The recently held conference on connecting resources and society has suggested a raft of measures that government needs to start looking into if it has to achieve illusive economic diversification.
Botswana is too reliant on the mining sector, which contributes over 30 percent to the country’s GDP. But of late calls have been made for the need to stimulate non-diamond growth.
This week industry experts cautioned that “while a diamond is forever, a diamond mine is not”, meaning alternative revenue should be found to prepare for the impending diamond plateau.
“Historical achievements were reviewed but future trends also mapped over what more could be done both within the diamond industry and in support of diversification,” the participants agreed at the end of the two-day conference.
“The need for non-diamond growth is high on the policy agenda in Botswana as the value added of GDP from diamonds has decreased, indicating strong growth in other sectors and that industry’s share of export earnings is still high. Development of tradable sectors was particularly encouraged.”
The consensus is that the diamond industry in Botswana can support further diversification through the transfer of skills and entrepreneurship programmes such as the Tokofala programme
A communiqu├® from the conference even suggested to government the areas that can drive the growth. It was pointed out that supporting small businesses can be an area that can drive non mining growth while availing funding could change the game altogether.
“Botswana can achieve job creating growth through the expansion of small enterprises into medium sized business,” the conference participants agreed.
“Such initiatives may be catalysed by enabling easier access to finance for small businesses, and partnering with the private sector for the transfer of key business skills. Stakeholder engagement has evolved to a driving force and the conference discussed how this can be developed further. Such a process should better inform the public of the benefits and complexities of the PPP and the tradeoffs required for deeper diversification.”
However the experts warned that to attract Foreign Direct Investment in a competitive environment, the government must confront the challenges of low productivity and competitiveness. It was highlighted that it also faces pressing energy and water shortfalls which impact the investment environment, and the government is constructively confronting these challenges.
“Debate about diversification of the Botswana economy beyond diamonds occurs particularly during downturns in diamond prices, but government policy to diversify during past downturns has been limited.”
Managing Director of Econsult Botswana Dr Keith Jefferis said GDP has become more diversified, but bemoaned that export earnings are still dominated by mining. He said what has been diversified is non-tradables.
“We have some success, but weak to diversify export,” the former Bank of Botswana deputy governor stated. Jefferis blasted that Botswana has achieved a false success as prosperity is not underpinned by productivity or competitiveness.
“We are prosperous, but not producing. Competitiveness needs to have higher profile in government”. Botswana continues to be outperformed by its peers in the Sub-Saharan Africa where growth continues at close to 5 percent, but competitiveness and productivity remain low.