ECONOMIC DIVERSIFICATION POLICIES AND STRATEGIES:

What Is Different From What We Have Always Done?

Joel Sentsho, PhDTrade Policy Advisor

Ministry Of Trade And IndustryMinistry Of Trade And Industry

27th August 2014

REPUBLIC OF BOTSWANA

MINISTRY OF TRADE AND INDUSTRY

BOTSWANA

PRESENTATION OUTLINE1. INTRODUCTION

2. WHAT IS DIFFERENT FROM WHAT WE HAVE ALWAYS DONE?

2.1 Market Approach visa-a-vis Pragmatic Approach

2.2 Economic Policy and Implementation Matrix

2.3 Development of Priority List of Sectors/Sub-Sectors

2.4 Development of Sector Specific Strategies

2.5 Institutional Setup

3. ACHIEVEMENTS SO FAR

4. CONCLUSION: - Where are our Policies and Strategies pointing to?

This will be based on Economic Policies, Strategies and Sector-Specific Strategies ECONOMIC POLICIES:

Industrial Development Policy for Botswana (July 2014)

Special Economic Zones Policy for Botswana (February, 2011)

Trade Policy for Botswana (2009)

Citizen Economic Empowerment Policy (CEEP)

ECONOMIC STRATEGIES:SPEDU Strategy for Selebi-Phikwe Regional Economic Diversification (2013) Botswana’s Cooperative Transformation Strategy (September 2012) Economic Diversification Drive (EDD) Strategy for Botswana (2010) Botswana National Export Strategy (2010) Investment Strategy for Botswana (2010) 

SECTOR SPECIFIC STRATEGIESThe Strategy for Development of the Dairy Sector in Botswana (2013)

Botswana Textile and Clothing Development Strategy (2013)

A High Level Strategy for the Development of the Leather Industry in Botswana (2012)

• Government creates conducive environment for Private Sector

• Private Sector identifies priority Sectors for development

Pragmatic

Approach

Market Approac

h

Govt Sector

Govt Sector

Devt Partne

rs

Devt Partne

rs

Parastatals

Parastatals

Private

Sector

Private

Sector

Labour

Labour

Economic Diversificati

on

Each Policy has a Vision, Mission, Theme and Implementation Matrix. For IDP 2014 we have:

Vision: To have diversified, sustainable, and globally competitive industries.

Mission: IDP2013 aims at promoting development of diversified and viable industries as well as commercial sectors, using skilled personnel and appropriate technology whilst leveraging on active private sector collaboration and participation.

Theme: Placing Botswana among the Industrialized Economies of the 21st Century.

Implementation Matrix with milestones, Strategic Initiatives, Responsible Implementer and Timeframes

A priority list of sectors is developed by all Stakeholders

The list includes sectors/Subsectors with potential for domestic and international market growth, export potential and employment growth

The identified list is developed by the private sector which is the engine of growth for Botswana

For each sector/sub-sector a Sector specific strategy is developed which includes:

SWOT Analysis

Value Chain Analysis

Cluster Development

Development of Business Linkages

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Value Chain Analysis breaks a production chain into its constituent parts to identify and understand:

Value adding activities in the chain;

Value chain business opportunities and challenges;

Economic actors at each stage of the value chain;

Value chain leadership or governance;

Domestic, international and global value chains;

Required policy interventions to sustain the sector.

BREEDERSBREEDERS

FEEDPROCESSING

TECHNICALSUPPORT FROM ALL

BDS

TECHNICALSUPPORT FROM ALL

BDS TRANSPORT

PACKAGING AND

BRANDING

FINANCIERSFINANCIERS

FEED GROWERS

DAIRY COWS

• Membership to represent all critical Stakeholders16 Ministries11 Parastatals 2 Independent Departments 3 Private Sector Representatives 2 MTI Departments 7 Chairpersons of Thematic Teams 5 EDD Unit

• Ensures Effective Coordination, Collaboration and implementation

• Monitoring and Evaluation to track progress

• Private Sector Involvement (BOCCIM and BEMA)

• Impact: Effective Coordination, Collaboration and Implementation

a) EDD purchases: Cumulative PurchasesA cumulative figure of Government purchases of P12.566 billion worth of goods and services has been recorded since inception of the EDD in 2010. Out of this figure, the cumulative value of purchases from local manufacturers and service providers is almost P7 billion.

Cumulative Purchases Since 2010

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Manufacturer

P97.5m P214.2m P298.3m P182.0m P792m

% 16.51 11.36 16.24 7.7111.86

Service Provider

P493.0m P1.672bn P1.539bn  P2.180bn P5.854bn

% 83.49 88.65 83.78 92.29 87.69TOTAL EDD PURCHASES

P590.5mP1.886b

nP1.837bn P2.362bn P6.676bn

CategoryApril 2010 – March 2011

April 2011 – March 2012

April 2012 – March 2013

April 2013 – March 2014

Total

a) EDD purchases: Cumulative Purchases by PercentagesCumulative Purchases Since 2010

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Manufacturer

P97.5m P214.2m P298.3m P182.0m P792m

Service Provider

P493.0m P1.672bn P1.539bn 

P2.180bnP5.854bn

TOTAL EDD PURCHASES

P590.5mP1.886b

nP1.837b

nP2.362bn P6.676bn

% 51.30 49.93 53.73 55.97 53.13Retailers P437.2m P1.460bn P1.208bn P1.504bn P4.609bn

% 37.98 38.66 35.33 35.64 36.68Foreign Supplier

P123.0m P431.0m P374.0m  P353m P1.281bn

% 10.69 11.41 10.94 8.36 10.19

TOTAL PURCHASES

P1.151bn

P3.777bn

P3.419bn

 P4.220bn

P12.566bn

CategoryApril 2010 – March 2011

April 2011 – March 2012

April 2012 – March 2013

April 2013 – March 2014

Total

a) EDD Purchases

ii) Analysis of Purchases per product for 2011/12

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b) Promotion of Local Production and Consumption

i) Employment Creation, Investment and Turnover

The turnover for these enterprises declined by over P86.9 million representing a 6% decline. The decline is for 37 enterprises out of the 110 enterprises in the sample, or 34%.

Most of the companies which showed declined in turnover are those involved in the production of building/construction products (such as bricks, pipes, cement) bakeries, milk, chemicals and furniture.

The figures are as shown in the table below:

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ACHIEVEMENTS SO FAR CONT’D

SPEDU Strategy – works that are underway:

◦Turning the old mine shaft into a mining museum;

◦Refurbishment of Selebi-Phikwe Airport;

◦Beneficiation of copper

◦Steel Manufacturing and Casting

◦Use water from the mine for Horticulture

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A Leather Park is planned to be developed at Lobatse.

Benchmarking studies [2014] have already been undertaken to Brazil, Ethiopia, India and Italy.

A feasibility study for the Leather Park will

be will be undertaken and is expected to be completed by December 2014

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“Develop diversified, sustainable and globally competitive industries,“ that will place Botswana among the industrialized countries of the 21st century.

“Develop diversified, sustainable and globally competitive industries,“ that will place Botswana among the industrialized countries of the 21st century.

Attract world class firms that will produce world class goods for world markets

Attract world class firms that will produce world class goods for world markets

Open world markets for Botswana Goods and Services

Open world markets for Botswana Goods and Services

Ensure that Batswana participate and benefit from the opportunities opened by Botswana’s economic policies and Strategies

Ensure that Batswana participate and benefit from the opportunities opened by Botswana’s economic policies and Strategies

Industrial Development Policy (2014)Industrial Development Policy (2014)

Special Economic Zones Policy (2011)Special Economic Zones Policy (2011)

Trade Policy for Botswana (2009)Trade Policy for Botswana (2009)

Citizen Economic Empowerment PolicyCitizen Economic Empowerment Policy

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Turn Selebi-Phikwe into a vibrant, Diversified, and sustainable economic region

Turn Selebi-Phikwe into a vibrant, Diversified, and sustainable economic region

Develop globally competitive enterprises

Develop globally competitive enterprisesDiversify exports and export markets through a vibrant and globally competitive private sector

Diversify exports and export markets through a vibrant and globally competitive private sector

Turn Co-operatives into Vibrant, Competitive and Profitable Business Enterprises based on modern business practices

SPEDU Strategy for Selebi-Phikwe Regional Economic Diversification

SPEDU Strategy for Selebi-Phikwe Regional Economic Diversification Economic Diversification Drive (EDD) Strategy

Economic Diversification Drive (EDD) Strategy

Botswana National Export StrategyBotswana National Export Strategy

Cooperatives Transformation Strategy

Cooperatives Transformation Strategy