Despite efforts to diversify the economy and reduce Botswana’s overdependence on diamonds, the sought-after stone continues to dominate local exports.
Speaking at ABSA Bank Botswana’s Economic Forum in Gaborone last Thursday, Senior Policy Advisor at Ministry of Finance, Keith Jefferis, admitted the diversification dream was making slow progress.
Illuminating this point, he revealed diamonds accounted for a dazzling 90 percent of Botswana’s exports in 2021.
“Exports are still highly dependent on diamonds therefore there is low progress with export diversification resulting in potential external imbalances given little or no growth. Non-diamond exports are declining due to lack of diversification or export growth,” explained the respected economist.
Breaking down last year’s numbers, Statistics Botswana noted that rough diamonds were responsible for 67 percent of total exports while polished diamonds represented 9 percent. Services and manufacturing achieved 10 and 8 percent respectively while other minerals stood at 4 percent and cattle & meat brought just 2 percent to the plate.
It means non-diamond imports once again far outweigh non-diamond exports, which Jefferis warned poses a sustainability challenge.
Although he did not give the exact figures, Jefferis added that the country’s overall high import bill compared to an improving but still ‘very low’ export bill creates a negative balance of payments.
Finishing with some good news, the financial advisor stressed it was not all doom and gloom, as the International Monetary Fund (IMF) has predicted an economic growth from 2022 to 2027.
In that time, Gross Domestic Product (GDP) is expected to reach around 4 percent while the mining and non-mining sectors are expected to record 2 and 4.5 percent growth each.
“It is great that growth is expected but it is not enough on its own to reach the high income status by 2036 or even create employment locally. To achieve these objectives, growth has to be increased to at least 6 percent, which in turn would lead to a doubling of per capita income growth with population growth of 2 percent,” said Jefferis.
The forum was held under the theme ‘Accelerating transformative investment in Botswana’ and brought government officials, business executives and thought leaders under one roof to share perspectives on the state of the economy and the business landscape.