International trade activity on the rebound
In some much welcome good news, data for the first quarter of 2021 shows international trade activity has continued to recover from the effects of the Covid-19 pandemic.
This was the finding of Econsult economists, Sethunya Kegakgametse and Kitso Mokhurutshe in their most recent review.
According to the duo, there were significant increases in exports in the first three months of the year, reaching P24.1 billion in total.
This marks a whopping 38.4 percent increase on the figure recorded in the final quarter of 2020, with a resurgence in diamond demand playing a big part.
“The sharp increase in exports was driven by diamond exports, which rose by 45 percent during the quarter as the global demand for diamonds improved during the period,” explained the economists.
During the same period (January – March), imports were valued at P22.8 billion, indicating a marginal decrease of 1.4 percent between quarters.
This resulted in a trade surplus (when exports outweigh imports) of P1.3 billion, Botswana’s first quarterly surplus since 2018.
However, normal service is likely to be resumed for Q2 (April – June), with experts predicting a substantial trade deficit for the three-month period.
Major events that happened in the second quarter include the commissioning of the Kazungula Bridge and the launch of the revised African Growth and Opportunity Act (AGOA) National Response Strategy. Both are expected to increase trade activity.
Seven years in the making, the impressive Kazungula Bridge, which provides passage for both road and rail, offers a one-stop border post and links regional markets as a north-south corridor.
With P9 million collected in revenue in June, the first full month of operation, economists say this indicates the bridge could become a useful source of government revenues. This will be raised mainly through toll fees and transport permits from the additional freight traffic generated by the bridge.
On the AGOA strategy, the economists believe the amended Act will increase Botswana exports to the United States markets.
“Sectors that have the potential to increase exports, create employment opportunities and contribute to export-led growth have been prioritized,” note Kegakgametse and Mokhurutshe in their review.
These include agriculture, textiles and apparel, meat and meat products, handicrafts, jewelry, and semi-precious stones, horticulture, and agro-processing, and indigenous products.
Since the commencement of AGOA in 2000, somewhat surprisingly, Botswana has mainly exported textiles and clothing as well as furniture.
It is hoped the inclusion of other industries in the revised AGOA will boost Botswana and increase export earnings.
Looking forward, the Econsult economists say data on recent developments provide a decidedly mixed picture, with some positive developments concerning economic growth, trade performance, and banking, offset by negative developments about inflation.