The World Bank has projected an average growth rate of 2.7 percent for Sub-Saharan African economies in the year 2018. This information is contained in the October 2018 issue of Africa’s Pulse report, a bi-annual publication of the Office of the Chief Economist in the World Bank Africa Region.
The document analyses the short term economic prospects for the continent and current development challenges, as well as a special development topic. According to the report Sub-Saharan African economies are still recovering from the slowdown in 2015-16, but growth is slower than expected, the average growth rate estimation of 2.7 percent mirrors a slight increase from 2.3 percent in 2017. “The region’s economic recovery is in progress but at a slower pace than expected,” observes World Bank Chief Economist for Africa Albert Zeufack.
According to Zeufack to accelerate and sustain an inclusive growth momentum, policy makers must continue to focus on investments that foster human capital, reduce resource misallocation and boost productivity. “Policymakers in the region must equip themselves to manage new risks arising from changes in the composition of capital flows and debt,” he said.
The World Bank further highlights that the slow growth is partially a reflection of a less favourable external environment for the region. Global trade and industrial activity lost momentum, as metals and agricultural prices fell due to concerns about trade tariffs and weakening demand prospects.
“While oil prices are likely to be on an upward trend into 2019, metals prices may remain subdued amid muted demand, particularly in China,” explains the 2018 Africa Pulse adding that financial market pressures intensified in some emerging markets and concern about their dollar-denominated debt has risen amid a stronger US dollar.
The slower pace of the recovery in Sub-Saharan Africa of 0.4 percentage points lower than the April forecast is explained by the sluggish expansion in the region’s three largest economies, Nigeria, Angola, and South Africa. Lower oil production in Angola and Nigeria offset higher oil prices, and in South Africa, weak household consumption growth was compounded by a contraction in agriculture. Growth in the region – excluding Angola, Nigeria and South Africa – was steady.
The World Banks says several oil exporters in Central Africa were assisted by higher oil prices and an increase in oil production. “Economic activity remained solid in the fast-growing non-resource-rich countries, such as Côte d’Ivoire, Kenya, and Rwanda, supported by agricultural production and services on the production side, and household consumption and public investment on the demand side” reports Albert Zeufack Office.
Furthermore the sub Saharan African economic review suggests that Public debt remained high and continues to rise in some countries. “Vulnerability to weaker currencies and rising interest rates associated with the changing composition of debt may put the region’s public debt sustainability further at risk,” says Zeufack World Bank Chief Economist for Africa Region. Zeufack further notes that other domestic risks include fiscal slippage, conflicts, and weather shocks.
“Consequently, policies and reforms are needed, to strengthen resilience to risks and raise medium-term potential growth” he said “Reforms should include policies which encourage investments in non-resource sectors, generate jobs and improve the efficiency of firms and workers,” added Cesar Calderon, Lead Economist and Lead author of the report.
Growth in the region is projected to increase from 2.7 percent in 2018 to 3.3 percent in 2019, rising to 3.6 percent in 2020, slightly below April forecasts. The recovery is set to continue amid a more challenging external environment, including moderating economic growth among the region’s main trading partners, a stronger U.S. dollar, heightened trade policy uncertainty, and tightening global financial conditions.
Against this backdrop, growth may be supported by a modest uptick in oil prices, the easing of drought conditions that had depressed agricultural output, and a rise in domestic demand as policy uncertainty of the past year recedes and investment rises.
This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.
“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.
Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.
A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.
Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.
A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.
Each Placing Share, according to Botswana Diamond Executives has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from, 7th September 2020, being the date of the Placing Warrants issue.
In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.
The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.
In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.
Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.
The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”
In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.
Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.
The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.