GABORONE – Economists have urged Botswana to undergo what they termed a second economic transformation. In a report compiled by Econsult Botswana, economists Dr Keith Jefferies and Sethunya Sejoe warned that diamond mining is unlikely to drive economic growth in future, as opposed to providing a foundation for current economic activity and income levels.
“Second, as mines get deeper and more difficult to exploit, costs of production go up and hence profits – and the sector’s contribution to GDP and government revenues – will gradually decline,” the duo said.
Thirdly, they said, the population is growing, so constant diamond production actually entails declining production (and income) per capita. They said there are also various economic and social stresses apparent that require something other than “business as usual”.
“Poverty rates have come down, but are still too high. Unemployment is high, because the rate of job creation is far too slow. Inequality is far too high, and the majority of households struggle to afford decent housing. Too many people are dependent upon government for their monthly incomes, mostly through various social safety net schemes, and this is unlikely to be sustainable,” the economists said.
They explained that what all this means is that a second transformation of the Botswana economy is needed to meet the challenges of the next 50 years.
“Eating diamonds” will not provide the basis for Botswana to move from upper middle-income status to high-income status, they warn. Indeed, it may not even provide the basis for maintaining current income levels.
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