RMB projects 4.2% growth for Botswana
Thabo Lewanika | Monday June 27, 2022 06:00
The forecast is marginally below government and the International Monetary Fund’s projections that the local economy will grow by 4.3 percent growth this year. The local economy expanded by 11.4% last year, rebounding from a COVID-19 induced contraction in 2020.
RMB’s forecasts are contained in its mid-year Africa Economic Outlook. RMB is the corporate and investment banking arm of FirstRand Bank Limited – of which RMB and First National Bank Botswana (FNBB) are both divisions.
FNBB economist, Gomolemo Basele, said a recovery in demand for the country’s minerals, particularly diamonds, would lead growth this year and into the short term.
“As pandemic-induced base effects wear away, the sustained recovery in diamond demand, barring any global setbacks, will support the recovery of the Botswana’s mining industry and improve the country’s growth prospects,” Basele said.
RMB further projects that the local economy will grow by four percent in 2023 and by another four percent in 2024. Analysts said the diversification of Botswana’s economy would remain key in order to create a more resilient growth profile, which requires developing the country’s primary and secondary sectors, particularly agriculture and manufacturing.
“The non-mining sector is expected to benefit from increased developmental spend through to (and) the improvement in government revenue over 2021 will allow for the delivery of key infrastructural projects, which will make the local environment better to operate in,” Basele said.
The Economic Recovery Transformation Plan (ERTP) which is government’s roadmap by government to stimulate the economy out of its pandemic-induced crisis, is set to also play a pivotal role in driving economic growth to the projected margins.
“The ERTP is expected to gain pace given the improved fiscal outlook as a result of increased mineral revenue over the medium term,” adds Basele. “The ERTP will also fast-track key infrastructural projects across the country in order to support growth in the local construction industry.”
Funds secured from the World Bank and African Development Bank at the tune of $250m and $137m respectively are also to be channelled to the execution of the ERTP.
These funds will be directed towards attracting private sector investment, contributing to the diversification of Botswana’s exports, and creating job opportunities towards a green economy.