Mining sector to rescue the economy-Barclays CEO

The mining sector is set to propel growth of the economy out of the woods, Barclays Bank of Botswana’s chief has said.“Our economy appears to be on track for a rebound, powered by the recovery in the mining sector,” said Reinette van der Merwe. She said the bank expects recovery in the mining sector to drive GDP growth to 4.6 percent, up from 2.4 percent in 2017.

Already statistic indicates that year on year, GDP expanded by 4.8 percent in the first quarter of 2018 driven by strong diamond production and value addition.Though the country has slowly enjoyed a diversified GDP over the years, the non-mining year on year GDP slowed in the first quarter to 4.2 percent from 5.7 percent in the previous year, amid the continued calls by government to diversify the economy.

Barclays however warns that the outlook remains vulnerable to global economic shocks, the latest being recession the country’s major trading partner is facing. “The slow growth in South Africa also poses a downside risk to the positive outlook,” van der Merwe said, also highlighting that the national accounts show weak second quarter GDP of minus 0.7 and first quarter data was revised down to minus 2.6.

In addition, the Barclays chief’s optimism is driven by the low inflation and strong economic prospects.“We believe that the MPC will maintain the bank rate at its prevailing stance of five percent, well into 2019.”The bank’s positive instinct on the mining sector driving economic growth is also shared by the country’s apex mining body. Early this year, Charles Siwawa, Botswana Chamber of Mines Chief Executive Officer told Botswana Guardian that the industry will make an exciting upturn.

“The general picture is not very good at the moment, but it can be better. We currently have 50 percent of the mines on care and maintenance,” said Siwawa, pointing out that operating mines have been trimmed from 14 in the year 2014 to seven currently. The fall of mines in the country has been attributed to international drop in commodity prices for both base metals and diamonds that swept across the globe over the three years, forcing companies to put mines under care and maintenance.

Though Botswana is considered the best diamond address in the world, Siwawa sees an equal opportunity for other minerals to twinkle too. His hunch is fueled by the upward spiraling of prices for most mining commodities, already igniting mining of the country’s black diamond –coal.Minergy the country’s latest coal mining company was granted a mining licence last months and has already made indications that mining at their project in Kweneng District will start next January.