Asset Consulting Botswana (Pty) Ltd

12/08/2026

A Relatively Low Debt to GDP Ratio can be Misleading as a Measure of our Ability to Service our Sovereign Debt

First, the debt to GDP ratio is not a very wise way of gaging how serious a particular debt level is for any country. If it was, the Japanese economy, with a debt to GDP ratio of more than 200%, would have long collapsed. Second, what is more important is the extent to which a country can comfortably service its debt. In other words, debt serviceability and not a contrived debt to GDP ratio is a more accurate metric in measuring whether a country is in distress of a debt crisis. Put differently, a country can have a relatively low debt to GDP ratio and yet still suffer a debilitating debt crisis; that is where we are heading if we do not seriously need the call to curtail government spending.

Let us take the analogy of a business. For those who are not accounting literate, interest on debt comes out of operating income. And, debt principal repayment comes out of cash flow, or net operating cash after deducting cash used in operations as well as cash used in investing. If these two sources of cash flow do not yield enough positive net cash flow, then surely the business is going to experience some challenges in servicing its debt. Such a country can only postpone a debt crisis by continually borrowing, as we have been doing since the advent of the UDC government.

Of course, a government is not necessarily the same as a private business. However, the two entities are very similar and benchmarking your ability to service your debt on revenues is a clumsy way of misleading Batswana. My own opinion is that a ratio of debt service, I.e. principal plus interest repayments, on government revenues would be more realistic than a debt to GDP ratio.

The morale of this comment is that as a government, as a people, we would be dangerously naive to keep on borrowing on the hope that the diamond market/industry would soon recover. Rather start by stabilizing the economy so that any delays in the diamond market would not surprise us into a debilitating debt crisis. We may not yet be experiencing a debt crisis, however, the rate at which we are building our government debt is truly frightening and if we refuse to curtail government spending, our journey to a rampant debt crisis may not be very long. Continuing to borrow can, to an extent delay the crisis, however very soon we are going to find ourselves totally overwhelmed.

E careful minister of finance.

While the UDC government continues to indulge in a borrowing spree, it should not forget that there are all sorts of risks ahead besides just the failure of the diamond market to recover. We are now talking about foot and mouth disease and very soon we will be talking about extreme drought inspired by El Niño.

Yes, borrow to tide the economy over but at the same time stabilize the economy by curtailing governement spending lest we find ourselves in a situation where our debt mountain is insurmountable while the state of the fiscus is in shambles.

Good Reading!

16/06/2026

Now you know the genesis of lab grown diamonds. Do you think natural diamonds can ever recover from the estimated 90% price crush? And would you pay $2,5 bn for De Beers on the believe that the price for natural diamonds can be restored to their former glory?

I don’t have answers to all these questions but remain highly skeptical.

Enjoy the video.

Мировая индустрия роскоши переживает крупнейший тектонический сдвиг...

12/06/2026

“ You do not buy a dead horse”.

These are the words attributed by The Namibian to an economist by the name of Omu Kakujaha-Matundu expressing disquiet about the talk of the Namibian governement expressing an interest to partake in the buying of De Beers from Anglo American. Fundamentally I share this misgiving expressed by Omu, and that applies to not only Namibia but also Botswana and Angola. On the other hand, the jury is still out on whether the horse is actually dead or still alive, albeit in my mind certainly on its death bed.

De Beers Group is fundamentally an exploring, mining, trading and marketing company with a wide footprint report to span some 35 countries. My view is that beyond the fiscal implications for the three countries, I.e. Botswana, Angola and Namibia, buying the 85% share currently in the hands of Anglo-American is a more vexing issue. In particular, the question relates to what it is that the three countries intend or hope to do with this “dying” horse. In other words, what value do they intend or hope to add to the company in order to improve its fortunes, beyond just owning it.

The value of De Beers has in recent times been progressively written-down by Anglo from from about $65,7 bn to about $6,9 bn, I.e. according to the Namibian. My own recollection is that its value has more recently been further written down to about $2,5 bn. in line with the continuing uncertainties surrounding the market for natural diamonds. A dying horse naturally is not going to be able to retain the current skills attaching to the De Beers Group business let alone attract new ones. So what is most likely to happen, if this transaction sees the light of day, is that the Group is going to further hemorrhage even more cash and hence lose even more value. And as I say, the most compelling question for me is what the “new” owners intend to do to turn the business around. It would appear to me that the most important nodes in the De Beers value chain relate to the trading and marketing aspects. The mining aspect is, by and large, outsourced and like exploration, does not appear to be the most binding constraint in the value chain of the group. This issue, in my view, seems not to have been sufficiently dealt with, if not deliberately held back from the public, by the aspiring new owners.

Would I buy if I were any of the these ostensibly cash strapped countries, perhaps with the exception of Angola? Assuming that there was a compelling strategic imperative for me to buy, and I do not see any at this stage, I would limit my exposure to the risk attaching to the natural diamond mining business to no more than 25% of De Beers for each country, perhaps leaving the remaining 25% to a strategic partner most preferably in the form of the current executive team of the Group. For Botswana that would mean taking on an additional 10% and for the other two sovereigns, 25% each. Otherwise, I would not buy and would neither advise any of the three countries to buy. As for Botswana, I would not advise her to increase her shareholding beyond the current 15%.

Besides, both Botswana and Namibia are heavily invested at 50% each in the mining and other upstream nodes of the value chain. Additionally, it is going to cost an arm and a leg to revamp the trading and marketing aspects of the value chain in order to meaningfully turnaround the commercial prospects for natural diamonds, bearing in mind that the lab-grown diamonds,, or fakes as some would prefer to call them, is steadily increasing its market share especially among the Gen-Zs.

Why would I adopt such an ownership structure? Because the future prospects for the natural diamond business is immensely fraught with enormous uncertainties. And hence I would want to share both the underlying business as well as the financial risks with people who know the industry well enough to assist in turning it around. Risk containment and risk sharing, therefore, appear to me to be the most plausible options over and above the need for fiscal prudence, particularly for Botswana. Namibia, on the other hand, seems to be upbeat about the prospects of it becoming one of the main oil and gas producers in Africa; only God knows when these two resources will start flowing and which prices they will command beyond the blockade of the Straight of Hormuz. The only country that appears to be currently enjoying a relatively comfortable budgetary position, among the three, is Angola. However, that does not mean that she should blindly plunge itself into a particularly risky business just because she can afford to do so.

Good luck to the three musketeers, plus the possible strategic partner, of course.

Good Reading!!

17/05/2026

It took the US dollar about 20 yrs to come down from about 75% share as a reserve currency to about 55 now. In another 20 yrs you might say, the share of dollar as a reserve currency will probably come down to about 35%. Well, until Biden and trump came about, America enjoyed a much higher level of trust. Now, with the turmoil and geo-political fragmentation, around the world, largely orchestrated by America, you would be naive to assume that the collapse of the dollar, henceforth, will be linear. I would hazard a guess that by 2030, the share of the dollar as a reserve currency might very well be less than 30%. Remind me I was wrong in 2030, I.e. assuming we will both be alive.

18/02/2026

Basics of Diversifying the Botswana Econmy.

There is a fallacy that is currently doing the rounds in the midst of a failed diversification of our economy by the previous government of the BDP among policy makers, specifically regarding the the need to diversify the economy away from the diamond industry.

It should be understood that, in simple terms, any diversification effort should seek to mitigate the impact arising from the economy being over dependent on a single dominant sector. In effect, by diversification we are referring to the need to grow a balanced economy across the risk profiles of all the various sectors of the economy with the view to hedge the risk of one sector dictating the performance of the whole economy. It is not only silly but also misleading to give the impression that diversifying within a sector such as mining, say between diamonds and copper, necessarily and sufficiently hedges against the vicissitudes of the commodities market.

In portfolio theory, which is where the concept of diversification is best articulated, any meaningful diversification ought to be across unrelated sectors of the economy in terms of their idiosyncratic or specific risk profiles. Diversifying within an economic sector or asset class can only yield partial results, at best, and therefore is bound to fail to achieve the intended objectives of shielding the economy against the demise of depending on a single sector or asset class.

That is no to say diversifying within a sector should be discarded outright, no! The point is that such a strategy is only bound to yield inferior outcomes. And it should also be pointed out that in fact there has been some diversification of the economy, albeit of limited impact on the economy; the diversification into the service sector is most notable in this respect, particularly the banking, asset management and tourism sub sectors of the economy.

Where the economy has failed dismally has been to diversify into the manufacturing sector. Having said that, there is ought to be economic linkages between the primary sectors and the secondary sectors for the manufacturing sector to flourish. This brings us to the fallacy of the now self-corrected “very bad economics” that ushered in the UDC government - a total failure to grasp the importance of the primary sectors as the basis of growing the manufacturing sector.

Yes thinking is hard but as a leader you ought to also accommodate the thoughts of other people, including those coming from your perceived nemeses. Thanks God, the UDC government seems to have reversed their misplaced “very bad economics” madness which initially led to the lifting of the ban on the importation of certain vegetables from South Africa.

And for those who are in the habit of saying emphasis should be put on exporting rather import substitution, as if the two cannot coexist, should stop misleading Batswana. Exporting what, when there is nothing to export but the failed diamonds.

Batswana should seriously guard against allowing their economy to be guided by the whims of the neo-liberal fundamentalists who can at best regurgitate failed policies from some faraway places.

Good reading!!

17/01/2026

In Diffense of Statistics.

In the past, president Boko, in one of his social media pronouncements hinted that he did not trust statistics; well in fact what he said demonstrated his deep desdain, or should I say his distrust, for statistics. In my view his utterances were the worst form of lack of understanding, not unlike Margaret Thatcher’s infamous assertion that where there are two economics, you get four different opinions. Like Mrs That president Boko, was, to put it mildly, reticent with details. For instance, what qualities of economists did Margret stumble over or for president Boko, which branch of statistics did he find so abhorent..

Well Margret is no longer with us but her legacy is deeply embedded in our minds. To our president, I would say they is a difference between a “statistic” and “Statistics”. Even the information extracted from your bank account would for a useful static, like, for instance, your bank balance and how many debit and credit entries went thru it during 2025. So Statustics is very important, after all, and that is why it is taught at almost all universities. And for those who are “educated” in it and do not intend to mislead, it can prove to be a Rey potent tool, indeed.

And, for what it is worth, it is never too late to enroll, I have no doubt UB would be most delighted to admit the president for a diploma course in introduction to statistics; gatwe ga e golelwe.

Granted, Statustics, in the wrong hands or otherwise, as can be the case with other professions, can be manip**ated in order to drive an agenda or to perpetuate an outright lie. Otherwise, statics just like accounting and economics are some of the fundamental bodies of knowledge that one can, and perhaps should familiarize with for him to make convincing statements about literally anything. This also applies to politicians and gladiators.

On a related note, sometimes earlier this week, the minister of home affairs reported in parliament that 40% of private companies in the country had adopted the P4 000 p.m. living wage. Like most people, I was astonished, to say the least, why opposition MPs appeared not interested to question this statistic, for their own sake as well as for the sake of other external stakeholders like myself.

Now let me ask minister of home affairs for myself and for others as well in the Statustics/economics profession.
1. What was the source of that statistic, I.e who actually compiled the statiiistic? If it was Statitics Botswana, what is the title of the report so that one may check it up on their website?
2. Does the 40% statistic apply to all categories of private companies in the country, I.e. small, micro and medium enterprises as well large private companies? This is where I find the Ministers assertion utterly vexing. Not all private companies, especially SMMEs in the hinterland can afford this pay - needless to say, this is my personal opinion; albeit informed by my experience about this sector of the economy.
3. To the extent that the P4 000 is not a minimum wage and therefore its adoption is voluntary, one might want to know if those private companies that have chosen to adopt it can sustain it, especially under the current state of the economy?
4. Another, albeit not so trivial information, is how the 40% was derived? Was it thru a sample survey or a pop**ation survey? In both methodologies, a student of statistics might want to know what the sample size was, I.e. in the case of a sample survey; the same information would be useful in the case of a pop**ation survey.

Come to think of it, bearing in mind how costly a pop**ation survey can be, the methodology employed, if at all, was probably a sample survey. However, this till begs the question, what type of sample survey.

These, in my view, are the questions our opposition MPs ought to have, or should, ask the minister. Then perhaps the most maligned professions, regrettably by the novices, of economics and statistics may be respected as they should.

As for the opposition MPs, Batswana see you as their eyes, ears and mouths in parliament; when you ask questions, you are not doing that only for your sake but also for that of your constituents. When a whole minister of finance dismisses an economic policy as “very bad economics”, only to reinstate it almost a year later, you should ask him to explain himself, particularly if he is not an economics.

Reckless decisions like unbanning the importation of some vegetables and later reversing that decision has cost implications for the poor farmers who are struggling with quality and price decisions of their produce as well as with the reluctance of the predominantly SA chain stores who are reluctant to source locally at fair prices.

Good reading!

02/01/2026

You do not need to be an engineer to appreciate what this video clip seeks to demonstrate, I.e. a bad loser often ends up being a real loser.

Enjoy it.

Explore the high-stakes saga behind Thailand's advanced submarine deal with China and the global ripple effects it caused. Delve into why the sought-after Ge...

13/12/2025

So we think we are smart to be utterly dependent on SA, our proxy and virtual colonial master until 1976, I.e before the p**a was introduced. Others would argue that we are still so dependent on SA we might as well see ourselves as their colony, the same as Lesotho, Namibia and Swaziland.

In 1987, our trade deficit with SA was about P15,0 billion p.a, now I estimate it at more than P35,0 billion. At the same time we are so obsessed about the so-called SACU customs revenues, as if we cannot collect the same if we pulled out from SACUA and imposed our own tariffs on imports from non CFTA members including those that camouflage as genuine SA, thereby flouting the rules of origin principle.

Now that “the very bad economics” madness is gone with the wind and the restrictions on some imported vegetables seem to be back, SA is threatening to punish Botswana not because they are in right but because they have reckoned that we are virtually at their mercy. That type of arrogance was aptly displayed by the so-called West against Russia in 2022 at the inception of what Russia calls the SMO. And guess what, in less than four years Russia has been transformed from a wheat deficit country to a wheat surplus country exporting some of their wheat to even the very West that sought to cripple the Russian economy with extensisive sanctions.

Are we really at the messy of Mtsantsi? Tragedy is that we do not know and our governement would probably give the same answer. For instance, if we pulled out of SACUA and introduced our own tariff regime set at about 10%, I believe the current average tariff for SACUA is in the region of 8%, how much revenue would be able to raise on imports in the form of customs and exercise duties? By how much does the SA exports to the rest of African countries depend on our transport network, virtually for free? Well you would have thought that the previous governement and the current one would have found it necessary to investigate these issues. Alas! Do not be too hopeful, somehow governements are always reactive.

Granted, currently, our economy is on shaky ground so much so that tempering with the status quo could complicate matters. However, going forward, certainly by 2030, that is if I were “my boy”, powerful as he is, I would pull Botswana out of SACUA, introduce an independent tariff regime with customs and exercise duties set at levels that would allow us to derive more or less the same SACUA receipts that we currently receive, improve our transport network and charge tolls on it, gradually ban all imported vegetables, ensure that all imported goods are subject to a rules of origin requirement with a cut off point of 65% and finally train our people and develop appropriate systems that would track all imported goods into the country and ensure that every one observes the rules, otherwise punitive charges would apply. That is the only way we can industrialize and lessen our dependence on the likes of SA which is not only unsustainable but arguably suicidal too.

Failing which, even the BNETP intended projects may also fail the same way that many other projects in the past failed because of pressure from SA interest groups such as the SA Motor Vehicle Association which made sure that the Hyundai project failed and was ultimately taken over by SA. Of course, other structural reform policies, infrastructure develeopment and other support policies would need to be introduced in order to encourage more industrial development.

Good Reading!!

13/12/2025

So we think we are smart to be utterly dependent on SA, our proxy and virtual colonial master until 1976, I.e before the p**a was introduced. Others would argue that we are still so dependent on SA we might as well see ourselves as their colony, the same as Lesotho, Namibia and Swaziland.

In 1987, our trade deficit with SA was about P15,0 billion p.a, now I estimate it at more than P35,0 billion. At the same time we are so obsessed about the so-called SACU customs revenues, as if we cannot collect the same if we pulled out from SACUA and imposed our own tariffs on imports from non CFTA members including those that camouflage as genuine SA, thereby flouting the rules of origin principle.

Now that “the very bad economics” madness as gone with the wind and the restrictions on imported vegetables seems to be back, SA is threatening to punish Botswana not because they are in right but because they have reckoned that we are virtually at their mercy. That type of arrogance was aptly displayed by the so-called West against Russia in 2022 at the inception of what Russia calls the SMO. And guess what, in less than four years Russia has been transformed from a wheat deficit country to a wheat surplus country exporting some of their wheat to even the very West that sought to cripple the Russian economy with extensisive sanctions.

Are we really at the messy of Mtsantsi? Tragedy is that we do not know, including our own governement. For instance, if we pulled out of SACUA and introduced our own tariff regime set at about 10%, I believe the current average tariff for SACUA is in the region of 8%, how much revenue would be be able to raise on imports in the form of customs and exercise duties? By how much does the SA exports into the rest of African depend on our transport network, virtually for free? Well you would have thought that the previous governement and the current one would have found it necessary to investigate these issues. Alas! Do not be too hopeful, somehow governements are always reactive.

Granted, currently, our economy is on shaky ground so much so that tempering with the status quo would complicate matters. However, going forward, certainly by 2030, that is if I were “my boy”, powerful as he is, I would pull Botswana out of SACUA, introduce an independent tariff regime with customs and exercise duties set at levels that would allow us to derive more or less the same SACUA receipts that we currently receive, improve our transport network and charge tolls on it, gradually ban all imported vegetables, ensure that all imported goods are subject to a rules of origin requirement with a cut off point of 65% and finally train and develop systems that would track all imported goods into the country and ensure that every one observes the rules otherwise punitive charges would apply. That is the only way we can industrialize and lessen our dependence on the likes of SA which is not only unsustainable but also suicidal.

Failing which, even the BNETP intended projects are going to fail the same way that many other projects in the past failed because of pressure from SA interest groups such as the SA Motor Vehicle Association which made sure that the Hyundai project failed and was ultimately taken over by SA.

Good Reading!!

23/11/2025

If what the global financial makers experienced last week is going to continue into December, then this year’s Christmas is going to be a total disaster. First, we saw spectacular collapses investors as well as investors in the private credit market, then Bitcoin lost about one third of its market value from its peak followed by the much talked about Yen forex carry trade collapse as Japanese yields skyrocketed leading to a stronger Yen and a pandemonium among Japanese investors clamoring to repatriate their dollar investments in order to preempt further losses occasioned by a stronger Yen and compounded by the need to preempt devastating margin calls.

Without a doubt, last week was a blood bath for the global financial markets. For institutional investors such as pension funds and insurance companies, both local and foreign, we say “caveat emptor”. Do not be carried away by what appears to be attractive returns and stake your underlying beneficiaries’ assets into opaque investments such as private credits.

Be warned!!!