Saturday, May 15, 2021

Botswana’s economic prospects remain sub-optimal

Botswana, like many other Sub-Saharan countries, has a promising food and drink sector although it is being held back by high risks. Private consumption growth is forecast to be a little stronger in 2015 and come in at about 4.5 percent, although continued high unemployment rates and recent price hikes on alchoholic beverages are likely to drain growth in private spending, which will impact the food and drink sector.

“The relative appeal of the country is undermined by a poor demographic profile, with a smaller population, especially the all-important youth population, than many of its peers.”

This is according to the Consumer outlook report which was released earlier on this week. “Premiumisation is therefore likely to be a key target for industry players in Botswana. The country also benefits from a good business environment, a relatively well-developed food retail sector and an even distribution of incomes.” It goes on to further add that “economic headwinds will temper per capita consumption growth.”

The Consumer Outlook report also states that Botswana’s economic growth prospects will remain sub-optimal during 2015 despite improved production and exports of diamonds. The country’s underperforming power sector and weak global demand for precious metals will continue to be the main factors dragging on performance.

In light of this, the report forecasts real GDP growth in 2015 to reach 4.5 percent and fall back a little in 2016 to 4.0 percent. Botswana is heavily reliant on diamonds for its economic wellbeing. Exports of precious stones account for over 70percent of export revenue and around 30percent of GDP, and so any fall in international prices or domestic production can seriously impact upon growth. The development of the coal mining sector will help Botswana diversify its economy away from this overreliance, but much of this coal is earmarked for use in domestic power production.

The outlook for other mineral exports, such as nickel and copper, is not particularly rosy, as companies draw down against falling prices. In order to safeguard against the vagaries of commodity markets, Botswana must also develop a foods processing or manufacturing base.

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