There is need for increased individual participation for the Botswana financial sector to grow.
The Governor of the Bank of Botswana (BoB) Moses Pelaelo said this at the launch of the 2019 Monetary Policy Statement on Tuesday.
Pelaelo said individuals need to trust fund managers to bring them returns on investment and this can only be achieved if there is adherence to codes of conduct by the employees in the financial sector.
Giving a stern warning, the Governor said, employees who have been found to be dishonest and dealing in bad faith should not be circulated around companies within the sector but rather removed altogether.
“This will maintain the integrity of the sector,” he said.
Pelaelo also announced that the bank rate had been retained unchanged at 5 percent. The decision was made at the MPC meeting held on February 26, 2019.
According to him, the outlook for price stability remains positive with inflation forecast to remain within the Bank’s 3 – 6 percent objective range in the medium term.
The Governor also noted that inflation fell from 3.8 percent in November to 3.5 percent in December 2018.
“Subdued domestic demand pressures and the modest increase in foreign prices contribute to the positive inflation outlook in the medium term,” he said.
The outlook, he said, is subject to upside risks emanating from the potential rise in administered prices, in particular, domestic fuel prices and government levies and/or taxes, beyond current forecasts.
He said, however, that restrained growth in global economic activity, technological progress and productivity improvement present downside risks to the outlook.
Pelaelo also announced that Real Gross Domestic Product (GDP) grew by 5.1 percent in the 12 months to September 2018, compared to a lower expansion of 2.4 percent in the year to September 2017, influenced by recovery in mining output and continued improvement in non-mining sectors.
The first MPC statement of 2019 reports that mining output expanded by 4 percent in the year to September 2018, compared to a contraction of 12.4 percent in the corresponding period ending September 2017.
For the same period, non-mining GDP grew by 5.2 percent from 4.4 percent.
“GDP is projected to increase by 4.2 percent in 2019, lower than the estimate of 4.5 percent for 2018,” said the central bank, adding that the significant influences on domestic economic performance include conducive financing conditions as indicated by accommodative monetary policy as well as a sound financial environment that facilitates policy transmission, intermediation and risk mitigation.
The MPC anticipates that an increase in government spending, as well as implementation of initiatives such as the doing business reforms, should also be supportive of economic activity. “Overall, it is anticipated that the economy will operate close to, but below full capacity in the short to medium term, thus posing no upside risk to the inflation outlook,” the statement continues.
The next full update of the Bank’s outlook for the domestic economy and inflation will be published a week after the MPC meeting of April 24, 2019 in the Monetary Policy Report.
April 24th 2019 is the next date for the committee’s meeting.