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Botswana at a Glance: 2007-08

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Botswana at a Glance: 2007-08 Country Report Botswana Botswana at a glance: 2007-08 OVERVIEW The government, under the presidency of Festus Mogae, will remain firmly in power, with the ruling Botswana Democratic Party (BDP) clearly the dominant political party. Expanded diamond production will drive real GDP growth of 4.7% in 2007 and 6% in 2008. Diversification of the economy away from diamond mining will remain a key goal of economic policy. Inflation is expected to remain on a downward trend, at an average rate of 6.5% in 2007 and 4.7% in 2008, as monetary policy remains tight and South African inflation declines in 2008. Import growth will be driven by higher capital spending by the government and mining companies. Additional mining capacity will drive up exports. The surplus on the services account will increase during 2007-08, owing to increased capacity to provide services, particularly in the tourism, finance and diamond-related sectors. The deficit on the income account is expected to narrow because of higher returns on portfolio investments abroad. The surplus on the current transfers account will remain firm in the forecast period, reflecting large payments from the Southern African Customs Union. The current-account surplus is forecast to increase from 15.2% of GDP in 2006 to 16.1% of GDP in 2007 and 17% of GDP in 2008. The pula is expected to depreciate slightly over the forecast period, in line with downward trends in the rand, to average P6.29:US$1 in 2007 and P6.60:US$1 in 2008. Key changes from last month Political outlook • A cabinet reshuffle has brought in two prominent leaders of an under- represented faction of the BDP, thus setting the stage for greater unity in the party over the forecast period. Economic policy outlook • New data from the Bank of Botswana show that significant under-spending, particular on development expenditure, took place in the first half of fiscal year 2006/07 (April-March). The Economist Intelligence Unit now estimates the government surplus for 2006/07 at 5% of GDP, up from 2.6% of GDP previously. Economic forecast • There have been no significant changes to our economic forecast in the past month. February 2007 The Economist Intelligence Unit 26 Red Lion Square London WC1R 4HQ United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For 60 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where the latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 26 Red Lion Square The Economist Building 60/F, Central Plaza London 111 West 57th Street 18 Harbour Road WC1R 4HQ New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7576 8000 Tel: (1.212) 554 0600 Tel: (852) 2585 3888 Fax: (44.20) 7576 8500 Fax: (1.212) 586 0248 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: www.eiu.com Electronic delivery This publication can be viewed by subscribing online at www.store.eiu.com Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright © 2007 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author's and the publisher's ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it. ISSN 1356-4021 Symbols for tables "n/a" means not available; "–" means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK. Botswana 1 Contents Botswana 3 Summary 4 Political structure 5 Economic structure 5 Annual indicators 6 Quarterly indicators 7 Outlook for 2007-08 7 Political outlook 8 Economic policy outlook 9 Economic forecast 12 The political scene 17 Economic policy 20 The domestic economy 20 Economic trends 21 Agriculture 21 Mining 22 Manufacturing 22 Infrastructure 23 Financial and other services 24 Foreign trade and payments List of tables 9 International assumptions summary 12 Forecast summary 15 Local council by-election results 17 Government finances 19 Human Development Index, 2006 20 Labour force and unemployment List of figures 12 Gross domestic product 12 Consumer price inflation Country Report February 2007 www.eiu.com © The Economist Intelligence Unit Limited 2007 Botswana 3 Botswana February 2007 Summary Outlook for 2007-08 The government, under the presidency of Festus Mogae, will remain securely in power throughout the forecast period, with the ruling Botswana Democratic Party (BDP) continuing to dominate the political scene and opposition parties struggling to forge greater unity. Diversification of the economy away from diamond mining and job creation will remain the chief policy goals. Real GDP growth will rise from 4.7% in national accounts year 2007/08 (July-June) to 6% in 2008/09 as mining production increases. Inflation is expected to subside to 6.5% in 2007 and 4.7% in 2008, although the rate of decline will be curtailed by the gradual depreciation of the pula, imported inflation from South Africa and high international oil prices. Strong diamond exports will drive a current- account forecast at 16.1% of GDP in 2007 and 17% of GDP in 2008. The political scene A cabinet reshuffle has brought in Daniel Kwelagobe and Ponatshego Kedikilwe, the leaders of an under-represented faction within the BDP. Negotiations to create an electoral alliance between the main opposition party, the Botswana National Front (BNF), and three smaller opposition parties have failed. The leader of the BNF, Otsweletse Moupo, has resumed his duties after a leave of absence. Botswana!s High Court has ruled that the relocation of the Basarwa from the Central Kalahari Game Reserve (CKGR) was unconstitutional. Economic policy According to the Bank of Botswana, development spending in the first half of fiscal year 2006/07 (April"September) is well below budgeted levels. A leaked report by the Business and Economic Advisory Council has criticised the government!s empowerment policy. The development of a number of new industries has been proposed, including a high-technology innovation centre. The domestic economy The official 2005/06 Labour Force Survey has put the unemployment rate at 17.3%. A new consumer price index basket has been introduced by the Central Statistics Office, and suggests that year-on-year inflation reached 8.5% in December 2006. The government has announced plans to promote ostrich farming by supplying young birds. The construction of a new nickel refinery has begun. A UK-based company, African Copper, has been granted a licence for the Dukwe copper mine. A South African airline, SA Airlink, has been chosen as the preferred bidder for Air Botswana. Foreign trade and payments Botswana has chaired the plenary meeting of the Kimberley Process, at which the control of "conflict diamonds" was discussed. Editors: Nicola Prins (editor); Roger Boulanger (consulting editor) Editorial closing date: January 25th 2007 All queries: Tel: (44.20) 7576 8000 E-mail: [email protected] Next report: Full schedule on www.eiu.com/schedule Country Report February 2007 www.eiu.com © The Economist Intelligence Unit Limited 2007 4 Botswana Political structure Official name Republic of Botswana Form of state Unitary republic Legal system Roman-Dutch law; cases in rural areas are heard by customary courts National legislature National Assembly consisting of 57 members elected by universal suffrage, the president, the attorney-general and four members appointed by the president; a 15-member House of Chiefs advises on tribal matters National elections October 2004 (legislative); next legislative election due in October 2009 Head of state President, chosen by the National Assembly National government The president, his appointed vice-president and cabinet (reshuffled in January 2007) Main political parties Botswana Democratic Party (BDP; the ruling party); Botswana National Front (BNF); Botswana Congress Party (BCP); Botswana People!s Party (BPP); New Democratic Front (NDF); Botswana Alliance Movement (BAM) President Festus Mogae Vice-president Ian Khama Key ministers Agriculture Johnnie Swartz Communications, science & technology Pelonomi Venson-Motoi Education Jacob Nkate Environment, wildlife & tourism Kitso Mokaila Finance & development planning Baledzi Gaolathe Foreign affairs & international co-operation Mompati Merafhe Health Sheila Tlou Labour & home affairs Charles Tibone Lands & housing Ramadeluka Seretse Local government Margaret Nasha Minerals, energy & water affairs Ponatshego Kedikilwe
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