Government Enclave and its senior advisors were this week confessing to the old truth that they were told by the media over the last 12 months about the global economic down-turn on the fortunes of the country.
The move followed a series of meetings in the northern parts of the country in the last three weeks where four cabinet ministers were consulting with the residents, trade unions, employment bureaus and mining houses about the global impact of the financial crisis on the area.
“The financial crisis has now started to impact negatively on the real economy. The lack of available credit and long term investment funds has slowed down growth in consumer spending, reduced employment incomes, as well as causing capital losses on personal savings and other assets.
“The credit crunch has also led to curtailment and postponement of capital expenditure programmes by many enterprises, thus aggravating the decline in aggregate demand, and exacerbating the negative impact on the economic activity and employment,” Finance Minister, Baledzi Gaolathe said.
He added: “For Botswana, the impact of the recent financial crisis will be substantial with serious implications for the economy. The main risk to our economy from the crisis on the mineral exports, in particular our diamonds sales, which started to fall significantly in November 2008.
“In addition, there has been a sharp decline in commodity prices in the past three months for other minerals like copper, nickel and gold. As a result of these developments, there will be a slow down in economic growth and decline in government revenue, in particular mineral revenue which forms the bulk of government’s total revenues from the end of 2008/09 until 2010/11,” he said. “The current worldwide economic meltdown with a consequent freefall in commodity prices, has adversely affected all mining operations in Botswana and not only the BCL and Tati Nickel operations. Other companies are being impacted adversely. Revenue for mining companies is reducing. During the period from August 2008 to middle of November 2008, nickel price dropped from about USD 9.4/lb to USD 4.8/lb.
“During the same period copper dropped from USD 3.8/ lb to 1.6/lb clearly putting considerable pressure on the finances of BCL and Tati operations.”