Gaborone – The Bank of Botswana (BoB) says money from the Southern African Customs Union (SACU) has overtaken tourism to become the country’s second largest revenue earner after diamonds.
In a media briefing last week, the media on the latest economic developments recently, BoB director of research and financial stability, Dr Tshokologo Kganetsano, said the country was earning roughly P3,5 billion (approximately US$303 million) every three months in SACU revenue.
However, Botswana’s monthly import bill is around P5,5 billion (or US$470 million) monthly.
Botswana, Lesotho, Namibia, South Africa, and Swaziland constitute SACU.
“What we are receiving every three months (from SACU receipts) is lower than what we need every month,” said Dr Kganetsano, emphasising the need to move away from overreliance on diamonds, more so at a time the mining sector has been negatively affected by COVID-19.
“With no revenue from diamonds, we are faced with an increasingly worrying situation. Hence economic diversification is more urgent than ever before,” he said.
In July, Statistics Botswana said the country’s major export destinations were fellow SACU members. SACU accounted for 77,4 percent of Botswana’s exports.
Of that, 73,7 percent went to South Africa and 7,3 percent to Zambia, with Botswana mostly exporting minerals, salt and soda ash, and meat and products.
Meanwhile, Dr Kganetsano attributed a sharp decline in economic growth to weak performance of the diamond industry the previous year. He said growth in mining output decelerated mainly due to the slow expansion of the diamond industry, which went from 3,2 percent to 2,1 percent.
He said global demand for rough diamonds was also adversely affected by a trade dispute between China and the United States, in addition to social unrest in Hong Kong in 2019.
“The recent outbreak of (the new) coronavirus in China could heavily affect the local diamond mining sector and the tourism sector in the long run,” Dr Kganetsano said, adding that China was the second largest buyer of Botswana’s diamonds.
Diamonds account for 25 percent of Botswana’s GDP, 85 percent of exports earnings and about 33 percent of government.