Non-mining sector growth restrains GDP drop to 3%
Mbongeni Mguni | Tuesday April 8, 2025 06:00
The Ministry of Finance had expected the economy to contract by 3.1 percent in 2024, while leading credit ratings agency, S&P, recently forecast a negative 3.3 percent performance. The International Monetary Fund, in its last update in November, projected a one percent growth for the local economy.
The marginally “stronger” performance from the economy appears to have been thanks to the non-mining sectors, whose resilience and growth in recent years has become more significant in the growth calculation.
According to Statistics Botswana figures released this week, values added in the mining and quarrying sector fell by 24.1% last year, while the diamond traders sector contracted by 34.1%. Both sectors’ contributions are traditionally critical for the economy.
In 2023, mining and quarrying grew by 2.9 percent whilst diamond trading contracted by 26.8%, reflecting the onset of the diamond slump which is only now levelling out.
The data agency’s figures show that in the non-mining sector, only agriculture and manufacturing recorded declines during 2024, at -0.3 percent and -0.25 percent respectively. Whilst the agriculture sector’s decline was expected given the record El Niño drought that affected the year, the manufacturing’s contraction from 1.9 percent growth in 2023, will be worrying.
The manufacturing sector is one of government’s top priorities for export-led, diversified growth, with billions of pula poured annually into various interventions such as loans, grants, mentorship, supplier development support and others, through various parastatals and agencies.
The star performance in the non-mining sector was water and electricity were value added last year jumped to 20.2% from a contraction of 14.3% in 2023. The performance reflects stable and growing production in electricity generation and water supply during the year, key factors required to support healthy economic activity in other sectors.
Real value added in the wholesale and retail sector grew by 5.8 percent in 2024, compared to 4.5 percent in 2023, a positive signal for a sector which is the main employer of young, semi-skilled citizens.
Finance minister Ndaba Gaolathe expects growth of 3.3 percent this year, amidst numerous risks and variables.
“In 2025, the economy is projected to grow below its potential at 3.3 percent,” he said in his budget speech in February. “This growth outlook is premised on the recovery of the diamond industry which is expected in the latter part of 2025 and continued positive sentiments in the non-diamond mining sectors.”
Already, two of the six risks outlined by Gaolathe in his budget speech have occurred, namely extreme weather events and “lower than expected energy supply due to recurring defects and maintenance works at Morupule B Power Station”.
The country experienced widespread flooding in February which claimed nine lives, whilst breakdowns at Morupule B have triggered nationwide loadshedding sometimes resulting in up to eight-hour blackouts.