Seretse Khama Ian Khama was inaugurated as Botswana's president on Tuesday, inheriting a rare political and economic success story on the world's poorest and most unstable continent.

Just next door, millions of Zimbabweans desperate to end economic misery anxiously awaited results of an election in which President Robert Mugabe faced the biggest challenge in 28 years of iron-fisted rule.

The Batswana can expect a smooth transition under Khama, who analysts say is likely to stick to sound fiscal management that has brought prosperity to the country of nearly two million, the world's biggest diamond producer.

"Botswana has managed to avoid the path of other neighbouring countries that have just squandered their natural resources," said Mark Schroeder, an Africa analyst at Stratfor Strategic Forecasting Inc. "I don't think this will change."

President Festus Mogae retired after nearly a decade in power to hand over to Khama, 55, first-born son of Botswana's hugely popular founding president, Seretse Khama. The president is also paramount chief of the biggest tribe, the Bangwato.

He inherits a country with GDP per capita forecast at $8,453 in 2008, the highest in sub-Saharan Africa, according to global investment banking group UBS. Botswana also has the highest sovereign ratings in Africa, and is ranked the continent's least corrupt country by Transparency International.

CONTRAST

The contrast with neighbouring Zimbabwe is stark.

There, the world's highest inflation rate of over 100,000 percent has made the currency virtually worthless. Severe food, fuel and foreign currency shortages are part of everyday life.

Botswana's Gross Domestic Product has grown an average 8 percent for two decades and the IMF forecasts an expansion of 5.2 percent this year. Zimbabwe's GDP has contracted every year since 2000 -- by 10.4 percent in 2003 alone -- and the IMF forecasts a fall of 4.5 percent this year.

The World Food Programme says 83 percent of Zimbabweans live on less than $2 per day and that 45 percent are malnourished.

Even if Zimbabwe's elections lead to stability, many foreign investors have been scared away by the instability.

In Botswana, a general election is expected in 2009 and the ruling Botswana Democratic Party (BDP), which has won every election since independence from Britain, seems assured of another victory.

"Elsewhere, in times of leadership transition, there would be murmurs, or even tremors which could result in confusion and chaos," Mogae told the BDP's national council last week.

"We must be grateful that we do not even have a ripple of disquiet as we change the guard."

But some fear the new president's military background as a former general may bring in an authoritarian leadership style that could taint Botswana's consistent democracy.

Questions have been raised over its human rights record.

Botswana faced international scrutiny in 2006 when its highest court ruled it had illegally forced its San Bushmen off their ancestral lands. Last year it banned 17 people, mostly foreign journalists and human rights activists from the country.