Botswana President Ian Khama said the decline in the mining sector has seriously dented Botswana economic growth, and the country now wants to focus more proactively in the need to grow employment and wealth through small, medium and micro-enterprises.

Delivering the State of the Nation address on Monday, Khama said that Botswana's economy has done badly with the main blame on decline in the mining sector during the first half of this year.

"During the first quarter of 2012, mining output in real terms was 9.5 percent less than in the first quarter of last year, and in the second quarter it was 7.6 percent less than the same period a year earlier," Khama said.

He said the global diamond market experienced negative performance during the first half of this year and that reduced sales volumes and prices on diamond--which the country depended on.

"This reflects constrained global demand, exacerbated by slow growth and uncertainty in the Euro Zone, China, India, and the USA. The recent IMF World Economic Outlook warns of continued weakness in the performance of both advanced and key emerging market economies," said Khama.

Developments in the world economy for the first half of 2012 were generally negative with the overall global economic outlook being much gloomier than it was during the first half of 2011. Advanced economies are expected to register growth of only 1.3 percent this year and 1.5 percent in 2013.

Given its global linkages the domestic economic outlook is thus uncertain. Botswana forecasts a 3.5 percent growth in 2012 and 5 percent in 2013.

Meanwhile most non-mining sectors have, however, recorded positive real growth rates for the same period, with construction growing by 19.7 percent, utilities by 11.2 percent, social and personal services by 10 percent.

According to Khama, the numbers are indicative of modest progress towards economic diversification.

However, he said that given the continued uncertainties in the global economy the outlook for Botswana's domestic economy and government revenues is not encouraging.

Preliminary results of the overall revenue projections going forward up to and including 2015/16 show that there will be no substantial increase in income resulting in the possibility of no new major projects in coming years under the government's decision to achieve budget surplus.

After running budget deficits from 2008/09 to 2011/12, largely due to the economic downturn, Botswana's government took the decision to balance the budget for the 2012/13 financial year and thereafter achieve moderate surpluses to build up reserves and re- pay debts.

The effort aimed to buffer the economy from external shocks, while avoiding a debt trap. It is estimated that there will be budget surplus of 1.15 billion pula (about 150 million U.S. dollars) this financial year, following the reduction in budget deficits from a high of 9.5 billion pula in 2009/10 to an estimated 2.2 billion pula in 2011/12.