Thursday, October 29, 2020

Govt. should facilitate export competitiveness – Dr Jefferies

By Portia Nkani

Government has been urged to prioritise supporting local exporters and thereby place lesser attention on imports.   

Responding to The Telegraph, Economist, Dr Keith Jefferies – the founding Managing Director of Econsult- argued that government needs to do much more to improve the business environment, reduce costs for business and facilitate improved export competitiveness which will support job creation by the private sector.

By so doing, this will help bring the country on track on employment creation and diversification efforts which continue to be elusive.

For many years, government has been attempting to diversify the economy from its main revenue sources being diamonds and Southern African Customs Union (SACU) revenues.

Jefferies also emphasized that in addition to supporting exporters, “government also needs to do more to improve the quality of policy making, and ensure that it is based on evidence, high quality data, and analysis of potential impacts. Finally, government needs to dramatically improve its own efficiency with regard to administration, implementation and the delivery of public services.”

Looking at the components of Gross Domestic Product (GDP) by type of expenditure in the third quarter of 2018, derived from Statistics Botswana; real exports of goods and services increased by 13.5 percent in the third quarter of 2018 compared to a decrease of 31.9 percent realized in the same quarter of 2017.

Imports of goods and services recorded an increase of 0.6 percent during the quarter under review, compared to 16.4 percent decline realized in the same quarter of the previous year.

During October 2018, total imports were valued at P7, 268.5 million while total exports were valued at P3, 316.7 million, resulting in a trade deficit of P3, 951.8 million. There was a significant increase of 35.2 percent in total imports value for October 2018 compared to the September 2018 value of P5, 376.8 million.

In terms of commodities, diamonds contributed the most to total imports at 37.8 percent, followed by fuel; machinery & electrical equipment and food, beverages & tobacco at 12.2 percent, 11.2 percent and 10.4 percent respectively. Exports were similarly dominated by diamonds at 79.4 percent of total exports during the period under review.

SACU was the main import trading partner for Botswana during October 2018. Within the SACU region, South Africa was the biggest source of imports into Botswana, contributing 59.2 percent of total imports during the month.

Fuel and Food, Beverages & Tobacco dominated imports from South Africa by contributing 18.8 percent and 16.4 percent respectively, of the total imports from that country.

Other commodities which contributed notably to imports from South Africa were diamonds, machinery & electrical equipment and chemicals & rubber products at 13.3 percent, 12.6 percent and 11.0 percent respectively.

The major destinations at region level for Botswana exports during the current period were Asia, the European Union and SACU with 43.6 percent, 25.7 percent and 23.1 percent of total exports respectively.

The diamonds group was the main commodity group exported to Asia. Singapore alone received 13.9 percent of total exports. In October 2018, total exports fell by 45.2 percent compared to the September 2018 value of

P6, 053.7 million.

Meanwhile, on the country’s economic performance; economic growth gained momentum in the second quarter of 2018, driven by improved consumer and investment spending. Local economists expect the GDP to expand between 4.5 percent and 4.6 percent.

Adding to the discussion, Barclays Botswana Economist, Naledi Madala, said “Growth prospects remain upbeat, buoyed by higher diamond production and improvements in the non-mining sector. Growth in advanced and emerging market economies will spur demand for Botswana’s rough diamonds in the short to medium term, boosting economic activity. Outside the mining sector, the services sector, improved water and electricity stability, growth in government expenditure and other economic diversification initiatives under promotion by the government should further stimulate the economy.

South Africa emerged from recession in the third quarter with a moderately better than expected GDP rebound of 2.2 percent.  Madala said the rebound is encouraging as the slow growth in South Africa is one of the major downside risks to Botswana’s growth prospects. She predicted full year growth of 4.6 percent, while Dr Jefferies maintained his at 4.5 percent for the year 2018.

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