Sunday, July 14, 2024

Is Botswana’s economic engine of growth grinding to a halt?

Economic pundits – both at the government enclave and within the private sector bat the ball back and forth about the best way to keep the country’s economic engine running. 

Botswana’s Trade and Investment Minister – Peggy Serame says with the global economic growth at its lowest due to the Covid- 19 pandemic, improving doing business environment has become pertinent to support businesses and promote investment. 

According to the 2020 Doing Business Report, Botswana is ranked 87th out of 190 economies, down from 86 th in 2019, with the most problematic areas being starting a business, getting electricity and enforcing contracts. 

To address these challenges, Serame says the Botswana Government has since introduced the Online Business Registration System (OBRS) which integrates Botswana Unified Revenue Services (BURS), Public Procurement and Asset Disposal Board (PPADB) and Omang Systems. 

“Further, the Tourism Licensing and Information System (TOLIS) has been launched to support online applications and payments. Further, the Trade and Industrial Development Acts and their enabling Regulations have been revised to reduce the turnaround times”, Serame told Parliament this past week during the National Development Plan 11 midterm review. 

Recently the country’s Finance and Economic Development Minister – Dr Thapelo Matsheka altered the NDP 11 document to reflect the impact that the Covid-19 pandemic has had in the ailing economy for the past four months. 

Accordingly, Matsheka says to turn around the economy Botswana will need ten times more than what has been spent in the last four months. The Finance and Economic development ministry recently pegged the COVID-19 Economic Stabilisation Plan expenditure P4 billion. 

“The aim is to promote implementation of the pre-COVID-19 development and transformation agenda, while incorporating the lessons learnt and seizing new opportunities to pursue the path towards high-income status by 2036,” Matsheka said in parliament when presenting the Mid -Term review paper.

Given the decline in government revenues, and a widening budget deficit, the Botswana government will now be forced to settle for upfront payment for its financial requirements. Officials at the Finance Ministry have pegged the total financing requirement for the remaining half of NDP 11 at P43 billion.  

At the same time, Dr Matsheka told Parliament that some money will have to be raised through a combination of increased domestic revenues such as taxes and levies, and government debt. 


While some economic pundits were suggesting that the government could once again tap into the country’s Foreign Reserves for funding, some on the other hand are cautioning against such a move. 

Dr Matsheka, who is an economist by profession is on the side of the latter economists. He told Parliament that the government has little scope to draw down further on the Government Investment Account – the government’s portion of the foreign exchange reserves, 

“As this needs to be preserved as a financial buffer”. Official figures show that the GIA account has been declining in recent months as government pulled emergency funds from the buffers. Bank of Botswana’s statement of financial position for the year ended June 2020 shows the country’s reserves at P63.6 billion, 3.8 percent lower than the previous month’s P66.1 billion, and lower than P71.8 billion recorded in June 2019, reflecting a 11.4 percent fall in an annualised rate. 

The reserves are made up of the transactions balances tranche (TBT), liquidity investment tranche (LIT), the Pula fund and the International Monetary Fund (IMF) tranche. Much of the decline in foreign exchange reserves during June was due to slight 16 percent decrease in the Transactions Balances Tranche, falling from P4.1 billion to P3.4 billion, caused by domestic foreign exchange demand and net capital outflows.

The Liquidity Investment Tranche retreated plunged by 31 percent to P5.7 billion, while the Pula fund, the largest contributor to foreign reserves grew by 1.6 percent P52.6 billion. 


To jumpstart the sluggish economy, which is clearly operating below its potential, Serame says the NDP 11 second half budget allocation will ensure that only projects with high impact will be pursued to avoid wasteful and inefficient spending. 

“The indicative ERTP estimated expenditure is P14.5 billion out which P10.562 billion is for the Economy and Employment Sector in the remaining years of the Plan”, Serame said on Wednesday. 

During the last part of NDP 11 the Botswana government says efforts will be geared towards transformation of the economy through various Strategies and Programmes.


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