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Thabelo NemaoraniApril, 2013
Economic Background Upper-middle income economy, GDP/cap around$7500 – among the highest in SSA Long period of rapid gro...
Economic Growth - 5year averages0%2%4%6%8%10%12%14%16%
GDP Growth-50.0%-40.0%-30.0%-20.0%-10.0%0.0%10.0%20.0%30.0%GrowthrateGDP Mining Non Mining Priv. Sect. Sluggish growth T...
Sources of growth 2003-2012(economy diversified?)-40%-30%-20%-10%0%10%20%30%40%contributiontoOverallgrowth
International Trade
Share of Exports in 2012(Need for Export Diversification?)Meat1%Soda Ash2%Gold2%Textiles1%Vehicles andparts2%Machinery &el...
Exports, Imports & Trade Balance Both imports andexports havegrowth steadilysince early 2009 Imports driven byhigher fue...
Fiscal Position
Sources of Government Revenue SACU largestshare (34%) in2012/13, first timesince 1970’s Mineral’s sharedeclining Fell f...
Employment
Formal Employment levels050000100000150000200000250000300000350000Private Parastal Government Most recent data-June2011 ...
Share of formal employment –June 201144%4%11%14%5%22%GovtMiningManufacturingW/sale &Retail TradeHotels & Rest.Other 335 1...
Botswana faces challenges of; Undiversified exports Fiscal dependency on Mineral revenues High unemployment
Is Coal the answer to Botswana’sChallenges?
Coal Economic opportunities Coal mining- largereserves ( estimated 212billion tonnes) Coal exports (India andChina is po...
Projected Mineral Exports (real) Coal exportsprojected to growsteadily till theyplateau at P 15.9 bnin 2024 At peak of M...
Projected Real Govt Revenues fromMining05,00010,00015,00020,00025,00030,000Govtrevenue(mn)Coal Other Diamond Mineral Govt...
Projected Employment levels050,000100,000150,000200,000250,000300,000350,000400,000450,000Non-mining Other mining Coal Co...
Barriers /challenges Narrow window of opportunity Increased efforts to reduce Green House Gas emissions Renewable energ...
Diamonds Vs Coal If you replace a BWP 1 bnworth of Diamonds witha BWP 1 bn worth ofCoal, Govt stands tomake less Diamond...
Conclusion Coal alone can’t replace Diamonds, especially withrespect to: Exports Government Revenue But it can make a ...
Thabelo Nemaoranithabelo@econsult.co.bw
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botswanacoal,Botswana economic growth, growth forecast, role of the mining/coal industry in future economic developments

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Thabelo Nemaorani, Economist, from Econsult Botswana has presented at the Botswana Coal and Energy Conference. If you would like more information about the conference, please visit the website: http://bit.ly/13MkVsy

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Transcript of "botswanacoal,Botswana economic growth, growth forecast, role of the mining/coal industry in future economic developments"

  1. 1. Thabelo NemaoraniApril, 2013
  2. 2. Economic Background Upper-middle income economy, GDP/cap around$7500 – among the highest in SSA Long period of rapid growth since independence in1966 Diamond mining historical the largest economicsector – around 30% of GDP A dominant role for government in the economy –largely financed by mineral revenues
  3. 3. Economic Growth - 5year averages0%2%4%6%8%10%12%14%16%
  4. 4. GDP Growth-50.0%-40.0%-30.0%-20.0%-10.0%0.0%10.0%20.0%30.0%GrowthrateGDP Mining Non Mining Priv. Sect. Sluggish growth Total GDP grew by3.7% in 2012,slowing down from6.1% in 2011 NMPS recordedgrowth of 7.5% in2012 (9.7% in 2011) Mining outputcontracted by 8.1%in 2012 (-2.4% in2011)
  5. 5. Sources of growth 2003-2012(economy diversified?)-40%-30%-20%-10%0%10%20%30%40%contributiontoOverallgrowth
  6. 6. International Trade
  7. 7. Share of Exports in 2012(Need for Export Diversification?)Meat1%Soda Ash2%Gold2%Textiles1%Vehicles andparts2%Machinery &electrical eq.3%Othermanufactures5%Copper-nickel9%PolishedDiamonds14%RoughDiamonds61%
  8. 8. Exports, Imports & Trade Balance Both imports andexports havegrowth steadilysince early 2009 Imports driven byhigher fuel prices Exports spiked in2012 H2 due torecovery indiamonds, but havesince fallen back Perpetual tradedeficit-10000-50000500010000150002000025000BWPmillionBalance Imports Exports
  9. 9. Fiscal Position
  10. 10. Sources of Government Revenue SACU largestshare (34%) in2012/13, first timesince 1970’s Mineral’s sharedeclining Fell from 48% in2006/07 to 29%in 2012/1305,00010,00015,00020,00025,00030,00035,00040,00045,000Mineral SACU NMIT VAT Other
  11. 11. Employment
  12. 12. Formal Employment levels050000100000150000200000250000300000350000Private Parastal Government Most recent data-June2011 Total of 335,156 jobs Formal employmentgrowth slow – 1.5% inyear to June 2011 Job creationinsufficient: 4,828 new jobs in12 months Approx 15-20,000new jobs neededeach year Officialunemployment rate(2009/10) 17.8%
  13. 13. Share of formal employment –June 201144%4%11%14%5%22%GovtMiningManufacturingW/sale &Retail TradeHotels & Rest.Other 335 156 jobs in toformalemployment Relative to GDPshares, govt hashigh employment,while miningshare is low Mining share 4 %(11,688)
  14. 14. Botswana faces challenges of; Undiversified exports Fiscal dependency on Mineral revenues High unemployment
  15. 15. Is Coal the answer to Botswana’sChallenges?
  16. 16. Coal Economic opportunities Coal mining- largereserves ( estimated 212billion tonnes) Coal exports (India andChina is potentialmarkets) Electricity generationfor domestic use andexport Coal exports needdedicated railway lineand PortFaced with 3 Options: Through Zimbabwe toMozambique in East(complex) Trans-Kalahari throughNamibia (simpler) Through South Africa’s(Waterberg area) and useexisting infrastructure(limited capacity)
  17. 17. Projected Mineral Exports (real) Coal exportsprojected to growsteadily till theyplateau at P 15.9 bnin 2024 At peak of Mineralexport in 2025, coal’sshare is 23%(diamond’s share is60%) Coal becomesincreasinglyimportant asDiamond exportdeteriorates However, coal cantreplace diamondexports010,00020,00030,00040,00050,00060,00070,00080,000BWPmillionsCoal Other minerals Diamond
  18. 18. Projected Real Govt Revenues fromMining05,00010,00015,00020,00025,00030,000Govtrevenue(mn)Coal Other Diamond Mineral Govtrevenues toincrease until theyplateau at aroundP26 bn Remains fairlystable from 2017until 2026 The declinebrought upon byfall in Diamondsector
  19. 19. Projected Employment levels050,000100,000150,000200,000250,000300,000350,000400,000450,000Non-mining Other mining Coal Coalscontribution toemployment low Coal employmentto peak in 2024(6,759 ) At peak, onlyaccounts for 2%of totalemployment &35% ofemployment inmining
  20. 20. Barriers /challenges Narrow window of opportunity Increased efforts to reduce Green House Gas emissions Renewable energy (solar and wind) getting cheaper High risk High investment on uncertain future No real alternative use of infrastructure Coal can’t fully replace diamonds as source of Govtrevenues Relative profitability (coal much less profitable to mine thandiamonds) Tax rates (lower on coal compared to diamonds)
  21. 21. Diamonds Vs Coal If you replace a BWP 1 bnworth of Diamonds witha BWP 1 bn worth ofCoal, Govt stands tomake less Diamond have a higherprofit margin and taxedmore than Coal.Diamonds CoalProfitrate80% 30%Tax rate 80% 30%Govtrevenue64% 9%
  22. 22. Conclusion Coal alone can’t replace Diamonds, especially withrespect to: Exports Government Revenue But it can make a significant contribution – along withother activities – to economic diversification Need for swift action on providing the necessaryinfrastructure Railway line (West or East) Dedicated Port
  23. 23. Thabelo Nemaoranithabelo@econsult.co.bw
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