As the national economy mends itself after the ravages of Covid-19, the African Development Bank has expressed hope that the Economic Transformation and Recovery Plan will help such recovery process.
“GDP growth is projected to moderate at 4.0 percent in 2023, supported by anticipated higher economic activity from the liberalized beef sector, higher diamond prices, and ramped-up copper and vaccine production. The forecast hinges on the fast-tracked implementation of the government’s Economic Transformation and Recovery Plan,” the Bank says in its African Economic Outlook Report for2023.
In terms of liberalising the beef sector, farmers are being allowed to export their cattle and meat directly to consumers abroad without having to go through the Botswana Meat Commission (BMC). The BMC itself will be restructured to separate its Lobatse, Maun and Francistown plants into stand-alone private sector entities. Since independence, BMC has been the only entity licensed to export beef.
A growing number of people, some farmers, strongly feel that Botswana’s reliance on the European Union export market is not really beneficial to the country. While the most lucrative, this market is also the most stringent in terms of requirements. As even a former BMC CEO has publicly asserted, the cost of meeting these requirements is prohibitive and has taken a toll on the Commission. It has also taken a toll on the Ministry of Agriculture which periodically has to go to considerable expense to meet EU requirements.
Diamonds remain the mainstay of Botswana’s economy, making up the bulk of the country’s exports. In her 2023/24 budget speech, the Minister of Finance, Peggy Serame, cited diamond trading as the main reason for Botswana having “one of the fastest recoveries from the impact of the COVID-19 pandemic.”
On account of strong demand for copper and rising prices, Botswana is emerging as a hotspot for this mineral. Last month, Australia’s Sandfire Resources announced that it has produced the first copper concentrate at its Motheo Copper Mine. In February this year, Khomecau Copper Mining announced that it has successfully ramped up its mining and processing operations to full production during December 2022. In 2021, the government sold the defunct BCL Mine in Selebi Phikwe to a Canadian company called Premium Nickel Resources. The latter plans to “redevelop and modernize” the Selebi Main and Selebi North deposits in Selebi Phikwe as well as the former Tati Nickel Mining Company Selkirk Mine in Francistown.
As regards vaccine production, a company called NantBotswana is currently constructing a vaccine manufacturing plant that will produce Pula Corbevax vaccine against COVID-19. This project is being undertaken in partnership with Texas Children’s Hospital Center for Vaccine Development and Baylor College of Medicine. Botswana already has the world-class Botswana Vaccine Institute (BVI) which manufactures and sells livestock vaccinations both nationally and internationally. An atypically scandal-free state-owned enterprise, BVI has partnered with the Keck Graduate Institute in the United States to develop low-cost vaccines for developing countries. These vaccines will also be adapted for use against COVID-19.
Its optimism notwithstanding, the AfDB cautions that that headwinds could come in the form of higher global inflation from supply-chain disruptions linked to Russia’s invasion of Ukraine, lower diamond earnings if diamond market economies go into recession, persistent droughts, lower exports and the Southern African Customs Union revenue if weak economic conditions persist in South Africa. As regards the latter, the weak conditions could get even weaker if South Africa follows through on its pledge to not arrest Russia’s president, Vladimir Putin, when he attends the BRICS summit in Cape Town in August. Putin is the subject of an arrest warrant by the International Criminal Court and South Africa has indicated that it won’t arrest the Russian president. In the event western powers (namely the United States, the EU and Britain) mete out come kind of punishment on South Africa (economic sanctions have been mentioned), Botswana will also suffer badly.
With the economy operating below full capacity, the Bank has projected Botswana’s inflation to fall to 5.8 percent in 2024 – which will be within the central bank’s target range.
“The projected fiscal surplus of 0.6 percent of GDP can be supported by full implementation of the government’s consolidation and public financial management reforms. The current account may stay in surplus as the diamond and tourism industries rebound. Unemployment may be mitigated by the government’s planned well targeted social protection system.”
