Botswana narrows trade deficit with China

MBONGENI MGUNI
Staff Writer | Wednesday March 13, 2013 00:00

China, a fast expanding and export-oriented economy, generally enjoys a trade surplus with many countries, including giants like the United States. Botswana had a trade surplus of P166 million in 2007 but the balance swung in China's favour from 2009 as Chinese engineering and construction firms scooped public works tenders worth billions of Pula.

Latest Statistics Botswana figures indicate that the trade balance with China deteriorated to a deficit of P534 million in 2009, P1.8 billion in 2010, P5.1 billion in 2011 before dropping to P1.4 billion last year.Prior to 2009, Botswana enjoyed a surplus of P58 million in merchandise trade with China and another P166 million in 2007, while 2006 and 2005 recorded deficits averaging P178 million.

While the data agency did not give reasons behind the latest trends in Botswana's trade balance with China, other sources indicate that the lower deficit in 2012 was due to the completion of several public projects awarded to Chinese companies by government.

These include the mammoth P11.1 billion Morupule B project in which heavy outlay had been made in the procurement of key components such as turbo alternators, turbines and boilers from the Oriental giant.Chinese contractors have also utilised components from their home country in public projects within the water, sports and other sectors over the years, increasing merchandise imports as recorded by Statistics Botswana.

Analysts said state owned enterprises, which comprise the majority of Chinese companies operating in Botswana, tied procurement from China into the contracts they entered into with government. Last Friday, Parliament heard that there are 16 Chinese state owned enterprises operating in Botswana, which collectively have 18 public projects. 'While generally harmless in the short term, sustained trade deficits with China point to the displacement of jobs from Botswana and their creation in China,' a local trade analyst told Mmegi Business. 'In addition, such a massive trade deficit erodes the local manufacturing sector's export capacity, again with a similar creation of the same in China.

However, the large deficits with China are linked to several specific government projects and thus decisions by Botswana procuring authorities. They are not reflective of any long term trends in the trade balance,' the analyst said. Botswana exports to China consist largely of mineral products such as copper and nickel. Botswana diamonds reach the Asian country indirectly.