Monday, May 17, 2021

Botswana’s economic diversification on track

Botswana’s economic diversification drive seems to be slowly bearing fruit. Economic Consultant, Dr. Keith Jefferies, said in Francistown recently that a number of other exports have been added onto the country’s export portfolio, which shows that the country is slowly moving away from over dependence on diamond exports and slowly achieving its economic diversification ambitions.

Botswana’s headline GDP growth has recovered from the revised 0.6% in 2005/06 to 6.2% in 2006/07 which confirms earlier signs of recovery from other indicators. The non- mining private sector has also experienced tremendous growth after several years of decline, shooting from a previous revised 5.3% to 9.7% in 2006/07.

“This shows that there has been some success in government’s economic diversification drive, especially from diamond exports,” said Dr. Jefferies.
Several non mining private sector enterprises have shown significant growth over the last two years, most notably transport (20%), trade (17%), manufacturing (13%) and construction (8%). These sectors, said Jefferies, posted exceptional growth rates and they are the very sectors that had been earmarked for growth in the economic diversification drive.

It is also heartening to note that while all the other sectors in Botswana have posted significant growth, government did not experience substantial growth rates, which is good for budget stability and sustainability.

The Bank of Botswana business confidence survey shows that the impact of the growth of the non mining private sector has been good for the country’s economic prospects as business confidence has steadily grown from 25-30% in 2005 to about 70% in the last two years.

There has also been a tremendous increase in mining developments in the country as there are presently a number of mining projects that are in progress while another handful are in the pipeline. Projects that are in progress include the Diamonex project in Lerala, the African Copper Mowana mine in the Dukwi area, the Norilsk Nickel projects, which include the Tati Nickel Mine and the Botswana Metal Refineries Activox project in Matsiloje, and the recent diamond aggregation project. Meanwhile there are some projects that are in the pipeline and are likely to proceed in the near future. These include the African Diamonds AK6 project, which is awaiting approval of its mining license, the BPC Morupule plant expansion project (2008-2011) and the CIC Energy Mamamabula project of which negotiations are in earnest progress.

Other prospective projects include the Discovery nickel and zinc project in Maun, the A-Cap Uranium project , the Firestone diamond project in Tsabong and, over the long term, possibilities of gas deposits (CBM ) and trans Kalahari copal mining. There are also numerous active prospecting projects that are on through out the country.
All these translate to huge investments in processing and mining and major spin offs that are expected as the projects start operations. The mining projects will also have a positive impact as they will increase Botswana’s export portfolio, create thousands of jobs and other spin offs like supplies and service delivery opportunities. However, these projects are not yet impacting on economic growth data in any major way.
Botswana has also seen its export portfolio growing much faster than the import portfolio, which is a positive development as intended by the exchange rate policy. “This is one of the positive results of the much castigated devaluation of the Pula in 2004/05,” said Dr. Jefferies.

He also added that the increase of exports over imports shows a healthy balance of trade surpluses and accumulation of foreign exchange reserves. “The recent growth of imports, which has mostly been driven by capital goods, is an indication that investment is on the way to recovery,” he said. There is a strong indication of the emergence of a variety of exports from Botswana in 2007 and a wide variety of them are non diamond exports, which shows that the country is slowly moving away from dependence on diamond exports.

Textiles, copper, nickel and meat products are the best performers in this category. While 10 years ago diamond exports contributed about 80% of Botswana’s exports, they presently contribute only 65%. Textiles, for example, have shown tremendous growth, presently contributing about 14% of the country’s exports. The service exports like tourism have also shown tremendous growth.


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