Diversification begins to yield results

Fast-tracking
economic
diversification must
remain a priority
for Botswana as it continues
to implement its economic
stimulus programme (ESP).
According to NKC African
Economists Botswana
specialist Pieter du Preez,
this plan is paying off.
“If one looks at the
national accounts of
Botswana over the last ten
years then the programme
is definitely adding value,”
he told FTW. “Looking at
the contributions to GDP –
trade, hotels & restaurants
increased its contribution
from 12% in 2006 to over
18% last year; finance
& business service from
11.3% to 13.6% over the
same period; transport and
communication from 3.8%
to 5.7%; and construction
from 4.8% to 6.2%.”
But, he said, taking
the same figures into
consideration it was
clear that accelerated
implementation of the
Economic Diversification
Drive (EDD) was required.
“Mining’s contribution
fell from 32.2% in 2006 to
19.9% last year,” said Du
Preez.
The agriculture and
manufacturing sectors
are also concerning.
“Manufacturing in Botswana
has fared relatively poorly
the last couple of years.
More specifically, the
manufacturing sector’s
contribution to GDP fell
from just over 6% five years
ago to just over 5% last year.”
According to Du Preez
this was mainly due to the
sector only growing by 0.5%
and 0.8% in 2014 and 2016,
respectively.
“The diversification drive
by the government has yet
to see any tangible results in
this sector,” he said.
Whilst De Beers moved its
sorting and sales operations
from London to Gaborone
in 2013, where almost 20
manufacturing units operate
– in an effort to boost
manufacturing in Botswana
– the sector remains under
pressure.
“This will certainly help
economic growth – but
it’s linked to the diamond
sector and falls outside local
authorities’ diversification
plans. They will ideally want
to boost manufacturing
outside the diamond sector
sphere as well,” said Du
Preez.
He added that looking at
the economic figures it was
clear that diversification
efforts were well under
way and delivering positive
results.
“However, the slump in the
diamond market in 2015 and
the subsequent contraction in
GDP during the same year is
worrying and shows that the
government still has some
way to go. In the medium to
long term we expect growth
on an annual basis to be
between 4% and 5%.”
He said these projections
were based on the
assumption that local
authorities would continue
to drive diversification
efforts away from the
diamond sector and maintain
monetary and fiscal stability.
Du Preez told FTW part
of this drive would be to
increase infrastructure
investment in the country.
“In the latest Business
Monitor International (BMI)
infrastructure risk & reward
index for sub-Saharan Africa,
Botswana has fallen by 10
places due to infrastructure
yielding low returns,” said
Du Preez.
CAPTION
De Beers moved its sorting and sales operations from London to Gaborone in 2013, where
almost 20 manufacturing units operate.