The ascendance to the Presidency by Mokgweetsi Masisi on April 1 this year is said to have brought with it an upturn in business confidence, at least anecdotally.
An economic review from Econsult firm for the first quarter of the year compiled by economists, Keith Jefferis, Sethunya Sejoe and Kitso Mokhurutshi suggests that the private sector is anticipating the implementation of reforms that will improve the business environment and promote investment growth.
Masisi’s presidency has brought with it renewed hope as the business expects a number of implementation from the man. The president has already indicated opening room for improvement on how best to deal with the alcohol levy and it should be operated.
Notwithstanding the euphoria, the economists however have noted that economic growth data for 2017 show a slowdown in GDP growth to 2.4 percent.
This is said to have been largely expected as the impact of the closure of the BCL Mine towards the end of 2016, starts to manifest. The set back is believed to be temporary and growth is expected to recover to 4-5 percent in 2018.
The growth is expected to come from the BCL effect falling out of the GDP growth calculations during the year, expected increase in diamond production, and the impact of fiscal expansion given the substantial increase in government spending that is expected during this financial year.
While expectations are high, Econsult economists have warned of worrying signs in the economic data such as the fall of imports which reportedly fell by a massive 18.5 percent in 2017.
Usually this would be suggestive of an economy experiencing a major recession, but Jefferis and his colleagues believe the import data are unreliable as previously pointed out in other reviews. Another worrying factor is the rise in arrears on bank lending, which is said to have impacted on bank profitability.
The main defaulters are said to be State Owned Enterprises (SOEs) or parastatals as they are commonly referred to which reflects the poor state of financial and general management at these SOEs.
The economists have noted that the interesting part of the 2017 GDP data is the result that, for the first time in almost four decades, mining is no longer the largest sector of the economy, having been overtaken by trade, hotels and restaurants sector.
While this is due to the contraction of the mining sector in 2017, it is also believed to be sign of economic diversification.
Figures show that mining contracted by a significant 11.2 percent in 2017, compared to a decline of 3.5 percent in 2016.
In his inaugural speech, Masisi spoke about addressing the issue of high unemployment, particularly among graduates. Economists say that this is a very important economic challenge, and dealing with it is fundamental to improving household incomes and living standards and reducing poverty and inequality.
They however note that there is no quick or easy answer to this; but raising the rate of job creation sufficiently to reduce unemployment will be a long-term task.
Nevertheless, it is suggested that there are some changes that can, in principle be made to get the process started. Jefferis and other economists say much could be achieved through the passage of an all-encompassing Business Environment Reform Act, as was done in Mauritius in 2006.
The crucial changes required in Botswana, the review says, include reform of immigration regulations for foreign investors and workers, and visa regulations for tourists and other visitors; abolishing trade licences, except where there is a public health and safety justification; reducing the range of reserved economic activities (those that are closed to foreign investors); liberalising land and property ownership regulations; reform of zoning regulations to allow more mixed-use development; reducing the scope of environmental impact assessments (EIA) for developments in non-sensitive areas; legally establishing the “one government” principle, among many others.