BCL closure slows economic growth
Brian Benza | Friday July 7, 2017 18:00
Although the economy’s new driver, the services sector continued to perform well, it was the 28.9% decrease in the real mining value added that largely slowed economic growth.
BCL’s closure also affected coal production with Morupule Coal Mine (MCM) reducing output while the water and electricity sector also reduced output due to the closure of the copper and nickel mines.
BCL was one of the biggest local consumers of MCM production while the mine also consumed power in huge quantities.
Figures released by Statistics Botswana (SB) show that the 0.8% growth in the first quarter was attributed to real value added of trade, hotels & restaurants and finance and business services, which increased by 18.7% and 5.4% respectively.
All other industries recorded positive growths of more than 1.2% with the exception of water & electricity and manufacturing which decreased by 32.2% and 0.3% respectively.
The services sector has replaced mining as the new driver of economic growth with trade, hotels and restaurants growing by 18.7% due to the increase in real value added of wholesalers, vehicle dealers and hotels and restaurants by 76.0, 7.2 and 6.3% respectively.
“Wholesalers’ value added increased significantly due to the positive performance realised from downstream diamond industries,” said SB.
In the quarter under review, copper/nickel production was zero due to the provisional liquidation of the BCL Mine in October 2016.
On the other hand, SB says diamond value added decreased by 2.8% during the quarter under review because diamond prices continue to be vulnerable to market tremors hence a reduction in diamond production.
Soda Ash value added decreased by 41.5% because the markets remain restrained due to low demand, as some of the industries utilising the commodity have been affected by the low metal prices.
While coal prices also remain depressed and stagnated which negatively impact on the commodity’s export viability, the closure of BCL also impacted on the Morupule Colliery Mine production.
The water and electricity sector’s value added for the first quarter of 2017 was P112.1 million compared to P165.5 million registered in the same quarter in 2016, recording a decrease of 32.2%.
“Electricity value added decreased mainly because of the closure of the BCL Mine. Total electricity distribution in kwh went down by 15.1%, with distribution to BCL decreasing by 79.1%,” said SB.
The national economy bounced back to a healthy 4.3% growth in 2016 from a negative growth in the previous year as the services sector cemented its position as the new driver of economic growth. The 4.3% growth for 2016 was however much higher than initial forecasts.Presenting the 2017 budget speech in February, Finance minister Kenneth Matambo said he expected the domestic economy to recover and record a growth rate of 2.9% in 2016, and was forecast to reach 4.2% in 2017.