31 Jan 2016

Botswana needs a more diversified economy  to ensure sustainability of economic growth, the deputy managing director of the International Monetary Fund (IMF), Mr Min Zhu has said. 

Speaking in an interview in Gaborone, Mr Zhu said the country should work on developing a strong entrepreneurial class that could aid job creation and broaden the country’s revenue streams. 

“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 and ensure that the labour force is skilled,” Mr Zhu said. 

He said what Botswana had achieved since independence was commendable, noting that reaching middle-income status had been a positive milestone for the country, but insisted that there was room for further development. 

Mr Zhu said the country had experienced slower growth but expected higher growth over the next few years. 

“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. 

But we anticipate Botswana’s growth to recover with a gradual recovery of the global diamond market, low domestic interest rates, and the impact of the government’s economic stimulus programme,” Mr Zhu said. 

He said Botswana should avoid a ‘huge’ stimulus programme, but would be best served by a tempered stimulus programme as well as investing in the water and energy sectors. 

Mr Zhu lamented the fact that Botswana had received low levels of foreign direct investment, despite the country having prudent fiscal policy and good credit rating from international institutions.

“Botswana currently receives low FDI. 

The country is stable and has pursued good policies, and perhaps what is necessary to attract investors further could be good infrastructure, having an educated labour market, and innovation,” Mr Zhu said. 

Furthermore, Mr Zhu said the IMF, which had over the years been criticised for creating inequality by promoting ‘Washington Consensus’ policies such as austerity, deregulation and currency devaluation, was concerned about social inequality and urged African states to pay attention to the social needs of their citizens. 

“Unlike in the past, the IMF now looks at social inequality and advices states to pursue policies that are inclusive and address poverty. 

There is a need for social safety nets, healthcare and education, and to uplift women, ensure that there is no gender disparities,” he said. 

Mr Zhu said that the IMF delegation had been well received in Botswana and thanked the country for its hospitality. Ends