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Botswana seeks to escape middle income trap

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The private sector has been urged to re-position itself to assist the country escape the middle income trap.

This refers to a situation where countries that have attained a certain level of development find it difficult to make the leap required to become advanced economies.

President Mokgweetsi Masisi made the call during a question and answer session dubbed, Conversation with the President at the just ended 15th National Business Conference. The biennial gathering was held under the theme: Breakthrough to a high income Botswana, The role of the private sector in charting the way.

President Masisi explained that government was doing its part through enrolling more students on technical courses and encouraging the use of information technology in the delivery of services.

In addition, he highlighted that while government was addressing the problem of skills mismatch, the private sector should also play its part in this regard. As a way of positioning the country’s transition to a high income status, President Masisi also explained that global partners were going to be key in this objective as evidenced by the P340 million grant from China for key infrastructural projects that facilitate business innovation.

Read also: Ghana considering $50 bln century bond, president says

In this regard, President Masisi highlighted that government was also looking at increasing the number of science and engineering graduates and attaching them in innovative organisations in developed economies.

Furthermore, President Masisi noted that a high income status would only come about when Botswana improved her productivity levels, the quality of education, innovation, developed the financial sector and diversified her economy away from diamonds.

“I urge the private sector to up its game with regards to efforts aimed at economic diversification,” he added.

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Private sector concerned as Nigeria’s central bank raises interest rate to 26.25% 

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The decision of Nigeria’s central bank’s Monetary Policy Committee to raise the country’s benchmark interest rate has alarmed members of the organized private sector and economists alike, some of whom believe it will severely impair the ability of business operators to repay their debts.

The decision of the committee was declared by Olayemi Cardoso, the governor of the Central Bank of Nigeria and chairman of the MPC, after the latter’s 295th meeting on Tuesday.

The interest rate was increased by 150 basis points by the MPC, from 24.74% to 26.25%. The benchmark interest rate increased for the third time this year on Tuesday with the MPR boost.

The policymakers raised the MPR by 750 basis points since the MPC reconvened in February. In February, the MPR jumped from 18.55% to 22.75%, a 400 basis point rise. In March, it was raised by 200 basis points to 24.75%.

Cardoso said, “The key focus of the MPC at this meeting remained to achieve price stability by effectively using tools available to the monetary authority to rein in inflation. Members observed that while year-on-year headline inflation in April 2024 rose moderately, the month-on-month measures of headline, food and core all declined significantly. This follows a decline (month-on-month) of headline and food measures in March 2024, suggesting that the recent tight monetary policy stance of the Bank is beginning to yield the desired outcomes.”

Cardoso added, “For the first time since October, we have seen a relatively significant moderation in the rate of increase and that is working. I believe very strongly that the tool that the central bank is using is working. I have said it before, there is no magic wand, these are things that need to take their own time. I’m confident and the figures show that we are beginning to get some relief and I believe in a couple of more months, we will see some positive reports on the effects of what the CBN is doing.”

Cardoso defended the decision to raise the MPR once more during a press conference on Tuesday following the MPC meeting. In the face of an uncertain economic environment, the MPC has remained hawkish in its approach to combating inflation.

Nigeria’s inflation rate increased to 33.69% in April. As compared to the headline inflation rate for March 2024, the National Bureau of Statistics reports that the headline inflation rate for April 2024 increased by 0.49 percentage points.

According to the NBS, the headline inflation rate increased by 11.47 percentage points year over year from the 22.22% rate reported in April 2023. In April 2024, food inflation was 40.53%. Cardoso stated that the MPC has connected the ongoing naira volatility to the principles of the free market.

“Members further observed the recent volatility in the foreign exchange market attributing this to seasonal demand, a reflection of the interplay between demand and supply of a freely functioning market system. The committee also noticed the marginal increase in the foreign reserve between March and April 2024,” he said.

Segun Kuti-George, National Vice Chairman of the Nigerian Association of Small-Scale Industrialists, denounced the Interest Rate Increase by MPC. At a time when many firms were depending on loans to operate, Kuti-George argued it was callous to keep rising interest rates.

He said, “That is the only thing they know. The only thing they know is to increase the interest rate. As long as the industrial sector cannot access cheap funds, we are joking. We cannot be talking about economic development.”

In addition, Gabriel Idahosa, the president of the Lagos Chamber of Commerce and Industry, who disagreed with the rate hike, charged that the CBN was employing the incorrect measure to combat inflation.

Idahosa said, “The CBN is like a farmer that does not have any other tool. So, they are stuck with one tool. We just came out of a consultation session and this was the issue. The CBN is driving a metric that is not related to the problem.

“The problem is the cost of production. It has nothing to do with interest rates. It is not advisable to keep raising the interest rates, but they have run out of ideas and they don’t want to be seen to do nothing.”

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Under govt pressure, Zimbabwean lithium miners present their refinery plans

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A Zimbabwean government official announced on Monday that four lithium mining businesses had submitted plans to produce battery-grade lithium in the country to strengthen its economy.

Zimbabwe, the continent’s leading supplier of lithium, which is used in batteries for electric cars and to store renewable energy, is encouraging miners to refine the mineral domestically. At the moment, Chinese lithium miners, who control the majority of the industry in Zimbabwe, only generate concentrates, which they export to China for additional processing.

Zimbabwe’s finance minister, Mthuli Ncube, stated in November of last year that miners had until March 2024 to submit their proposals for domestic refining.

Deputy Minister of Mines Polite Kambamura told Reuters that the government has decided to extend the deadline by two months at the request of certain miners.

“They are coming forward with plans but these are long-term plans which we are receiving. We have four large-scale producers who have come forward,” Kambamura said.

He noted that the government has not yet given the plans any thought, but he declined to identify the companies that had submitted blueprints.

Over $1 billion in investments have been made by Chinese miners, such as Zhejiang Huayou Cobalt, Sinomine Resource Group, Chengxin Lithium Group, Yahua Group, Canmax Technologies, and the Tsingshan Group, in response to Zimbabwe’s some of the largest hard-rock lithium reserves in the world.

According to Huayou, it will investigate producing battery-grade lithium in Zimbabwe “only when the economic and construction conditions are right”.

According to the business, Zimbabwe lacks the natural gas, sulfuric acid, and dependable renewable energy sources required to generate lithium suitable for batteries. Nonetheless, Zimbabwe has pushed for domestic refining to profit from the anticipated rise in lithium demand as the globe moves toward greener energy sources.

“We are not going to end on concentrates, we want batteries to be manufactured here,” Kambamura said.

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