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Economy grew by 1.2% during Q3 2017

The domestic economy increased by 1.2 percent in the third quarter of 2017 compared to an increase of 6.9 percent recorded in the same quarter of 2016. The increase was attributed to real value added of Water & Electricity, Finance & Business Services, Transport & Communications and Mining industries which increased by 15.7, 4.8, 4.5 and 4.4 percent respectively.

The estimated GDP at current prices for the third quarter of 2017 was P43, 067.9 million compared to P43, 146.6 million registered in the second quarter of 2017. The estimated GDP at constant 2006 prices for the third quarter of 2017 was P22, 689.2 million compared to P22, 884.4 million recorded in the second quarter of 2017.

All other industries recorded positive growths of more than 2.0 percent with the exception of Trade, Hotels and Restaurants which decreased by 9.3 percent (See table 4). Water and Electricity value added at constant 2006 prices for the third quarter of 2017 was P98.3 million compared to P84.9 million registered in the same quarter of 2016, recording an increase of 15.7 percent. In the third quarter of 2017, Electricity recorded a negative value added of P103.2 million compared to a negative value added of P117.8 million registered in the same quarter of 2016 recording an increase of 12.4 percent.

The improvement in the Electricity real value added is attributed to an increase in local electricity production by 10.7 percent and a decrease of 62.1 percent in electricity imports. Water sector recorded a positive value added of P202.9 million compared to P209.0 million registered in the same quarter of the previous year amounting to a decrease of 2.9 percent. Water consumption in kilolitres went down by 10.9 percent during the quarter under review.

The increase of 4.8 percent in the real value added of the Finance and Business Services industry was mainly due to the rise in the value added of Banks, Real Estate and Business Services by 6.4, 5.9 and 5.4 percent respectively. Transport and Communications growth of 4.5 percent was attributed to the increase in real value added of Air transport, Road transport and Post & Communications by 7.2, 5.1 and 5.0 percent respectively.

The increase in the real mining value added of 4.4 percent was mainly driven by Diamond and Other Mining value added which increased significantly by 32.9 and 37.4 percent respectively. Other Mining comprises of Gold Mine and quarrying activities. Diamonds production in carats increased by 33.0 percent in the third quarter of 2017 compared to an increase of 9.3 percent recorded in the same quarter of 2016. Gold production in kilograms increased by 52.6 percent.

In the quarter under review, Orapa diamond mine production increased by 60 percent mainly driven by the upgrading of Plant 1, which was previously on partial care and maintenance in response to trading conditions in late 2015. Jwaneng diamond production increased by 23.0 percent as a result of planned increases in feed to plant. Mining sector growth without Copper/Nickel stood at 29.7 percent. The year on year growth compares the third quarter of 2016 value added which has copper contribution and the current period without copper value added.

Copper/nickel production was zero due to the provisional liquidation of the BCL mine in October 2016. Trade, Hotels and Restaurants real value added decreased by 9.3 percent in the third quarter of 2017 compared to an increase of 16.3 percent registered in the same quarter of the previous year. The negative growth is attributed to the decrease in real value added of wholesale sub sector by 79.3 percent. Wholesale value added decreased because downstream diamond industries contributed negatively to the industry during the quarter under review.

Non-mining GDP increased by 0.9 percent in the third quarter of 2017 compared to 5.6 percent registered in the same quarter of the previous year. On quarterly basis, Trade, Hotels and Restaurants remained the major contributor to GDP by 17.0 percent followed by Mining at 15.9 percent while General Government came third at 15.3 percent. Trade, Hotels and Restaurants contribution increased because of inclusion of diamond aggregation processes under wholesale sub sector.

Components of GDP by Type of Expenditure

Total final consumption expenditure recorded an increase of 5.2 percent in the third quarter of 2017, whereas in the same quarter of the previous year it rose by 2.6 percent. Household final consumption increased by 6.1 percent, Government final consumption increased by 3.2 percent and Fixed capital formation decreased by 8.0 percent in the quarter under review. Imports of machinery & equipment and transport & equipment also decreased by 16.2 and 35.4 percent respectively.

In the case of foreign trade, real exports of goods and services decreased by 14.1 percent in the third quarter of 2017 compared to an increase of 50.6 percent realized in the same quarter of 2016. Diamond is the major export commodity. Exports of diamonds in Pula decreased by 5.6 percent in the third quarter of 2017 compared to a decrease of 18.7 percent registered in the same quarter of 2016. Imports of goods and services recorded a decrease of 16.3 percent during the quarter under review, compared to 9.0 percent decline realized in the same quarter of the previous year.

GDP at current prices stood at P170, 588.9 million in 2016 compared to a revised level of P146, 065.8 million in 2015, recording an increase of 16.4 percent. Real GDP increased by 4.3 percent in 2016 compared to 1.7 percent decrease in 2015. The increase in real GDP was mainly attributed to Water & Electricity, Trade, Hotels & Restaurants and Transport & communications industries which recorded an increase in value added of 95.2, 13.5, and 6.6 percent respectively.

Water and Electricity value added at constant 2006 prices for the year 2016 was P623.5 million compared to P319.4 million registered in the previous year, recording an increase of 95.2 percent. The sector recorded the highest growth but it is the lowest in terms of contributions to Gross Domestic Product. In 2016, Electricity recorded a negative value added of P183.1 million compared to a negative value added of P195.5 million registered in the previous year, recording an increase of 6.3 percent.

The improvement in the Electricity real value added is attributed to an increase in local electricity production by 8.4 percent and a decrease of 0.7 percent in electricity imports in 2016. In 2016, the water sector registered a highest growth of 57.4 percent because water consumption in kilolitres January 2016, Water Utilities Corporation introduced dual billing system. Consumers were charged for both portable water and waste water.Trade, Hotels & Restaurants increase in real value added of 13.5 percent is attributed to the increase realized in the downstream diamond industries.

In 2016, their value added increased by 74.1 percent compared to 48.7 percent decline registered in 2015. During 2016, diamond prices remained relatively stable and therefore the diamond industry had not been significantly impacted by the commodity pricedownturn. A decrease of 3.5 percent in the real value added of the Mining sector was mainly due to Copper and Coal value added which declined by 21.2 and 9.4 percent respectively.

Copper/Nickel production decreased by 22.4 percent in 2016. BCL copper mine was placed under provisional liquidation in October 2016. Coal production went down by 9.4 percent in the year under review. Diamond production increased slightly by 0.3 percent in 2016. Contribution to GDP by industry is shown in table 2. In 2016, Mining and Trade, Hotels & Restaurants remained major contributors to GDP, their contributions stood at 20.5 percent and 18.2 percent respectively.

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Business

Banking on Your Terms: Exploring the World of Self-Service Banking

23rd February 2024

In today’s digital age, banking is no longer just about visiting a branch during business hours. It’s about putting you, the customer, in the driver’s seat of your financial journey. But what exactly is self-service banking, and how do you stand to benefit from it as a customer?

Self-service banking is all about giving you the power to manage your finances on your terms. Whether you want to check your account balance at midnight, transfer money while on vacation, or deposit cash without waiting in line, self-service banking makes it possible. It’s like having a virtual branch at your fingertips, ready to assist you 24/7.

This shift towards self-service banking was catalyzed by various factors but it became easily accessible and accepted during the COVID-19 pandemic. People of all ages found themselves turning to digital channels out of necessity, and they discovered the freedom and flexibility it offers.

Anyone with a bank account and access to the internet or a smartphone can now bank anywhere and anytime. Whether you’re a tech-savvy millennial or someone who’s less comfortable with technology, you as the customer have the opportunity to manage your finances independently through online banking portal or downloading your bank’s mobile app. These platforms are designed to be user-friendly, with features like biometric authentication to ensure your transactions are secure.

Speaking of security, you might wonder how safe self-service banking really is. Banks invest heavily in encryption and other security measures to protect your information. In addition to that, features like real-time fraud detection and AI-powered risk management add an extra layer of protection.

Now, you might be thinking, “What’s the catch? Does self-service banking come with a cost?” The good news is that for the most part, it’s free. Banks offer these digital services as part of their commitment to customer satisfaction. However, some transactions, like wire transfers or expedited bill payments, may incur a small service fee.

At Bank Gaborone, our electronic channels offer a plethora of services around the clock to cater to your banking requirements. This includes our Mobile App, which doesn’t require data access for Orange and Mascom users. We also have e-Pula Internet Banking portal, available at https://www.bankgaborone.co.bw as well as Tobetsa Mobile Banking which is accessible via *187*247#. Our ATMs also offer the flexibility of allowing you to deposit, withdraw cash, and more.

With self-service banking, you have the reins of your financial affairs, accessible from the comfort of your home, workplace, or while you’re on the move. So why wait? Take control of your finances today with self-service banking.

Duduetsang Chappelle-Molloy is Head: Marketing and Corporate Communication Services

 

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Business

Botswana records over P6 billion trade deficit

7th February 2024

Botswana has recently recorded a significant trade deficit of over P6 billion. This trade deficit, which occurred in November 2023, follows another deficit of P4.7 billion recorded in October of the same year. These figures, released by Statistics Botswana, highlight a decline in export revenues as the main cause of the trade deficit.

In November 2023, Botswana’s total export revenues amounted to P2.9 billion, a decrease of 24.3 percent from the previous month. Diamonds, a major contributor to Botswana’s exports, experienced a significant decline of 44.1 percent during this period. This decline in diamond exports played a significant role in the overall decrease in export revenues. However, diamonds still remained the leading export commodity group, contributing 44.2 percent to export revenues. Copper and Machinery & Electrical Equipment followed, contributing 25.8 percent and 10.1 percent, respectively.

Asia emerged as the leading export market for Botswana, receiving exports worth P1.18 billion in November 2023. The United Arab Emirates, China, and Hong Kong were the top destinations within Asia, receiving 18.6 percent, 14.2 percent, and 3.8 percent of total exports, respectively. Diamonds and Copper were the major commodity groups exported to Asia.

The Southern African Customs Union (SACU) received Botswana’s exports worth P685.7 million, with South Africa being the main recipient within SACU. The European Union (EU) received exports worth P463.2 million, primarily through Belgium. Australia received exports worth P290 million, while the United States received exports valued at P69.6 million, mostly composed of diamonds.

On the import side, Botswana imported goods worth P9.5 billion in November 2023, representing an increase of 11.2 percent from the previous month. The increase in imports was mainly driven by a rise in Diamonds and Chemicals & Rubber Products imports. Diamonds contributed 23.3 percent to total imports, followed by Fuel and Food, Beverages & Tobacco at 19.4 percent and 15.0 percent, respectively.

The SACU region was the top supplier of imports to Botswana, accounting for 77.7 percent of total imports. South Africa contributed the largest share at 57.2 percent, followed by Namibia at 20.0 percent. Imports from Asia accounted for 9.8 percent of total imports, with Diamonds, Machinery & Electrical Equipment, and Chemicals & Rubber Products being the major commodity groups imported. The EU supplied Botswana with imports worth 3.2 percent of total imports, primarily in the form of Machinery & Electrical Equipment, Diamonds, and Chemicals & Rubber Products.

Botswana’s recent trade deficit of over P6 billion highlights a decline in export revenues, particularly in the diamond sector. While Asia remains the leading export market for Botswana, the country heavily relies on imports from the SACU region, particularly South Africa. Addressing the trade deficit will require diversification of export markets and sectors, as well as efforts to promote domestic industries and reduce reliance on imports.

 

 

 

 

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Business

Business sector optimistic about 2024

7th February 2024

The business sector in Botswana is optimistic about the year 2024, according to a recent survey conducted by the Bank of Botswana (BoB). The survey collected information from businesses in various sectors, including agriculture, mining, manufacturing, construction, and finance, among others. The results of the survey indicate that businesses expect trading conditions to improve in the first quarter of 2024 and remain favorable throughout the year.

The researchers found that firms anticipate improvements in investment, profitability, and goods and services exported in the fourth quarter of 2023 compared to the previous quarter. These expectations, combined with anticipated growth in all sectors except construction and real estate, contribute to the overall confidence in business conditions. Furthermore, businesses expect further improvements in the first quarter of 2024 and throughout the entire year.

Confidence among domestic market-oriented firms may decline slightly in the first quarter of 2024, but overall optimism is expected to improve throughout the year, consistent with the anticipated domestic economic recovery. Firms in sectors such as mining, retail, accommodation, transport, manufacturing, agriculture, and finance are driving this confidence. Export-oriented firms also show increased optimism in the first quarter of 2024 and for the entire year.

All sectors, except agriculture, which remains neutral, are optimistic about the first quarter of 2024 and the year ending in December 2024. This optimism is likely supported by government interventions to support economic activity, including the two-year Transitional National Development Plan (TNDP) and reforms aimed at improving the business environment. The anticipated improvement in profitability, goods and services exported, and business investment further contributes to the positive outlook.

Firms expect lending rates and borrowing volumes to increase in the 12-month period ending in December 2024. This increase in borrowing is consistent with the expected rise in investment, inventories, and goods and services exported. Firms anticipate that domestic economic performance will improve during this period. Domestic-oriented firms perceive access to credit from commercial banks in Botswana to be relaxed, while export-oriented firms prefer to borrow from South Africa.

During the fourth quarter of 2023, firms faced high cost pressures due to increased input costs, such as materials, utilities, and transport, resulting from supply constraints related to conflicts in Ukraine-Russia and Israel-Hamas. According to the survey report, the firms noted that cost pressures during the fourth quarter of 2023 were high, mainly attributable to increase in some input costs, such as materials, utilities, and transport arising from supply constraints related to the Ukraine-Russia and Israel-Hamas wars. β€œHowever, firms’ expectations about domestic inflation decreased, compared to the previous survey, and have remained within the Bank’s 3 – 6 percent objective range, averaging 5.4 percent for 2023 and 5.4 percent for 2024. This suggests that inflation expectations are well anchored, which is good for maintenance of price stability,” reads the survey report in part.

However, firms’ expectations about domestic inflation decreased compared to the previous survey, and inflation expectations remained within the Bank’s objective range of 3-6 percent. This suggests that inflation expectations are well anchored, which is beneficial for maintaining price stability.

In terms of challenges, most firms in the retail, accommodation, transport, manufacturing, construction, and finance sectors considered the exchange rate of the Pula to be unfavorable to their business operations. This is mainly because these firms import raw materials from South Africa and would prefer a stronger Pula against the South African rand. Additionally, firms in the retail, accommodation, transport, and mining sectors cited other challenges, including supply constraints from conflicts in Russia-Ukraine and Israel-Hamas, as well as new citizen economic empowerment policies that some firms considered unfavorable to foreign direct investment.

On the positive side, firms highlighted factors such as adequate water and electricity supply, a favorable political climate, an effective regulatory framework, the availability of skilled labor, and domestic and international demand as supportive to doing business in Botswana during the fourth quarter of 2023.

Overall, the business sector in Botswana is optimistic about the year 2024. The anticipated improvements in trading conditions, supported by government interventions and reforms, are expected to drive growth and profitability in various sectors. While challenges exist, businesses remain confident in the potential for economic recovery and expansion.

 

 

 

 

 

 

 

 

 

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