Top economic events to watch for in 2024

Mbongeni Mguni - Lewanika Timothy - Pauline Dikuelo | Monday January 15, 2024 06:00

The trade deficits reported for September and October last year, which are the last available official figures from Statistics Botswana, indicate a collective shortfall of P10.1 billion. Between both months, the single biggest factor has been the collapse in diamond exports, which fell from P5.2 billion in August to P2.5 billion in September and then P1.3 billion in October.

The economy’s principle commodity and traditional revenue anchor endured a trying 2023, as reflected in the trade balance figures. Consequently, a major knock is expected across other fiscal metrics, but the economy holds the promise of many other events worth following.

Budget pains

The preliminary budget deficit for 2023-24 due to be unveiled by Finance Minister, Peggy Serame in her budget speech next month, is a key point to watch in the economy this year. In September, the Budget Strategy Paper trimmed the deficit expected for 2023-24 by P1.9 billion to P5.7 billion. However, from then De Beers reported a steeper sales drop, while the Okavango Diamond Company suspended its auctions in November and December, citing low demand and the need to prop up demand. The only saving grace in the situation has been the stronger dollar, which has to an extent helped Pula-denominated diamond export revenues and in turn, reduced the impact on the budget. The 2023-24 deficit will be eagerly monitored as government battles to return to fiscal stability, in the wake of weaker reserves and more scrutiny from development partners such as the IMF.

Lucky lottery

The Gambling Authority (GA), according to its own commitments, is expected to finally award the country’s first-ever national lottery within the next few months. The eagerly awaited lottery has been pending for several years and has been held up by bidder wars and legal wrangling. The GA has been in talks with the second preferred bidder since 2022 after revoking a previous bidder’s licence due to the failure to show the financial muscle required to kick-start the lottery. The national lottery has had a troubled journey since it was announced in 2017.

Hidden investors

The Companies and Intellectual Property Authority (CIPA) is expected to finally make public the register of beneficial owners in the country, after postponements to the eagerly anticipated database. Amendments to the Companies Act from 2018 and 2022 required the identities of beneficial owners of companies to be updated to CIPA’s Online Business Registration System (OBRS), the main online platform where all companies operating in the country are required to register. The database of “hidden investors” was due to have gone public last August and reveal to Batswana exactly who owns what in the country. However, CIPA said technical limitations had delayed the database’s publication.

Sparkling deal

Government and De Beers are this year expected to put final pens to paper on the long-drawn out sales agreement between the two. On June 30 at the expiry of a tight and tense deadline, the two partners signed an agreement in principle on the terms of the new arrangement between them. In late September, they then signed heads of terms, meaning they were transitioning to a non-variable stage of the various conditions agreed to in June. From the heads of terms, the two sides have been drafting the final binding contracts on the various terms. It is expected that these final documents will be agreed upon and signed soon, marking the end of the most nerve-wracking negotiations in the two partners’ 55-year relationship.

Trade tensions

South African government officials in agriculture and trade are due to meet with their local counterparts on the touchy issue of the horticultural import ban extended recently by government. Pretoria raised loud concerns in November when government formally extended the two-year ban on imports of 16 horticultural items for another two years. Government also extended the list of the imported veggies. The vegetable ban has stirred discontent in SA, with farmers there expressing dismay while analysts, also from SA, have said the situation risks a potential trade war. Meanwhile, local agriculture and trade officials have held their ground, saying the import bans are required to boost local production and food self-sufficiency.

Copper billions

All eyes are on the finalisation of the $1.9 billion Khoemacau deal by Chinese-state owned MMG. The sale, which is expected to close in the first half of 2024, has been termed the biggest private sector acquisition in the local market. The finalisation of the acquisition will give MMG access to a top producing asset in the rich but underdeveloped Kalahari Copperbelt. The acquisition is further expected to significantly increase MMG group’s business scale and bring increased exposure to copper with greater geographical diversification earnings. The deal comes at a time when copper prices are anticipated to reach more than 75% over the next two years, with the demand being driven by green energy transition.

Solar boost

Norwegian firm, Scatec ASA, expects to commission a 60MW solar power station in Mmadinare by June, representing the largest renewable energy generation plant in the country. The power station, which will also be the country’s first utility-scale plant, is government’s largest renewable energy procurement to date. The plant is being built under a binding 25-year Power Purchase Agreement (PPA) signed between Scatec and the Botswana Power Corporation in August. Under the PPA, Scatec will finance, develop, and operate the solar power station, with the BPC purchasing the generation. Government has also exclusively awarded Scatec the right to expand the plant by another 60MW in coming years.