Botswana’s has ended the previous year with a huge trade surplus in over sixteen years despite a weaker fourth quarter ended in deficit. The weak performance in December was underpinned by a 29.8 percent decrease in total exports. This information is contained in the latest International Merchandise Trade Statistics for December released by Statistics Botswana.
According to the monthly report, the total imports for December were valued at P5.175 billion, showing a decrease of 11.4 percent (P664.8 million) from the revised November 2016 value of P5.8 billion. The decrease was mainly influenced by Machinery & Electrical Equipment which decreased by 22.1 percent (P204.2 million) from P922.6 million in November 2016 to P718.4 million in December.
Other commodity groups that contributed significantly towards the decrease were Food, Beverages & Tobacco with a decrease of 22.6 percent (P181.5 million) from P804.0 million to P622.5 million and Chemicals & Rubber Products with a decrease of 16.6 percent (P92.1 million) from P555.7 million to P463.6 million during the periods under consideration.
Comparison of import figures for December 2016 and December 2015 shows a decrease of 19.2 percent (P1.2 billion), from P6.4 billion recorded during December 2015 to P5.175 billion recorded during the month under review. The decrease was mainly due to the 29.9 percent (P703.2 million) decrease in the import value of diamonds, from P2.3 billion during December 2015 to P1.6 billion in December 2016.
The total exports were valued at P5.151 billion, showing a decrease of 29.8 percent (P2.2 billion) from the November 2016 revised value of P7.3 billion. This decrease was mainly due to a decline of 29.2 percent (P1.96 billion) in diamond exports, from P6.7 billion in November 2016 to P4.7 billion in December 2016
The total exports value for the period under review, compared to that of December 2015 shows a decrease of 2.8 percent (P146.7 million) from P5.2 billion recorded during December 2015 to P5.151 billion recorded during December 2016. The decrease is mainly attributed to the fall in exports of Copper & Nickel, which dropped by 99.8 percent (P406.9 million) from P407.5 million in December 2015 to P0.6 million during the period under review. The decline in Copper & Nickel is due to the closure of the main mine producing these minerals in October 2016. Copper & Nickel group includes products of the two minerals and the P0.6 million is the value for Copper waste & Scrap.
The weak performance in December accentuated what was already a weak quarter to deliver the first quarterly trade deficit of 2016. Figures show that the country recorded a trade surplus in the last three quarters. However the fourth quarter opened with a massive P2.5 billion trade deficit in October. This was later followed by soft recovery in November after recording P1.4 billion in trade surplus. For the month under review, the country recorded a trade deficit of P24 million to end the fourth quarter down with a P1.1 billion trade deficit.
A trade deficit was widely expected in the fourth quarter following major developments that included the government’s decision to shut down the BCL group operations. The decision to close the mines in October wiped hundreds of millions from the economy. In the previous trade report, Copper and Nickel contributed about 2% to the total exports.
Despite the slump in the fourth quarter of 2016, Botswana finished the year strongly with a trade surplus of P13.4 billion, a stark reversal from the P9.7 billion trade deficit recorded in 2015. This is 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.
Fourth-quarter diamond exports leapt to P4.5 billion, making 92% of total exports. In 2015, orders dived 34 percent because of a slump in demand due to oversupply of polished and inflated rough prices. This dented the performance of Botswana focused miners such as De Beers, whose sales fell 36 percent that year. Botswana’s total exports, of which 83 percent are diamonds, grew by an estimated 26.4 percent in 2016, mainly as a result of the recovery in the diamond market.
Earlier this year when giving the budget speech, Mr. Kenneth Mathambo, Minister of Finance and Economic Development, said that the domestic economy contracted by 1.7 percent in 2015, compared to a positive growth rate of 4.1 percent recorded in 2014. This negative growth was mainly due to weak performance of the mining sector, as a result of the reduction in diamond and copper production by 15.6 percent and 35 percent, respectively, during the year. The non-mining sectors also registered a lower growth of1.7 percent in 2015 compared to 4.9 percent in 2014, reflecting the impact of water and electricity disruptions on the rest of the economy.
“The outlook for 2016 is however positive, with the domestic economy expected to recover and record a growth rate of 2.9 percent for the year, and forecast to reach 4.2 percent in 2017. The optimistic outlook is based on the anticipated slight improvement in the mining sector, and positive growth prospects for the non-mining sectors,” the minister added.
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The recent study on youth entrepreneurship in Botswana has identified difficult access to funding, land, machinery, lack of entrepreneurial mindset and proper training as serious challenges that continue to hamper youth entrepreneurship development in this country.
The study conducted by Alliance for African Partnership (AAP) in collaboration with University of Botswana has confirmed that despite the government and private sector multi-billion pula entrepreneurship development initiatives, many young people in Botswana continue to fail to grow their businesses into sustainable and successful companies that can help reduce unemployment.
University of Botswana researchers Gaofetege Ganamotse and Rudolph Boy who compiled findings in the 2022 study report for Botswana stated that as part of the study interviews were conducted with successful youth entrepreneurs to understand their critical success factors.
According to the researchers other participants were community leaders, business mentors, Ministry of Trade and Industry, Ministry of Youth, Gender, Sport and Culture, financial institutions, higher education institutions, non-governmental institutions, policymakers, private organizations, and support structures such as legal and technical experts and accountants who were interviewed to understand how they facilitate successful youth entrepreneurship.
The researchers said they found that although Botswana government is perceived as the most supportive to businesses when compared to other governments in sub-Saharan Africa, youth entrepreneurs still face challenges when accessing government funding. “Several finance-related challenges were identified by youth entrepreneurs. Some respondents lamented the lack of access to start-up finance, whereas others mentioned lack of access to infrastructure.”
The researchers stated that in Botswana entrepreneurship is not yet perceived as a field or career of choice by many youth “Participants in the study emphasized that the many youth are more of necessity entrepreneurs, seeing business venturing as a “fall back. Other facilitators mentioned that some youth do not display creativity, mind-blowing innovative solutions, and business management skills. Some youth entrepreneurs like to take shortcuts like selling sweets or muffins.”
According to the researchers, some of the youth do not display perseverance when they are faced with adversity in business. “Young people lack of an entrepreneurial mindset is a common challenge among youth in business. Some have a mindset focused on free services, handouts, and rapid gains. They want overnight success. As such, they give up easily when faced with challenges. On the other hand, some participants argue that they may opt for quick wins because they do not have access to any land, machinery, offices, and vehicles.”
The researchers stated that most youth involved in business ventures do not have the necessary training or skills to maintain a business. “Poor financial management has also been cited as one of the challenges for youth entrepreneurs, such as using profit for personal reasons rather than investing in the business. Also some are not being able to separate their livelihood from their businesses.
Lastly, youth entrepreneurs reported a lack of experience as one of the challenges. For example, the experience of running a business with projections, sticking to the projections, having an accounting system, maintaining a clean and clear billing system, and sound administration system.”
According to the researchers, the participants in the study emphasized that there is fragmentation within the entrepreneurial ecosystem, whereby there is replication of business activities without any differentiation. “There is no integration of the ecosystem players. As such, they end up with duplicate programs targeting the same objectives. The financial sector recommended that there is a need for an intermediary body that will bring all the ecosystem actors together and serve as a “one-stop shop” for entrepreneurs and build mentorship programs that accommodate the business lifecycle from inception to growth.”
Botswana Housing Corporation (BHC) is said to have recorded an operating surplus of P61 Million, an improvement compared to the previous year. The housing, office and other building needs giant met with stakeholders recently to share how the business has been.
The P61 million is a significant increase against the P6 million operating loss realized in the prior year. Profit before income tax also increased significantly from P2 million in the prior year to P72 million which resulted in an overall increase in surplus after tax from P1 million prior year to P64 million for the year under review.
Chief of Finance Officer, Diratsagae Kgamanyane disclosed; “This growth in surplus was driven mainly by rental revenue that increased by 15% from P209 million to P240 million and reduction in expenditure from P272 million to P214 million on the back of cost containment.” He further stated that sales of high margin investment properties also contributed significantly to the growth in surplus as well as impairment reversals on receivables amounting to P25 million.
It is said that the Corporation recorded a total revenue of P702 million, an 8% decrease when compared to the P760 million recorded in the prior year. “Sales revenue which is one of the major revenue streams returned impressive margins, contributing to the overall growth in the gross margin,” added Kgamanyane.
He further stated professional fees revenue line declined significantly by 64% to P5 million from P14 million in the prior year which attributed to suspension of planned projects by their clients due to Covid-19 pandemic. “Facilities Management revenue decreased by P 24 million from P69 million recorded in prior year to P45 million due to reduction in projects,” Kgamanyane said.
The Corporation’s strength is on its investment properties portfolio that stood at P1.4 billion at the end of the reporting period. “The Corporation continues its strategy to diversify revenue streams despite both facilities management income and professional fees being challenged by the prevailing economic conditions that have seen its major clients curtailing spending,” added the CEO.
On the one hand, the Corporation’s Strategic Performance which intended to build 12 300 houses by 2023 has so far managed to build 4 830 houses under their SHHA funding scheme, 1 240 houses for commercial or external use which includes use by government and 1 970 houses to rent to individuals.
BHC Acting CEO Pascaline Sefawe noted that; BHC’s planned projects are said to include building 336 flat units in Gaborone Block 7 at approximately P224 million, 100 units in Maun at approximately P78 million, 13 units in Phakalane at approximately P26 million, 212 units in Kazungula at approximately P160 million, 96 units at approximately P42 million in Francistown and 84 units at approximately P61 million in Letlhakane. Emphasing; “People tend to accuse us of only building houses in Gaborone, so here we are, including other areas in our planned projects.”