Wednesday, May 25, 2022

Gaolathe cautions against global recession

Baledzi Gaolathe, the Finance and Development Planning Minister, warned Sunday that a prolonged global recession will most likely affect the implementation of some of the National Development Plans 10 projects.

“I think everything is relative and if the recession is going to be prolonged then certainly, it is going to affect some of the projects,” he told Sunday Standard.

His comments came just a day before the USA, the world’s biggest economy that buys 50 percent of diamond jewelry, announced that it had entered into a recession that was sparked by the credit crunch.

That  announcement  by  the USA that it had  entered into a recession wiping over US $  1 trillion  dollars on its  major stock exchanges in a single-day was, on Tuesday, followed by Asian markets that  took  a nose-dive, some as  deep as six percent.

However, local mining companies have been reeling under the impact of the global economic contraction as BCL and Botswana Metal Refinery announced that they would be slashing jobs.
BCL intends to retrench as much as 10 percent of its staff complement while BMR said that, out of its staff┬ácomplement of 200, only 23┬áwill remain by end of this year. On the other hand, African Copper near Francistown has indicated that it has suspended hiring┬ánew staffÔÇöexcept in specialized areas.

Further, Discovery Metals, exploration┬áand budding miners indicated that they might be forced to delay their proposed mining plans in Botswana while┬áGem Diamonds said it was wary of the international developments that┬áare likely to make “funding for such big project to be harder to come by.”

“We have made some advancement regarding the Gope project and our environmental┬áimpact study has been approved by government. Right now, we are talking to government as it should be the case under Botswana’s Mineral Act before we can get a mining license. The┬áissue of┬áglobal recession normally makes funding of such big projects to be harder to come by,” Gem Diamonds’ Chief Executive Officer, Clifford Elphick, told the Sunday Standard in a telephone interview from London.

If the recession is prolonged, it would make it difficult for government to fund its projects, especially under the present situation where mining accounts for over 40 percent of the Gross Domestic Products.

That would pose a serious challenge to government which has tasked itself with a long term vision of 2016. Most of the ideal goals of the vision will remain unfulfilled and poverty and unemployment would not be tackled.

The current recession is likely to see government starting to cut on spending on development budget that is to be announced in February in preparation of unforeseen scenarios.


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