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UAE emerges as Botswana’s leading export market

The United Arab Emirates (UAE) has emerged as Botswana's leading export market, according to the Statistics Botswana's latest International Merchandise Trade Statistics (IMTS) figures released this week.


 

The IMTS is an account of all business transactions of merchandise between domestic businesses and the rest of the world with global exports valued at P3 700.4 million leaving the country in the month of August alone.  This shows an increase of 39.2 percent in exports compared to the revised July 2019 value of P2 658.9 million.

Imports for the same August were valued at P5 071.2 million, showing a decline of 14 percent from the revised July 2019 value of P5 896 million.



The IMTS figures showed that the largest export market for Botswana's goods was the UAE.

"The UAE was the largest destination of Botswana exports, having received 25.3 percent of total exports during August 2019," Statistics Botswana said in its IMTS report.

Botswana mostly exported diamonds, which accounted for 87.3 percent of the total exports during the month under review followed by machinery and transport equipment which contributed 4.2 percent while meat and meat products, and salt and ash contributed 1.7 percent and 1.2 percent respectively.

"India and Belgium followed (UAE) with 19.7 percent and 12.6 percent respectively.  South Africa received 12.4 percent of total exports.

Asia as a regional bloc received 63.7 percent of Botswana's total exports," Statistics Botswana said.

Asia was followed in the volume of exports by the European Union (EU), which accounted for 16.7 percent while the Southern African Customs Union (SACU) received 15.4 percent.  SACU is a grouping of Botswana, South Africa, Namibia, Eswatini (formerly Swaziland) and Lesotho.

On imports into Botswana, SACU as a region contributed 78.1 percent of the total imports during August 2019.



"Most of the imports from SACU came from South Africa followed by Namibia accounting 67.4 percent and 10.5 percent respectively of total imports value for the month.

"Imports from Asia and the EU regions made contributions of 10.5 percent and four percent respectively.  Canada and the USA respectively contributed 3.7 percent and 1.5 percent of imports into Botswana.  The country's imports were led by diamonds with a contribution of 18.2 percent followed by food, beverages and tobacco at 15.3 percent. 

Machinery and electrical equipment, and fuel contributed 15.3 percent and 13.1 percent respectively of total imports during August 2019 while chemicals and rubber products contributed 10.9 percent,"  the Statistics Botswana report shows.

The most imported commodity group from the SACU region was food, beverages and tobacco with a contribution of 19.6 percent and valued at P777.7 million following by fuel at 15.3 percent and valued at P605.5 million.

"India was the main source of imports from Asia, having supplied 3.1 percent ( P155.2 million), followed by China, Russia and Japan with 2.3 percent (P117.8 million), 1.2 percent (P63 million) and one percent (51.2 million) respectively of total imports during the period under review.



"Canada and the USA supplied P187.3 million (3.7 percent) and 73.9 million ( 1.5 percent) respectively worth of imports to Botswana during August 2019."
According to Statistics Botswana, the mode of transport that are mostly used in the country for international merchandise trade are air, road and rail.

"Imports amounting to P3 514.8 million representing 69.3 percent of total imports reached the country by road during August 2019. 

Air and rail transport accounted for 18.6 percent (943.7 million) and 12 percent (P610.5 million) respectively.  During the period under review, 89.7 percent (P3 317.9 million) of total exports left the country by air, road accounted for 10 percent (P368.3 million) of total exports during the month," Statistics Botswana said.

The IMTS remains one of the major contributing indicators of the performance of Botswana's economy and its competitiveness on the world market.  The statistics are also used by Government institutions in preparing for trade negotiations with other nations.

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Botswana on high red alert as AML joins Covid-19 to plague mankind

21st September 2020
Botswana-on-high-alert-as-AML-joins-Covid-19-to-plague-mankind-

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.

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Finance Committee cautions Gov’t against imprudent raising of debt levels

21st September 2020
Finance Committe Chairman: Thapelo Letsholo

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.

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Gov’t Investment Account drying up fast!  

21st September 2020
Dr Matsheka

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”

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