Botswana’s economic direction is about to take a new twist. This was revealed by the Managing Director of a consulting firm ÔÇô Econsult Botswana (Pty) Ltd, Dr Keith Jefferis. The former Bank of Botswana deputy Governor was making a presentation at the just ended resource sector conference in Gaborone. He said the economy “is at a transition stage” and this is due to a number of combinations. Key to this is the diversification in the mining sector and paradigm shift in policy direction.
In the past, government focused a lot on manufacturing as a way broadening the country’s economic base and that has yielded limited success. But the authorities have since embraced a broader range of activities in an effort to diversify the economy, a thing Jefferis has commended. The range of sectors that have been identified alongside manufacturing include tourism, new mining ventures as well as financial and business services. Jefferis emphasised the need for diversifying beyond the diamonds and he underscored the importance of an export-led broadening of economic base, which is equally based on integration with the global economy.
“There is need to diversify sources of economic activity to sustain future growth,” he said. Diversity would equally generate employment.
Jefferis, however, said diamonds remain very important in the countries economy, but the period of rapid diamond-led growth coming to an end. This would be evident as the four mines abandon the open pit in favour of underground mining due to deepening of the minerals.
Underground mining is more expensive as compared to the open pit. Diamond mining has propelled the country’s economy from one of the poorest to a middle income state and one of the best performing economy in Africa over three decades ÔÇô from 1970 to 2000. The country’s average economic growth rated 10 percent, one of the highest in the world and it is only “comparable with Asian “Tiger” economies,” said Jefferis. The growth has since seen the country marking per capita income of about US$6 500.00 by 2005.
Minerals make up some 90 percent of total export revenues, and that comprises of diamonds, copper-nickel, gold and soda ash. Mineral revenues, Jefferis noted, have been the basis of a consistent balance of payments surpluses and accumulation of substantial foreign exchange reserves.
Mineral revenues make 50 percent of total government revenues.
Despite the importance that is being played by the diamond sector, Jefferis emphasised the need to broaden the country’s economic base beyond the valuable gemstones. This is partly because diamonds are vulnerable to market changes.