AMN - Mining is driving Botswana’s economy – comment by Yolanda Torrisi

Innovation Botswana is a shining light for the mining industry throughout the African continent and the government is keen to see that it continues to contribute the lion's share of gross domestic product (GDP), government revenues and foreign exchange earnings.

While the industry's general global upswing is playing a part in the boosting the country's economy, increased government spending in a number of areas and more mining-friendly regulations than other countries are helping.

Local investment managers Kgori Capital believes that the ramp-up in government spending will continue boosting economic activity in the second half of 2018, and beyond.

Portfolio manager Tshegofatso Tlhong said recently: "That, coupled with the recovery in the mining sector, is positive for the economy in the near-term."

He added that the country was recording increased activity in the resources sector. "Essentially, this means companies are raising capital to fund exploration and operational activity and investors are selectively investing in companies in this sector (mining) after years of mine closures and disinvestment."

Tlhong was referring to the uncertainties caused by the global mining downturn of the past few years, which resulted in half the country's mines being put under care and maintenance.

Three years later, he said, prospects were looking bright again.

Other initiatives likely to improve confidence in the country and help increase investment include a program that seeks to address economic diversification and unemployment challenges. This was launched earlier this month by the United Nations Development Program (UNDP) and Botswana's Ministry of Investment, Trade and Industry.

The Business Supplier Development Program focuses on three main areas - policy design, policy implementation, and policy monitoring and evaluation. It aims to create demand-based, market-driven opportunities to increase the competitiveness of small and medium-sized enterprises (SMEs).

Through the program, small-scale producers and suppliers will be connected to larger markets locally and abroad. The program, which will strengthen the entrepreneurial ecosystem in the country to encourage innovation and create employment, is likely to lead to more opportunities for local businesses to better service the mining industry.

The government is also seeking to assist the economy by easing the process of issuing work and resident permits and visas in an effort to reduce impediments of doing business in the country.

The Ministry of Nationality, Immigration and Gender Affairs has decided to grant a visa at the same time as approved work and residence/exemptions permits.

Previously, citizens of countries that require a visa to enter Botswana had to apply for work and residence permits, or exemptions and they could only apply for a visa once the other documents have been approved, or when they got exemptions. This process was often long and deemed discouraging by potential investors who wanted to come and do business in the country.

Botswana's new President Mokgweetsi Masisi said in his first official address to the media in May that his government would look for new ways to lure investors into the country.

Evidence of the country's investor-friendly approach came early in 2018 with a 4.8% growth in the economy. GDP reached US$4,152.50 in the first three months of 2018, up 0.9% year-on-year at comparable prices.

Botswana's Statistician General Burton Mguni attributed the GDP increase to the real value added by the mining, transport and communications, and finance and business services, which increased by 12.1%, 6.5% and 5.4% respectively.

He said the mining increase of 12.1% was mainly driven by the diamond value-add which increased by 11.5%. Diamond production in carats increased by 11.5% in the first quarter of 2018 compared to a decrease of 2.5% in the same quarter of 2017.

Yolanda Torrisi is Chairperson of The African Mining Network and comments on African mining issues and the growing global interest in the continent. Contact:yolanda@yolandatorrisi.com