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Mismatch in economic growth and job creation

The Botswana National Human Development Report 2014 draft report of March 2015 submitted to the United Nations Development Programme Botswana Office (UNDP) by the University of Botswana academics indicates that the current challenge for Botswana’s economy has been and is still about finding appropriate policies and strategies to sustain the economic growth beyond the diamond era.
 
The report suggests that country therefore needs to work with development partners to find the appropriate economic policies and strategies to sustain the levels of growth. While economic growth is not sufficient to achieve economic development, it is nonetheless a necessary requirement for the same.

“While Botswana has been successful in maintaining a robust macroeconomic environment albeit with lower growth than in the previous period, its weakest major link has been the lack of connection between the economic growth and employment creation,” reads the report.

According to the report, this has to do with the fact that the sector that contributes significantly to growth is highly capital intensive and contributes less than 5 percent to total employment.

The report notes that the largest sector in terms of employment is agriculture which employs about 30 percent of total labour. And yet the agricultural sector in Botswana is dominated by subsistence farming and pays the lowest in terms of average wages. The sector also has problems of low productivity.

The second largest employment is in the Wholesale and Retail Trade Industry with 14 percent contribution to total employment. Mining and Quarrying was in 2005/06 employing 3 percent of the labour force even though it has over years been contributing the most in terms of GDP share.

There is therefore need to shift employment from the low productivity low pay subsistence agriculture to other high productivity high pay sectors. This is in addition to creating employment to the currently unemployed who were estimated at 19.8 percent in 2013.

“With the inadequate link between growth and employment growth the result has been a high unemployment rate that has been around 20 percent.

The unemployment is higher than most comparable countries that are classified as upper middle income countries. It is however lower than some comparable countries in the region in particular South Africa and Namibia which recorded 24 percent and 27 percent unemployment rates in the current period respectively.”   

In addition the UNDP report states that Botswana’s unemployment is however at quite a level that is worrisome for policy makers and requires urgent attention. With a population of about two million people, unemployment of about 180 thousand people reflects quite a big challenge. Added to these are those discouraged who may have stopped looking for a job due to unavailability of new jobs and also those who are underemployed who were estimated at 5 percent in the 2005/06 Labour Force Survey.

“The unemployment in Botswana is distributed unequally amongst different social groups. It is generally highest for youth and for women and for urban villages and rural areas than for cities/towns and for those with no training. The Botswana Core Welfare Indicators Survey (BCWIS) results estimate total unemployment of 13.1 percent, 23.4 percent and 16.2 percent for cities/towns, urban villages and rural areas respectively.”  

From the same data, the report says women were facing an unemployment rate of 21.4 percent in 2009/10 and that of males was 14.6 percent. In 2013 estimates from the Botswana HIV/AIDS Impact Survey women unemployment was estimated at 22.3 percent compared to men of 17.8 percent, a trend that is similar in all estimates from all the surveys.  

“Unemployment is generally highest for the youth with those at age 15-19 facing an unemployment rate of 41.4 percent and females in that age group facing unemployment rate of 50.5 percent. Unemployment generally declines with increases in age.  The youth are likely to be highly unemployed in an economy not generating many new jobs given that they do not have the required on the job experience and most of them have no training beyond formal school.”

“This may also be a reflection that the education is not producing graduates with the required skills especially vocational type of education. Employment creation to absorb these youth and also make the youth employable from an appropriate training are key challenges to the current Botswana economy.

This is an area that requires efforts in many forms from development partners. Despite the country being classified as upper middle income, this challenge seems to be one that is elusive in terms of solutions and clearly requires appropriate policies and programmes that can be developed by government and other stakeholders with the assistance of development partners.”

BOTSWANA ECONOMY AT GLANCE

Meanwhile the UNDP draft report notes that Botswana’s economy has also undergone structural change from an economy that was dominated by agriculture which made 43 percent of output in 1966 to one that was to later be dominated by mining.

From the 1980 to the early period of the 2000 decade mining was making more than 40 percent of GDP. Figures 1.2 and 1.3 summarise sectorial share of GDP for 2005 and 2012. Mining was contributing the largest share at 43 percent of GDP and agriculture the smallest share with about 2 percent share. In 2012 mining was now contributing a relatively smaller share to GDP at 20 percent. Agriculture was still among the lowest contributors to GDP making 2.7 percent of 2012 GDP.

The figures show some degree of diversification from mining to the other sectors particularly those in the services sector. Mining however still dominates in terms of contribution to GDP indicating that there is still need to intensify efforts towards economic diversification away from mining particularly diamond mining. This is important given the fact that diamond production in Botswana is highly capital intensive and therefore generates less employment creation.

Modest employment of about 3,000 have however been created from current efforts to further process diamond in the in terms of further cutting and polishing. This is however still not adequate to deal with the current employment challenges especially among the youth.

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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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