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Economic transformation can revive Africa’s growth miracle

Economic transformation can revive Africa’s growth rates while promoting development and climate goals, according to a new report from the New Climate Economy.


The report, Africa’s New Climate Economy, is the first to bring economic transformation together with development and climate change in one comprehensive assessment.
In an effective economic transformation, productivity is boosted within sectors and there is some shift of workers from low-productivity sectors like agriculture to high-productivity sectors like industry and services.

Sub-Saharan Africa is still at an early stage, with around 60% of employment in agriculture and only 5% in manufacturing, so the potential is enormous.
The region’s “growth miracle” of the early 2000s has slumped in the past two years, with growth in 2016 projected at just 1.6%. Recent progress in reducing poverty is at risk, especially considering Africa is expected to be the region worst affected by climate change, with a median loss in GDP of around 4%.


“The choices that African leaders make in the next few years will have major implications for economic growth, human well-being and climate resilience in the decades ahead,” said Ngozi Okonjo-Iweala, former finance minister of Nigeria and a member of the Global Commission on the Economy and Climate. “It’s encouraging to see these three priorities brought together.”


Initial indicators of economic transformation are positive. By one estimate, it has already added about 1% to productivity growth across the region since 2000, rising as high as 4% for Rwanda, and 2-3% for Nigeria, Tanzania and Uganda.
The report details actions that can promote economic transformation and green growth in 4 key economic systems: cities, land use, industry, and energy.


Unleashing the power of urbanization: By 2050, sub-Saharan Africa’s cities will increase by almost 800 million people. Urbanisation in Africa has been something of a missed opportunity so far, but a shift towards more compact, connected and coordinated cities can create agglomeration benefits and reduce air pollution and traffic costs.


Transforming agriculture and land use: Cropland in sub-Saharan Africa is expanding at twice the global rate due to low yields and rapid population growth. Intensifying yields per hectare with climate-smart agriculture techniques can help boost farmers’ incomes while protecting the environment.


Diversification into manufacturing and other high-productivity, modern sectors: Africa’s share of world manufactured export markets is so tiny – less than 1% – that even modest increases in its share can have a big impact on the sector’s growth.
Fostering a modern energy transition: Some 620 million people in sub-Saharan Africa lack access to electricity. Countries have an opportunity to “leapfrog” to modern, energy efficient technologies. The region has a rich portfolio of clean energy assets, including about 1,100 gigawatts of solar capacity, more than enough to meet total energy demand in the region.


“Across multiple sectors, economic, social, and environmental transformations can reinforce each other and create numerous virtuous circles,” says Milan Brahmbhatt, lead author of the report. “Many of the policy and institutional reforms needed to boost growth and reduce poverty over the next 15 years will also contribute to better management of climate risk.”

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Botswana on high red alert as AML joins Covid-19 to plague mankind

21st September 2020
Botswana-on-high-alert-as-AML-joins-Covid-19-to-plague-mankind-

This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.

The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.

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Finance Committee cautions Gov’t against imprudent raising of debt levels

21st September 2020
Finance Committe Chairman: Thapelo Letsholo

Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.

He was speaking in  Parliament on Tuesday delivering  Parliament’s Finance Committee report after assessing a  motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.

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Gov’t Investment Account drying up fast!  

21st September 2020
Dr Matsheka

Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.

The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.

The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.

The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.

This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.

Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.

Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.

However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.

Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.

When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.

This  as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.

Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.

The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.

Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.

In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.

Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.

Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.

Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.

Acknowledging the need to draw down from GIA no more, current Minister of Finance   Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”

He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”

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