Khan predicts exponential economic growth in 2017

The domestic economy will accelerate at a much faster pace in 2017 compared to last year, a top economist from leading global lender, Standard Chartered plc Razia Khan has told business leaders during her visit to Botswana last week. The country, which has experienced back to back  droughts and fall in diamond sales looks set to return to glory days this year, picked mainly by diamonds, the mainstay of the economy. “Growth will be better this year,” said a confident Khan at an event organised by Standard Chartered Bank Botswana and Botswana Investment and Trade Centre (BITC). However, the British-based economist did not disclose the forecast rate of growth when quizzed by Botswana Guardian afterwards. Earlier this year, Finance and Economic Development minister, Kenneth Matambo said the economy is expected to have grown by 2, 9 percent in 2016, after contracting by 1, and 7 percent the year before. Fresh data from Statistics Botswana shows that real Gross Domestic Product (GDP) expanded by 4,3 percent in 2016. Khan, who is Standard Chartered Africa economist, stated that the economy will expand more this year due to several factors. Chief among others will be diamonds sales, which have started the year on a high note. Sales from De Beers, a company that sells Botswana diamonds have jumped notably since the year commenced. Last week, the world’s No. 1 diamond producer achieved a marginal increase in sales in the third sales cycle of this year to $580million (about P5, 8billion), from the $545million (P5, 4billion) in sales in the second sales cycle. There is also ‘a lot of optimism’ from major economies where Botswana diamonds are consumed.

United States of America’s economy is also picking up, after much uncertainty post Donald Trump’s election as the 45th President of the world’s biggest economy last year. Copper prices have also jumped. This will however not benefit Botswana since its biggest copper producer, BCL mine is undergoing a liquidation process.  In the Asian region, consumer confidence has also jumped, a plus for Botswana which is looking at the area to expand its diamond sales, away from traditional US market. Despite Britain’s exit from the European Union (EU), the region’s economic prospects look promising. Domestically, the Botswana’s economic fortunes will be boosted by the impact of Economic Stimulus Programme which was introduced two years ago. The programme, which is in its last year, has been budgeted at well over P3bilion for three years. Its target sectors are projects that can prop-up the economy within a short time. On other matters, Khan cautioned that, while public spending is important to drive economic growth in any country, it is also critical to have a vibrant private sector which can stand on its own. Botswana’s private sector depends on government expenditure for survival, a trend which does not sit well with analysts such as Khan as this cannot be sustained in the long run.

Public spending cannot sustain the economy, she stressed. “Even communist China realised this in the 1970s,” pointed out Khan. For the private sector to thrive there is need for government to provide conducive environment. More and more companies in Botswana have complained about the ‘ease of doing business’. It takes quite a considerable amount of days to register a company, let alone to be issued a trading certificate. Some South African companies in the retail sector are having it tough when they seek trading licences. Government has tightened the criterion used to allow foreign citizens to work in Botswana. BITC Acting Chief Executive, Meshack Tshekedi told attendants of the forum that they are working with government to address numerous areas that are found to be negatively affecting the ease of doing business in the country which turned 50 years last September.  Hotel and Tourism Association Botswana’s Chief Executive, Lilly Korong expressed disappointment that, government has been slow to come up with new ways of improving ease of doing business which also affects the hospitality and tourism industry. “There is too much talk, but there is no action,” she said worriedly. During the Standard Chartered/BITC forum, there were renewed calls for Botswana to diversify its economy away from mining, whose performance is affected mainly by external factors.