BOB defends its monetary policy

Bank of Botswana (BoB) leapt to the defence of its Monetary Policy while at the same time conceding that local commercial banks are making “abnormal profits” that raise concern through lending interest rates.

The move by the central bank follows an article carried by Sunday Standard a fortnight ago that stated that local commercial banks were making a killing out of Bank of Botswana Certificates (Bobcs) and the lending interest rates.

The Sunday Standard article was based on Professor Roman Grynberg’s research, "The Cost of Botswana’s Monetary Policy" that showed that, under the current tools used by Bank of Botswana, commercial banks are making huge profits from unbelievable interest rates while at the same time getting huge returns from Bobcs at no risk. Click here for more.



GDP (Botswana) contracts by 8.4 percent in the second quarter

The Central Statistics Office (CSO) has published estimates indicating that the gross domestic product (GDP) contracted by 8.4 percent in the second quarter of 2010 compared to the previous three months. However, on an annual basis, growth remained positive at 6.5 percent. The contraction was mainly concentrated in the mining sector, where output is estimated to have fallen by 23.5 percent. In contrast, non-mining GDP grew by 1 percent. In the first six months of 2010, overall GDP was 7 percent higher than during the same period in 2009.

Click here to access report from the CSO website.

Reaching the MDGs: An Action Plan for Trade

The paper projects lack of integration into the global economy as a major factor in the continued underdevelopment of the poorest countries. The reasons for this include obstacles faced by exporters both abroad and at home: access to foreign markets is frequently limited by import barriers, while inadequate infrastructure and weak policies at home—including their own trade policies—often frustrate producers seeking to compete abroad.

With many low-income countries (LICs) lagging in the global effort to reach the Millennium Development Goals (MDGs), there are calls for intensified action to spur growth and development. Trade is one key area where action can be taken. This paper suggests possible actions to foster trade integration for the LICs, substantially increasing their export potential and thereby helping them to progress toward the Millennium Development Goals.

As the foundation for these ambitions, the paper emphasises the role of a secure, open global trading environment—strengthened further by concluding the WTO Doha Round. The Fifteen Point Plan of possible actions outlined in this paper could increase annual exports of the least developed countries (LDCs) by US$10 billion or more, with additional benefits for other LICs. Click here to access the full paper.

World Development Report 2010: Development and Climate Change

The report indicates that climate change is a  threat to all countries, but particularly developing ones. Therefore, understanding what climate change means for development policy is the central aim of the World Development Report 2010. It explores how public policy can change to better help people cope with new or worsened risks, how land and water management must adapt to better protect a threatened natural environment while feeding an expanding and more prosperous population, and how energy systems will need to be transformed.

The report is an urgent call for action, both for developing countries who are striving to ensure policies are adapted to the realities and dangers of a hotter planet, and for high-income countries who need to undertake ambitious mitigation while supporting developing countries efforts. In the crowded field of climate change reports, WDR 2010 uniquely: Emphasizes development; takes an integrated look at adaptation and mitigation; highlights opportunities in the changing competitive landscape and how to seize them; proposes policy solutions grounded in analytic work and in the context of the political economy of reform.

The report is accessible at the following URL: http://publications.worldbank.org/index.php?main_page=product_info&cPath=0&products_id=23631

A hard copy of the report is available in the BIDPA Library.

The effects of tourism development on rural livelihoods in the Okavango Delta, Botswana

The article assesses the impact of the Community-Based Natural Resource Management (CBNRM) program on communities around the Okavango Delta  in Botswana. CBNRM assumes that if rural communities derive benefits from natural resources, they will be obliged to use such resources sustainably. Using the sustainable livelihoods framework, this study analyzes the effects of tourism development through CBNRM on rural livelihoods at Khwai, Sankoyo and Mababe in the Okavango Delta, Botswana, using primary and secondary data sources. Results of long-term surveys and in-depth interviews indicate that the three communities have forgone traditional livelihood activities such as hunting and gathering, livestock and crop farming to participate in tourism through CBNRM. Livelihoods in these villages have been improved as a result. Basic needs such as shelter, employment and income and social services like water supply systems, transportation, scholarships and payment of funeral expenses are now provided to community members and funded with income from CBNRM. Social capital has been built up in order to agree, manage and develop the CBNRM process. These results show that tourism development in these villages is achieving its goal of improved livelihoods, contradicting claims that community development projects are failing to achieve rural development. The article appears in Journal of Sustainable Tourism, vol 18, No.5, 2010.

The Global Competitiveness Report 2010-2011 [Botswana slips to 76th spot)

The Global Competitiveness Report 2010-2011 released by the World Economic Forum recently . The United States falls two places to fourth position, overtaken by Sweden (2nd) and Singapore (3rd). The Nordic countries continue to be well positioned in the ranking, with Sweden, Finland (7th) and Denmark (9th) among the top 10, and with Norway at 14th. Sweden overtakes the US and Singapore this year to be placed 2nd overall. The United Kingdom, after falling in the rankings over recent years, moves back up by one place to 12th position.

Botswana is ranked 76 compared to last year's 66. Problematic factors which contribute to this level of competitiveness include poor work ethic, inadequately educated workforce, inefficient government bureaucracy, access to financing, inadequate infrastructure, restrictive labor regulations, inflation, corruption, crime, poor public health; policy instability, etc. Click here for the full report.

Botswana pays heavily for its monetary policy

The Sunday Standard Newspaper (12.09.10 edition) carries news that the Central Bank’s monetary policy has been sharply criticised for enabling the local commercial banks to rip-off customers through huge interest rates while at the same time milking the country of billions of pula through Bobcs. This has emerged from a recent research report by Professor Roman Grynberg, a Senior Research Fellow at the Botswana Institute for Development Policy Analysis (BIDPA)

In his paper, entitled “Cost of Botswana Monetary Policy”, which is currently circulating within a close net of people, Professor Roman Grynberg charged that the tolls that are employed by Bank of Botswana have enabled commercial banks to profit from unbelievable interest rates while at the same time getting huge returns from Bobcs at no risk. Click here to read more...

Bank of Botswana Research Bulletin

The Research Bulletin is the forum through which the Bank of Botswana publishes a selection of economic research which is judged suitable for wider dissemination.  Most articles are prepared by Bank staff, mainly from the Research Department, but also more widely. The current, August 2010 edition contains the following articles:

• 
  
  2010 Monetary Policy Statement
• 
  
  The Southern African Customs Union (SACU): Agreement: Past, Present and Future Prospects
• 
  
  The Efficiency of the Botswana Equity Market
• 
  
  Interpreting National Accounts Estimates for the General Government Sector: The Case of Botswana

Click here to access the bulletin.

IMF Country Report No. 10/280 (Botswana), Sept 2010

According to this report, Botswana’s economy is rebounding after a significant setback following the global financial crisis. The economy entered the crisis from a position of considerable strength because of past prudent macroeconomic management. This facilitated a timely easing of fiscal and monetary policies, which helped cushion the impact on growth of the crisis and the subsequent collapse in demand for diamonds. The economy is likely to see some rebalancing beginning this year, as lower government spending dampens growth in the nonmining sector while recovery of the diamond sector accelerates. Click here to access the full report.

Mid-Term Review of the 2010 Monetary Policy Statement: Bank of Botswana

The Bank of Botswana has published the Mid-Term Review of the 2010 Monetary Policy Statement. The review notes that the prevailing monetary policy stance remains consistent with achieving the current medium-term objective for CPI inflation of 3 – 6 percent. The review further indicates that the policy remains appropriate for supporting economic recovery, including sustained growth in the non-mining sectors.

As anticipated at the beginning of this year, the economy began to recover during the first quarter although the overall level of domestic economic activity was below trend, a factor that exerted low demand pressures on inflation. Price developments were also in line with the projections, with inflation rising in the first half of 2010, from 5.8 percent in December 2009 to 7.7 percent in June 2010, due to the increase in value added tax (VAT), as well as electricity tariffs and fuel prices. Click here to read more.