Botswana’s trade deficit conundrum

Botswana has consistently recorded a trade deficit from September 2023 to September 2024, Statistics Botswana (SB) revealed in its International Merchandise and Trade Statistics Monthly (IMTS) September 2024 report. It is a monthly digest that provides a summary of trade statistics on Botswana’s total imports and exports of goods for September 2024. The international merchandise trade statistics records all goods which add to, or subtract from, the stock of material resources of a country by entering (as imports) or leaving (as exports) its economic territory. 

During September 2024, Statistics Botswana said the country recorded trade deficit amounting to P4, 430.6 million while exporting merchandise valued at P3, 434.5 million to external markets with diamonds being the dominant exported commodity, accounting for 56.8 percent (P1, 951.3 million). Statistics Botswana indicated that diamond exports were followed by Copper and Machinery and Electrical Equipment at 24.0 percent (P823.4 million) and 6.4 percent (P221.4 million) respectively. An independent economist Lame Bothata said a trade deficit recorded for a whole year is a bad signal for economic growth. 

He said the deficit is expected to widen more so that diamonds sales remain weaker, adding that constant efforts to address the trade imbalance are important as government seeks to diversify the economy away from mineral (diamonds) dependence. 

“Botswana for a very long time has failed to diversify the export basket base and is dominated by the diamonds. Currently the diamond sales blues are having a negative impact on the entire economy. Government’s efforts to diversify the economy must be focused on value addition of diamonds where they can be processed into jewellery rather than exporting them as raw materials,” said Bothata. He also said there is a need to explore Non- Resource-Based Exports, stating that while diamonds are currently dominant, actively promoting other sectors like tourism, manufacturing, and agriculture holds significant potential to diversify the export basket and reduce heavy dependence on a single commodity. 

Furthermore, he said it is important for Botswana to carefully study import composition analysis, saying that entails analysing the specific types of imported goods (fuel, food, machinery, etc.) to identify opportunities for import substitution. 

He said encouraging domestic production of goods currently being imported, especially food, can help reduce the trade deficit. 

Meanwhile the report said in September 2024, imports stood at P7, 865.1 million, registering a decrease of 9.9 percent from the revised August 2024 value of P8, 730.7 million. 

The top imported commodity groups were Diamonds at 19.6 percent, followed by Fuel at 17.6 percent. 

Food, Beverages & Tobacco, Machinery & Electrical Equipment and Chemicals and Rubber Products came next, with contributions of 15.5 percent, 13.1 percent and 10.9 percent in that order. 

According to Statistics Botswana, the Southern African Customs Union (SACU) was the main source of imports at 77.9 percent. Asia and the European Union (EU) accounted for 7.8 percent and 2.9 percent of total imports respectively. 

“At country level, South Africa was the main supplier of imports at 59.7 percent of the total, followed by Namibia at 17.2 percent. Mozambique, China and, Canada contributed 4.5 percent, 3.5 percent and 3.1 percent respectively,” the report underscored. 

During the period under review, Botswana’s exports were mostly absorbed by Asia and SACU with market share of 39.3 percent and 29.4 percent respectively. 

At country level, Botswana’s top export destinations were South Africa, the United Arab Emirates (UAE) and Belgium, having received 23.0 percent, 21.1 percent and 12.4 percent of total exports respectively. Australia and China followed at 11.7 percent and 11.1 percent respectively.