09 Feb 2020

Minister of Investment, Trade and Industry, Ms Peggy Serame says Botswana is committed to diversifying its economy from mineral revenue. 

Speaking on the sidelines of a two-day workshop organised by Bank of Botswana in collaboration with the International Monetary Fund (IFM) and other stakeholders in Kasane last week, Ms Serame said although diamonds have significantly contributed to the socio-economic development of Botswana, the country has to look for other sectors to grow the economy. 

She noted that revenue from the mineral sector, especially diamonds, continued to decline hence the need to look for other sectors that could contribute to the development of the country. 

Ms Serame further explained that the main objective of the workshop was for Botswana to learn from other countries and international organisations such as the IMF on how they had managed to diversify their economies to sustainable development. 

She said the workshop, themed Fostering diversification to escape the middle income trap, came at a time when Botswana was reviewing its National Development Plan 11 to take into account the challenges facing the country and the need to align the focus of the plan with global, continental and regional initiatives such as the UN’s Sustainable Development Goals, AU Agenda 2063 and Vision 2036. 

Welcoming delegates, governor of Bank of Botswana, Mr Moses Pelaelo said given the challenges the country faces, there was a need to acknowledge and embrace the transformation aspirations of the government, including the transition to a knowledge-based economy, cluster industrialisation approach and high-income status. “In this regard, national policy dialogue and agenda should be on identification, prioritisation and sequencing of reforms as well as urgent development of effective implementation frameworks and approaches,” he added. 

Mr Pelaelo further explained that policies and their implementation, institutional energy and social engagement should focus on the attainment of Vision 2036 aspirations. He emphasised the need to highlight the misaligned nexus between macro-economic stability, economic growth and development outcomes that included economic diversification, inclusive growth, employment, inequality and poverty reduction. Mr Lelaelo explained that there was need to recognise that while previously all elements of macro-economic stability were well anchored, the recent past showed a transition to structural government budget deficits and resultant deterioration of fiscal buffers. 

“Therefore, while the economic benefits from macro-economic stability remain sub-optimal, and there is need for substantial improvement, it is now also necessary to urgently address sustainability of the fiscal position and evaluate opportunities to rationalise the role of government and domestic resource mobilisation and funding options,” said Mr Pelaelo. 

He said the country had to identify new sources of growth because of the combination of exhaustion of the mineral resource, increasing relative costs of production, changing lifestyles and consumer choices, including the impact of synthetic diamonds. 

Mr Pelaelo said there were prospective changes in regional and international trade arrangements, adding that a more immediate policy assignment was to evaluate prospects for the Southern African Customs Union and the African Continental Free Trade Area in order to appreciate the potential adverse developments for Botswana, and also to identify opportunities that may be harnessed for prospective positive impact on the domestic economy. 

The governor also highlighted the issue of climate change that involved unreliable and unpredictable weather patterns, which had a broad-based impact on economic performance in various sectors and areas of the economy that were prospects for macro-economic and financial stability and socialisation.

He also underscored that the workshop came at the right time for Botswana derived from an assessment of economic performance of the country and consequent need for urgent discussion on transformation approaches to address the seemingly intractable challenges and to help transition the country to high-income status. 

“Fortunately, it is propitious that the workshop is held in the same week that the first budget speech of the 12^th Parliament was delivered by the Minister of Finance and Economic Development, thus an opportunity to examine prospective initiatives coming from this workshop alongside the most recent policy pronouncements by the government,” he concluded. ends