Botswana has high hopes that diamonds will prove to be its best friend, having revised its growth forecast to 9.7% for 2021.The country’s minister of finance and economic development announced the rate forecast on the back of improving commodity prices, including diamonds, which are the mainstay of the economy.After the outbreak of Covid-19 in early 2020, international diamond sales dropped and Botswana’s biggest diamond mining company, Debswana Diamond Company (a joint venture between the government and De Beers), experienced a 30% fall in diamond sales.The latest forecast, says Duncan Bonnett, a director at Africa House, is wholly dependent on a significant increase in diamond sales during the second half of last year.“Botswana was hard-hit by the pandemic and felt the drop in the commodity prices harshly, especially in the diamond sector. The economy contracted by nearly 9%, after growing by 3% in 2019,” he told Freight News. “Of course, the country’s tourism sector was just as impacted by the pandemic and the lockdown restrictions that prohibited the movement of people – especially international tour ists.”With global demand for diamonds on the rise again, Botswana believes that sales, particularly during the latter half of 2021, were high enough to warrant a nearly two-digit growth forecast.Not everyone, however, is quite as optimistic.The African Development Bank has said it does not expect to see growth over 7.5% in 2021 for the southern African country. It has further set growth for 2022 at only around 5.5%. In addition, the International Monetary Fund (IMF) has stated it does not foresee such high growth either, penning its forecast at 8.3%, while emphasising that the outlook is subject to great uncertainty.“The country will show positive growth, but it remains to be seen if it will be as high as the government expects,” said Bonnett, indicating that tourism also needed to show an uptick for Botswana to really be able to recover from the impact of Covid-19.While the expected growth is good news for investment in 2022, particularly in the diamond mining sector, the past two years have, however, highlighted the importance of Botswana diversifying its economy and reducing its dependence on diamonds.According to Bonnett, there have been ongoing efforts to bring this about for several years. In October last year the country launched a national e-commerce strategy, putting e-commerce and the digital economy at the forefront of its efforts to ensure the f low of digitalised content and information, goods, services and data.It was described by officials as “a milestone in the strengthening and diversification of Botswana’s economy”, and the government said it intended to move from mining minerals to mining knowledge.“E-commerce offers developing countries real opportunities for inclusive economic growth,” reads the strategy.While the country is well positioned for e-commerce growth, it does face a number of challenges – including ICT and telecommunications infrastructure, the high cost of internet, and problems with the quality of service.
