As if the economy has not been battered enough, the alarming rate of job losses in the mining sector is a cause for concern. However, the development does not come as much of a surprise given the poor economic conditions that are prevalent in the global economy, rendering Botswana in a position of imminent threat because of its heavy dependence on a single natural resource.
The collapse of commodity markets has been a long time coming and the warning signs were always visible. Like in the case of China, time was simply postponing the inevitable. It would be remiss to fail to acknowledge that difficult times such as these have come and gone, suggesting therefore that this is not the end of the road. Just a few years ago Botswana and the rest of the world were hit hard by the global economic meltdown as jobs were eroded in such a fleeting manner that it seemed they had never existed. Somehow Botswana managed to contain the harm and although it moved delicately towards recovery, a silver lining has always been visible in the horizon. Today, the economy is held at ransom by the commodity markets. This raises the question whether the resilience demonstrated by Botswana following the 2008/09 financial crisis can still be replicated today.
It must be highlighted that prior to the crisis, the economy had reflected somewhat strong and stable growth, which is not the case in the current economic state which has not been so robust. Perhaps the record levels of economic growth before the recession provided a buffer that cushioned Botswana against the rigours of the economic meltdown.
It is not clear if Botswana can be able to withstand such a meltdown given the recent dismal economic performance. The national economy is estimated to have grown by one percent in the past year. There is no doubt that a severe decline in economic activity may find Botswana much more vulnerable, with a thinner veil to cushion it against the resultant shocks. Only time will answer the question of whether the national economy will be able to ride out the storm; but there is no doubt that the road to recovery will be steeper.
The Economic Stimulus Programme (ESP) was formulated out of the realization that the economy needs a boost to sustain growth and development, by so doing facilitating job creation and diversification. However, the job losses emanating from the mining sector will negate attempts to create jobs through the ESP and unemployment figures will remain unchanged if they don’t get worse. This undermines the efforts of the ESP. What must also be taken into consideration is the fact that a loss of jobs also means that households are losing the means to survive. The negative impact on households also trickles to the financial sector, which is highly likely to result in an increasing number of written off debt, a burden that the sector will shoulder amid its own challenges. The prospect of new jobs lurks in the myriad of existing challenges.
What options exist for Botswana; what should be the next step? Perhaps government must now seriously consider the capital markets as a source of growth. At the BSE listings conference held last week, captains of industry unanimously agreed that opportunities for growth can be found in the capital markets.
