development.
7. Privatisation of parastatals which is the transfer of state or public
assets through selling.
8. Penalities of those people who break the law, for example, traffic
offences such as over speeding.
9. Licensing, for example, renewal of business licences, hunting
licences and drivers licences.
10. Fees, for example, school fees and tourists who pay fees to enter
into game reserves and national parks for wild life viewing.
11. Joint ventures, for example, the government of Botswana and
DeBeers forming company known asDebswana which is
responsible for mining and selling diamonds.

Page 8 of 32
MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 2
 TECHNOLOGY Advantages of Simple Technology Disadvantages of Simple Technology
 Simple technology is cheap  Simple technology is very slow
Technology is the combination of tools, skills and machinery a society
to buy and use. method of production.
employs to produce goods and services.
 It uses unskilled labour.  Poor quality goods are
Technology is dynamic, that is, it is always changing.For example:  The tools can be made at produced.
home.  Simple technology leads to low
 Primitive societies such as hunter-gatherers used simple tools  Simple technology creates productivity.
made from bones and wood. Production was very low. a lot of employment  Simple technology is strenuous,
 Agriculture societies used better tools made from iron, for
opportunities. for example, tiresome and
example, hoes, axes and spears.
 Modern societies use complex technology such as machines, back-breaking work.
computers, motor vehicles. Production is very high.
(b)Intermediate Technology is the use of simple machines to produce
goods and services. For example:
TYPES OF TECHNOLOGY
- Sewing machines
There are three types: simple, intermediate and complex. - Animal drawn ploughs and carts
- Windmill water pumps
- Cement blocks machines
- It can be used both at home and in industry.
- It can be used by both semi-skilled and unskilled labour.

Advantages of intermediate Disadvantages of intermediate

Technology
 It is relatively faster means
of production than simple
technology.
 It is cheaper.
Fig.3
(a)Simple Technology is the use of hand tools to produce goods, for  It is easy to use and
example, hoes for weeding and knives for cutting. maintain.
 It demands a lot of manual labour.  It produces good quality
goods.
 It is mostly used by traditional societies, for example, subsistence  It creates employment
farmers.
because it is labour
intensive.
Technology
 It is strenuous to use
because it needs a lot of
human effort.
 It leads to low productivity.
 Slows method of production
as compared to complex
technology.
 It produces lower quantities
of goods.

Page 9 of 32
MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 2

(c) Complex technology is the use of big and sophisticated machines for
production.
 Machines are power driven, for example, electricity and fuel.
APPROPRIATE TECHNOLOGY
Appropriate technology refers to tools, skills and machines that are best
suited for particular conditions in society.
 It depends on the level of development of the society.

 Some machines are automatic.  For example, a subsistence farmer will use ox-drawn ploughs, carts
and hoes because he can afford and maintain them than complex
 For example, Automatic Teller Machines, factory machines, machinery.
computers and telephone.
 In developed countries a tractor is appropriate for the farmer
 It requires education and training. because they have the capital, big farms and the skills to make and
maintain them.
Advantages of intermediate Disadvantages of intermediate
Technology Technology THE FACTORS THAT DETERMINE APPROPRIATE
 It creates employment in  It expensive to buy and TECHNOLOGY
factories. maintain
- Levels of development, developed societies tend to concentrate on
 Complex technology  Have to import spares at complex technology while developing societies concentrate on
produces high quality great costs. simple and intermediate technology.
goods.  Increases dependency on
 It is very fast and efficient Developed countries - Education and skills, complex technology needs highly educated
because of use of  It causes damage to the and skilled people to operate and maintain while simple
technology and intermediate technology need less skills and
machinery. environment, for example,
education.
 There is mass production pollution.
of goods.  It can lead to - Capital/Cost/Affordability, complex technology is expensive to
 It produces cheaper or unemployment because of buy and maintain therefore only the rich countries can afford it.
affordable goods. the use of automatic Developing countries are poor hence can only afford to use simple
machines and intermediate technology.

- Employment creation, developing countries like Botswana have

high unemployment levels hence need simple and intermediate
technology that are labour intensive. Complex technology would
be inappropriate as it would lead to high rates of unemployment.

- Environmental risks, for example, simple technology causes less

pollution while complex technology causes pollution.

Page 10 of 32
MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 2
 THE ADVANTAGES OF APPROPRIATE TECHNOLOGY
 Create employment
 Makes use of local resources
 Cheap to buy and maintain
 Produces relevant goods and services
 Promotes local development
DEVELOPMENT OF APPROPRIATE TECHNOLOGY IN
BOTSWANA
Botswana is one of the developing countries that recognise and appreciate
the importance of the use of appropriate technology for development this is
indicated by efforts undertaken by the Botswana Technology Centre
(BOTEC), Rural Industries Promotion Company (RIPCO) and Rural
Industries Innovation Centre (RIIC).
The primary aim of these organisations is to assist the people of Botswana
to identify appropriate technology choices for development. They create and
promote technologies that are best suited or appropriate to conditions
particularly to rural areas in Botswana.
The following are examples of the technologies invented and adapted by
BOTEC and RIIC in their effort to encourage appropriate technologies in
Botswana.
 Solar Cooker/Bakers: The solar cookers are developed by RIIC
and they operate by converting the sun’s energy into electricity.
The technology is appropriate for Botswana because Botswana has
plentiful supply of the sun and therefore the technology is cheap,
easy to use and repair. It also assist Batswana to reduce
dependence on the already disappearing firewood which leads to
deforestation and other environment impacts like soil erosion and
land degradation.
MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES
 Rural electrification: Photovoltaic Power Station at
Motshegaletau Power Station is another example of how the sun
can be used to generate electricity that is cheaper and affordable by
the rural people in Botswana. It uses solar panels to convert
sunshine into electricity.
 Solar Aid: BOTEC has converted a solar aid for the hearing
impaired people. It combines solar and hearing aid technologies to
make solar rechargeable hearing aid that never needs replacement
batteries.
 Water tanks: RIIC has also designed water tanks which are used
for rain harvesting. This is an appropriate technology for drought
prone Botswana with unreliable rainfall.
 Animal Drawn Ploughs: RIIC has designed animal drawn pumps
that do not require fuel in order to run. They suitable for rural areas
with a problem of water and are cheaper and easier to use.
 Farming implements; RIIC has developed farming implements
such as ploughs and planters that are simple, cheap and easy to use
and are thus appropriate for local subsistence farmers who lack
capital and modern skills.
 Other examples include technologies such as the Basic windmill
developed by RIIC to pump water and generate electricity.
Sorghum grinding and threshing machines and the rim oven. The
rim oven is another inventions by RIIC made from two trucks rims
welded together. It stands on three legs and has a hinged steel door.
It uses firewood and can bake a batch of nine loaves in an hour. It
is appropriate for rural dwellers.
All the above appropriate technologies indicated to us that Botswana is
making efforts in trying to encourage Batswana to use appropriate
technology for development.
We should then commend the department such as RIIC and BOTEC for
these good efforts because Batswana have less money and skills to use the
expensive and complicated technologies.
Page 11 of 32
MODULE 2
 THE MODES/METHODS OF PRODUCTION - It requires little skills to enter
or run
- It promotes human interaction
- It encourages craftsmanship
- It uses local skills &
knowledge

(c) capital-intensive production is a process of making goods and

providing services which relies heavily on the use of machinery
Fig.4 and money/finance
(a)Labour Intensive Production relies heavily on the use of simple
technology and manual labour.  Capital-intensive production is the use of advanced or complex
machines to speed up production.
What is labour intensive production?
 For example, using a mechanical digger to dig a trench, vehicles to
- Labour intensive is a way/process of making goods and providing transport goods.
services which relies heavily on the use of human manual effort.
 Mainly uses unskilled labour.  It needs trained or skilled people to operate and maintain the
technology.
 Example, cutting grass using slashers, transporting sand with Advantages of capital intensive disadvantages of capital intensive
wheelbarrows, digging trenches with picks and shovels. production production
- Greater opportunity to use - Causes pollution to the
Advantages of labour intensive disadvantages of labour intensive
machinery / quick & efficient environment because of the
production production
method of production use of advanced technology.
- In Labour intensive - Labour intensive may lead to - Production of quality goods - Lead to high unemployment
production, little capital is poor quality work and products - Mass production makes goods rate because the advanced
needed because of the use of because of the use of simple cheaper technology requires only few
simple technology. technology and unskilled - Acquire skills of operating people to operate.
- It creates employment to a labour. machines / skills development / - Lead to loss of craftsmanship.
large number of people - It is the slow method of creates a lot of skilled
- It is cheap to run and maintain production it relies heavily on manpower
/ little capital required since human manual effort. - It is expensive to buy and
simple technology used - It leads to low level of - Work is made lighter and more maintain.
- It provides with an opportunity production because of the use enjoyable because of the use of - It requires skilled manpower.
to train on the job of simple technology. machinery
- It causes less pollution or - It makes people tired because
destruction of the environment the work is strenuous.

Page 12 of 32
MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 2
 INFORMATION TECHNOLOGY
- Information technology is a way of disseminating data using
computers
THE WAYS BY WHICH INFORMATION TECHNOLOGY CAN
ENHANCE THE DEVELOPMENT OF BOTSWANA:
- Stores a lot of data which otherwise could be lost by traditional
record keeping / easier storage of complex information
- It is easy to transfer information from one source to another
- It can be used to project future development trends in Botswana
- It links Botswana with other countries & therefore good for
marketing the country
- Global communications
- Fast trade arrangements / electronic payments
- Dissemination of information
- Increased productivity / mass production / saves time
- Improvement of technology
- Development of infrastructure to suit the technology
- Draw behaviour patterns / project future trends
MASUNGA SENIOR SECONDARY SCHOOL
THE DISADVANTAGES OF INFORMATION TECHNOLOGY
- Very costly to acquire / costly to maintain
- Reduces craftsmanship
- Enslaves the mind
- Requires complex skills/training/reliance on foreign expertise
THE REASONS WHY IS IT DIFFICULT TO INTRODUCE
INFORMATION TECHNOLOGY IN BOTSWANA
- Few people are computer literate
- Computers are too expensive for the general public to afford
- Computer specialists who can maintain the IT systems are few &
very expensive to hire so sustaining the IT system is not guaranteed
- Issues of security of information may discourage some people to
acquire IT resources
- There is a tendency for people to fear introduction of machines such
as computers so they may prefer to use old traditional ways of doing
things / conservative / rigidity / fear of the unknown
- Existing levels of production are too low to encourage use of
computers
- Lack of supportive infrastructure e.g. electricity
Page 13 of 32
DEVELOPMENT STUDIES MODULE 2
 LABOUR Advantages of Division and Disadvantages of Division and
Labour is human effort that is directed at the production of goods and specialisation of labour specialisation of labour
services, for example, both physical and mental.
 Work can be done faster and  Doing the same job
Man is central to production because it is he who initiates production and is
also the consumer. perfectly because the worker repeatedly leads to boredom.
perform only one task.  Workers lose the initiative to
SPECIALISATION OF LABOUR  Little time is wasted moving exercise judgement and
from one task to the other. responsibility.
Specialisation of labour is the concentration of people on one job that they  There is a chance of  Increased risk of
are trained in, for example, teaching, engineering and nursing.
exploring people’s potential. unemployment because of the
It can be divided into three levels/forms, for example, individual, regional  It is cheaper and time saving greater use of machinery.
and national specialisation. to train in one particular job.  Loss of craftsmanship
(a) Individual Specialisation is when a person concentrates in one  Quality goods and services because of the increased use
activity only, for example, a doctor may specialise on teeth are produced because of use of machinery.
problems (dentist) of advanced technology.  Increased dependency easily
(b) Regional Specialisation is whereby people in an area are engaged
 There is higher productivity leads to disruption of
in the production of a particular commodity or service due to
geographical conditions, specific skills, or resource availability, for because of the use of production, for example, if
example, copper nickel in Selibe-Phikwe, Basketry in the North machinery. one worker is absent.
West.  Increases worker’s  Concentration on one task
(c) National Specialisation is whereby different countries specialise proficiency because of makes it difficult for one to
in producing certain commodities which they have comparative constant repetition. acquire other skills.
advantage, for example, Botswana specialises in Beef and
diamonds because of physical conditions, Lesotho specialises in  Creates a lot of employment
wool, Malawi-fishing, Zambia-copper. opportunities, for example,
DIVISION OF LABOUR teaching.

What is division of labour?

TYPES OF LABOUR
- Division of labour breaking down of work into small parts so that (a)Specialised Labour
each worker takes a part - These are people who are experts or highly skilled people.
- They have high education levels.
- When work is shared out in different parts between different people - They have spent long time training.
- They are paid high wages and salaries.
- The breaking down of the production process so that it may be based - Also known as professionals, for example, engineers, doctors,
on gender or age or training teachers, nurses and lawyers.

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MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 2
(b)Skilled Labour
 These are people who are highly trained in practical work related
to production, for example, artisans.
 They know how to design and make items.
 They are highly trained and paid.
 Examples, surveyors, electricians, auto mechanics, fitters and
turners.
 They are given technical qualifications, for example, City Guilds
and Crafts, Higher National Diplomas.
(c )Semi-Skilled Labour
- These are people who are trained on-the-job for specific tasks.
- Mostly found in industry.
- They usually have no paper qualifications but gain enough
experience to perform the job proficiently.
- For example a spanner boy who eventually become a fully-fledged
mechanic.
(d)Unskilled Labour
 These are workers who have no training at all.
 Mostly used as manual labourers, for example, farm workers,
cleaners and garden boys.
 They are paid low wages that is the minimum wages.
THE CONDITIONS THAT PROMOTE EFFICIENCY OF LABOUR/
LABOUR PRODUCTIVITY
Efficiency of labour is the ability of workers to be highly productive.
THE FACTORS THAT PROMOTE EFFICIENCY OF LABOUR
ARE:
 Education and training, the higher the level of training and
education the higher the level of productivity.
 Customs and attitudes of the people, some cultures encourage
hard work, for example, Japanese and Chinese culture.
 Technology, if workers use simple technology then productivity
will be lower. Workers who use advanced technology will be more
productive.
MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES
 Working conditions, good working conditions ensure high
productivity, for example, good ventilation, lighting, safety and
working hours.
 Worker welfare, workers must have peace of mind for them to be
productive at work. This can be done by giving workers medical
aid, pension schemes, funeral assistance, social and entertainment
facilities and housing.
 Motivation, workers can be encouraged to work harder by being
offered incentives such as higher wages, bonuses, participation in
decision making.
HOW CONDITIONS IN BOTSWANA FACILITATE THE
EFFIENCY OF LABOUR
 Education, there is free education for all to improve knowledge.
 Training, at university and other tertiary institutions to improve
the skills.
 Labour laws that protects the workers from exploitation, for
example, minimum wage and working hours.
 Pension schemes or social security, for both government and
private sector workers.
 The acquisition of modern technology such as complex
machines, computers, that help to raise productivity.
 Improvement of infrastructure, to improve the movement of
goods and provision of services.
 Better housing for workers, for example, institutional housing,
like teachers houses, Botswana Housing Corporation houses and
SHAA Programme.
 Provision of health facilities such as clinics, health post, hospitals
and so on for a healthy and productive population.
 Access to resources such as energy sources.
Page 15 of 32
MODULE 2
 THE CONDITIONS THAT MILITATE AGAINST THE
EFFICIENCY OF LABOUR IN BOTSWANA
 Lacks of skills, most of the people are unskilled without formal
training.
 Poor health mainly because of HIV/AIDS that makes workers
weak and unproductive.
 Poor infrastructure, for example, narrow roads that make traffic
move slowly; single rail, poor telephone coverage.
 Poor education system produces people that are unprepared to
join the job market
 Poor work ethics such as late coming, lack of discipline,
absenteeism and misuse of telephones .
 Poor or low level of technology, most of the work in Botswana is
done manually and slowly, for example, agriculture and
construction.
 Poor working conditions such as low wages, long working hours,
poor safety, and unavailability of pension schemes for some
private sector employees.
 Culture works against the efficiency of labour in the following
ways; the extended family that places a huge burden on the worker
making them less focused at work. Lack of assertiveness, for
example, going the extra mile.
ENTREPRENEURSHIP
Entrepreneurship refers to the art or skill of coordinating, managing,
organising and running a business.
What is an entrepreneur?
An entrepreneur is a person who takes the risk of putting down money to
start a business with the main aim of making a profit.
Role played by an entrepreneur
 Organisation: of land, labour and capital to produce goods and
services.
 Decision-making: on what to produce, how to produce and where
to produce.
 Management/leadership: the day to day running of business or
enterprise.
 Risk bearer: the ability to take risks and steer the business to be a
success.
Enterprise is the process of bringing together the factors of production to
come up with goods and services.
THE ECONOMIC SYSTEMS FOR ORGANISING
PRODUCTION IN SOCIETIES

There are basically three economic systems, namely:

 Capitalism/Market economy
 Socialism /Planned economy/ Communism
 Mixed economy

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MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 2
An economic system determines the following in a society: Advantages of market economy
 The economy responds quickly
 Who owns the means of production, for example, land , labour and
to the people’s needs and wants.
capital.
 Entrepreneurs always try to use
 Who controls production, for example, what and how much to the resources as efficiently as
produce. possible in order to get the most
profit out of them.
 Who benefits from production?  High quality goods and services
because of fierce competition.
CAPITALIST/MARKET ECONOMY
 Entrepreneurs are always
Market economy is an economic system whereby the means of production motivated to make a success of
are owned and controlled by individuals or the private sector. their businesses because they
The main emphasis is on private ownership of capital or property. want to make profit.
Examples:  Highly productive because of
 Africa: Kenya, Nigeria, South Africa, Malawi etc
the use of mass production
methods.
 Others: USA, Japan, Germany etc.
 Capitalist countries have
THE MAIN FEATURES/ CHARACTERISTICS OF MARKET achieved the highest levels of
ECONOMY development in the world, for
 Private property is when individuals have the right to own and example, japan and U.S.A.
control the means of production, for example, labour, land and  Anyone has the chance to
capital.
become rich provided he or she
 Freedom of choice is when people are free to choose what to
produce, how to produce and where to produce. has the business skills.
 Freedom of enterprise is when people are free to start businesses
of their choice.
 Self interest is when people are motivated by the need to make
profits for themselves.
 Competition is when businesses compete against each other.
Disadvantages of market economy
 It is unable to meet the basic
needs of the people since the
emphasis is only on profit.
 Businesses overcharge since
there is little government
control.
 Damage to the environment
goes unchecked in the pursuit
of profit, for example,
deforestation and pollution.
 Inequalities in society widen
with the rich becoming very
rich and poor very poor.
 Workers are exploited by the
employers, for example, long
working hours, violation of
labour rights.
 Uncontrolled competition may
lead to overproduction and
lowering of prices thus leading
to collapse economies, for
example, The economic
depression of 1929 in America
that even affected Europe and
the rest of the world.

 Price mechanism is when the laws of supply and demand

determine the prices for goods and services.

 Government role isminimal which means there is little

government interference with the running of the economy.

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MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 2
 SOCIALIST/PLANNED ECONOMY Advantages of planned economy Disadvantages of planned economy
 It satisfies all the people’s  It is difficult to plan for the whole
Planned economy is an economic system whereby the means of production basic needs, for example, country and these results in a lot of
are owned and controlled by the state for the benefit of the whole society.
food, shelter and clothes. mistakes.
Private ownership of property is prohibited.  The benefits of production  It suppresses individual freedom to
are distributed equally think and act.
The government controls all production, distribution and consumption. among the whole  State appointed managers are
population. inefficient because they are
Examples of planned economy:  Everyone has the right to appointees rather than
work or employment. entrepreneurs.
 Africa: Mozambique, Angola, Ethopia and Tanzania.
 Others: China, Cuba, North Korea and Vietnam.  The goods and services are  There is technological inefficient
made available at low because managers are prohibited
THE MAIN FEATURES/ CHARACTERISTICS OF PLANNED prices. coming up with new ideas or make
ECONOMY changes.
 Very luxury goods are produced
 State ownership: All means of production belong to the state. hence the people’s lives are
uncomfortable.
 State entrepreneurship: The government is the only
 A very limited choice for
entrepreneurship that is allowed to operate.
consumers since all goods and
 Collective interest: All people are expected to work for the good services are produced by the state.
of the society.  There is a low productivity level
because of over-employment,
 No competition: there is any competition since all businesses inefficient management and low
belong to the state. morale of the workers.
 NB: However most of the socialist
 Price control: All prices are set and controlled by the state.
are moving towards the Capitalist
 Central planning: Decisions on what and how to produce are mode of production.
made by the central government.

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MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 2
  Provision of basic infrastructure, for example, roads,
MIXED ECONOMY power, railways and water.
 Government provides social services for the people such as
Mixed economy is an economic system whereby there is both private and education, health, sanitation and social welfare.
state ownership of means of production.

It is a mixture of both capitalism and socialism. Advantages of mixed economy Disadvantages of mixed economy
o It redistributes the benefits of o The government may
There is a state planning, control and businesses operating alongside a production through the taxing discourage investment through
private sector. of businesses. laws and heavy taxation.
Most of the countries of the world are now mixed economies, for example,
Botswana, Zimbabwe and Zambia. o Helps the poor through the o Government always ends up in
welfare system. debt because of public
THE MAIN FEATURES/ CHARACTERISTICS OF MIXED expenditure.
ECONOMY o The government provides the
basic needs of the people. o The welfare system
 There is both private and state/public ownership of resources.
encourages people to be lazy
 There is freedom of enterprise. o The government protects the and irresponsible.
workers from exploitation.
 The government also operates enterprises, for example. State o State enterprises are inefficient
corporations/ parastatals. o Consumers obtain quality goods and a drain to the economy.
and services.
 The government plans for the economy, for example, National
Development Plans.
o The environment is protected
 The government interfers in the running of the economy through from unnecessary damage by
the following ways: laws.

o People are free to establish

 Taxation of businesses. enterprise of their choice.

 Legislation, for example, company laws and labour laws.

 Quality control, for example, through the Botswana

Bureau of Standards.

 Price monitoring

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MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 2
THE FEATURES THAT SHOW THAT BOTSWANA FOLLOWS A THE BENEFITS OF CHOOSING A MIXED ECONOMIC
MIXED ECONOMIC PRODUCTION SYSTEM
PRODUCTION SYSTEM
1. The feature that show that Botswana follows a mixed economic 1. The government social welfare programme ensures that everybody
production system is that parastatals operating side by side with the
has access to basic needs.
private businesses. For example, Botswana Power Corporation and
Choppies. 2. The government labour laws protects workers from exploitation
through coming up with labour laws.
2. The prices determined by market forces while the government
controls prices for some goods and services, for example, petrol 3. The benefit of choosing a mixed economic production system is
and maize meal.
having environmental laws that prevent damage to the
3. The government schools and universities such as University of environment.
Botswana and Botswana International University Of Research
4. The presence of government businesses or parastatals ensures
Science and Technology operating alongside private schools and
universities such as Botho College and Baisago University availability of essential goods and services, for example, water and
College.
electricity.
4. The government hospitals and clinics operating alongside private 5. The government price control ensures that basic needs are sold at
hospitals and clinics. For example, Nyangagwe Hospital in
affordable prices, for example, water, electricity, mealie meal and
Francistown and Riverside Hospital in Francistown. The
government prepares National Development Plans while petrol.
individuals implement them.
6. The government laws and regulations prevent immorality, for
5. The government set regulations for business operations such as example, banning of pornographic materials. The element of
quality control, price monitoring while individuals are free to make
freedom of enterprise allows high achievers to excel.
other decisions.

6. The government gives free food or basic needs to destitute while

other people must buy for themselves. The government exempts
the poor from paying school fees whilst other people pay.

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MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 2
 ENTERPRISE charge and can devote as business might be affected by
much of his time and the person who inherits it. If
Enterprise is an act of organizing factors of production in order to make energy to the business as he the inheritor is not a good
profit.
or she wishes. business person, the company
TYPES OF ENTERPRISE
 Sole proprietor/ sole trader  The owner has no need to will obviously collapse.
 Limited companies consult or involve anyone  Since the individual owner
 Partnership when making a new policy bears all the risks, he or she
 Parastatal for the business. This is liable for all the debts and
 Multi -National Companies allows the owner to put losses of the firm.
 Joint Venture decisions into effect  Liability is limited; this
 Cooperatives. without having to convince means the owners assets are
others. at risk.
SOLE PROPERIETOR/SOLE TRADER  Sole trader or sole  Sole trader is at times has
Sole proprietor is an enterprise owned and run by an individual. proprietors are usually difficulties to get money or
small and this allows the loan to finance the business
The person may be helped by a few people especially some family owner to have more closer since banks need security.
members. and personal contact with  There are no economies of
both the employees and scale. This means the sole
Sole proprietor is also known as a sole trader. customers. trader cannot buy in bulk to
 In most cases, it requires experience discounts.
THE CHARACTERISTICS OF SOLE PROPERIETOR
small amount of capital to  The division of labour may
 It is owned and run by one person who provides all capital needed start. be difficult to organise
to set it up and run it.  Sole trader pays tax for because of the small size of
development of the the business, resulting in
 The profit is enjoyed and the loss felt by the owner. country. little sharing of the workload,
 Sole trader creates jobs. hence the owner is
Advantages of sole proprietor Disadvantages of sole proprietor overworked. This may affect
 This type of ownership is  Individuals usually have productivity and labour
advantageous because the small amounts of capital and efficiency.
owner is usually self this might hinder the
motivated and has every expansion of the enterprise.
reason to make the  The success of the business
business become as depends on the owner’s
efficient as possible. The abilities, and on his or her
individual owner is in full death or retirement, the

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MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 2
 PRIVATE COMPANIES THE CHARACTERISTICS OF PARASTATALS
- They are established by Act of Parliament
Private company refers to a type of enterprise owned by shareholders and
run by a board of directors and a manager. - The y are separate legal entity from government
- The Chief Executive Officer (CEO) handles the daily operations
Shareholders earn some of the profit but if the company goes bankrupt, they
only lose the amount they have invested. - They are owned by government
- Profit goes to the government
Advantages of private companies Disadvantages of private
companies - The minister appoints board of directors
 They have a lot of potential  The private sector tends to - They focus on the provision of essential service such as water and
in increasing public invest mostly where returns electricity
awareness of an issue. or profit is assured.
THE BENEFITS /ADVANTAGES OF OPERATING PARASTATALS
 The private sector is profit  They tend to be owned
and efficiency driven, and mostly by expatriates and TO A DEVELOPING COUNTRY
as such tends to have a this contributes heavily to - To create employment for citizens
highly productive staff. the country’s capital flight.
- Parastatals prevent duplication of production which is wasteful
 The private sector is This is a situation in which
demand and client driven a lot of money generated in - Parastatals allows for economies of scale because they are large
and therefore very the country is sent out to - Parastatals ensure that essential goods and services are available even
responsive to the people’s other countries and this
if they are expensive to produce or provide, for example, water supply
needs. contributes very little to the
development of the and electricity
 The sector is very flexible
compared to others in that country. - Parastatals provide sufficient capital for large scale development
it has to amend its service - Parastatals rescue dying industries in order to protect employment
to fit the public whenever a
- Parastatals industries of strategic importance are in the hands of the
need arises.
government rather than private individuals, for example, atomic power
PARASTATALS or electricity
Parastatalsare state corporations owned by the government of the country
in which they operate. - Parastatals also serve as a strategy to promote industrialisation in the
They are funded by the government and the profits they make are taken by country
the state to be used for developmental purposes.
In Botswana we have parastatals such as Botswana Railways, Botswana - They are a source of foreign exchange
Telecommunications, Air Botswana and many others. - They encourage infrastructural development such as provision of piped
The government usually advertises for and appoints a board to run the
parastatals. water and tarred roads

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MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 2
 SOME PARASTATALS HAVE BEEN PRIVATISED - Private companies are profit driven so they fail to take care of the
- To raise capital from sale of shares environment/ disregard care for the environment, for example,
- To reduce the burden of running production from the government pollution
- To encourage more people to own shares/ encourage citizen Advantages of parastatals Disadvantages of parastatals
 They employ many people and  They tend to waste state funds if
empowerment
thus create employment in they are not run properly, which is a
- To encourage competition in some business areas where there is countries with a few private great cost to taxpayers.
companies such as Botswana.  They often lead to monopolies
monopoly  Parastatals have an advantage of whereby the government owns most
- To reduce trade union power since private companies are less likely to expansion because they are funded of the profitable enterprises and
by the government. competes with small companies and
give into demands by unions  The state has a chance to control this might lead to the collapse of the
the provision of essential services small companies.
- To increase efficiency in production since private productions will and goods. For example, water and  Parastatal mostly tends to provide
respond to market forces /to reduce bureaucracy electricity. goods and services of poor quality
 Parastatals enjoys economies of due to monopolies.
- To attract foreign investors so that individual companies pay tax scale hence offer cheaper price.  Most are too expensive to run and
 Parastatals are mostly not profit over stretch the taxpayer’s money.
THE PROBLEMS THAT MAY BE CAUSED BY PRIVATISATION
oriented.  Lack of initiative amongst workers
- Many privatised assets are sold too cheaply so taxpayer loses/  Parastatals provide secure leads to inefficiency in production.
employment to a large number of  Uniform products may not satisfy
encourages corruption local people. everyone’s taste.
- Sometimes shares or business can land in the hands of foreign  It reduces duplication of
equipment and unnecessary
companies so profit will go out of the country wastage of resources.
 Parastatal helps to implement
- Shares are bought by the rich businesses so locals fail to participate/ government policies.
widens the gap between the rich and the poor  It is a source of income of the
government.
- Privatisation may result in lower wages and poor working conditions  The effort is made to train and
employ local workers of all levels
fir workers/ exploitation of workers of production.
- Attempts to make profit often result in higher prices making
consumers suffer
- Sometimes privatisation changes state monopoly to a private
monopoly
- Privatised businesses often reduce workforce/ increases
unemployment/ loss of employment

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MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 2
 MULTI-NATIONAL COMPANIES/ CORPORATIONS Advantages of multi national
companies
Multi-National Companies are enterprises that have subsidiaries or  They pay tax to the host
branches in more than one country. government.
Multi-National Companies are also known as Trans National Companies.  They increase employment
opportunities.
 They bring new technology
to the host countries.
 They bring in foreign
currency when they export
from the host country.
 They enjoy greater
economies of scale.
THE CHARACTERISTICS OF MULTI NATIONAL COMPANIES  They give support, mostly
financial to the local social
 MNCs is usually a public limited company.
clubs and associations.
 The decision making is controlled from the head office.
 They offer goods and
services of better quality and
 They employ many people in different parts of the world.
variety to customers.
 They widen the country’s
income base increasing
Gross National Products.
MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES
Disadvantages of multi national
companies
 At times they dominate
economies by monopolistic
practices.
 Sometimes they bring in their
own expert instead of training
locals for managerial positions
within the host country.
 Attracts experts locals to work
for them at the expense of local
industries.
 They encourage dependency
and neo-colonialism through
dependence on foreign
technology.
 They may take all the profits
back to the country of their
origin.
 Sometimes they interfere with
the policies of the host country.
 Some are too powerful for the
host country to control.
Page 24 of 32
MODULE 2
 JOINT VENTURES PARTNERSHIP

Joint Venture is a form of partnership whereby two or more individuals or Partnership is a relationship that exists between two or more people who
companies agree to do business for a specific time under clear contract have come together to do a common business with the view to make profit.
conditions. We have a number of joint ventures in Botswana between retail THE CHARACTERISTICS
outlets.
For example, we have a joint venture between Metro supermarket and  Partnership is owned by many people between 2 and 20 people.
Sefalana supermarkets which is called Metsef Hyper-market.
Profits under joint ventures are shared out according to the written contract.  Partnership is controlled by partners.
Advantages of joint ventures Disadvantages of joint ventures
 Partnership has unlimited liabilities.
 They reduce unnecessary  They usually lead to the
competition between collapse of small businesses Advantages of partnership Disadvantages of partnership
companies selling the same because they are big and
 Partnership allows for  The decision may be
products which allows them to monopolise the market.
share the profits and losses. division of labour delayed by consultation.
 Joint ventures can expand  If the company collapses
easily and make more profits many people might lose their  In partnership create  The withdrawal of one or
because they have a lot of jobs because joint ventures continuity is assured. some partners may cause
capital. usually employ many people. the partnership to dissolve.
 Joint ventures can save money  It is easy to set up.
by buying products at low
 Lack of capital may limit
prices because they buy in
 There is shared decision expansion.
bulk.
 They create a lot of making.
employment by hiring many  Unlimited liability.
people because they have  Secrecy in business is
capital maintained.  It may be difficult to find a
suitable partner.
 There is greater chances of
security for loans.

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MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 2
 CO-OPERATIVES STAGESS/SECTORS OF PRODUCTION

Co-operatives are enterprises formed by people with a common goal who There are basically three stages of production:
bring together some of their resources such as money, tools, labour and
equipment in order to reduce production costs.

Co-operative members can either share the profit amongst the members or
they can reinvest it into other businesses.

The co-operatives can sometimes use their profit for the development of
their community or they can divert it to charitable events with the
agreement of all the members.

Examples of co-operatives in Botswana come in the form of co-operative

supermarkets that are spread throughout the country.

A bigger co-operative can be found in Mogobane village which runs a

poultry, diary and vegetable farm. Fig.8

Advantages of co-operatives
 They allow members to
have more buying power
than individuals because
they are large
organisations.
 A co-operative can give its
members access to cheaper
materials because it buys in
larger amounts or in bulk
which allows for discounts.
Disadvantages of co-operative
 Co-operatives in rural areas
are usually led by
inexperienced mangers and
often collapse and lose a lot
of money.
 It is often difficult to divide
the profits fairly amongst
members of a co-operative
because their contributions
are equally important even
though they vary.
(a)Primary Production is the extraction or removal of natural resources
directly from the earth’s surface without changing their form.
Examples:
 Mining which is the extraction of minerals from the ground or
earth.
 Fishing which is catching fish in water.
 Forestry is the growing and cutting down of trees for timber.
 Agriculture is the production of crops and livestock.
The products of primary production are:
- They are raw, that is, they are in their natural state.

- Generally unusable directly by the people since they need some

processing.

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MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 2
(b)Secondary Production involves the changing or transformation of raw  Retailing is the selling of goods directly to the public through
materials into semi-finished and finished products. shops and supermarkets.

They are three types of secondary production:  Transportation is carrying of goods and people using vehicle, for
example, cars, trains etc.
(i) Processing is the transformation of raw materials into useable
more goods. For example, cattle into beef, hides into leather, maize  Advertising
into mealie meal and copper ore into copper metal.
 Insurance services
(ii) Manufacturing involves the transformation of raw materials into
more specific and usable goods. These goods can be used directly  Banking and finance
by consumers or public. For example, leather into shoes, belts,
jackets and hats, steel into door frames and tools, chocolates from (ii) Direct services: Mainly aims at serving the people directly.
milk, cocoa and sugar. For example:

(iii) Construction is the building of houses, dams, roads and bridges. o Health services
Construction uses both the products of primary and manufacturing
industries. o Education and training

For example, to come up with complete building the following items
are used:
 Quarry stones, river sand, pit sand and cement from mining.
 Timber for roofing from forestry.
 Nails, window and door frames, plumbing materials, plate glass,
electrical components from manufacturing industries.
(c)Tertiary Production involves the provision of services that help in the
transfer of finished products from the factory to the consumer.
It is now the major employer in most of the modern economies.
o Entertainment, for example, music, sports and cinema
o Lawyers or legal services
o Architects or Architecture
o Security, for example, police, security firms.
(d)Quaternary are the activities concerned with research , compilation,
processing and dissemination of the research information to improve human
resource and production.

They are two types of services involved:

(i) Commercial services:

 Warehousing for storing of goods in bulk in large buildings.

 Wholesaling is the selling of goods in bulk to the shops and

supermarkets.

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MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 2
 STRATEGIES FOR DEVELOPMENT
The following are strategies for development: privatisation of parastatals,
citizen empowerment and localisation.
PRIVATISATION OF PARASTATALS
Privatisationis the transfer of public/state assets into the ownership of
individuals and companies usually through selling.
Privatisation refers to the process of transferring the ownership of public
enterprises to private buyers.
That is, the corporations owned by the state are turned to private companies
and given to individuals to own.
This is a very complex process involving the selling of shares to individuals
and groups as well as ensuring that some of the services provided by the
government are stopped to allow private companies to start businesses
providing those services.
PRIVATISATION CAN BE DONE FOR MANY REASONS WHICH
INCLUDE THE FOLLOWING:
 Privatisation can promote competition which may lead to
improving efficiency and increasing productivity of enterprises.
 It can increase direct citizen participation in the ownership of
national assets.
 It can stimulate entrepreneurship and investment in order to
accelerate economic growth.
MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES
AIMS OF PRIVATISATION
 To reduce fiscal burden by state enterprise.
 To accelerate the national development process.
 To reduce the role of the state in the economy in order to allow
the government to concentrate on the essential tasks of governing.
 To release limited state resources for financing of other demands.
 To promote economic efficiency in fastening well functioning
markets and competitions.
 To generate new investment.
THE FORMS OF PRIVATIZATION
 Contracting out work to private sector firms.
 Disposing of public sector shareholding in companies.
 De-nationalizing major public sector concerns by transferring the
ownership of assets from state to the private sector.
THE ADVANTAGES OF PRIVATISATION /BENEFITS OF
PRIVATISATION
- Privatisation improves efficiency because of competition and profit
- Privatisation increases participation in ownership of national assets /
citizen empowerment
- Privatisation reduces public bureaucracy
- Privatisation accelerates economic growth by stimulating
entrepreneurship
- Privatisation reduces prices and public sector budget deficit through
enhancing the quality of goods and services
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MODULE 2
- Empowers citizens where such sales are restricted to them
- Revenue/govt. gets tax from companies/revenue from sale of shares
- Removes burden from govt.
- Increases foreign direct investment
- Private companies take social responsibilities
THE DISADVANTAGES OF PRIVATISATION
- There is massive job losses due to redundancy
- Open to abuse by corrupt political bureaucrats
- Widens the gap between the rich and the poor
- Expensive due to adverts and publicity
- It is a transfer of monopoly from public to private hands/may lead to
emergence of private monopolies
- Will lead to hyper-inflation to meet initial costs
THE ROLE OF GOVERNMENT IN PRIVATISATION
- Government sets up regulatory price mechanism
- The government makes laws that govern privatisation process
- Government sets up prices of assets to be privatised
- The government empower citizens
- The government provide loans or grants
MASUNGA SENIOR SECONDARY SCHOOL
CITIZEN EMPOWERMENT AS A STRATEGY FOR
DEVELOPMENT
Citizen empowerment is the process of helping citizens to become self-
reliant through the provision of help by the government or Non
Governmental Organisations.
Citizen empowerment is the creation of opportunities and conducive
environment for nationals to participate fully in the socio-political and
economic development of the country.
It involves a process of ensuring that there is an increased participation of
citizen owned companies in the economy.
THE WAYS BY WHICH THE GOVERNMENT OF BOTSWANA
EMPOWERS CITIZENS
- Training/educating citizens
- Provision of financial assistance to locals
- Providing opportunity for locals to vote in elections
- Provision of information through radio, television, newspapers on
various issues
- Provision of health services to fight/ cure/control/treat diseases
- Teaching locals their rights
- Government providing a market to citizens or tenders
- Marketing of local goods and services to outside markets
- localisation
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DEVELOPMENT STUDIES MODULE 2
 STEPS TAKEN BY THE GOVERNMENT OF BOTSWANA TO
PROMOTE CITIZEN EMPOWERMENT
The government has over the years empowered Batswana through a number
of financial schemes such as the:
(a) Financial Assistance Policy (FAP)
(b) Citizen Entrepreneurial Development Agency (CEDA) for
Batswana to get loans and entrepreneurial training.
(c) Introduction of remote area dwellers program.
(d) Reservation and price control for citizen owned contractors.
(e) Universal free education.
(f) Citizen Mortage Assistance Equity Fund (CMAEF) to allow
citizens to buy shares in citizen owned property companies in order
to prevent property falling into hands of non-citizens.
THE FACTORS HINDERING CITIZEN EMPOWERMENT
 Fronting which means the foreigners use the locals to set up
businesses reserved for citizens by funding them and become silent
partners or controls them.
 Lack of markets/Insufficient market for goods produced locally
 Poor business skills
 Lack of commitment from the bureaucrats, especially in
dissemination of information.
LOCALISATION
Localisation of labour is the process of replacing expatriate public
servants with citizen public servants
What is localization policy?
- Localisation policy is the process of promoting citizen labour and
enterprise / The process of giving jobs or businesses to citizens
THE IMPORTANCE OF LOCALIZATION
 It is part of restoring national pride and asserting a country’s
independence.
 It promotes the socio-economic development of locals.
 It helps in making the citizens believe in themselves and not
always show much respect for foreigners.
MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES
 Some key posts which are quite politically sensitive need to be
localised.
THE ADVANTAGES / BENEFITS OF LOCALISATION OF
LABOUR IN BOTSWANA
- It promotes the socio-economic development of locals
- It is part of restoring national pride and asserting a country’s
independence
- It helps in making Batswana believe in themselves and not always
show too much respect for foreigners
- Citizens would occupy politically sensitive positions
- Creates employment for citizens
- Development is in accordance to culture
- There is possibility of making long term decisions as there is no fear of
end of contract
- Locals acquire necessary skills
- Workers are patriotic and have their national interest at heart
- Saves money wasted on foreigners
THE DISADVANTAGES OF LOCALISATION
The following are challenges /problems that the government may face
when trying to follow the localisation policy:
- shortage of skilled locals
- Poor work ethics among citizens
- Shortage of funds to implement the policy
- Lengthy training programmes that may delay the process, for example,
medical doctors
- Brain drain where trained locals prefer to work in developed countries
rather than at home
- Lack of experience among locals slows down production, for example,
when a fresh local graduate replaces an experienced expatriate
graduate
- The policy creates conflict between home government and other
governments/ it strains foreign relations/ promotes xenophobia.
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MODULE 2
 CONSUMPTION AND INVESTMENT
THE EXPLANATION OF CONSUMPTION AND INVESTMENT
(a) Consumption refers to buying goods or things which do not last
for a long period of time. For example, when people are paid their
monthly salaries, they buy groceries. However, these groceries do
not last for two months which means that they have to buy
groceries every month-end when they are paid.
(b) Investment refer to the use of purchasing power in the form of
money saved from previous income to purchase assets of the sort,
that can with reasonable assurance be expected to yield over the
future a total amount of purchasing power greater than that
represented by their cost. Investment is when individuals or
companies save money and invest it in many ways that will bring a
return in the future.
RELATIONSHIP BETWEEN PRODUCTION AND CONSUMPTION
Production means any activity which serves to satisfy human needs and
wants.
Consumption is the purchase and use of these goods and services made
through production.
In a community, all people are consumers and most are producers since they
contribute their labour to production through employment.
RELATIONSHIP BETWEEN SUPPLY AND DEMAND
(a)Supply can be seen as the amount of commodity that is available to be
used.
(b)Demand refers to the quantity required at a particular price, for it is
impossible to conceive of demand not related to price.
MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES
THE RELATIONSHIP BETWEEN CONSUMPTION, SAVINGS AND
INVESTMENT
Consumption is when we buy things which do not last such as food, drinks,
clothes and crockery.
Savings on the other hand is all the money that you have saved especially in
the bank, and investment is when individuals or companies save money and
invest it in ways that will bring a return in future.
THE FACTORS INFLUENCING SAVINGS
There are a number of factors that can directly influence savings. These
include:
(a)Income: The most obvious requirement is the ability to save and this
depends on the level of income. No one can save until the level of income is
sufficient to cover what are considered to be the necessities of life as
income which is devoted to consumption spending tends to fall.
(b)Social attitude: The prevailing social attitude towards thrift, which is
old-fashioned, wise and careful use of money, has significant influence on
the level of saving.
(c)The financial framework: In the developed countries, all kinds of
institutions for the safe deposit of savings are available. In less developed
countries, there are few such institutions and they are neither widely known
nor easily accessible.
THE BENEFITS AND RISKS OF INVESTMENT
By investment we mean engaging in an activity that will bring in more
money or make profit. For example, as sole proprietor or trader operating a
company can get a lot of returns from the business.
Taking risks in production is the function of the entrepreneur, and the
reward for risks is profit.
RISKS AND UNCERTAINTY
Risks involve situations or events which may or may not occur but whose
probability of occurrence can be calculated statistically and the frequency of
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MODULE 2
their occurrence predicted. It then follows that risks are insurable. Risks
include natural disasters such as floods, earthquakes, hurricanes, fire and
others.
Uncertain events are those which property cannot be insured against. Their
outcome cannot be predicated with sufficient statistical confidence. Sources
of uncertainty may include:
(i)External sources: where the decision maker will only be able to have
limited view of how political and economic factors will affect the situation
under review. External sources of uncertainty include the state of national
economies and world trade, potential legislation and political change.
(ii)Internal sources: The organisation may not be able to react to
challenges or crisis because it does not have the resources or the experience
to do so.
(iii)Finance: If the company is partly debt-financed, there is the problem of
ensuring that debt interest can be paid out of profits before interest and tax.
THE FOREIGN RESERVES AS A FORM OF INVESTMENT
Foreign reserves refer to the saving of money in other countries.
This involves saving money for future use in foreign countries. For
instance, Botswana Government has foreign reserves in the World Bank.
This money is saved for future investment and because it is a bank, it is
accumulating interest or profit.
THE ADVANTAGES OF FOREIGN RESERVES
(a) Money accumulates interest.
(b) The money is kept for future use in cash the country’s economy
drops.
(c) The money can be used to develop the country if need arises.
MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES
THE DISADVANTAGES OF FOREIGN RESERVES
Foreign reserves also have their setbacks or disadvantages. For instance
currency fluctuations. Botswana’s foreign reserves are saved in US dollars,
and because of a political situation such as the Iraq war, the dollar has been
fluctuating and as a result, Botswana’s savings are affected. Currently,
Botswana has lost US$ 1 billion of its foreign reserves.
EVALUATION OF A CULTURE OF INVESTMENT IN
BOTSWANA’S ECONOMY
Traditionally, a culture of investment existed amongst Batswana. However ,
this culture existed at a very minimal level.
For example, most of Batswana relied, as they still do, much on subsistence
farming or producing at a very small scale. This small scale method of
farming does not reflect a good culture of investment and has caused most
Batswana to rely on the government instead of being self-reliant.
This dependence on the government has made leaders to embark on various
programmes aimed at encouraging Batswana to invest and become self-
reliant.
For example, during the 1980s, the government introduced programme such
as Accelerated Rainfall Programme (ARAP) and Arable Land Development
Programme (ALDEP) in order to encourage a culture of investment
amongst Batswana
.
These two grants were meant to assist Batswana to start subsistence farming
in order to raise money and more food for Batswana.
In 1990s again, the Botswana government introduced another grant known
as the Financial Assistance Policy to encourage Batswana to start small
scale and large scale businesses for investment purposes.
Apart from the above investment systems, the three successive Head of
State travelled abroad to try to attract more foreign investors to come to
invest in Botswana. However, we have comparatively few large companies
operating in Botswana. We have a few multi-national companies such as
Coca Cola, BP, Shell and others that pay taxes to the government for
operating in Botswana.
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MODULE 2