2014; a prospective look
The year 2013 is gone and beyond recovery and therefore, we look forward to 2014.The previous year was not good economy-wise. Essentially, economic growth was both slow and uneven and creates doubt on whether the country will deliver on its Vision 2016 objectives. The gloomy prospects notwithstanding, there were some good indicators and policy interventions that should bode well for 2014. Hence, the challenge is for us to build on these and take the economy forward.
For a country to grow and develop its economy, it must be competitive on a global scale. The Global Competitiveness Report (GCR) is an authoritative measure of a country’s competitiveness. Over recent years, Botswana’s Global Competitiveness rankings have been declining. However, the 2013-14 GCR saw Botswana doing well. Botswana’s Global Competitiveness ranking moved up five (5) places from a ranking of 79th position out of 144 countries to 74th position out of 148 countries. The ranking, therefore, placed the country ‘in the 4th spot in the Sub-Saharan region and 3rd position in Southern Africa region behind Mauritius which was ranked in the 45th position and South Africa in the 54th position (BNPC, 2014; PRESS RELEASE – 2013-14 GLOBAL COMPETITIVENESS REPORT LAUNCH).’The other indicator is the Ease of Doing Business. In 2013, Botswana’s rankings moved 9 places up from 65th to 56th out of 189 countries surveyed (The World Bank, 2013; Doing Business; Botswana, 2014). Lastly, the Baseline Profitability Index (BPI) ranked Botswana the second best investment destination in the world (Nicolaus Brown, 2013; BOTSWANA RANKED AS WORLD’S 2nd MOST ATTRACTIVE LOCATION FOR FOREIGN INVESTMENT
On the monetary policy front, the Bank of Botswana’s Monetary Policy Committee (MPC) proactively intervened with easy/accommodative monetary policy initiatives. Thus, throughout 2013, the MPC adjusted the bank rate (the last adjustment prior to the 30 April 2013’s adjustment was in December 2010). Hence, on 12 December 2013, the Bank of Botswana cut the key bank rate to 7.5 from 8% and the overarching reason, like on previous occasions, was concern over medium-term inflation and the need to boost economic activity, specifically, through supporting aggregate demand (Mbongeni Mguni, ‘Central bank unveils fourth rate cut’, Mmegi, 12 December 2013). In this regard, the MPC contended that ‘the current state of the economy, in which unemployment remains high alongside below-trend economic activity, suggests scope for monetary policy easing to stimulate stronger output growth (quoted from ibid).’
Ending, it can be concluded that although 2013 was fraught with challenges on the economic front, there were encouraging signs, particularly, impressive Global Competitiveness, Ease of Doing Business and Baseline Profitability Index rankings. At the same time, during 2013, the Bank of Botswana unremittingly adopted an easy/accommodative monetary policy. Thus, these good indicators and easy/accommodative monetary policy should very favourably circumstance the country to grow and develop the economy in 2014 and beyond. However, it is notable that the Botswana economy does not exist in a vacuum and, accordingly, there is a need to make reference to the global and regional economic prospects when one talks about the prospects of the former. Hence, with the right global and regional economic prospects, the local economy is poised to do well.