The report compares the performance of countries across four factors being economic performance, market accessibility, social and human development and economic stability, producing one metric that gives investors a sense of how each of the 31 countries analysed rank. The report revealed that Botswana’s trade was dominated by SA especially in commodities such as petroleum and electricity. The report noted that South Africa’s economic challenges post COVID have had knock-on effects on the local economy, especially in the prices of electricity and fuel, which have been a major driver of inflation in the past years for Botswana. “The landlocked nation has a small domestic market and relies on its southern neighbour, South Africa, for imports of electricity and petroleum. This has not been a problem during spells where South Africa has been stable and growing.
“However, South Africa has entered a period of deep structural challenges, including an inability to produce sufficient electricity for its own needs, stagnant growth, deteriorating infrastructure and political schism,” the report noted. Chief Economist at RMB, Isaah Mhlanga, said while the country performed fairly well in the economic stability and performance indicators, there was an inherent risk in attracting investment for countries whose economies are pegged against a major regional economy. According to the economist, the over-reliance on SA threatens the stability of investments due to the risk of commodities being anchored against a singular supplier. “There is a need to develop relationships with other regional partners such as Namibia and Mozambique to de-risk the concentration of imports on South Africa,” he said.
The report further revealed that the challenge did not solely anchor on imports but also exports as Botswana's three main trading partners control over 90% of its total trade. "Nearly three quarters of the SADC members’ exports are diamonds and nearly one third of this volume is destined for the UAE, and another one fifth to Belgium. “For a small, open nation, this leaves Botswana’s economic fortunes largely in the hands of forces outside its control,” the report revealed. In May 2024, imports stood at P8.3 billion, with the top products being fuel, food, beverages and tobacco as well as machinery and electrical equipment. Nearly 78% of these imports came from South Africa. The country’s merchandise trade balance, which is the difference between its imports and exports of goods, has been in a deficit since the third quarter of last year, as diamond revenues have slipped. The expansionary budget this year is expected to widen the deficits, as more products are imported for capital projects and maintenance.
