â€¨â€¨Botswana's total global exports for September this year amounted to P4,250.6 million, showing a significant increase of 9.3 percent compared to August 2019 when exports had a lesser value of P3,889.5 million.â€¨â€¨
The latest figures were announced this week by the Statistician General Dr. Burton Mguni in the Statistics Botswana's International Merchandise Trade Statistics (IMTS) monthly digest.â€¨â€¨However, the Statistician General was quick to highlight that the value of the total exports in September 2019 showed a decrease of 2.7 percent when compared to September 2018, which had P5,247.1 million registered exports.
â€¨â€¨"Botswana's total exports amounted to P4,250.6 million, resulting in an increase of 9.3 percent when compared to the revised August 2019 value of P3,889.5 million. Imports for the month of September were valued at P5,247.1 million, showing an increase of 1.7 percent from the revised August 2019 value of P5,159.6 million," Dr. Mguni said.â€¨â€¨However, he stressed that the September 2019 combined exports were lower than those the country recorded in September 2018.â€¨â€¨
"Comparison of total exports value for September 2019 and 2018 shows a fall of 29.8 percent (P1,807.2 million) from P6,057.8 million recorded in September 2018 to P4,250.6 million during the period under review.â€¨â€¨"The decline in total exports was mainly influenced by the decrease in diamonds exports, having declined by 29.4 percent (P1,558.4 million) from P5,297.9 million recorded in September 2018 to P3,739.5 million registered in September 2019.
Salt and soda ash showed a decrease of P179.6 million ( 74.7 percent) from P240.5 million in September 2018 to P60.9 million recorded during the month under review," he said.â€¨â€¨In September this year, Belgium and South Africa were the major destination countries for Botswana's exports, having received 17 percent and 15.2 percent respectively. India and Switzerland received 14.5 percent and 14.2 percent respectively. The United Arab Emirates (UAE) got 11.9 percent of the total exports.
Asia as a regional bloc received 45.9 percent of total exports during the month under review. The Southern Africa Customs Union (SACU) got 18 percent while the European Union (EU) received exports accounting for 18.1 percent.â€¨â€¨"Botswana mostly exported diamonds, which accounted for 88 percent of total exports during September 2019. Machinery and transport equipment contributed 3.4 percent while meat and meat products, and salt and soda ash contributed 2.1 percent and 1.4 percent respectively," Dr. Mguni added.â€¨â€¨
"The SACU region contributed 81.6 percent of total imports during September 2019. Most of the imports from SACU came from South Africa, followed by Namibia, accounting for 70.8 percent and 10.3 percent respectively. Imports from Asia and the EU regions accounted for 7.5 percent and 3.8 percent respectively while imports from Canada accounted for 4.6 percent during the month under review," the Statistician General said.â€¨â€¨
Commodities that were imported mostly during September 2019 were led by diamonds at 21.8 percent, followed by machinery and electrical equipment at 15.6 percent while food, beverages and tobacco contributed 14.8 percent. Fuel imports accounted for 13.1 percent while imports of chemical and rubber products represented 10.6 percent.â€¨â€¨The IMTS is an account of all business transactions of merchandise between domestic businesses and the rest of the world and plays a vital role in many economies, Botswana included. It also remains one of the major contributing indicators of the performance of any country's economy and its competitiveness on the global market.
This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.
The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.
Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.
He was speaking in Parliament on Tuesday delivering Parliament’s Finance Committee report after assessing a motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.
Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.
The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.
The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.
The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.
This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.
Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.
Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.
However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.
Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.
When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.
This as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.
Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.
The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.
Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.
In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.
Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.
Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.
Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.
Acknowledging the need to draw down from GIA no more, current Minister of Finance Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”
He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”