06 Apr 2017

Standard Chartered Bank head of economics, Ms Razia Khan says Botswana’s economy is volatile due to the political instability in South Africa.

Speaking at a global market forecast meeting in Gaborone on Wednesday, Ms Khan stated that the South African Rand could continue to weaken more, which she said, had an impact on the SACU region.

The economist highlighted that investor confidence in South Africa had been risked by the recent cabinet reshuffle, adding that there was no assurance from the treasury office.

However, Ms Khan stated that there was high expectation on diamonds due to the rise in diamond prices globally, adding noting that the diamond industry was expected to experience growth in sales.

She noted that economists were questioning the efficiency of public investment, which she said was not sustainable because consumers were in debt due to borrowing from banks.

Ms Khan highlighted that revenue sources of Botswana were vulnerable due to the fact that it was dependent on the performance of commodities.

She said when commodity prices were high the diamond industry performs exceptionally well, and if the commodities prices weaken so was the diamond prices.

The analyst said Botswana should preserve the current credit rating status because the coming years would not be easy.

She said Botswana was underperforming relative to other middle income countries due to the fact that the economy was dependent much on the government rather than the private sector.

Ms Khan said the Economic Stimulus Programme was a good initiative provided the money was spent on areas where there was potential of growth.

She said Botswana did not get the same investment growth compared to other countries because of factors such as the small population and dependency on natural resources.  ENDS