The Bank of Botswana has called upon the government to review the existing tax structures and identify varied and new sources to fund future economic development of the country, given that the revenues from the diamond sector have begun to plateau, and will decline over the longer-term, according to local media reports.

Releasing its Annual Report for the year ending December 31, 2017, the country’s central bank said that the sharein exports and revenue from the diamond sector, which has been a key contributor to Botswana’s economic growth over the last few decades, is set to decline over the next 20 years.

Last year, diamonds accounted for 89% of Botswana’s exports and 27% of the country’s imports.

In this context, the Bank is reported to have said that it is “important to explore alternative and sustainable sources of financing for public infrastructure.”

The Bank’s Governor, Moses D Pelaelo, wrote, in his foreword to the Report, that “all economic sectors, except mining, recorded positive growth”. This is the context in which the Bank studied “financial resource mobilisation in terms of the determinants and policy initiatives… and also the scope for broadening the source of resources and/or resource mobilisation.”

A report by news agency Bloomberg quoted TshokologoKganetsano, Director of Research and Financial Stability at the bank as saying that the measures suggested include reduction in “investor concessions” and “expansion of the tax base through, among others, reducing the number of VAT-exempted items”.

Currently, a range of items including agriculture inputs, basic food items and medicine are VAT-exempt. The country also offers several long-standing tax concessions for investors.