While it received little in COVID-related interventions, the agriculture sector experienced positive growth of 2.3 percent in 2020
It must be known that when Botswana was dealt the COVID-19 contagion and prohibition of movement was declared first in the first quarter of 2020, it was in that desolation that agriculture found its glory. Statistical data indicates that while the pillars of the economy such as mining, trade, hotels and restaurants, manufacturing and construction plummeted, agriculture moved in the opposite direction.
Ironically, outside of the fact that people will always eat, numerous agricultural economists have stated that the real success of the sector is yet to come because of growing demand. According to a US-based academic, Prof. Chris Barret of Cornell University, “Three out of nine of the world’s fastest growing economies are in Africa. Agriculture is at the heart of much of that growth.”
Data from the Bank of Botswana annual report (2020) shows that the agriculture sector experienced positive growth of 2.3 percent in 2020, an upsurge from the negative growth of 0.1 percent in the previous year. Between 2016 and 2020, the highest recorded growth was in 2018 at 2.6 percent. In the two years prior to that, the sector saw modest growth of 1.9 percent (2017) and 0.6 percent (2016).
It is worth noting that the jump between 2019 and 2020 is what may in the years ahead turn out to be a defining epoch, particularly given that 2020 was characterised by movement restrictions that clamped on economic activity.
One could ask: how did agricultural experience such a positive growth when it does not appear that any targeted intervention by the government was implemented in the sector? Infact, 2020 was the year in which subsidies on animal feeds ceased. An Economic Response Plan was established in April 2020 in order to mitigate short-term economic impacts of COVID-19. These include the Industry Support Fund, government guaranteed loans by commercial banks, and tax-free wage subsidies. But these interventions do not quite talk to the country’s agriculture sector.
For one, development of agro-industries such as livestock feed processing plants, refrigerated transportation, abattoirs has always lagged behind and so the Industry Support Fund would have passed them by. Two, loans by commercial banks to the sector have typically been low. The Bank of Botswan annual report (2020) shows that distribution of loans to agricultural activities in 2020 was 7 percent, down from 8 percent in 2019. The trend between 2016 and 2020 depicts a stagnated distribution, the highest being 8 percent.
When these low single digits are compared to sectors such as commercial real estate and tourism and hotels, a wide gap emerges as these respective sectors get allotted loans in double digit numbers that are double and even triple those for agriculture. The tourism sector, for example, made use of the Industry Support Fund and the wage subsidies, even though the distress it suffered saw it recording a negative growth rate of 33.3 percent.
Putting this into perspective, it can be surmised that agriculture by itself carries huge potential. This confirms Professor Barret’s assertion that agriculture is at the centre of future economic growth in Africa. If the growth experienced 2020 is sustained, there is hope of returning agriculture to its former glory.