While nearly all policymakers are alive to the dangers of over-exposing the economy to diamond mining, few are aware that another "diamond danger" lies in SACU's contributions to public revenues. For 2012/13, Botswana's share of revenue from the customs union is expected to contribute 31 percent or P13.7 billion to the national budget, outstripping mineral revenues and other sources of public finance. The finance ministry also expects mineral revenues, which are largely exports, to contribute another P13.25 billion or 30.11 percent to this year's budget.
That scenario gives our country's economy the undesirable distinction of having two thirds of its budget dependent on external factors, a situation any public finance expert would cringe at. Various commentators - including SACU executives, IMF researchers and even our own finance minister Kenneth Matambo - have already warned that pressure will come to bear on the Union's revenues this year and going forward. Pressure on SACU revenues and consequently on Botswana's budget will emanate from lower economic growth within the Union's members states, especially South Africa, as a result of crises in Europe and stagnation in the US. The solution to both the over-exposure to SACU and over-reliance on diamonds is the same.
