Trade balance swings into deficit

Brian Benza | Wednesday October 5, 2016 16:23

According to figures released by Statistics Botswana, a trade deficit of P175.9 million was recorded in July from a surplus of P2.6 billion the previous month. Total exports were valued at P5.1 billion in July 2016, showing a decrease of 40% from the June 2016 revised value of P8.49 billion.

“This is attributable to decrease in exports of diamonds, which recorded a drop of 42% from P7.54 billion recorded during June 2016 to P4.37 billion during the month under review,” Statistics Botswana stated. Diamond exports predominantly comprise  rough production from Debswana mines as well as output from the country’s three other independent ones.  On a year-on-year basis, comparison of July 2016 total exports to that of July 2015 shows an increase of 11%. This is mainly attributable to exports of diamonds, which increased by 18.6% from P3.69 billion during July 2015 to P4.37 billion during July 2016.

In the month of July, copper and nickel also contributed to the decrease in total exports having declined by 48.1% from P301.2 million recorded during June 2016 to P156.4 million registered in July 2016.  This was primary due to the mothballing of mining operations at the country’s biggest copper and nickel mining group, BCL Mine. There is also no production coming from Mowana Mine, which was placed under liquidation November last year.

On the other hand, total imports were valued at P5.77 billion, showing a decrease of 10.1% from the revised June 2016 value of P5.87 billion. This was attributable mainly to a decrease in imports of fuel and diamonds.  Imports of fuel dropped by 41.2% from P1.13 billion during June 2016 to P665.2 million in July 2016 while those of diamonds decreased by 10.6% from P1.54 billion during June 2016 to P1.38 billion during July 2016. Apart from diamonds that come into the country for aggregation purposes, fuel is usually the highest contributor to Botswana’s import bill. However, in July, the fuel import bill almost halved suggesting a drop in diesel consumption by the mines as well as the power peaking plants. Indication from Botswana Power Corporation is that local generation of power seems to be declining due to the limited use of diesel-fueled power peaking plants. 

The country can produce a maximum of 195MW from its two power peaking plants, 90MW from Orapa and 105MW from Matshelagabedi. Although the emergency plants have played a critical role in alleviating electricity shortages in the past five years, they have come at a significant cost to government with the two turbines at the Orapa plant estimated to consume up to 17,000 litres of diesel per hour at peak use.