Preliminary trade data from Statistics Botswana indicate that merchandise imports in 2012 amounted to P61.4 billion, exceeding exports which were valued at P45.5 billion. Last year's trade imbalance represented the fifth year of rolling trade deficits.
According to the data, the running monthly deficits in 2012 peaked in July at P6.7 billion. This was due to the relocation of diamond aggregation activities from the De Beers' controlled Diamond Trading Company (DTC) International in London to Botswana. "The peak in imports curve in July 2012 was when the DTC International relocated from London to Gaborone," the data agency said in a trade digest released last Friday.
"As a result, diamonds that were still in the London office had to be exported to Botswana. This led to very high value of imports during that particular month, which ended in a very high trade deficit." DTC International's aggregation, sales and marketing activities have been relocated to Botswana under a 2011 agreement between De Beers and the government. Aggregation, which involves the blending of categories of rough diamonds like-for-like regardless of their country of origin, then splitting them into appropriate types and quantities, began in Gaborone last July with an auction held in August.
After the auction, parcels of diamonds were sent from Gaborone to the DTC's contract clients in the UK, Canada, South Africa and Namibia, with the balance remaining in Botswana for local clients. Statistics Botswana figures show that in July, rough diamond imports amounted to P4.9 billion from an average of P667 million for the three months preceding because of the parcels from London. "The aggregation process in Botswana continued through the months of July and August 2012 whereas the only exports of diamonds, were through diamond polishing or manufacturing companies," Statistics Botswana said.
"The first batch of aggregated diamonds was exported during September 2012, leading to a peak in exports during that month."The revelation of a record trade deficit for 2012 comes hot on the heels of a P21 billion drawdown of the Pula Fund by the Bank of Botswana. The central bank redirected the funds to the Liquidity Portfolio, a portion of the foreign exchange reserves set aside for the economy's short-term requirements.
Bank of Botswana officials said rising imports and the need to service external debts had necessitated the drawdown.