Botswana’s inflation rate has been recorded as the lowest amongst other Southern African Customs Union (SACU) member states. SACU is a customs union among five countries being Botswana, Lesotho, Namibia, South Africa and Swaziland.
According to Statistics Botswana’s ‘Prices Stats’ brief released this week, Botswana’s inflation rate was the lowest comparatively. The Brief compared Botswana’s Consumer Price Statistics with that of her trading partners in SACU.
The succinct Statistics latest report made a comparison of Botswana and SACU Headline Inflation and observed that comparatively, “Botswana’s annual average inflation rate of 2.8 percent in 2016 was the lowest among the SACU member states”.
It further points out that the highest annual average inflation rate was recorded in Swaziland with a rate of 7.8 percent whereas South Africa, Lesotho and Namibia recorded annual average rates of 6.3, 6.6 and 6.7 percent respectively. “This is feasible, considering the fact that Botswana’s rate was cushioned by stable fuel pump prices of petrol and diesel which was reduced in February 2016 and was kept at that price for the whole year,” states the Statistics report.
In addition, it posits that there was a sustained strength of the Botswana Pula relative to its counterparts for most of the year under review. Notwithstanding that, the annual average inflation rate of 2.8 percent recorded in 2016 was on the lower side of the inflation target range of 3 – 6 percent set out by the Bank of Botswana.
In terms of the Consumer Price Index, the Statistics Brief states that, on average, the All Items Index which is conventionally referred to as Cost of Living Index or Consumer Price Index (CPI) was 99.4 in 2016, which is an increase of 2.8 percent on the 2015 average index of 96.6. This means that the cost of a fixed basket of goods which cost 96.6 units in 2015 cost 99.4 units in 2016.
“The average inflation rate was 2.8 percent in 2016 compared to 3.1 percent realized in 2015. This means that consumers on average paid 2.8 percent less for the goods and services in the Consumer Price Index (CPI) basket in 2016 compared to 2015 (3.1 percent). The 2.8 percent inflation rate recorded in 2016 was the lowest since 1970,” it further points out.
Moreover, the Briefs explain that applying significant downward pressure on the inflation between 2015 and 2016 were the declining prices of major components in the CPI basket especially Transport group index (-2.7 percent) which accounted for 20.65 percent of CPI basket weights.
In terms of transport, the report stresses that all group indices experienced positive increase between 2015 and 2016 except Transport which recorded a decline of 2.7 percent. It states: “the deceleration was mainly attributable to a decline in the constituent section index of Operation of Personal Transport (1.3 percent). The decrease in the Operation of Personal Transport section index was due to the drop in retail pump prices of petrol by P0.15 and diesel by P0.45 per liter, which effected on the 1st February 2016, following a drop in global oil prices which had eased to an average of 50 US Dollar in 2016.”
Housing, Water, Electricity, Gas & Other Fuels
The Housing, Water, Electricity, Gas & Other Fuels group index stood at 98.8 percent on average in 2016, an increase of 6.3 percent from the 2015 average of 93.0. The Statistics briefs mentions that this “was due to overall increase in the constituent section indices except for water and electricity which remained constant for the rest of 2016”.
Food & Non-Alcoholic Beverages
According to the SB, the Food group Index registered an increase of 2.7 percent, from an average of 96.8 in 2015 to 99.4 in 2016. “Given the fact that the weight of Food & Non-Alcoholic Beverages is 16.51 in the CPI basket and the frequency at which a consumer purchases food items, high food prices can have a large impact on consumer confidence particularly, those individuals in the bottom income level, for whom food, as a share of total expenditures, is much larger.”
Clothing and Footwear
With regard to the Clothing and Footwear Group Index, it registered an increase of 6.5 percent, from an average of 93.1 in 2015 to 99.1 in 2016. The rise was attributed to a general increase in the section indices.
Other Group Indices
Other section groups recorded on average less than 5 percent inflation rate in 2016. It is said that Restaurants & Hotels Group Index stood at 4.0 percent whereas Alcoholic Beverages, Tobacco & Narcotics Group Index recorded 2.5 percent in 2016. The Education group index increased by 3.7 percent.
“Health and Furnishing, Household Equipment & Routine Maintenance group indices both recorded 3.0 percent. The Recreation & Culture increased by 3.0 percent while Communications group index rose by 0.2 percent.”
Cost of living Index and Inflation Rates by Strata
The report highlights that Consumer Price Indices (CPI) is also compiled by strata, meaning, CPI is recorded according to Cities/towns, Urban villages and Rural villages. In 2016 it is understood that products were generally costly in rural villages compared to cities/towns. In rural villages consumers needed 100.8 units in December 2016 to buy the same basket which would cost 100.4 units in Cities/towns. This implies that it was expensive to buy goods in rural areas compared to cities/towns as reflected by average inflation rate in 2016, the report emphasised.
Meanwhile, the Stats Brief presents a brief summary of Botswana Consumer Price Indices (CPI) and Inflation rates for 2016. According to Statistician General Anna Majelantle, Price Statistics information is useful for formulation of socio-economic and monetary policies, quantifying the purchasing power of the Pula in relation to goods and services over time in Botswana.
In order to produce statistics that reflect the current situation in the economy, she says Statistics Botswana has rebased the Consumer Price Index from September 2006 to September 2016. She also pointed out that the CPI rebasing covers a number of issues which includes the revised basket and weights, area coverage as well as the methodology.
“Area coverage was largely extended to areas in the western side of the country i.e. Shakawe, Gumare, Charleshill and Hukuntsi. Other areas were removed due to proximity to other areas where prices were already collected,” she explained.
CPI is an index which measures price changes in goods and services with reference to a base period. The current Botswana CPI series has a base period of September 2016.
In today’s digital age, banking is no longer just about visiting a branch during business hours. It’s about putting you, the customer, in the driver’s seat of your financial journey. But what exactly is self-service banking, and how do you stand to benefit from it as a customer?
Self-service banking is all about giving you the power to manage your finances on your terms. Whether you want to check your account balance at midnight, transfer money while on vacation, or deposit cash without waiting in line, self-service banking makes it possible. It’s like having a virtual branch at your fingertips, ready to assist you 24/7.
This shift towards self-service banking was catalyzed by various factors but it became easily accessible and accepted during the COVID-19 pandemic. People of all ages found themselves turning to digital channels out of necessity, and they discovered the freedom and flexibility it offers.
Anyone with a bank account and access to the internet or a smartphone can now bank anywhere and anytime. Whether you’re a tech-savvy millennial or someone who’s less comfortable with technology, you as the customer have the opportunity to manage your finances independently through online banking portal or downloading your bank’s mobile app. These platforms are designed to be user-friendly, with features like biometric authentication to ensure your transactions are secure.
Speaking of security, you might wonder how safe self-service banking really is. Banks invest heavily in encryption and other security measures to protect your information. In addition to that, features like real-time fraud detection and AI-powered risk management add an extra layer of protection.
Now, you might be thinking, “What’s the catch? Does self-service banking come with a cost?” The good news is that for the most part, it’s free. Banks offer these digital services as part of their commitment to customer satisfaction. However, some transactions, like wire transfers or expedited bill payments, may incur a small service fee.
At Bank Gaborone, our electronic channels offer a plethora of services around the clock to cater to your banking requirements. This includes our Mobile App, which doesn’t require data access for Orange and Mascom users. We also have e-Pula Internet Banking portal, available at https://www.bankgaborone.co.bw as well as Tobetsa Mobile Banking which is accessible via *187*247#. Our ATMs also offer the flexibility of allowing you to deposit, withdraw cash, and more.
With self-service banking, you have the reins of your financial affairs, accessible from the comfort of your home, workplace, or while you’re on the move. So why wait? Take control of your finances today with self-service banking.
Duduetsang Chappelle-Molloy is Head: Marketing and Corporate Communication Services
Botswana has recently recorded a significant trade deficit of over P6 billion. This trade deficit, which occurred in November 2023, follows another deficit of P4.7 billion recorded in October of the same year. These figures, released by Statistics Botswana, highlight a decline in export revenues as the main cause of the trade deficit.
In November 2023, Botswana’s total export revenues amounted to P2.9 billion, a decrease of 24.3 percent from the previous month. Diamonds, a major contributor to Botswana’s exports, experienced a significant decline of 44.1 percent during this period. This decline in diamond exports played a significant role in the overall decrease in export revenues. However, diamonds still remained the leading export commodity group, contributing 44.2 percent to export revenues. Copper and Machinery & Electrical Equipment followed, contributing 25.8 percent and 10.1 percent, respectively.
Asia emerged as the leading export market for Botswana, receiving exports worth P1.18 billion in November 2023. The United Arab Emirates, China, and Hong Kong were the top destinations within Asia, receiving 18.6 percent, 14.2 percent, and 3.8 percent of total exports, respectively. Diamonds and Copper were the major commodity groups exported to Asia.
The Southern African Customs Union (SACU) received Botswana’s exports worth P685.7 million, with South Africa being the main recipient within SACU. The European Union (EU) received exports worth P463.2 million, primarily through Belgium. Australia received exports worth P290 million, while the United States received exports valued at P69.6 million, mostly composed of diamonds.
On the import side, Botswana imported goods worth P9.5 billion in November 2023, representing an increase of 11.2 percent from the previous month. The increase in imports was mainly driven by a rise in Diamonds and Chemicals & Rubber Products imports. Diamonds contributed 23.3 percent to total imports, followed by Fuel and Food, Beverages & Tobacco at 19.4 percent and 15.0 percent, respectively.
The SACU region was the top supplier of imports to Botswana, accounting for 77.7 percent of total imports. South Africa contributed the largest share at 57.2 percent, followed by Namibia at 20.0 percent. Imports from Asia accounted for 9.8 percent of total imports, with Diamonds, Machinery & Electrical Equipment, and Chemicals & Rubber Products being the major commodity groups imported. The EU supplied Botswana with imports worth 3.2 percent of total imports, primarily in the form of Machinery & Electrical Equipment, Diamonds, and Chemicals & Rubber Products.
Botswana’s recent trade deficit of over P6 billion highlights a decline in export revenues, particularly in the diamond sector. While Asia remains the leading export market for Botswana, the country heavily relies on imports from the SACU region, particularly South Africa. Addressing the trade deficit will require diversification of export markets and sectors, as well as efforts to promote domestic industries and reduce reliance on imports.
The business sector in Botswana is optimistic about the year 2024, according to a recent survey conducted by the Bank of Botswana (BoB). The survey collected information from businesses in various sectors, including agriculture, mining, manufacturing, construction, and finance, among others. The results of the survey indicate that businesses expect trading conditions to improve in the first quarter of 2024 and remain favorable throughout the year.
The researchers found that firms anticipate improvements in investment, profitability, and goods and services exported in the fourth quarter of 2023 compared to the previous quarter. These expectations, combined with anticipated growth in all sectors except construction and real estate, contribute to the overall confidence in business conditions. Furthermore, businesses expect further improvements in the first quarter of 2024 and throughout the entire year.
Confidence among domestic market-oriented firms may decline slightly in the first quarter of 2024, but overall optimism is expected to improve throughout the year, consistent with the anticipated domestic economic recovery. Firms in sectors such as mining, retail, accommodation, transport, manufacturing, agriculture, and finance are driving this confidence. Export-oriented firms also show increased optimism in the first quarter of 2024 and for the entire year.
All sectors, except agriculture, which remains neutral, are optimistic about the first quarter of 2024 and the year ending in December 2024. This optimism is likely supported by government interventions to support economic activity, including the two-year Transitional National Development Plan (TNDP) and reforms aimed at improving the business environment. The anticipated improvement in profitability, goods and services exported, and business investment further contributes to the positive outlook.
Firms expect lending rates and borrowing volumes to increase in the 12-month period ending in December 2024. This increase in borrowing is consistent with the expected rise in investment, inventories, and goods and services exported. Firms anticipate that domestic economic performance will improve during this period. Domestic-oriented firms perceive access to credit from commercial banks in Botswana to be relaxed, while export-oriented firms prefer to borrow from South Africa.
During the fourth quarter of 2023, firms faced high cost pressures due to increased input costs, such as materials, utilities, and transport, resulting from supply constraints related to conflicts in Ukraine-Russia and Israel-Hamas. According to the survey report, the firms noted that cost pressures during the fourth quarter of 2023 were high, mainly attributable to increase in some input costs, such as materials, utilities, and transport arising from supply constraints related to the Ukraine-Russia and Israel-Hamas wars. “However, firms’ expectations about domestic inflation decreased, compared to the previous survey, and have remained within the Bank’s 3 – 6 percent objective range, averaging 5.4 percent for 2023 and 5.4 percent for 2024. This suggests that inflation expectations are well anchored, which is good for maintenance of price stability,” reads the survey report in part.
However, firms’ expectations about domestic inflation decreased compared to the previous survey, and inflation expectations remained within the Bank’s objective range of 3-6 percent. This suggests that inflation expectations are well anchored, which is beneficial for maintaining price stability.
In terms of challenges, most firms in the retail, accommodation, transport, manufacturing, construction, and finance sectors considered the exchange rate of the Pula to be unfavorable to their business operations. This is mainly because these firms import raw materials from South Africa and would prefer a stronger Pula against the South African rand. Additionally, firms in the retail, accommodation, transport, and mining sectors cited other challenges, including supply constraints from conflicts in Russia-Ukraine and Israel-Hamas, as well as new citizen economic empowerment policies that some firms considered unfavorable to foreign direct investment.
On the positive side, firms highlighted factors such as adequate water and electricity supply, a favorable political climate, an effective regulatory framework, the availability of skilled labor, and domestic and international demand as supportive to doing business in Botswana during the fourth quarter of 2023.
Overall, the business sector in Botswana is optimistic about the year 2024. The anticipated improvements in trading conditions, supported by government interventions and reforms, are expected to drive growth and profitability in various sectors. While challenges exist, businesses remain confident in the potential for economic recovery and expansion.