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No implication for Botswana as SA economy slips

Economist, Dr. Keith Jeffries

One of Botswana’s foremost economists, Dr. Keith Jeffries has said that the slipping of South Africa into third place in the rank of Africa’s most sizeable economies will not have any effect on Botswana. Dr. Jeffries says what happened is simply just a measurement issue, where the rand has depreciated significantly against the dollar hence shrinking the size of the South African economy in dollar terms. “But some sectors of that economy have shown growth,” he emphasized.

Asked if there will be implications for Botswana, Dr Jeffries simply responded; “Not really.” This reporter asked if SACU revenues will shrink given that South Africa is the largest economy and the biggest contributor to the customs union and if the appreciation of the Dollar against the Rand pointed to a bounce back by the world’s major economies, still Dr. Jeffries responded in the negative. He said the customs union was Rand based, and that the depreciation of the Rand against the Dollar did not signal a bounce back by major economies. He further pointed out that a number of factors were responsible for the depreciation, highlighting that the Rand has been on the decline for some time.

South Africa lost the top spot in early 2014 after Nigeria rebased its gross domestic product (GDP) data. The International Monetary Fund’s (IMF) World Economic Outlook (WEO) released in mid-April provides a shocking GDP statistics for South Africa, suggesting that the South African economy would grow by a mere 0.6% this year, but also that the country is now only the third largest economy on the continent behind Nigeria and Egypt. 

According to the IMF, South Africa recorded a decline in the US dollar value of its economy during 2012-15 because of slowing real growth, in local currency terms, as well as depreciation in the value of the rand. The South African currency weakened from an average of R8.20/$ during 2012 to an average of R12.74/$ in 2015, a depreciation of more than 50%. Consequently, the nominal US dollar value of South Africa’s GDP declined by an average of almost 7% per annum over the past four years.

This, the IMF notes, compares to Egypt’s nominal US dollar GDP expansion which averaged of 7.5% per annum during 2012-15. The Egyptian pound’s depreciation during the period was at a much slower pace when compared to that of the rand.

The multilateral organization however admits that South Africa remains the continent’s most developed economy, and has a more diversified economic base than the Egyptian economy. The IMF warned; “However, its fall from first and now second place amongst the continent’s giants is of great concern, especially as this development is largely attributed to weakness in the rand that, in turn, has largely been as a result of domestic issues.”

The IMF has projected that global growth in 2016 will be a modest 3.2 percent, broadly in line with last year, and a 0.2 percentage point downward revision relative to the January 2016 WEO Update. The recovery is projected to strengthen in 2017 and beyond, driven primarily by emerging market and developing economies, as conditions in stressed economies start gradually to normalize. But uncertainty has increased, and risks of weaker growth scenarios are becoming more tangible. The fragile conjuncture increases the urgency of a broad-based policy response to raise growth and manage vulnerabilities.

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China’s GDP expands 3% in 2022 despite various pressures

2nd February 2023
China’s Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.

The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The country’s fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.

In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.

Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.

China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.

Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.

On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.

According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry said.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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