05 Sep 2024

Botswana has made notable progress in advancing towards an export-led economy, supported by a number of policies and strategic measures.

Answering a question in Parliament on behalf of the Minister of Finance recently, Minister of Transport and Public Works, Mr Eric Molale said according to Statistics Botswana, trade merchandise statistics indicated that exports continued to grow at an average of 7.9 per cent from 2019 to 2023. Minister Molale said further disaggregation of trade data showed that non-diamond exports grew on average by 15 per cent.

“Much of this growth stems from the exportation of copper by 17 per cent, machinery and equipment by 24 per cent as well as the exportation of live cattle by nine per cent. Specifically, the increase in exportation of live cattle reflects the significance of the decision that was taken by government in 2019, to liberalise the beef sector and discontinue the monopoly hitherto enjoyed by Botswana Meat Commission (BMC) as the country’s sole beef exporter,” he said.

On the other hand, he said Botswana’s import growth had averaged 7.1 per cent over the period 2019 to 2023, slightly lower than the growth of exports.

He also indicated that growth of non-diamond imports averaged 2.6 per cent, driven by food and fuel imports, which contributed, on average, 18 per cent and 21 per cent respectively, to total non-diamond imports. 

He further said the trade balance had on average been volatile, with three successive deficits in the period between 2019 and 2021, as well as in 2023.

“Overall, during this period, the trade balance averaged a deficit of P11.6 billion or -6.1 per cent of GDP. Much of these deficits were largely attributed to weaker diamond exports, amid subdued global economic activity, during the COVID-19 pandemic, including the recent weaker global demand for rough diamonds in 2023,” he added.

The minister told Parliament that measures and interventions aimed at realising an export-led economy included implementation of exchange rate policy on the exchange rate policy side, which he said had been aimed at providing a stable and competitive exchange rate environment.

“Against this, a crawling peg framework has been implemented in line with the inflation differential between Botswana and inflation in trading partner countries,” he said.

He said beyond implementation of exchange rate policy, government had also embarked on various measures aimed at enhancing regional trade, with a view to supporting the free movement of goods in and outside Botswana.

“For instance, through the National Export Strategy, government in 2019 approved the establishment of Special Economic Zones led by the Special Economic Zones Authority (SEZA) as part of attracting Foreign Direct Investment and promotion of export-led growth. Further, government developed the Citizen Empowerment Policy and Economic Inclusion Act,” he said.

Again, he said in addition to such measures, the 2024/2025 approved budget recognised agriculture as one of the critical sectors in the economy, through the introduction of Temo Letlotlo and Thuo Letlotlo programmes.

 “These programmes combined with the ban on vegetable imports are intended to substantially increase domestic food production to reach a higher level of agricultural product self-sufficiency, as part of agriculture sector value-chain development and in the event reduce the high import bill. These programmes are aimed at supporting the country’s food security and export efforts,” the minister explained.

He said other significant measures or interventions included an investment of P500 million at the Selebi-Phikwe Citrus project which had targeted 70 per cent of production for export.

The first harvest, he added, was in March this year.He further said other measures or incentives included partnership between SEZA and the Ministry of Agriculture to develop the value chain for sunflower oil and reduce imports of cooking oil. Among others is the 10-year sales agreement, as per Heads of Terms between government and De Beers Group that would accelerate economic diversification efforts through the creation of a multi-billion Pula Diamonds for Development Fund, an increase in diamond cutting and polishing companies from 23 to 46 as at December last year as well as the first ever export of diamond jewellery consignment by a local jewellery manufacturing company in March last year.

He, however, said despite such measures, government acknowledged that export diversification had not occurred at a pace it would have hoped for, given that exports were still dominated by diamonds. He added that a number of factors explained the slow progress, saying after the 2019, Botswana, like many other countries, was affected by the COVID-19 pandemic.

“In response to this, government developed the Economic Recovery and Transformation Plan (ERTP), with a view to accelerating Botswana’s transformation agenda to help the country in transitioning from the impact of the COVID-19 pandemic, by stimulating economic activity and improving economic growth,” he said.

Minister Molale said some of the initiatives in the ERTP which were geared towards fostering export diversification and export-led growth included fast tracking digital transition, accelerating SMMEs development and developing an enabling environment for businesses as well as improving food security and self-sufficiency.

Lobatse legislator, Dr Thapelo Matsheka had asked the minister to appraise Parliament on progress achieved in realising an export-led economy in the last five years or since the 2019 elections or the adoption of the Economic Recovery. Dr Matsheka also asked the minister to state the average growth of imports over five years, average growth rate of exports over the same period as well as the trade balance.

He also asked the minister to share the measures and interventions that were implemented in an effort to realise an export-led economy. Ends