Economic growth slows again
Business
The World Bank has said economic growth in Sub-Saharan Africa is forecast to slow again in 2016, to 2.5 percent, down from an estimated 3.0 percent in 2015, citing persistently low commodity prices, weak global trade, diminishing capital inflows and slow growth in advanced economies.
In its latest Global Economic Prospects report, the bank said that commodity exporters and developing economies have struggled to adapt to low oil and other commodity prices.
According to the Bank, oil exporters are not likely to experience any significant pickup in consumption growth, while lower inflation in oil importers should support consumer spending.
Subsequently, growth in these economies will advance at a meager 0.4 percent in 2016, a downward revision of 1.2 percentage points from the bank’s outlook in January.
“Economic growth remains the most important driver of poverty reduction, and that’s why we’re very concerned that growth is slowing sharply in commodity-exporting developing countries due to depressed commodity prices,” World Bank Group president Jim Yong Kim said in a statement.
He added that it is critical for countries to pursue policies that will boost economic growth and improve the lives of those living in extreme poverty.
On a positive tone, the bank noted that commodity importing emerging markets and developing economies have been more resilient than the exporters. These economies are set to expand at 5.8 percent in 2016, down modestly from an earlier forecast of 5.9 percent in 2015.
The report states that, low commodity prices, tightening global financial conditions and drought in parts of the region are holding back economic growth in Sub-Saharan Africa this year. The slowdown is particularly pronounced among oil exporters (Nigeria, Angola), but has also weighed on non-energy mineral exporters (Botswana, South Africa, Zambia).
Several countries, especially in Southern Africa, are facing severe El Nino related conditions that are adversely impacting agricultural production and pushing up consumer prices.
WB expects activity to remain weak in the region’s three largest economies in 2016. Nigeria is forecast to expand at a 0.8 percent pace, a 3.8 percentage point downward revision from January’s outlook, as foreign exchange restrictions, fuel shortages, and low oil output weigh on economic activity, compounding the effect of low oil prices.
Botswana is seen slowing to 3.7 percent pace whilst South Africa is seen slowing to a 0.6 percent pace, as low business confidence and political tensions slow investment growth and as high unemployment and tight monetary policy limit private consumption. Angola is projected to ease to a 0.9 percent rate, due to low oil prices, a weak investment climate, and rising inflation.
Growth is expected to pick up in Ghana (5.2 percent) thanks to improved investor sentiment, new oilfields, and more reliable electrical power. Cote d’Ivoire (8.5 percent) and Kenya (5.9 percent) are expected to continue to expand at a robust pace, boosted by ongoing investment and agricultural production. Output in Zambia is expected to remain subdued (3.4 percent) as a result of lower copper prices and power shortages.
The World Bank has cautioned that a sharper-than-expected slowdown in China could further weaken activity in commodity exporters.
“A further oil price decline could strain the fiscal and current account balances of oil producers and force more public spending cuts. Disappointing Euro Area activity could depress exports and reduce investment flows,” the report stated.
The bank highlighted that the BRICS economies will have varied growth patterns. While China is expected to grow at 6.7 percent this year, Russia and Brazil will remain in deeper recession. India will hold steady at 7.6 percent and South Africa will grow at 0.6 percent this year, 0.8 of a percentage point more slowly than the January forecast.
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.