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Matambo uneasy as crop output falls 30%

Matambo says the poor cropping season could negatively impact growth forecast
Finance and Economic Development minister, Kenneth Matambo is keeping a wary eye on his 5.3 percent growth forecast for the economy this year, after figures from the recent cereal harvest showed a 30% drop in output.

Official production figures from the cropping season were published on Tuesday showing that Botswana faces a 462,000 tonne cereal deficit.  This follows a disastrous season in which a prolonged dry spell saw production fall to 66,000 tonnes from 94,436 tonnes in the 2016-2017 season. Cereals in Botswana include maize, sorghum and millet.

The 30% drop was the third worst contraction in the region after Lesotho and Zambia. The estimated total area planted decreased to 185,700 hectares from 284,500 hectares the previous season, as farmers gave up on the rains, which eventually arrived mid-February.

On the same day the crop figures were announced, Matambo told BusinessWeek the agricultural performance was a threat to the economic forecast. “I’m keeping my fingers crossed with regards to the possible drought because that could impact the extent of the economy’s performance,” he said.

While agriculture directly contributes little to the broader economy, a poor cropping season means a drop in the rural economy, loss of incomes, greater dependence on government social programmes and weaker productive activity.

 A regional vulnerability assessment released this week by SADC and other aid agencies estimate that at least 35,000 Batswana will be food insecure between March 2018 and April 2019, as a result of the weak harvest. The number is nearly three times higher than last year and above the five-year average for Botswana.

Pressure will also come from the expected increase in regional cereal prices, as the country ups its imports to supplement the poor harvest. While the region as a whole will enjoy a surplus this year, cereal prices are expected to begin rising earlier than

usual as grain stocks are exhausted and those living in areas affected by the prolonged dry spell look to the markets.

“Without assistance, poor households are likely to have reduced access to grain on the market. Assessments confirmed that many households have limited carry-over stock,” the SADC report read.

In February, when Matambo announced his 5.3 percent forecast for growth this year, analysts described the projection as ambitious, particularly as his forecast for last year of 4.2 percent actually came in at 2.4 percent.

Matambo, however, told BusinessWeek that apart from the agricultural threat, the economy was on track to meet the forecast, buoyed by a more optimistic world economic outlook.

“There’s a lot of optimism that the global economy will grow and we are positive that Botswana will benefit from that. Mining will contribute a lot in 2018 and generally, I have not had reason to revise the growth forecast downwards or upwards,” he said. Researchers at Economic Intelligence Unit said mining would anchor growth in 2018 due to higher commodity prices globally and the fading out of the impact of the BCL and Tati Nickel mine closures.

“However, based on weak sale figures at De Beers’ diamond auctions so far in 2018, which are down 1.5 percent in 2017, it seems unlikely that the company will want to sustain strong output growth for the whole year,” the researchers said in a note on Wednesday.

An 11% production jump at Debswana’s mines powered the economy to a growth of 4.8 percent in the first quarter of 2018, according to recently released numbers from Statistics Botswana.




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