Botswana must search for new engines of growth
Business
To redeem the economy from the deepening economic decline that has characterized it from 2008 to date, there is need to come up with new engines of growth as well as enhancing private sector led growth, as the country moves into the next 50 years.
Currently, the local economy is undergoing sobering realism as heavy reliance on a single export diamonds commodity has made the economy susceptible to external shocks to the extent of 8% contraction of growth during the global crisis period. In the eight years leading to 2015, growth averaged 3.8% compared to 8% averages during the 1970s, 1980s and 1990s
In an interview with the award winning economist and a Research manager at First National Bank Moathlodi Sebabole he highlighted the need to revisit current policy initiatives and foster in new ideas to change the current course of the economy.
Botswana’s economy since 1966 can be divided into four phases, where Phase one (1966 – 1971) economic growth was mostly concentrated in the agricultural sector prior to diamond discovery. Phase two (1972 – 2001) was characterized by decades of rapid economic growth followed by the beginnings of economic slowdown. Phase three (2002 – 2007) was a period of moderate economic growth and mixed fortunes, whereas, phase four (2008 – 2016) is generally a period of stagnation and mild recoveries, comprising of negative and general decline in economic performance followed by some economic recovery.
Sebabole clearly stated that if the economic woes are to be overcome, policy-making must be rational, based on evidence and implemented consistently and transparently in the national interest.
“There is need for regulatory reforms and such should focus on promoting less, but better and more targeted regulation. Such reforms should remove current barriers to regional and global integration that have the effect of blocking Botswana from attaining high-income status,” he noted.
Sebabole highlighted that existing policies like the National Export Strategy, Botswana Excellence Strategy and Special Economic Zones Strategy should be implemented and more importantly, create a conducive environment for attracting and retaining FDI in the country.
He added that the private sector must drive productivity growth and look for external markets rather than depend on government contracts.
“Promotion of public private partnerships and transformation into a private sector led economic will provide a solid foundation for future growth that is sustainable. Government has to change its approach towards the private sector by facilitating rather than controlling the sector,” says Sebabole.
Botswana has not experienced the same industrialization as other parts of the World. The growth is narrow-based and comes mostly from mining, making the economy very vulnerable to external shocks as the necessary diversification has not taken place. The impact of the recently fluctuating diamond prices has shown the danger.
He said as we move into the next 50 years, the focus should be on new engines of economic growth in the service sector, the promotion of new mining technologies and products, establishment of the transport hub for SADC region, new mineral products, agricultural innovations, locally manufactured products and services.
“The development of the value chains along these economic activities and fostering of linkages across them will play a significant role in achieving growth, diversification and sustainability and hence open more opportunities for economic prosperity,” he said.
Business
Stargems Group establishes Training Center in BW
Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.
The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.
“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.
In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices. Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.
“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.
Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy, Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.
“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.
Business
Food import bill slightly declines
The latest figures released by Statistics Botswana this week shows that food import bill for Botswana slightly declined from around P1.1 billion in November 2022 to around P981 million in December during the same year.
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Business
Moody’s Reaffirms African Trade Insurance’s A3 Rating & Revises Outlook to Positive
Moody’s Investors Service (“Moody’s”) has affirmed the A3 insurance financial strength rating (IFSR) of the African Trade Insurance Agency (ATI) for the fifth consecutive year and changed the outlook from stable to positive.
Moody’s noted that the change in outlook to positive reflects the strong growth in ATI’s membership base – that has resulted in improved portfolio diversification, strengthened capital adequacy, and the good profitability despite the challenging operating environment. In addition, ATI benefits from its preferred creditor status (PCS) amongst sovereign member states which protects it from the risk of default by member sovereigns through securing recoveries against claims paid on guarantees.
The strong membership and equity growth are some of the key considerations for the consistent reinstatement of ATI’s A/Stable rating by Standard & Poor’s and Moody’s rating, over the years. Also supporting the rating affirmation are; consistent improvement in financial performance, commitment of its shareholders who continue to uphold the preferred creditor status, its high quality and conservative investment portfolio as well as strong relationships with a number of global reinsurers that provide significant risk-bearing capacity.
With the change in outlook to “positive”, ATI is now better placed to provide enhanced support to its member countries, attract additional shareholding and grow its portfolio. The positive outlook is an indication that if ATI continues to demonstrate its strong underwriting performance and ability to recover claims under the preferred creditor arrangements, among other factors, an upward pressure towards an upgrade may be generated. The Moody’s press release can be accessed from here
Commenting on the rating, Africa Trade Insurance Chief Executive Officer Manuel Moses said: “This positive revision is in line with our 2023 – 2027 strategic objectives in which we set to improve our rating outlook to positive in the first year, and achieve an upgrade of at least “AA”/Stable rating by both Moody’s and S&P within this Strategic Plan period. We aim to achieve this by doubling our exposures and increasing our capital to more than USD1 billion.”
ATI’s mandate is to provide trade-credit and political risk insurance, as well as other risk mitigation products to its member countries and related public and private sector actors. These insurance products not only directly encourage and facilitate foreign direct investment as well as local private sector investment in our member countries, but also contribute to intra- and extra-African trade.
About The African Trade Insurance Agency
ATI was founded in 2001 by African States to cover trade and investment risks of companies doing business in Africa. ATI predominantly provides Political Risk, Credit Insurance and, Surety Insurance. Since inception, ATI has supported US$78 billion worth of investments and trade into Africa. For over a decade, ATI has maintained an ‘A/Stable’ rating for Financial Strength and Counterparty Credit by Standard & Poor’s, and in 2019, ATI obtained an A3/Stable rating from Moody’s, which has now been revised to A3/Positive.