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No future for mining beyond 2050 – experts

Botswana‘s economic future is persistently put in doubt by some international commentators. As far as national income generation and provision of sustainable jobs are concerned, there are no guarantees.


Currently the mixed structured open economy is largely dependent on mineral revenue mainly from the diamond sector for foreign income generation and the government dominates, coordinates and regulates almost every sector of the middle income economy that Botswana is. This current setup in which the diamond sector alone is responsible for a quarter of the national treasury and is the largest single private sector employer is constantly viewed as an economic danger looming.


This sentiments were echoed again recently at a discussion hosted by the World Bank Group where they also released Botswana Mining Investment & Governance Review report. According to reports from the gathering it was emphasized that Botswana needed to move with speed and unearth other sources of revenue and income generation to breathe life into an economy that could otherwise be  lifeless in a decade or two to come.


Specially Elected Member of Parliament, Ms Bogolo Kenewendo weighed on the same, urging that plans for a Botswana beyond Mining need to unfold as soon as yesterday. “We need to plan for a future that has a broader and diverse economy with a variety of sectors contributing significantly to the country‘s revenue pot,” she said. Kenewendo, a shrewd economic expert was also quoted saying that it was no longer a matter of choice to diversify the economy but an obligation.


 “We need to find ways for mining revenue to trickle down to the rest of the citizenry and also increase the impact of mining revenues on areas where mines in Botswana are situated. Business linkages and cluster developments need to show evidence at rich mineral areas,” she said.


According to the youngest legislator in parliament, Botswana needs to devise ways in which mining revenues would benefit the rest of citizenry apart from free basic service, she said that would be archived by sharing national wealth with its people and wealth creation at an ordinary individual level.


Though mineral revenue increased by 63 % in 2016 financial year, with government pocketing tens of billions from mineral tax, dividends and mining royalties and recent figures presenting a positive outlook for most companies and stable profitability for Botswana’s largest mining company Debswana, fluctuating market commodity prices and closure of some mining companies raise concern over an uncertain future for Botswana’s economy.


2016 saw liquidation and shut down of some mining companies especially copper and nickel companies due to low commodity prices. BCL Mine, Tati Nickel, Mowana are some of the victims. Meanwhile some have been reported to be on the brink of reopening soon.
 Debswana’s Damtshaa Mine has been put under care and maintenance. Debswana also reported a fortnight ago that their Letlhakane Mine, popularly known as DK 1, has reached the end of its lifespan with tailings project to take the operations not beyond 20 years to come.


Already prospected kimberlitic and precious deposits at the world’s largest diamond mine by value, Jwaneng Mine place the mine not beyond 2034 (Cut 8). All these factors and others which experts term unforeseen economic circumstances,  expose Botswana to be vulnerable to a possible economic crush in a few decades to come unless  something major is done to transform the economy and diversify national revenue sources.


At the Mining Investment & Governance Review report, Kenewendo observed that the World Bank Group’s Botswana Mining Investment and Governance Review report was expected to help government improve the sector’s performance  and to attract further investment.
According to the review by the world economic think tank, even the Mining sector itself is poorly managed here in Botswana.

 

It was pointed out that ordinary Batswana citizens and remote area settlers were just spectators in the Mining industry wealth creation symposium. The World Bank observes that Mining contractors and big money business partnerships in the mining sector are largely enjoyed by foreign owned enterprises which collect millions and invest them across borders or in their native countries.


The review indicates that Botswana Government regulations and policies are not structured in a way that locals benefit from doing business with mining companies especially in areas of procurement, supplies, as well as human resource as foreign national continues to enjoy preference in highly technical and skilled areas of mining human resource.


Permanent Secretary in the Ministry of Mineral Resources, Green Technology and Energy Security, Mr Kgomotso Abi agreed with the sentiments adding that Botswana needs to strengthen performance and address issues of concern to investors.
“We need to build an environment that will stimulate more investment in mineral extraction,” he said.


World Bank Country Representative, Ms Elene Imnadze said even though the mining sector immensely contributed to the development of Botswana, more still needs to be done to ensure mineral beneficiation, as well as secure a future for Botswana beyond mining.
“Other mines, more especially the copper ones, have had to close down due to low commodity prices. The copper mines, including BCL which is under provisional liquidation, remain closed even though base metal prices are beginning to increase slightly,” she continued.


According to the expert, government has to find ways of diversifying the economy and the capital generated from the mining sector should be invested into sectors that would be sustained beyond mining. She said this could be done by employing more people, building local suppliers and strengthening small and medium enterprises.  Botswana’s Mining Investment and Governance Review was compiled to help strengthen the mining sector’s governance, investment, environment and development impact in Botswana.


It reviewed sector performance from the perspective of three main stakeholder groups -government, investors in the mining value chain, and civil society and it identifies gaps between declared and actual government policy and practice. In 2015 Government of Botswana established the Mineral Development Company as a wholly state owned independent company to manage Botswana is multibillion Pula mining sector portfolio.


The company which is still undergoing full setting up, resourcing its personnel and defining its area of business is expected to manage all government shares in the mining sector and also transform the sector to fully benefit Batswana and the economy. Since establishment MDCB has being facing challenges of formative obstacles especially in the area of securing prominent personnel for the sensitive mandate it’s geared to deliver. Recently MDCB was reported to have licked out its controversial CEO Paul Smith who is constantly blamed for liquidating Botswana’s oldest copper mining giant BCL Mine.

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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. “However, 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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