Botswana’s child justice system at sea

In August 2023, Statistics Botswana released the export figures for the month, revealing a significant decrease in total exports. The country’s export revenues were down by P1.1 billion, marking a concerning trend for the economy.

The figures show that total exports revenues during the month amounted to P6, 634.7 million (around P6.6 billion) a decrease of P1, 051.7 million (around P1.1 billion) from the revised July 2023 value of P7, 686.5 million (around P7.7 billion).

“Botswana’s value of total exports declined by 13.7 percent (P1, 051 .7 million), from the revised July figure of P7, 686.5 million to P6, 634.7 million in August 2023. The decrease was attributed to diamond exports which went down by 17.3 percent (P1, 090.6 million) from a revised July 2023 value of P6, 294.3 million to P5, 203.7 million in the current month,,” reads the Statistics Botswana’ International Merchandise Trade Statistics (IMTS) monthly update.

Firstly, it is crucial to examine the possible reasons behind this decline in export revenues. One plausible explanation could be the global economic slowdown, which has affected many countries worldwide. Botswana heavily relies on international demand for its goods and services. If there is a decrease in global demand, it directly impacts the country’s export revenues. Factors such as trade tensions, geopolitical uncertainties, and the ongoing after effects of the COVID-19 pandemic could have contributed to this decline.

Furthermore, the composition of Botswana’s exports plays a significant role in understanding the decrease in revenues. The country is known for its diamond industry, which constitutes a substantial portion of its exports. Fluctuations in diamond prices can have a profound impact on Botswana’s export revenues. If there has been a decline in global diamond prices, it would directly affect the country’s overall export earnings. Additionally, the diversification of exports is crucial to mitigate risks associated with relying heavily on a single commodity. Therefore, it is essential for Botswana to explore other sectors and products to reduce its vulnerability to fluctuations in diamond prices.

According to figures from the monthly update that provides a summary of trade statistics on Botswana’s total imports and exports of goods, Botswana exported merchandise valued at P6, 634.7 million during August 2023. Diamonds led with a contribution of 78.4 percent (P5, 203.7 million), followed by Copper and Machinery & Electrical Equipment at 9.6 percent (P636.2 million) and 5.0 percent (P334.2 million) respectively. During the month Botswana also exported significant quantities of salt & soda ash, live cattle, coal, vehicle and transport equipment, textiles gold, plastics & plastic products, meat & meat products and iron & steel products.

Botswana’s exports destined to Asia, Southern African Customs Union (SACU) and the European Union (EU) during the month under review represented 63.7 percent, 14.6 percent and 12.7 percent of the total exports, respectively. “Exports destinations for Botswana mostly lie in Asia, while some portion falls in Europe and the SACU region. Asia was the largest export market for Botswana, having received 63.7 percent (P4, 225.7 million) of total exports. These exports were mainly destined to the UAE and India at 32.7 percent (P2, 171.3 million) and 14.2 percent (P943.4 million) of total exports, respectively. Diamonds and Copper were the major commodity groups exported to Asia, at 91.9 percent (P3, 881.6 million) and 8.1 percent (P342.9 million) respectively.”

Exports destined to the SACU region amounted to P969.1 million, accounting for 14.6 percent of total exports during the month under review. “Diamonds and Machinery & Electrical Equipment were the major commodity groups exported to the customs union, accounting for 35.5 percent (P343.7 million) and 29.3 percent (P283.5 million) of total exports to the regional block respectively. South Africa was the main recipient of exports within SACU, at 12.4 percent (P825.8 million.”

The EU received exports amounting to P839.6 million, accounting for 12.7 percent of total exports. “Belgium received almost all the exports destined for the union, at 12.6 percent (P837.8 million) of

total exports. Diamonds was the main commodity group exported to the EU at 99.7 percent (P837.2 million).”

Australia received exports worth P272.3 million, representing 4.1 percent of Botswana’s total exports and the major commodity group exported to Australia was copper at 99.6 percent (P271.2 million) of exports.

Statistics Botswana indicated that as a result of lower export revenues compared to import bill during the month of August 2023 Botswana recorded a trade deficit during the month under review. In August 2023, Botswana recorded a trade deficit of P360.4 million, according to the government owned statistics entity. “Botswana’s total imports was valued P6, 995.1 million in August 2023, registering a decline of 2.2 percent (P156.7 million) from the revised July 2023 figure of P7, 151.9 million. The decline was mainly due to a decrease in Vehicle & Transport Equipment by 36.2 percent (P315.6 million) and Diamonds by 34.3 percent (P272.9 million).”

The statistics entity noted that during August 2023, the top import groups were; Fuel; Food, Beverages & Tobacco and Machinery & Electrical Equipment. Fuel imports contributed 21.2 percent (P1, 485.6 million) of total imports, while Food, Beverages & Tobacco and Machinery & Electrical Equipment imports accounted for 17.9 percent (P1, 248.7 million) and 15.2 percent (P1,060.1 million) respectively. Chemicals & Rubber Products and Vehicles & Transport Equipment contributed 12.9 percent (P904.9 million) and 8.0 percent (P556.5 million) respectively.

The SACU region was the top supplier of imports to Botswana contributing 75.2 percent (P5, 262.3 million) to the total imports and the top most imported commodity groups from the customs union were;  Fuel; Food, Beverages & Tobacco and Machinery & Electrical equipment with contributions of 22.8 percent (P1, 200.9 million), 22.7 percent (P1,195.3 million) and 13.6 percent (P714.5 million), respectively. Chemicals & Rubber Products and Vehicles & Transport Equipment accounted for 11.3 percent (P597.1 million) and 8.7 percent (P458.1 million), of total imports from the union. Among the SACU member states, South Africa was the largest source of imports within the region, with a contribution of 70.3 percent (P4, 919.5 million) to total imports during the period under review. Namibia followed with 4.3 percent (P301.6 million) of total imports during the month under review.

Asia supplied Botswana with imports worth P579.3 million, equivalent to 8.3 percent in August 2023. The major commodity groups imported were Chemicals & Rubber Products, Machinery & Electrical Equipment and Diamonds with contributions of 24.9 percent (P144.2 million), 24.2 percent (P140.5 million) and 19.9 percent (P115.2 million) of total imports from the block, respectively. China and India supplied imports worth 2.6 percent (P185.0 million) and 2.3 percent (P161.5 million) of total imports respectively during the month under review.

In August 2023, Botswana received imports worth P333.1 million from the EU translating to 4.8 percent. Machinery & Electrical Equipment, Chemicals & Rubber Products and Diamonds were the major commodity groups imported from the EU at 40.4 percent (P134.4 million), 24.8 percent (P82.5 million) and 18.5 percent (P61.6 million) of total imports respectively. Germany and Belgium supplied 1.3 percent (P93.6 million) and 1.0 percent (P70.2 million) of total imports respectively. During the current period, Canada supplied 4.3 percent (P301.0 million) of total imports, of which 90.6 percent (P272.7 million) were Diamonds. The United States of America (USA) supplied imports valued at P90.9 million (1.3 percent) of total imports, according to Statistics Botswana.

Another factor that could have contributed to the decline in export revenues is the appreciation of the Botswana Pula. If the local currency strengthens against major trading partners’ currencies, it makes Botswana’s exports relatively more expensive, leading to a decrease in demand. This can be detrimental to the country’s export earnings, as it becomes less competitive in the global market. Therefore, it is crucial for Botswana to maintain a stable exchange rate to ensure the competitiveness of its exports.

The implications of this decline in export revenues are significant for Botswana’s economy. Firstly, it could lead to a decrease in foreign exchange reserves, which are crucial for maintaining stability in the country’s financial system. A decline in reserves could limit the government’s ability to finance imports, service external debt, and support the local currency. This, in turn, could lead to inflationary pressures and economic instability.

Moreover, a decrease in export revenues could also impact employment opportunities in Botswana. The export sector is a significant source of employment, particularly in industries such as mining and manufacturing. If export revenues continue to decline, it could lead to job losses and increased unemployment rates. This, in turn, could have social and economic consequences, including reduced consumer spending and a decline in overall economic growth.