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Botswana faces colossal trade deficit amid weak diamond trading

Latest released statistics shows Botswana choking at a trade deficit of more than P3 billion. And this current drift is contributed mostly by the dwindling diamond exports, a red flag for the diamond dependent economy.

The latest released International Merchandise Trade Statistics which covers the last quarter of 2019 until now for Statistics Botswana and released in December, shows signs of an economy with a niggling trade deficit. The last time Statistics Botswana compiled information on trade during October 2019, Botswana registered a trade deficit of P3, 425.1 million. During October 2019, Botswana’s total imports were valued P5, 587.0 million, resulting in an increase of 3.8percent compared to the revised September 2019 value of P 5, 383.4 million.

According to Statistics Botswana total exports for the period under review were valued at P2, 161.9 million, registering a decrease of 49.3 percent from the previously revised period which had a value of P4, 260.2 million. During the current period according to the national statistics body Botswana exported Diamond accounting 79.2 percent of total exports. Machinery & Transport Equipment and Meat & Meat Products followed with 5.7 percent and 3.9 percent respectively.

According to Statistics Botswana, India and United Arab Emirates were the major destinations for Botswana exports, having received 28.8 percent and 18.7 percent respectively, of total exports during October 2019. Statistics Botswana says Belgium and South Africa received 14.7 percent and 12.2 percent respectively. The fall of 49.3 percent of exports was mainly attributed to the 54.2 percent (P2, 026.6 million) decline in Diamonds exports during the current month compared to the value recorded for the previous month.

The diamond was not the only culprit to this country’s low export rate, it is lined up with Salt & Soda Ash which dropped by P25 .3 million or 41.6 percent from the previous quarter which is Q3. Salt & Soda Ash had dropped from P60.9 million during September 2019 to P35.6 million during the period under review. In the latest international merchandise trade statistics, Botswana exports P623.2 million worth of diamonds to India which is a leading buyer of Botswana stones.

United Arab Emirates bought diamonds worth P403.5 million while Belgium, Botswana’s biggest EU partner imported rough diamonds worth P317.5 million. The world’s biggest economy USA even trails Israel as it bought P47.2 million of diamond while Israel paid Botswana P178 million for its precious stones. Currently riddled by political protests Hong Kong remains in the top five of Botswana’s top diamond buyers as it imported diamonds worth P83 million.

Botswana’s neighbor and one of Africa’s leading economy is not a big fan of Botswana diamonds as it only bought P10 million worth of the stones in the period under review. South Africa mostly buys machinery and electrical equipment from Botswana which was worth at P104.7 million in the period under review. Most of Botswana’s exports, mostly diamonds, in the just ended quarter of 2019 were transported by air and they were worth P1, 8 billion or 82.6 percent of the entire export bill. Road transport accounted for 16.5 percent (P356.0 million) of total exports during the month under review.

Botswana dogged by trade deficit as it is currently an import dependent economy

The trade deficit of P2 billion which was recorded by Statistics Botswana shows a continue trend of the country living at a negative trade balance. Last year the trade deficit rose from P1 billion in October to P2 billion in December. For October 2019 it was already at P3 billion and trade expects said it is going to soar to more than P4 billion in December 2019 given the bad year that was last year.

In 2017 Botswana’s trade balance has been flip flopping and fluctuating with quarters of the year and months. Botswana ended the first quarter of year 2017 with a trade deficit and continued to the next quarter with a trade balance running at a negative before recovering in the third quarter albeit flip flopping between getting trade surplus and trade deficit.

The story of bad trade balance did not end three years ago, it even continue to 2018, with some months having trade surplus while some experiencing. This trend was inherited by Botswana trade dynamics towards last year where the country only experienced trade surplus only in January and June. In other months Botswana was grappling with a huge trade deficit. Statistics Botswana is yet to release the November and December trade statistics.

According to Statistics Botswana, a trade balance refers to the total value of goods exported minus the total value of goods imported by a given economy in a given period of time. A positive trade balance (trade surplus) indicates that a country is exporting more in value terms than it is importing. A negative trade balance (trade deficit) indicates that the country is importing more than it is exporting.

High import bill

The Botswana imports which were more than exports, causing a huge trade deficit in the year under review amounted to P5.6 billion. This resulted in an increase of 3.8 percent when compared to the previously revised period of 2019 where they were valued at P 5, 383.4 million.

According to Statistics Botswana, Diamonds contributed the most to the total imports, at 24.8 percent (P1, 385.5 million) followed by Food, Beverages & Tobacco and Machinery & Electrical Equipment at 14.6 percent (P813.1 million) and 12.9 percent (P722.2 million) respectively. Fuel contributed 12.4 percent (P693.3 million) while Chemicals & Rubber Products contributed 10.2 percent (P569.2 million) to total imports during the period under review.

Most of the imports from SACU came from South Africa followed by Namibia, accounting for 65.4 percent and 10.5 percent respectively, according to Statistics Botswana. South has a contribution of 65.4 percent (P3, 7 billion) of total imports during the month under review. Botswana is known to be dependent on its southern neighbor for Food, Beverages & Tobacco and Fuel and in the period under review these commodities were the top most imported goods from South Africa, with contributions of 20.8 percent (P759.6 million) and 16.1 percent (P588.1 million) respectively.

A lot of Botswana’s import bill shows that most of the commodities were also sourced from Asia and these main commodities imported from the region were Diamonds and Machinery & Electrical Equipment with contributions of 28.9 percent (P157.5 million) and 17.7 percent (P96.4 million) respectively. According to Statistics Botswana Asia also sold Chemicals & Rubber Products and Vehicles & Transport Equipment made contributions of 14.9 percent (P81.1 million) and 13.9 percent (P75.6 million) respectively. India and China were the main sources of imports from Asia, having supplied 3.1 percent (P175.7 million) and 2.4 percent (P132.2 million) respectively, of total imports during the season under review.

Also seen on Botswana’s import bill is the European Union (EU) which supplied imports valued at P372.5 million, accounting for 6.7 percent of total imports during October 2019. In the region Belgium and the United Kingdom were the main sources of imports from the EU, having contributed 3.0 percent (P165.4 million) and 1.3 percent (P70.6 million) in that order, to total imports during the month under review.

During October 2019, Canada supplied 4.5 percent (P250.5 million) of total imports to Botswana. Most of the imports from Canada were unsorted Diamonds at 98.9 percent (P247.7 million) of total imports from that country, according to Statistics Botswana. Statistician General, Burton Mguni recently said as a result, international merchandise trade statistics remains one of the major contributing indicators of the performance of a country’s economy and its competitiveness on the world market. He said the report is a compilation of the country’s national accounts and balance of payments percent and 12.2 percent respectively.

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Jackdish Shah loses interest in BDP

17th May 2022
Jackdish

As the preparations for the Botswana Democratic Party (BDP) congress are about to kick off, reports on the ground suggest that the party’s Deputy Treasurer Jackdish Shah will not defend the position in August as he contemplates relocation.

According to sources, the businessman who joined the BDP Central Committee in 2015 at the 36th Congress held in Mmadinare is ready to leave the party’s politburo. It is said he long made up his mind not to defend the position last year. A prominent businessman, Shah, when he won the position to assist Satar Dada in 2015 was expected to improve the party’s financial vibrancy. By then the party was under the leadership of Ian Khama.

According to close sources, Shah long decided not to contest because he has fallen out of favour with the party leadership. It is said he took the decision after some prominent businessmen who are BDP members and part of football syndicate decided to push him out and they used their proximity to President Mokgweetsi Masisi to badmouth him hence the decision.

“The fight at the Botswana Football Association (BFA) and Botswana Football League (BFL) has left him alone in the desert and some faces there used their close access to the President to isolate him,” said a source. Media reports say, Shah does not see eye to eye with BFA President MacLean Letshwiti who is also Masisi’s buddy hence the decision.

BFL Chairman Nicholas Zackhem is said to be not in good terms with Shah, who at one point Chaired the then Botswana Premier League (BPL). “He is seriously considering quitting because of what is unfolding at the team (Township Rollers) which is slowly not making financial gains and might be relegated and he wants to sell while it is still worth the investment,” said a highly placed source.

Shah is a renowned businessman who runs internet providing company Zebra net, H &G, game farm in Kasane, cattle farm in Ghanzi region and lot of properties in Gaborone. He also has two hotels in USA, his advisors have given him thumbs up on the possible decision of relocating provided he does not sell some of the investments that are doing well.

Asked about whether he will be contesting Shah could not confirm nor deny the reports. It is said for now it is too early as a public decision will have to be taken after the national council meeting and prior to the national congress. “As a BDP Central Committee member he cannot make that announcement now,” a BDP source said.

BDP is expected to assemble for the National Council during the July holidays while the National Congress is billed for August. It is then that the party will elect a new CC members. The last time BDP held elective congress was at Kang in 2019. The party is yet to issue writ.

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Govt ignores own agreements to improve public service

17th May 2022
Govt

The government has failed to implement some commitments and agreements that it had entered into with unions to improve conditions of public servants.

Three years after the government and public made commitments aimed at improving conditions of work and services it has emerged that the government has ignored and failed to implement all commitments on conditions of service emanating from the 2019 round of negotiations.

In its position paper that saw public service salaries being increased by 5%, the government the government has also signalled its intention to renege on some of the commitments it had made.
“Government aspires to look into all outstanding issues contained in the Labour Agreement signed between the Employer and recognised Trade Union on the 27th August 2019 and that it be reviewed, revised and delinked by both Parties with a view to agree on those whose implementation that can be realistically executed during the financial years 2022/23, 2023/24 and 2024/25 respectively,” the government said.

Furthermore, in addition to reviewing, revising and de-linking of the outstanding issues contained in the Collective Labour Agreement alluded to above and taking on a progressive proposal, government desires to review revise, develop and implement human resource policies as listed below during the financial year 2022/23,2023/24,2024/25

They include selection and appointment policy, learning and development policy, transfer guidelines, conditions of service, permanent and pensionable, temporary and part time, Foreign Service, expatriate and disciplinary procedures.

In their proposal paper, the unions which had proposed an 11 percent salary increase but eventually settled for 5% percent indicated that the government has not, and without explanation, acted on some of the key commitments from the 2019/2020 and 2021/22 round of negotiations.  The essential elements of these commitments include among others the remuneration Policy for the Public Service.

The paper states that a Remuneration Policy will be developed to inform decision making on remuneration in the Public Service. It is envisaged that consultations between the government and relevant key stakeholders on the policy was to start on 1st September 2019, and the development of the policy should be concluded by 30th June 2020.

The public sector unions said the Remuneration Policy is yet to be developed. The Cooperating Unions suggested that the process should commence without delay and that it should be as participatory as it was originally conceived. Another agreement relate to Medical Aid Contribution for employees on salary Grades A and B.

The employer contribution towards medical aid for employees on salary Grades A and B will be increased from 50% to 80% for the Standard Option of the Botswana Public
“Officers’ Medical Aid Scheme effective 1st October 2019; the cooperating unions insist that, in fulfilling this commitment, there should be no discrimination between those on the high benefit and those on the medium benefit plan,” the unions proposal paper says.

Another agreement involves the standardisation of gratuities across the Public Service. “Gratuities for all employees on fixed term contracts of 12 months but not exceeding 5 years, including former Industrial class employees be standardized at 30% across the Public Service in order to remove the existing inequalities and secure long-term financial security for Public Service Employees at lower grades with immediate effect,” the paper states.

The other agreement signed by the public sector unions and the government was the development of fan-shaped Salary Structure. The paper says the Public Service will adopt a best practice fan-shaped and overlapping structure, with modification to suit the Botswana context. The Parties (government and unions) to this agreement will jointly agree on the ranges of salary grades to allow for employees’ progression without a promotion to the available position on the next management level.

“The fan-shaped structure is envisaged to be in place by 1st June 2020, to enable factoring into the budgetary cycle for the financial year 2021/22,” the unions’ proposal paper states. It says the following steps are critical, capacity building of key stakeholders (September – December 2019), commission remuneration market survey (3 months from September to November 2019), design of the fan-shaped structure (2 to 3 months from January to March2020) and consultations with all key stakeholders (March to April 2020).

The unions and government had also signed an agreement on performance management and development: A rigorous performance management and reward system based on a 5-point rating system will be adopted as an integral part of the operationalization of the new Remuneration System.

Performance Management and Development (PMD) will be used to reward workers based on performance. The review of the Performance Management System was to be undertaken in order to close the gaps identified by PEMANDU and other previous reports on PMS between 1st September 2019 and 30th June 2020 as follows; internal process to update and revise the current Performance Management System by January 2020.

A job evaluation exercise in the Public Service will also be undertaken to among others establish internal equity, and will also cover the grading of all supervisory positions within the Public Service.
Another agreement included overtime Management. The Directorate of Public Service Management (DPSM) was to facilitate the conclusion of consultations on management of overtime, including consideration of the Overtime Management Task Team’s report on the same by 30th November 2019.

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Health Expert rejects ‘death rates’ links to low population growth

17th May 2022
Health-Expert

A public health expert, Dr Edward Maganu who is also the former Permanent Secretary in the Ministry of Health has said that unlike many who are expressing shock at the population census growth decline results, he is not, because the 2022 results represents his expectations.

He rushed to dismiss the position by Statistics Botswana in which thy partly attributes the low growth rates to mortality rates for the past ten years. “I don’t think there is any undercounting. I also don’t think death rates have much to do with it since the excessive deaths from HIV/AIDS have been controlled by ARVs and our life expectancy isn’t lower than it was in the 1990s,” he said in an interview with this publication post the release of the results.

Preliminary results released by Statistics Botswana this week indicated that Botswana’s population is now estimated to be 2,346,179 – a figure that the state owned data agency expressed worry over saying it’s below their projected growth. The general decline in the population growth rate is attributed to ‘fertility’ and ‘mortality’ rates that the country registered on the past ten years since the last census in 2011.

Maganu explained that with an enlightened or educated society and the country’s total fertility rate, there was no way the country’s population census was going to match the previous growth rates.
“The results of the census make sense and is exactly what I expected. Our Total Fertility Rate ( the average number of children born to a woman) is now around 2.

This is what happens as society develops and educates its women. The enlightened women don’t want to bear many children, they want to work and earn a living, have free time, and give their few children good care. So, there is no under- counting. Census procedures are standard so that results are comparable between countries.

That is why the UN is involved through UNFPA, the UN Agency responsible for population matters,” said Maganu who is also the former adviser to the World Health Organisation. Maganu ruled out undercounting concerns, “I see a lot of Batswana are worried about the census results. Above is what I have always stated.”

Given the disadvantages that accompany low population for countries, some have suggested that perhaps a time has come for the government to consider population growth policies or incentives, suggestions Maganu deems ineffective.

“It has never worked anywhere. The number of children born to a woman are a very private decision of the woman and the husband in an enlightened society. And as I indicated, the more the women of a society get educated, the higher the tendency to have fewer children. All developed countries have a problem of zero population growth or even negative growth.

The replacement level is regarded as 2 children per woman; once the fertility level falls below that, then the population stops growing. That’s why developed countries are depending so much on immigration,” he said.

According to him, a lot of developing countries that are educating their women are heading there, including ourselves-Botswana. “Countries that have had a policy of encouraging women to have more children have failed dismally. A good example is some countries of Eastern Europe (Romania is a good example) that wanted to grow their populations by rewarding women who had more children. It didn’t work. The number of children is a very private matter,” said Maganu

For those who may be worried about the impact of problems associated with low growth rate, Maganu said: “The challenge is to develop society so that it can take care of its dependency ratio, the children and the aged. In developed countries the ratio of people over 60 years is now more than 20%, ours is still less than 10%.”

The preliminary results show that Mogoditshane with (88,098) is now the biggest village in the country with Maun coming second (85,293) and Molepolole at third position with 74,719. Population growth is associated with many economic advantages because more people leads to greater human capital, higher economic growth, economies of scale, the efficiency of higher population density and the improved demographic structure of society, among many others.

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