“In terms of recent developments since the last time we visited, one of the key highlights of our mission was that after two consecutive years of strong growth in the aftermath of the global financial crisis, growth has moderated in 2012, which continued in the first quarter of 2013,” International Monetary Fund (IMF) Botswana mission chief Lamin Leigh told CNBC Africa on Friday.
“This was mainly reflective of the very weak performance of the mining sector of the economy. At the same time, the non-mining sector of the economy, in particular construction and services, continues to register strong growth, which has partly offset the subdued performance of the mining sector.”
The IMF visited Botswana’s capital this year to conduct economic consultation discussions with the country. The team focused on reviewing recent economic developments as well as prospects and polices that continued macroeconomic stability and growth.
Diamond mining exports in Botswana indicated significant decline. Rough diamond exports were at around 719 million dollars in the first quarter of 2013, down substantially from 2012’s exports.
Polished diamond exports were at 102 million dollars, down from 160.5 million dollars in the same period of the first quarter of 2012.
“The diamond sector continues to register very subdued performance in Botswana. This is largely linked to the uncertain external environment. A bulk of Botswana’s diamonds goes to advanced economies and emerging markets, so this is partly one of the reasons of the moderation in growth,” Leigh explained.
“But we are focused in a growth rate of about 4 per cent this year underpinned by the relatively strong performance in the non-mining sector.”
Diamond company De Beers plans to re-establish itself in Botswana, a move that might spur an increase in dimanond exports.
Because of the uncertain current global picture, however, there is concern for the future of diamond demand amid a world economic slowdown.
Improving the quality of spending and the efficiency of the tax system is in the meantime a top government priority in accordance with Botswana’s 2013 and 2014 budget.
Trimming down on non-productive spending, especially in the area of current spending, as well as promoting capital spending are other key aspects of improvement government plans to implement.