While parliament has approved the Transfer Duty Bill with the intention of benefitting citizens, especially first time owners, experts warn the move is likely to greatly impact the property market.
The bill wants the rate of transfer property purchases for non-citizens increased from 5 percent to 30 percent.
In their latest report for the second quarter of the year, economists at Econsult led by Keith Jeffries along with Kitso Mokhurutshi and SethunyaSejoe, argue this would result in fewer transactions and lower prices.
In addition, it is feared the move will negatively impact on the banking system and reduce the availability of mortgages.
While praising government for relaxing some of the transfer duty proposals’ harsher elements, economists feel the proposed increase for foreigners is likely to have unpleasant effects on the economy.
The belief is that it will discourage the much-needed Foreign Direct Investment (FDI) inflows.
Meanwhile, Econsult economists have forecast troubles ahead for the local economy as signs of economic quandary emerge.
While they say the year started relatively well in terms of economic performance, they point to the weakening of the global diamond market as a sign that worrying times lie ahead.
De Beers’ rough diamond sales have been weaker during the first half the year as compared to the same period last year, a trend linked to a number of factors such as weak demand for diamond jewellery in major markets such as the U.S and China.
Other factors include overstocking in the midstream and lack of profitability due to narrow margins between rough and polished diamond prices.
Downward pressure on prices of lower value diamonds due to competition from synthetics or lab-grown diamonds is also seen as a factor.
The dwindling diamond market’s performance, which has been the economy’s mainstay for decades, is said to be a wake-up call to fast-track different export products.
Currently, diamonds represent 73 percent of Botswana’s total export goods and services.
However, it is reported that the economic diversificationcurrently taking place is primarily focused on non- tradable sectors, i.e. services that only serve the local economy, and not exports.