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Economy grows by 4.3 percent

The Botswana domestic economy registered positive growth in 2016 following a slump in 2015. The latest release from Statistics Botswana show that the Real Gross Domestic Product (GDP) in the fourth quarter grew by 0.1 percent on quarterly basis as it made a recovery from the 1.1 percent decline in the third quarter. The growth in the fourth quarter added to other quarterly growth to give the commodity depended country its largest real GDP growth since 2014.

The estimated GDP at current prices for the fourth quarter of 2016 was P43.7 billion compared to a revised level of P44.1 billion registered in the third quarter of 2016. GDP at current prices  also known as nominal GDP measures GDP using the current price level. As a result, nominal GDP will often appear higher than real GDP

The estimated GDP at constant 2006 prices for the fourth quarter of 2016 was P22.42 billion compared to P22.41 billion registered in the third quarter of 2016. GDP at constant prices is known as the real GDP as it is adjusted for inflation, that is, it adjusts GDP for changes in inflation.

On a year to year basis, the domestic economy increased by 4.2 percent in the fourth quarter of 2016 compared to a decline of 3.5 percent recorded in the same quarter of 2015. The increase was attributed to real value added of Trade, Hotels & Restaurants and Transport & communications which increased by 12.4 and 6.5 percent respectively.

 All other industries recorded positive growths of more than 0.5 percent with the exception of mining which decreased by 6.2 percent. Trade, Hotels & Restaurants growth of 12.4 percent was attributed to the increase in real value added of Wholesalers, Vehicle dealers and Hotels & Restaurants by 95.5, 7.1 and 5.8 percent respectively. Wholesaler’s value added increased significantly because downstream diamond industries contributed more to the industry.

The decrease in the real mining value added of 6.2 percent was because of closure of the copper/nickel mines during the fourth quarter of 2016. In the quarter under review, copper/nickel production was zero due to the provisional liquidation of the BCL mine in October 2016. The closure of BCL mine also affected the Tati Nickel copper mine. On the other hand, diamond valued added increased by 14.3 percent during the quarter under review due to positive recovery in the global markets, particularly in the major markets for diamonds. During 2016, diamond prices have remained relatively stable and therefore the diamond industry has not been significantly impacted by the commodity price downturn.

Statistics Botswana’s fourth quarter GDP data shows that Non mining GDP increased by 5.5 percent in the fourth quarter of 2016 compared to 1.7 percent registered in the same quarter of the previous year. The increase is mainly due Trade, hotels and restaurants particularly the wholesale sub industry. Water and Electricity value added at constant 2006 prices for the fourth quarter of 2016 was P232.6 million compared to P122.3 million registered in the same quarter in 2015, recording an increase of 90.1 percent. Even though the sector registered the highest growth, its contribution to GDP is still the lowest.

In the end, the diamond rich nation recorded the largest annual GDP growth in over three years following growth of 4.1 percent in 2014 and a contraction of 1.7 percent in 2015. The economy emerged from 2015’s recession after registering positive growth in the first and second quarter of 2016, followed by contraction in the third quarter before making a recovery in the fourth quarter. In 2016, nominal GDP stood at P169.7 billion compared to P145.9 billion registered in 2015, recording an increase of 16.3 percent. Real GDP increased by 4.3 percent in 2016 compared to a decrease of 1.7 percent registered in 2015.

The impressive economic growth in 2016 was underpinned by consistent growth in Trade, Hotels & Restaurants and Transport & communications industries which recorded an increase in value added of 13.5, and 5.6 percent respectively. An increase in the real value added of the Trade, Hotels and Restaurants was mainly due to the significant growth from downstream diamonds industries due to the recovery in the global markets. In 2016, diamond production increased by 0.3 percent as opposed to a decline of 15.6 percent recorded in 2015.

All other industries recorded a positive growth with the exception of Mining and Agriculture which declined by 3.7 and 1.0 percent respectively. The data collecting agency says a decrease in the real value added of the Mining industry was attributed to a decline in copper/nickel value added by 21.2 percent in 2016. In the year under review, copper production decreased by 22.4 percent due to provisional liquidation of BCL mine in October 2016. A decrease in the real value added of the Agriculture industry was attributed to a decline in Other Agriculture value added by 0.6 percent in 2016. The sub sector is mainly driven by horticulture activities. In 2016, production for both fruits and vegetables decreased by 19.5 percent.

The positive GDP growth in 2016 has surpassed the 4.2 percent that was forecasted for 2016. Botswana’s economy ended 2016 strongly with a trade surplus of P13.4 billion, a stark reversal from the P9.7 billion trade deficit recorded in 2015. This was the largest yearly trade surplus in over sixteen years. Botswana’s rough-diamond exports bounced back last year after a plunge in 2015, helping the country return to economic growth. The nation shipped about P40 billion of rough diamonds in 2016, a jump of 54 percent, according to the Bank of Botswana. The country’s total exports, of which 83 percent are diamonds, grew by an estimated 26.4 percent in 2016.

According to the World Bank, Botswana’s economy is expected to keep up the momentum with projected GDP growth rates of 4.1 percent in 2017, driven mainly by an expected improvement in the mining sector as demand from developed economies stabilizes. Continued fiscal stimulus is expected to drive the non-mining activity thus contributing to the positive performance. However, SACU transfers will remain soft mainly due to a weak near-term economic outlook for South African growth.

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Matsheka seeks raise bond program ceiling to P30 billion

14th September 2020
Dr Matsheka

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.

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Lucara sits clutching onto its gigantic stones with bear claws in a dark pit

14th September 2020
Lesedi La Rona

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.

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Botswana Diamonds issues 50 000 000 shares to raise capital

14th September 2020

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.

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