Q1 2016: bad news

SHARE   |   Monday, 09 May 2016   |   By Staff Writer
Econsult economist, Keith Jefferis Econsult economist, Keith Jefferis

The first quarter of 2016 was generally a period of bad economic news as the slowdown in the global commodities continued, affecting severely sectors such as mining, according to Econsult economists. In their review for the period from January to end of March, Keith Jefferis and his colleague, Sethunya Sejoe, said the local bad economic news were nearly compensated by positive news from the diamond market. The first quarter of 2016 has seen the diamond sector enter a recovery mode from the dismal performance witnessed in the second half of 2015.

Jefferis and Sejoe say during the last quarter of 2015, the global rough diamond market was in a dismal state. “The supply pipeline through trading, cutting, polishing, jewellery manufacturing and retail activities was overstocked; consumer demand was weak; and high rough prices relative to retail prices left little scope for profits,” they state in the report, explaining that this led to limited demand for rough and downward pressure on prices. The first three months of the year saw a rebound in the industry as signs of recovery showed up. De Beers was able to raise $607 million form the three sights of the first three months – an improvement from the same period last year.

The economists further noted that the inadequate employment statistics in Botswana presents a challenge and until recently available statistics were that on 2013. They argue that the 0.7 percent employment growth rate between 2013 and 2015 does not really translate into any telling job creation. According to the Econsult report, information from Statistics Botswana shows that 2,207 jobs were created between the two years whereas over that time there were probably over 40,000 net new entrants into the labour market from school and college leavers. “Given this dismal experience with job creation, it is surprising that government policy is not focused more on resolving the problems that lie behind the lack of job creation,” they regret.

Touching on BTCL IPO, which occurred during the first quarter of the year, Econsult economists say as much as the IPO was a positive development and equally successful, the exclusion of foreign investors from participating in the IPO was in contradiction with the official Privatisation Policy. To buttress this act of sheer ignorance, Jefferis and Sejoe quoted a paragraph from such policy which states that “out-right exclusion of foreign investors or across-the-board fixed restrictions on foreign participation in privatised enterprises will be avoided and any restrictions will be considered on a case-by-case basis. Allowing foreign participation in privatisation activities is in line with Government’s policy of promoting Botswana as an investor friendly location for international companies.”