GABORONE, Botswana (miningweekly.com) – The days of mineral-led economic growth in Botswana were over with mining actually subtracting from Botswana’s economic growth in recent years, Econsult economist Dr Keith Jefferis said here on Wednesday.

Speaking at the thirteenth Botswana Resource Sector Conference, Jefferis said that undiversified exports, fiscal dependency on minerals and high unemployment were challenging the Botswana economy.

He outlined how diamond mining's output has shrunk by a quarter to a third and the new drivers of growth were services, in finances, retail, hotels and tourism, but that the downside of the services growth was that it did not add very much to exports.

While Botswana had diversified its sources of growth, exports had not become diversified and the structure of exports was still dominated by diamonds.

Rough diamonds mined in Botswana remained the biggest share of exports with aggregated rough of diamonds, imported from Namibia, South Africa and Canada, making the second-biggest export contribution.

Polished diamonds contributed about 10%, copper and nickel 5% and gold and soda ash a half per cent each.

The remainder, Jefferis said, was made up by a range of other manufactured products, including textiles, with the contribution from services, mainly tourism, actually bigger than that of other manufacturers.

Aggregated diamonds, which are all imported, were causing balance of trade issues and for the first time in seven years, Botswana last year ran a balance of trade surplus.

Mineral revenues had risen marginally with Botswana’s fiscal weaknesses stemming from not generating enough revenues from domestic sources.

Growth was not adding meaningfully to the 340 000 formal sector jobs with formal employment growth of 1% too low to provide jobs for the country’s 15 000 to 20 000 yearly school leavers.

The official unemployment rate was 20% but the percentage coming out of education without jobs was much higher.

Employment is heavily government dominated at 40% and with capital-intensive Botswana mining only contributing 4% of the formal employment opportunities.

The Botswana government expenditure of mining revenue over the last 40 years of $50-billion has been overwhelmingly invested in infrastructure and human capital.

Education has always had 20% to 25% of the budget, but despite that there are still problems with productivity.

Roads and dams and schools have been built, but while the money has been spent, there are issues around quality, which suggests management problems around public sector projects.