The Business Monitor International (BMI) has revised down the country’s GDP forecast noting that the economy will be hit hard by the global diamond price and demand slump.
In a report released this week, the firm states that the fall in global diamond demand and prices which is already taking a toll on the economy will further weaken it in 2016 resulting in contraction of the GDP.
“Botswana's economy will be hit by the global diamond price and demand slump, slashing real GDP growth in half in 2016,” stated the report.
Global growth has slowed down, and with countries like India and China experiencing slower growth, there has been an impact on the developing world. Commodity prices have gone down and this has affected Botswana whose economy relies on diamonds.
“We have revised down our near term real GDP forecast for Botswana, the world's second biggest diamond producer after Russia. Economic growth will slow to 3.7% in 2016, compared to our previous forecast of 4.1%,” reads the report.
Data from Statistics Botswana reaffirms BMI forecast; as it notes that in Q3 2015 GDP decreased by 3.5 percent due to low diamond demand in the global economy.
BMI forecast that the Bank of Botswana will keep rates unchanged in Q216 “We expect inflation to remain low due to factors such as subdued oil prices, low demand pull pressure due to low real GDP growth and a depreciating rand,” reads the report.
The report says in the continued absence of meaningful economic diversification, mining sector is set to remain a key engine of growth. While nickel, copper and particularly coal will become more prominent in the country's export base, tourism related investment will increase.
Recently the deputy managing director of the International Monetary Fund (IMF), Mr Min Zhu cautioned that Botswana has been doing extremely well, with a well structured economy and strong, prudent macroeconomic policy. But for the country to maintain growth and create jobs, Botswana needs to further develop the private sector, diversify the economy from heavy reliance on diamonds
BMI has cautioned Botswana on it’s over dependence on imported energy and food saying any unexpected rise in global food or oil prices will affect the country's growth levels.
“Uncertain energy supplies pose a persistent risk to economic activity in Botswana,” reads the report.
The ongoing revisions to Botswana's national accounts estimates will affect growth. Amid ongoing efforts by Statistics Botswana to more accurately portray the size and structure of the economy, GDP estimates remain subject to frequent and often notable adjustments.
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.
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.
African heads of state and global CEOs at the World Economic Forum Annual Meeting backed the launch of the first of its kind report on how public-private partnerships can support the implementation of the African Continental Free Trade Area (AfCFTA).
AfCFTA: A New Era for Global Business and Investment in Africa outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the AfCFTA, and illustrative examples from successful businesses in Africa to guide businesses in entering and expanding in this area.
The report aims to provide a pathway for global businesses and investors to understand the biggest trends, opportunities and strategies to successfully invest and achieve high returns in Africa, developing local, sub-regional and continental value chains and accelerating industrialization, all of which go hand in hand with the success of the AfCFTA.
The AfCFTA is the largest free trade area in the world, by area and number of participating countries. Once fully implemented, it will be the fifth-largest economy in the world, with the potential to have a combined GDP of more than $3.4 trillion. Conceived in 2018, it now has 54 national economies in Africa, could attract billions in foreign investment, and boost overseas exports by a third, double intra-continental trade, raise incomes by 8% and lift 50 million people out of poverty.
To ease the pain of transition to its new single market, Africa has learned from trade liberalization in North America and Europe. “Our wide range of partners and experience can help anticipate and mitigate potential disruptions in business and production dynamics,” said Børge Brende, President, and World Economic Forum. “The Forum’s initiatives will help to ease physical, capital and digital flows in Africa through stakeholder collaboration, private-public collaboration and information-sharing.”
Given the continent’s historically low foreign direct investment relative to other regions, the report highlights the sense of excitement as the AfCFTA lowers or removes barriers to trade and competitiveness. “The promising gains from an integrated African market should be a signal to investors around the world that the continent is ripe for business creation, integration and expansion,” said Chido Munyati, Head of Regional Agenda, Africa, World Economic Forum.
The report focuses on four key sectors that have a combined worth of $130 billion and represent high-potential opportunities for companies looking to invest in Africa: automotive; agriculture and agroprocessing; pharmaceuticals; and transport and logistics.
“Macro trends in the four key sectors and across Africa’s growth potential reveal tremendous opportunities for business expansion as population, income and connectivity are on the rise,” said Wamkele Mene, Secretary-General, AfCFTA Secretariat.
“These projections reveal an unprecedented opportunity for local and global businesses to invest in African countries and play a vital role in the development of crucial local and regional value chains on the continent,” said Landry Signé, Executive Director and Professor, Thunderbird School of Global Management and Co-Chair, World Economic Forum Regional Action Group for Africa.
The Forum is actively working towards implementing trade and investment tools through initiatives, such as Friends of the Africa Continental Free Trade Area, to align with the negotiation process of the AfCFTA. It identifies areas where public-private collaboration can help reduce barriers and facilitate investment from international firms.
About the World Economic Forum Annual Meeting 2023
The World Economic Forum Annual Meeting 2023 convenes the world’s foremost leaders under the theme, Cooperation in a Fragmented World. It calls on world leaders to address immediate economic, energy and food crises while laying the groundwork for a more sustainable, resilient world. For further information,