Wednesday, July 6, 2022

Financial, services sectors seen playing role in diversification

The services and financial sectors, which have displayed resilience in 2012, showing positive growth, have been hailed as having the potential to play an even more prominent role in the economic growth process.

Overall, economic growth has been lower at about 3.7 percent significantly below the overall growth rate of about 6.1 percent in 2011 mainly due to lower growth in the mining sector. Hence the role of the non-mining sector in spearheading sustainable growth remains fundamental to promote economic growth.

Growth performance figures continue to show the mining sector has on overall growth performance in Botswana as it tends to drive the growth path in general.

Dr. Grace Tabengwa, a Research Fellow with the Botswana Institute for Development Policy Analysis (BIDPA), said growth of these sectors is subject to a conducive business and policy environment to ensure that foreign direct investment can be attracted into these sectors to enhance their potential.

Tabengwa said despite the slow growth in 2012, it is encouraging to note the positive growth in the non-mining sector. “It is a good sign that the private sector could take the growth momentum though implementation of some reforms in the business and policy environment to enhance the non-mining sector growth process,” she said.

For the year 2012 the growth trends of the services and financial average were about 10-15 percent.
“Though significant growth in the financial and services sectors have been realized, an increase would do Botswana good,” said Tabengwa.

Several sectors, however, grew at a slower rate in 2012 than in 2011, notably mining, water and electricity, manufacturing, government, trade and construction. Other sectors, such as the agricultural sector, manufacturing, trade experienced growth rates averaging below 10 percent or even less than 5 percent.

“This is a matter of concern since these sectors have the potential for employment creation and income generation,” she said.

Tabengwa added that this could actually play a positive role on government efforts to address other economic challenges of poverty, unemployment and industrial development and sector linkages, particularly the manufacturing sector.

Regarding policies in the various sectors, Tabengwa said in the case of Botswana policies are, to a large extent, in place though there is room for improvement.

She noted that in other sectors a number of supportive strategies have been developed and implementation could be fast tracked, citing the Human Development Strategy.

“It is important that factors that enhance the policy environment be hastened to reap the sectoral growth benefits to put Botswana on a sustainable growth path that is driven more by the non-mining private sector,” said Tabengwa.

She stressed the need for strategies that support technology advancement and adaption to be given priority since this is one area where Botswana continues to lag behind and it affects overall growth and competitiveness.

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