The International Monetary Fund has warned the Sub Saharan economies
to be receptive to foreign direct investment as recovery in the
developed world could mean tighter financial management.
IMF Economic Counsellor and Director of the Research Department,
Olivier Blanchard, said they forecast growth of 5.4 percent, but
warned that although this shows strength of the economies in this
region, they have to perform as they operate in a changing global
“Stronger growth in advanced economies implies increased demand for
their exports, and that is clearly very good for them,” stated
“But the normalisation of monetary policy in the United States,
however, implies tighter financial conditions and what can be
described as a tougher financial environment. So stronger exports on
one hand, and tougher environment, financial environment on the
other,” he added.
The U.S accounts to 45 percent of Botswana diamonds exports–although
China now is becoming another growing market.
The Minister of Finance and Development Panning, Kenneth Matambo
warned during his budget speech in February that the global economy
continued to be weak during 2013, thus impacting negatively on the
domestic economic performance.
He said the world economic activity is projected to remain subdued,
largely as a result of the slow pace of recovery in the euro area, as
well as weaker domestic demand and slowing growth in some key emerging market economies such as China and India.
IMF’s World Economic Outlook of January 2014 stated that the world
output growth declined to 3.1 percent in 2012, down from 3.9 percent
in 2011. It was projected to further decline to 3.0 percent in 2013,
before recovering slightly to 3.7 percent in 2014, underpinned by the
recovery in emerging economies.
On the other hand, the regional economies grew moderately by 4.9
percent in 2012, compared to 5.5 percent in 2011, and are projected to
have registered a growth of 5 percent in 2013 and 6 percent in 2014.
However, Sub-Saharan growth forecast of 5.4 percent is in line with
Botswana projected real GDP growth of 5.4 percent in 2013 and by 5.1
percent in 2014 driven by the expected growth in some non-mining
sectors such as Trade, Hotels and Restaurants and Finance and Business
Matambo also highlighted in the budget speech that productivity has
been falling in the country, which could affect the country’s
“Botswana cannot compete for foreign direct investment, nor can its
products compete in the international export markets without improving
its productivity,” he said.
However, in a bid to enhance competitiveness and doing-business in
Botswana, Matambo said government in collaboration with the World Bank
is implementing several projects under the Economic Diversification
and Competitiveness Programme that include: improvement of the
business environment by streamlining business registration, licensing
and issuance of permits; establishment of an e-Government policies and
standards; and capacity building to support Monitoring and Evaluation
of the national strategies and policies.
“Foreign investors are becoming less forgiving and so macroeconomic
weaknesses, even if they’re not worse than before, are becoming more
costly,” warned Blanchard.
IMF said the recovery is strongest in the United States, without much
question, where growth is forecast to be 2.8 percent in 2014. It is
also strong in the U.K., in Germany, where some imbalances persist,
but where we forecast growth to be 2.9 percent for the United Kingdom,
and 1.7 percent for Germany. In Japan, where we forecast 1.4 percent
growth in 2014, fiscal stimulus has played a large role.