GROWING PAINS
Local GDP projected to grow by 4.3 percent in 2022
Propelled by a vastly improved showing from diamonds, Botswana’s Gross Domestic Profit (GDP) is projected to grow by 4.3 percent over the 2022 financial year.
Despite this, in their annual report released last week, Bank of Botswana (BOB) warned there is still much uncertainty surrounding the country’s - and indeed the global - economy.
The potential for further Covid-19 outbreaks as well as the far-reaching financial impact of the Russia-ukraine war, leave Botswana vulnerable. This is especially true for both diamond demand and tourism.
Focusing on the positives, 2021 proved relatively fruitful, with GDP growing by 8.6 percent having shrunk by 7.3 percent the previous year.
As has so often been the case over the years, the improvement was driven by a resurgence in the diamond sector, with the sparkling stone accounting for 90.1 percent of all exports. This was attributed to steady recovery in major rough diamond markets, China and America, as well as the easing of travel restrictions and movement of goods across borders.
In total, Botswana raked in a whopping P73.4 billion in diamond sales from September 2020 to 2021, way more than the P43.3 billion collected the year before
The non-mining GDP also stretched its admittedly much smaller muscle over the 12-month period to September 2021, growing by 6.9 percent having decreased by 2.8 percent the previous year. This was primarily down to improvement in sectors such as construction, water and electricity, wholesale, and retail and manufacturing just to mention a few.
Sharing his expertise with Voice Money, local economist, Powell Kebinaefhe, admitted the projected 4.3 percent growth was ‘conventionally attractive’ given the current state of affairs nationally and worldwide.
“However, it then depends on which sectors of the economy are going to contribute in such growth. Manufacturing sector would largely accrete job opportunities available, countering unemployment growth, which has been growing .exponentially,” he said.
Kebinaefhe is adamant industrialisation holds the key, in particular the agriculture and manufacturing sectors.
“The growth is positive but that alone can’t make us grow and reach high income status. We have to grow structurally in sectors deemed to be essential, such as manufacturing, agriculture and financial sectors and industrialise. It calls for the country to look into other ancillary ways of improving the coffers of the government - for example tap into or grow the sovereign investment vehicle which I am lead to believe has been dormant. Sovereign investment fund is a contemporary way of diversifying, it is for the country to look into its own competitive and comparative advantages and invest abroad in its disadvantages. In the same breath, we should guard against the economy overheating,” was Kebinaefhe’s advice.
Nevertheless, there is hope that the non-mining sectors will continue to improve and show positive growth due to the accommodative monetary conditions, improvements in electricity and water supply, as well as finance, insurance and pension funds sectors.