20 Aug 2019

Maun business community has been urged to intensify their efforts in the tourism sector as it has the potential to diversify the country’s economy, which is over reliant on diamonds.

Presenting the summary of 2018 annual report theme chapter on financing strategies for industrialisation and transition income status in Maun recently,  director of Research and Financial Stability department from Bank of Botswana, Dr Tshokologo Kganetsano underscored the need to strengthen efforts to diversify the economy and revenue sources in case the mining sector could crash.

He explained that Gross Domestic Product (GDP) growth was mostly driven by diamonds and yet tourism and agriculture sectors were also identified as potential areas to drive the industrialisation process.

He shared the Zambian experience about the copper belt, noting that the country used to be what Botswana it is today, unfortunately the mine collapsed in early 1975 impacting negatively on the economy.

Dr Kganetsano stated that the report had identified access to finance as a major challenge in Botswana, noting that ‘limited access to finance is one key constraint to business growth in the country’.                                                                                                                                      

He said funding of tourism and agriculture enterprises had declined, citing that the agriculture sector had declined from 14 per cent to six per cent while tourism sector was still at two per cent.

Other challenges, he mentioned,  included shallow capital markets and lack of collateral registry.  

However Dr Kganetsano said one of the recommendations was that government should reform some state-owned enterprises and ensure that their mandate focused on funding economic sectors.

The enterprises, he said, should know their customers structure and cater for their needs.

Dr Kganetsano stressed the need for the government to support industrialisation and entrepreneurship, noting that a successful and productive financial resource mobilisation depended on conducive business environment, openness to Foreign Direct Investment (FDI), sound governance and accountability for the Development Finance Institutions.

He also shared some exciting cross country experiences on how other countries did with regard to funding.  Dr Kganetsano cited the case of Singapore, saying the government was involved both in debt and equity financing and that the government provided funding for SMMEs only when approved by commercial banks and financial institutions.

In Singapore, he said the government backed schemes, thus creating a business friendly environment and encourage entrepreneurship. In addition, he said the government worked with multi-national corporations, which attracted more FDI.

The meeting learnt that the multi-national corporations enhanced public expenditure efficiency in infrastructure and also mobilised domestic resources such as taxes and markets.

Some of the recommendations of the report called for effective harnessing of financial resources by optimising domestic resource mobilisation; enhance the deployment of financial resources and maintaining a sound and stable financial system.

The report also pointed out that external sources remained a viable option with added advantages.

Meanwhile, the meeting learnt that the theme topic was a sequel to the 2016 and 2017 ones and it intended to complement and further enrich the policy analysis and prospects for success of the national industrialisation strategy. ENDS