Wednesday, May 25, 2022

Botswana’s manufacturing sector growing – Serame

The country’s manufacturing sector is said to have helped to reduce the import bill where imports of manufactured items totaled P41 billion in 2020 while domestic production of manufactured items was just under P10 billion.

Even though in the earlier years the Ministry of Investment Trade and Industry did not set targets for the contribution of the manufacturing sector to GDP, in 2019, the Ministry set a yearly target of 7 percent for the period 2019 to 2036.

This was revealed by the Minister of Finance Peggy Serame in Parliament and stated that government has undertaken steps to bolster the growth of the sector. She said some of the steps included prioritized value chain development to unlock opportunities to promote citizen economic empowerment and that the initial sectors of focus will be minerals, tourism, food, and education. Another step she said its development of Special Economic Zones such as Pandamatenga focusing on agricultural production including agro-processing. She spoke of imposition of import restrictions for commodities such as bottled water, salt, baked goods and school uniforms which has resulted in increased production of these products within the country.

“Through the Botswana Investment and Trade Centre (BITC), attracting foreign direct investment (FDI) into export-oriented manufacturing,” said Serame.

She further said that according to Statistics Botswana Formal Employment Sector Statistics, the ratio of employment for the manufacturing sector to total formal employment was 6.7 percent in 1980, 8.5 percent in 1990, 11.2 percent in 2000, and 10.2 percent in 2010. In 2020, manufacturing accounted for 7.7 percent of formal employment according to the new Quarterly Multi-topic Household Survey, which uses a different methodology to the old formal employment survey and hence the results are not directly comparable. She stated that nevertheless, these results show that manufacturing is relatively labour intensive, and accounts for a larger share of employment than of GDP.

“The manufacturing sector reduced the import bill as many domestically produced goods would otherwise have been imported,” she said.

Serame further stated that the Industrial Development Policy 2014, broadly defines industrialization to include manufacturing and services. She added that while in proportional terms the contribution of the manufacturing sector to GDP has remained constant over time, in absolute terms, the manufacturing sector has been growing. She added that over the period 1994, to 2020, manufacturing grew in real terms by 4.0 percent a year, on average, compared to 3.5 percent a year for GDP as a whole.

Serame observed that according to Statistics Botswana and the World Bank reports, the contribution of the manufacturing sector to GDP was 4.4 percent in 1980; 4.9 percent in 1990; 7.5 percent in 2000; 8.5 percent in 2010; and 5.7 percent in 2020. The average contribution of the manufacturing sector to GDP for the period 1994 to 2020, according to the most recent data series published by Statistics Botswana, was 7.3 percent.

“For the rural areas, the Local Economic Development (LED) programme is being implemented by the Ministry of Local Government and Rural Development specifically targeting the growth of industries in rural areas,” said Serame.

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