The Botswana Democratic Party (BDP) has adversely affected Botswana’s economic outlook, a London based international markets research company has revealed.
Companiesandmarkets.com announced this week in the Botswana Business Forecast report Q3 2010 that although the country’s economy continues to recover with quarterly growth turning positive in year on year terms in the fourth quarter of 2009, after three consecutive quarters of contraction, “the usually stable political environment is fraught with uncertainty as a faction of the ruling Botswana Democratic Party (BDP) has announced its intention to split from the party and establish a separate political entity”.
The international research company’s report further states that, “the ramifications of the announcement by the Barata-Phathi’ faction to leave the BDP are unclear as it is unknown how many members of the party will defect. In a worst-case scenario for the BDP, defections will be sufficient to allow for a successful vote of no confidence in President Ian Khama, although this would also require the backing of existing opposition parties, something that is not assured. Looking beyond the short-term uncertainty, the split could mark the beginning of the emergence of a credible opposition party which we would view as a positive development”.
“The split also brings uncertainty to the government’s efforts to cut the large budget deficit. There is an outside chance that Khama will call a snap election as a result of the split, which would likely place upward pressure on government spending.”
Members of the Barata-Phathi faction have already registered the splinter party ÔÇô the Botswana Movement for Democracy (BMD) with the Registrar of Societies. Party spokesperson, Advocate Sidney Pilane was recently quoted in a local newspaper saying eventually they expect about 25 Barata Phathi MPs to join the BMD. This would increase the number of opposition Members of Parliament to 37. Parliament has a total of 61 members.
The report, however, states that, “uncertainties aside, our core scenario is that a combination of restrained spending and improving revenues will see Botswana’s fiscal shortfall head lower over coming years. Looking at the 2010/11 fiscal year (FY10/11) specifically, we expect tax revenues will see a recovery in line with reviving diamond exports and an uptick in economic activity in general”.
“Furthermore, we believe that the government’s planned spending cuts outlined in the FY10/11, although ambitious, are achievable.”
According to the budget, the bulk of the cuts will affect development expenditure. Funds will still be made available, however, for the rural electrification scheme in a bid to ensure that 80% of the population have access to electricity by 2016 (up from 56% currently). As part of the scheme, the government has announced plans to build a 50mn-litre-per-annum biodiesel plant and has set about acquiring 70,000 hectares of land for the growing of jatropha crops to feed the plant.