Botswana’s economic autonomy threatens SA trade relations
Lewanika Timothy | Monday October 30, 2023 06:00
However, recent shifts in trade dynamics have prompted Botswana to reconsider this relationship, highlighting a growing concern over the imbalance in trade favouring SA, oftentimes at the detriment of the former. Trade relations between the two nations have roots dating back to the apartheid era when Batswana patriarchs, with little to no skills, worked as mining artisans in SA gold mines to support the families they left behind while earning the country foreign exchange. With time, economic relations strengthened, positioning Botswana as an evergreen trade partner for its southerly neighbour until the recent produce bans. President Mokgweetsi Masisi, emphasising the need for economic autonomy, particularly in the power sector, expressed what critics across the border quickly deemed unpopular views. “Clearly, reliance on power imports to meet our increasing electricity requirements is no longer an option as this poses a huge risk to our economy,” Masisi said. After expressing his views on national interest during the launch of the Jindal Mmamabule Power Station, Masisi's sentiments were emphatically made clear during a Botswana-SA business round table discussion last year. Acknowledging the skewed trade balance, he called for a change in trade rules. A comprehensive view of government policies reveals Botswana's reluctance to rely solely on SA's economic largesse.
As is, Morupule B has a baseload capacity of 600MW but is presently generating well below that as it undergoes an overhaul. Botswana’s peak energy demand, which occurs during winter, is more than 700MW. The difference is sourced through imports from the bilateral import agreements with SA's Eskom, other regional utilities, and purchases from the Southern African Power Pool.
In silos, the statements do not echo much trade splinter weight. However, taking into account other government trade policies, it becomes increasingly visible that Botswana is no longer willing to survive on the crumbs that fall off SA’s economic table.
In 2022, a ban on 16 types of vegetables was enforced to bolster the local horticulture industry, which primarily affected SA imports. The stiff competition had rendered the local market impenetrable for Botswana's farmers. As of August 2023, Statistics Botswana valued vegetable imports at over P81 million, with the majority coming from SA.
Government’s decision to embargo the entry of 16 vegetable types into the country sent pain directly to South Africa where large-scale farmers have been thriving economically. The vegetable ban stirred discontent in SA, with farmers expressing dismay and threatening a potential trade war. According to the Observatory of Economic Complexity, in July 2023, South Africa exported P4 billion to Botswana but only imported P622 million, resulting in a negative trade balance of over P3.3 billion for Botswana. Self-reliance has been a consistent goal for Botswana, with past administrations attempting economic diversification. However, the intricate web of dependence on SA remains evident, with the neighbouring country serving as a crucial logistics corridor.
Statistics Botswana shows SA as Botswana's primary trade partner, supplying 67% of all imports, challenging the feasibility of achieving a 'trade on equal footing agenda.' While Botswana seeks a more balanced trade relationship, the sheer economic and political might of SA, with an annual GDP exceeding a trillion rands, poses challenges. The recent discontent voiced by industrial farmers in South Africa, accusing Botswana of betrayal, underscores the complexities. Despite Botswana's efforts to assert its economic independence, the path to a more equitable trade balance remains uncertain and subject to SA's response to Botswana's initiatives. The recent displeasure of industrial farmers in SA, conveyed through the National Agricultural Marketing Council, that Botswana is betraying its affiliation with the Southern African Customs Union (SACU). “This is unfortunate and raises greater concerns about creating the 'Africa We Want' – the aspiration of the Africa Agenda 2063, which is promoted through the African Continental Free Trade Agreement, Comprehensive Africa Agricultural Development Programme and other tools that the African Union is promoting to create a single market that caters for all Africans,” officials had stated.