Monday, October 18, 2021

Botswana’s plan to grow economy not enough to end poverty ÔÇô Matambo

Botswana will target an average economic growth rate of 4.4 percent in the next six years from 3.8 percent currently but this won’t be enough to end poverty, the finance minister said on Monday.

Finance Minister Kenneth Matambo said the country’s faces poverty, income inequality and unemployment, and is keen “to find measures that increase the growth of the economy beyond the projected level of 4.4 percent.”

Despite Botswana’s success in promoting sustainable economic growth prior to the global financial crisis of 2008/09, the three major development challenges have remained an albatross on the economy of the world’s top diamond producer by value.

Under the 11th National Development Plan, a medium-term socio economic framework covering the period from 2017 to 2022, Matambo said revenues are estimated at 372.3 billion pula against an expenditure of 370.2 billion pula resulting in an expected slight budget surplus of 2.079 billion pula.

Under the previous plan, which covered 2009-2016, the minister said the economy achieved a growth rate of 3.9 percent from a target of 3.3 percent boosted by the non-mining sector.

Botswana has said its mining revenues are seen falling by 8 percent in 2016 due to depressed prices and weak demand.

Recently the government investment arm, the Botswana Development Corporation (BDC) is said to have approached the African Development Bank (AfDB) for a line of credit (LOC) of an amount close to one billion Pula. 

The BDC loan comes at a time when the government is battling a narrow economic base that is dominated by mining and the public sectors. In February, Matambo indicated that the domestic economic growth slowed down 3.2 percent in 2014 and further to 1.2 percent in 2015 due to weak demand for diamonds as well as electricity and water shortages. 

At the same time the downturn in the global diamond market and its impact on the domestic economy prompted the Government to adopt the Economic Stimulus Programme (ESP) as a strategy to boost growth, promote economic diversification, and create jobs.

However AfDB believes that its loan to BDC will provide scarce and competitively priced long-term funding to enable the corporation to meet its growth and financing needs and complement efforts to mobilise resources from other sources. 

“In line with the government’s ambitions, the LOC will support entrepreneurship, economic diversification and avail scarce long-term funding to critical sectors in Botswana as well as enable jobs and wealth creation and tax-revenue generation,” AFDB said at the time of announcing the loan.   

Meanwhile the AFDB facility is expected to be complemented by a grant to strengthen the BDC’s implementation capacity, effectiveness and deliver institution’s implementation skills.

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