The Bank of Botswana (BoB) has maintained the lending rate at 6 percent saying the medium-term outlook for inflation and domestic growth were within its targets.
In 2015 alone the BoB cut the interest rates twice in a bid to spur credit growth.
“The current state of the economy including the inflation forecast suggests that the prevailing monetary policy stance is consistent with maintaining inflation within the Bank's medium-term objective range of 3-6 percent,” the Bank of Botswana said in a statement.
Botswana's consumer inflation quickened to 3.1 percent year-on-year in October from 2.9 percent in September.
Garry Juma an investment analyst with a local brokerage Motswedi Securities has hailed the move by BoB as a good one in that it will not destabilize the financial system.
“It’s not surprising that BoB has maintained the interest rate because the interest rates are at an all-time low. Credit growth was slow and any further reduction would affect banks thereby destabilizing the financial system,” he said
Juma said he expects the economy to pick up because of the economic stimulus package especially the construction sector in the first half of 2016.
Despite interest rates being at a 26 year low of 6.0 percent, annualised credit growth slowed from 12.4 percent in January 2015 to 9.8 percent in April, the lowest in four years. The decline was mostly driven by a slowdown in the growth of credit to firms, which fell from 18.9 percent in January 2015 to 11.8 percent in April.
The Monetary Policy Committee concluded that the medium-term outlook for price stability remains positive, with inflation forecast to be close to the lower bound of the 3 – 6 percent medium-term objective range.
Global output is projected to grow by 3.1 percent in 2015 compared to the estimated 3.4 percent in 2014 and the 3.6 percent forecast for 2016. However, global economic growth performance remains uneven, with challenges relating to economic restructuring in both developed and emerging market economies constraining medium-term prospects.
The country’s GDP growth is estimated at 4.2 percent in the twelve months to June 2015, compared to 6.1 percent in the corresponding period in 2014, thus reflecting the slower expansion of 1.3 percent for the mining sector.
Non-mining output growth was 4.8 percent for the same period. Inflation was 3.1 percent in October 2015, marginally higher than 2.9 percent in September. Low domestic demand pressures and subdued foreign price developments contribute to the positive inflation outlook in the medium term.
“This outlook is subject to downside risks arising from sluggish global economic activity and the resultant weakening commodity prices. The inflation outlook could, however, be adversely affected by any unanticipated large increase in administered prices and government levies as well as international oil and food prices beyond current forecasts,” BoB stated.
The central bank says the current state of the economy and both the domestic and external economic outlook; including the inflation forecast suggest that the prevailing monetary policy stance is consistent with maintaining inflation within the Bank’s medium-term objective range of 3 – 6 percent.
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,