At 17.7 percent, unemployment rate in an economy considered to be performing well, is still high, says Statistics Botswana Deputy Statistician General, Dr Burton Mguni.
But the reasons are evidently clear - the country’s undiversified economy is anchored by the mining industry, which is not labour intensive. Such economies may do very well where the diamond mining industry is doing well and contributing a lot to the economy.
However, the mining industry is not a great employment creator hence the situation whereby the economy of the country is doing well but there is high unemployment, said Dr Mguni while releasing the results of the Botswana Multi Topic Household Survey 2015/2016 survey.
The purpose of the survey was to provide a comprehensive set of indicators for labour market and poverty. He said that unlike construction and agriculture, the mining industry does not employ many people but contributes more to the economy.
This is due to the fact that mining companies across the globe are focusing on reducing the cost of production to remain viable during this time when commodity prices are depressed.
The world over, more mining companies are embracing new and more advanced and automated technologies.
Against this background the way workers are employed is changing resulting in many being made redundant.
Currently jobs in the mining sector are not growing and in Botswana, the total mining workforce ranges between 11 000 and 12 000 over the last 5-10 years.
Debswana has the highest number of workers averaging 5 000 and the company says it is unlikely that number will increase.
According to Botswana Statistics’ latest survey, the overall unemployment rate for a population aged 15 years and above was at 17.7 percent. In recognition that majority of those aged under 18 years were still pursuing their education and regarded as children, an estimate of unemployment rate for those aged 18 years and above was 17.6 percent.
The data suggests an improvement in the unemployment rates from 19.9 percent in 2011. At the time of the survey, the total population aged 18 years and above was estimated at 1 268 677 of which 838 002 were economically active and 430 675 were economically inactive.
Of the 838 002 economically active population, 690 901 were employed and 147 101 were unemployed.
The survey revealed that the private sector remained the largest employer as it employed 44.6 percent of the labour force, followed by public administration with 22.1 percent, private households with 12.2 percent and subsistence farming with 9.9 percent.
The country’s Gross Domestic Product expanded slightly in the first three months of 2017, bringing fresh doubts on the recovery of the mining-led economy going forward.
This is according to fresh facts coming from Statistics Botswana, a government-agency tasked with the collection, analysis and publication of key economic and social data periodically. A statement released by the agency’s Head, Anna Majelantle, shows the economy leapfrogged by 0, 8 percent in the three first quarter of the year (Q1:2017) compared to a modest growth of 2, 3 percent in the same period the year before.
The mining sector, which is dominated by diamonds, saw its total output taking a nosedive of 28, 9 percent as a result of BCL closure, depressed diamond markets and fragile recovery of copper prices. In May 2017, copper prices dropped to a 19 month low, on growth concerns from China, the world’s biggest consumer of metal.
“The decrease in the real mining value added of 28.9 percent was because of the closure of copper/nickel mines during the fourth quarter of 2016. In the quarter under review, copper/nickel production was zero due to the provisional liquidation of the BCL mine in October 2016,” said the agency.
Government, the sole owner of BCL group of companies has put BCL and Tati copper mines under an insolvency process, a decision which has effectively put the operation of the mines to a complete halt. The shareholder cited rising cost of running the mines, which was not helped by the declining copper prices at the time for the closure of the two mines, sending thousands of workers into the street.
During the quarter under review, value added by diamonds to the domestic economy slipped by 2, 8 percent. Statistics Botswana stated the reason for the fall in diamond output was in part due to the vulnerability of diamond prices to market tremors. Despite the above output by diamond, De Beers, a company owned partly by Botswana government, has continued to show notable rise, as seen in the recent cycle of sale which netted the unlisted miner over P5 billion.
“Following positive feedback from the Las Vegas trade show, and in line with recent trends, we saw continued good demand for De Beers rough diamonds in the fifth sales cycle of the year,” commented De Beers CEO, Bruce Cleaver after their June 2017
The diamond market, the biggest contributor to the mining sector, blew hot and cold last year mainly due to weak demand from major consumers such as United States and China, two biggest world economies. The mining sector’s weak production was also worsened by the fall in production at Botswana Ash.
During the period under review, soda ash’s contribution took a knock of more than 40 percent. The production of the commodity was restrained as some industries utilising it (soda ash) were affected by metal prices. Metal prices dwindled in the past two years as China, the biggest consumer, experienced an economic cooling off.
Despite a fall in mining output, non-mining sectors such as tourism, finance and business continued to hold its ground amid poor consumer confidence. Non mining GDP increased by 5.6 percent in the first quarter of 2017 compared to 3.7 percent registered in the same quarter of the previous year. “The increase was mainly due to trade, hotels and restaurants particularly the wholesale sub industry,” said Statistics Botswana. Meanwhile, Bank of Botswana executives are bullish that the economy can grow at a forecast level of 4, 2 percent provided all factors remain equal. Finance and Economic Development Minister, Kenneth Matambo and BoB have predicated the growth level on the recovery of mining. “If the momentum of diamond sales continue (in 2017), we are confident that the economy will grow at the predicted levels,” said Dr Alex Tshoganetso, Head of Financial Stability and Research at BoB
Botswana recorded a second trade surplus for the month of February, indicating that the country was not importing more that it was selling outside the country.
This is according to fresh data from Statistics Botswana, which shows that, in the month under discussion, the landlocked country exported goods worth P6, 7 billion to various destinations.
The trade merchandise statistics which was signed off by Statistician General, Annah Majelantle, shows that exports ballooned by 6, 1 percent month-on-month. “This increase is mainly due to a rise of 7, 2 percent (P424, 2 million) in diamond exports,” said the statement released this week.
Experts, including the Finance and Economic Development minister, Kenneth Matambo have forecast a recovery in the diamond sector after a slump in the past few years. This was largely due to weak economic growth in major diamond markets such as the United States, Europe and China.
US is poised for a robust growth this year same as China which is expected to leapfrog by 6, 5 percent in 2017, according to Fortune magazine. Diamonds are the single biggest export revenue earner for the mining economy which has seen its efforts to diversify falter for various reasons.
Meanwhile, it remains to be seen if diamond exports will continue on an upward trend following South African government refusal to grant De Beers (SA) an exemption to export diamonds to Botswana for aggregation purposes. De Beers has since taken minerals minister Mosebenzi Zwane to court over the decision, which is likely to fuel tension between the two neibouring countries.
After a deal with De Beers six years ago, all diamonds from De Beers mines are aggregated in Botswana, and then exported to their various destinations, which has worked well for Botswana.
Meanwhile, statistics also shows that for the month of February, vehicle and transport equipment also picked the country’s exports. “Vehicle and transport equipment group contains mainly re-exports,” added the statement.
For the period under review, the group recorded a 100 percent increase to close February at P21, 5 million. Some of Botswana exports include beef and soda ash.
As far as imports are concerned, the country imported goods and services worth P4, 2 billion in February 2017. Fuel contributed the highest in terms of value. To power its activities, Botswana imported fuel amounting to P215, 4 million.
Machinery and electrical equipment also had a notable contribution to imports.
According to Statistics Botswana, the country recorded a trade balance of P2, 5 billion, keeping the country in a healthy balance sheet.