Thursday, March 4, 2021

Report spells out Botswana’s economic diversification solution

Botswana’s transformation will demand not just creative and vigorous diversification, but also deeper partnerships with the private sector and stronger foundations for competitiveness, mostly in developing the skills and knowledge capabilities of the workforce, a report released this week by the African Centre for Economic Transformation has shown.

The report titled “2014 African transformation; growth with depth” says that despite Botswana’s favourable rankings on human well-being, expansions in education and health, infrastructure, and other welfare-enhancing programs that target vulnerable groups would strengthen the country’s transformation effort.

The report says that Botswana has not been able to leverage its high income from diamonds
to transform the economy, despite the impressive growth.

“The export base remains narrow. Diamonds account for more than 70% of total exports, followed by copper, nickel, textiles, and beef products (in that order). With growth slowing in the past two decades, pursuing transformation while the diamond income lasts should be a foremost concern of policymakers,” states the report.

It says Botswana’s political stability has provided continuity for the government to develop policies and programs and build strong institutions that can ensure effective implementation.

Recognizing its reliance on a few non renewable resources and the mining industry’s weak labour absorptive capacity and weak links with the rest of the economy, Botswana has recently embarked on ambitious initiatives to diversify its economy, including diamond polishing, states the report.

“But these initiatives have yet to produce sustainable, productive, and competitive sectors that would ensure future growth,” says the report.

According to the report, sectors that can boost transformation include services, manufacturing, and tourism.

“Very important in current diversification initiatives are the six hubs for diamonds, transportation, agriculture, health, education, and innovationÔÇöidentified in Vision 2016 and coordinated by the National Strategy Office,” states the report.

The report also indentified tin products as the fastest growing export. “Botswana has a high revealed comparative advantage in pearls and precious and semiprecious stones, unworked and worked ores and concentrates of base metals, and meat and edible meat offal, fresh, chilled, or frozen,” the report says.

Other areas with good prospects for boosting exports, the report says, include financial services, mining and minerals value addition, glass manufacturing, health services, ICT and data processing, tourism, and manufacturing.

In addition to the recent initiative to upgrade part of diamond exports into polished stones, diversification priorities could focus in the short to medium term on garments and textiles, packaging food and beverages, packaging materials, leather, ceramics, jewellery, tourism, and financial services, says the report.

Attention will need to be paid to improving transportation and power generation, including solar power in rural areas, the report says.

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Read this week's paper