Thursday, December 3, 2020

Reduced euro area growth threaten beef and diamond revenues

Reduced economic growth in Europe threatens to negatively impact on Botswana’s mining and beef revenues.

This was said by Secretary for Economic and Financial Policy in the Ministry of Finance and Development Planning, Dr Taufila Nyamadzabo, in response to Sunday Standard enquiries on what the impact of the reduced growth in Europe would be on the Botswana economy.

In his 2011 budget speech, Finance Minister Kenneth Matambo said the European Union (EU) was still far below its pre-crisis growth at 1.8 percent during 2010 and is projected to fall to 1.5 percent in 2011.

Nyamadzabo explained that the EU area is highly integrated with the global economy through exchange of goods and services in the international trade markets adding that the euro financial markets were also more developed and integrated with both the developed and developing countries.

“In this connection, the reduced growth in the euro area means that there is reduced demand for goods and services from other countries including developing countries such as Botswana,” he said.
Botswana sells beef, diamonds and copper at higher prices to countries that are members of the European Union.

The reduced economic growth in the euro areas means that those business people importing our products have less income at their disposal and hence their purchasing power is reduced.

“Alternatively, Botswana could look for other lucrative markets which is not an easy thing to do. Hence, reduced growth in the euro area would result in Botswana losing out in terms of revenue from mining and beef products,” said Nyamadzabo.

He added that the European Union supported Botswana in terms development aid as well as through the European Development Fund and that such a programme may be reduced or stopped if reduced growth persisted in the euro area.

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Digital edition of The Telegraph, December 2, 2020.