Whilst Botswana need atleast a 5.7 percent annual growth to reach the high income status by 2026, the country will not come anywhere closer to that mark during the year 2023.
On Monday, Finance Minister Peggy Serame made a four (4) percent economic growth projection for the local economy in the year 2023 during a budget speech read in Parliament. Serame admitted that the government has a medium-term growth target of 5.7 percent.
Serame’s latest projections follows a set of GDP data that show that the diamond driven local economy grew modestly in the third quarter of 2022, parrying off fears of looming recession that has been associated with other economies.
According to Statistics Botswana’s latest GDP data report on annual basis, Botswana’s real GDP expanded by 7.4 percent in the first quarter of 2022, before slowing to 5.8 percent growth in the second quarter, and picked up to 6.3 percent in the third quarter.
GDP growth in the third quarter was anchored by the water and electricity sector which experienced a significant boost, with growth of 35.1 percent. The diamond trade also saw a substantial increase, rising by 28.5 percent. All other sectors of the economy averaged 1.9 percent of growth, except for the agriculture sector which grew by 0.4 percent.
The top five major contributors to Botswana’s P200 billion economy are; mining and quarrying at 18.5 percent of GDP, followed by public administration and defence at 16.3 percent, wholesale and retail at 10.8 percent, construction at 10.6 percent, and manufacturing at 5.5 percent.
On Monday Serame said that efforts are being made to move the local economy away from reliance on minerals revenue.
The contribution of mining to GDP fell between 2016 and 2021, although the share of government spending and contribution rose. The contribution of the non-mining private sector jumped from 53 percent to 59 percent of GDP over this period. However, the main driver of this change was a sharp decline in diamond rather than robust growth of the non-mining private sector. Available figures show that Debswana’s parent company, De Beers increased its production by 7 percent in 2022, in what has been an incredible year. The diamond company reported that it mined 34.6 million carats last year, up from 2021’s 32.3 million carats.
The strong performance was underpinned by increased output from Botswana, which contributed 24.1 million carats, accounting for roughly 70 percent of De Beers’ total production for 2022. The output from Jwaneng and Orapa mines were largely driven by strong plant performance and treatment of higher grade ore. The diamond mining giant disclosed recently that rough diamond production target for 2023 will be between 30 to 33 million, taking a conservative approach following softening of rough diamond prices in the last quarter of 2022.
