Botswana was able to withstand the economic turmoil that roiled through the world in 2008/09 because its non-mining sector performed very well. When the mining sector contracted by 2.1 percent during the global financial crisis, the non-mining sector compensated for the loss of growth by growing at 9.7 percent with the net effect of overall growth of 3.9 percent.
“Had the non-mining sector not grown by that much, the whole economy would have contracted,” says the draft report of the NDP 10 Mid-term Review.
Even better news is that the non-mining private sector is projected to increase its contribution to GDP from 55 percent in 2011/12 to 63.7 percent in 2015/16. The report says that to the extent that this result will be achieved, credit has to go to the Botswana’s Private Sector Crowding in Strategy.
The non-mining sector has also helped shore up the economy during periods outside of the crisis.
Says the report: “During the first three years of NDP 10 the non-mining sector, on average, grew at 6.6 percent while the mining sector only averaged 4.4 percent growth. Government on the other hand achieved only 0.8 percent growth.”
The main drivers of the sector’s growth during this period were Transport and Communications, Agriculture, Trade, Hotels and Restaurants, and the Manufacturing sector which recorded growth rates above 5 percent. The report says that although the Construction sector contracted by 3.8 percent during the crisis period, it performed well thereafter.
However, the report warns that there is still a serious policy challenge within the non-mining sector that needs to be tackled. The sector is dependent on government spending which, in turn, is dependent on the mining sector. To get around this problem, the report proposes “a much more robust diversification strategy.” The report says that a sectoral comparison of the real growth rates for the remaining part of NDP 10 reveals that Government Sector GDP will actually decrease by 6.4 percent during the period between 2012/13 and 2013/14 and by a lesser amount in 2014/15 only to recover by 2 per cent in 2015/16. It also recommends that the non-mining sector should be supported and assisted to become the alternative engine of growth for the economy.